7/22/07 Say It Isn't So
Bill Bonner and Lila Rajiva: "It has been said that a man is only as good as his word. Well, dear reader, the same can be said for the U.S. dollar. Since there is nothing else to support it, we must trust that it is worth what it says it is worth. Unfortunately, the dollar's 'word' may soon be worth no more than the paper it's printed on...Ben Bernanke would like to boost rates to support the dollar and help American tourists, but faced with a liquidity crisis in the $500 trillion derivatives market, he'll have to think thrice before doing so. But rates are going up with or without him. Lenders are finally growing wary. Afraid of the poisonous debt packages, buyers are passing up another helping. "All but one of the 15 ABX indexes fell to a record low," says Bloomberg news. Offers for CDOs are said to be going "no bid." And several major debt offerings had to be withdrawn or rescheduled as promoters were afraid that they, too, would go "no bid."...And dollar holders all over the world are tightening their grip, fearing that their flying money might fly away."
In a stinging legal challenge to the administration’s detention policies, a ruling requires virtually all information to be shared with defense lawyers.
Brad Setser: "But relative to say 2004 or even 2005, the oil exporters are spending and investing a lot more, which means that they are importing a lot more – and thus spending a lot more on European goods. And relative to 2004 or 2005, I suspect that the oil exporters are putting a somewhat smaller share of their savings into dollars. Russia is the most obvious example – it lowered the dollar share of its reserves from around 70% to 50% or less. And some of the Gulf countries likely have been paring their exposure to the dollar as well."
Brett Steenbarger: "Going back to 2004, I could only find 8 occasions in which a day with over 1000 20-day highs among NYSE, NASDAQ, and ASE stocks was followed by a day with over 1000 new 20-day lows. On five of those eight occasions, the S&P 500 Index (SPY) was lower over the next week of trading. The reason for this is that good bull markets pull pretty much everything off their lows. When averages make new highs amidst many new lows in individual issues, the new highs most often are a function of selective strength among the most highly weighted stocks in the indexes. Most traders don't realize that the largest 50 stocks in the S&P 500 account for nearly 50% of the index's weighting...Rather, my point is that there are cracks in the market foundation. We're seeing a flight to quality in Treasuries, with risk aversion in fixed income. We're seeing a U.S. dollar hitting all-time lows against the Euro--and now even losing some strength vs. the Yen. That's helping us record fresh highs in commodity prices, such as oil, that are denominated in dollars.
And the banks: they dominate the 52-week low list. Financials are hurting, as fears of overaggressive lending are now spreading outside the subprime housing sector.
Yes, you could say it's a wall of worry. The problem is that many stocks are not climbing that wall. We've been up over the past three months of trading. But new 65-day lows currently outnumber new highs by more than 2:1. We've certainly been up in the major averages over the past year. But if we count just the common stocks trading on the NYSE, we find that 84 made new annual highs on Friday and 67 made new 52-week lows. And small caps? We had 14 stocks make annual highs among the S&P 600 issues on Friday against 42 fresh 52-week lows.
Dow 14,000 made a great headline. For my part, I'll keep an eye on that market foundation."
George W. Bush issued long-awaited guidelines for Central Intelligence Agency interrogators but withheld details of what methods would now be permitted.
According to the Financial Times, Ford will next week say whether it will proceed with selling Jaguar and Land Rover after receiving a surprise offer for the British luxury carmakers from TPG Capital, the private equity firm, along with several other approaches. The cash Ford is seeking to recoup from the sale of the two carmakers is said to have dropped from its initial target above $5bn to a level closer to $3bn, according to auto executives. It paid $2.7bn for Land Rover in 2000
Barclays would make a better merger candidate with ABN AMRO than a bid by a group led by Royal Bank of Scotland aimed at breaking up the Dutch bank, a Dutch newspaper quoted ABN's chief executive as saying on Saturday.
ConocoPhillips Co. is prepared to spend billions of dollars on pipelines and refinery upgrades to allow it to process oil sands crude throughout its refinery network stretching to the U.S. Gulf Coast, company chairman Jim Mulva said.
The extension of the pipeline network into the Gulf Coast would open a vast new market for Canadian oil sands producers and help ensure that oil sands projects that have already been proposed could go ahead.
From the Houston Chronicle: "Canada is likely to be a "focal point" for Houston-based Weatherford International, which has relatively large exposure to the region, at 15 percent to 20 percent of revenue, said Bill Herbert, industry analyst with Simmons & Company International in Houston. But those fears also may be unwarranted because Weatherford, like Schlumberger, is well-positioned geographically to offset weak Canadian business. "There's a big world out there beyond Canada and North America," he said.
Doug Noland: "The unappreciated predicament of 1929 and today is Risk Intermediation. Dr. Bernanke refers to the study of The Great Depression as the “Holy Grail of economics.” He blames the “Bubble Poppers” and the Fed’s subsequent failure to create enough money. Conventional thinking has it that had the Fed only created $5 billion and filled the hole in bank capital the devastating downturn could have been avoided. But the issue at the time wasn’t, as conventional monetary economist believe today, the few billions necessary to recapitalize the banking system - but the ongoing tens of billions that would be required to sustain unsustainable Credit Bubble-induced inflated asset prices, inflated corporate profits, inflated earnings, and myriad worsening economic maladjustments...Confidence in the dollar is faltering in the face of untenable $800bn annual Current Account Deficits. The Credit system is weakened by unprecedented impending subprime losses and acute vulnerability throughout “prime” mortgages. The GSEs are weak financially and extraordinarily vulnerable. The Credit insurers are highly exposed to myriad Credit and financial risks. The Wall Street firms and “money center banks” are heavily exposed to mortgage and capital market risk. The untested Credit derivative marketplace has been shaken by the rapidity and severity of the subprime implosion. The CDO market wasn’t a factor in 1998, let alone a vital facet of system Credit creation and risk intermediation...In stark contrast, today – and going forward – there will be an unrelenting torrent of risk that must be intermediated (risky Credits transformed into palatable debt instruments), and it is not at all clear who is in a position to absorb significant risk. The leveraged speculators are more than likely keen to shed risk. The big “banks” and “brokers” are already fully-loaded. And the general marketplace, well, it’s reeling with the realization that much of structured finance today suffers from pricing and liquidity issues and, worse yet, not even debt ratings can be trusted. “Ponzi Finance” dynamics are in full play and the U.S. Bubble economy is incredibly exposed to a reversal in speculative finance and resulting liquidity crisis. These are very serious issues and indicative of the types of unavoidable risk intermediation problems that will stymie this historic Credit Bubble."
In the middle of the biggest glut of condominiums in more than 30 years, Miami developers keep on building. The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s, and help push Florida's economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody's Economy.com, who owns a home in Vero Beach, Florida.
Paul Kasriel: " Despite mounting evidence to the contrary, the Fed keeps saying that the housing recession is quarantined. Does it really believe this or is it so terrified about what might happen to the dollar if it were to cut rates to prevent a recession that it keeps up this Orwellian newspeak that there does not appear to be much negative spillover from housing to the rest of the economy."
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Saturday, July 21, 2007
Friday, July 20, 2007
Results
7/20/07 Results
Google's earnings excluding the cost of stock options came in at $1.12 billion, or $3.56 per share. Revenue excluding traffic acquisition costs was $2.72 billion. Analysts had been expecting the company to post earnings of $3.59 per share on revenue of $2.68 billion, according to consensus estimates from Thomson First Call. Hiring expenses exceeded budgets. Cantor Fitzgerald on Friday increased its year-end profit target for Google Inc.to $15.11 a share from $15.06 a share. For 2008, analysts at the brokerage firm shaved their forecast to $19.45 a share from $19.56 a share. Google shares fell 7.5% in pre-market trades to $507.55 a share.
BHP Billiton is no longer considering making an offer for Alcoa, The Australian newspaper reported on Thursday, citing unnamed sources, pushing Alcoa shares down more than 7 percent.
Capital One expects full-year 2007 earnings to be towards the lower end of a previously announced range of $7 to $7.40 a share.
AMD reported a net loss of $600 million, or $1.09 a share. In the same period last year, AMD earned $89 million, or 18 cents a share. Sales rose 13% to $1.37 billion, topping Wall Street's estimate of $1.25 billion, according to analysts polled by Thomson Financial.
Microsoft Corp's fiscal fourth-quarter profit rose only slightly compared to the same period a year earlier, due to a previously-announced $1 billion charge resulting from its Xbox video game business. Net income for the period ended June 30 came in at $3.04 billion, or 31 cents a share, compared to $2.83 billion, or 28 cents a share in the period a year earlier. Meanwhile revenue rose to $13.37 billion from $11.8 billion. Excluding items such as the Xbox charge, Microsoft said earnings were 39 cents a share. Analysts polled by Thomson Financial had expected earnings excluding items of 39 cents a share on revenue of $13.27 billion. "Vista appears to be disappointing," said Israel Hernandez, analyst with Lehman Brothers, noting that revenue growth for the Windows Client division was below his expectations and at the low end of Microsoft's previous guidance. "I think it missed most Street expectations. ... One quarter after the biggest product cycle in the company's history, you'd think you'd see a little more upside," Hernandez said. Sarah Friar, analyst with Goldman Sachs — which does investment-banking business with Microsoft, as does Lehman Brothers — repeated those sentiments in a note to investors after Microsoft reported its fiscal fourth-quarter results Thursday: "Client revenue of $3.8 billion (up 14 percent year-over-year) was slightly shy of our $3.9 billion estimate — somewhat surprising given recent data on PC growth."
SanDisk said its earnings were hurt by ongoing declines in the average selling prices of NAND flash memory chips.
Gilead Sciences Inc. reported net earnings for the latest three-month period of $407.9 million, or 42 cents a share, vs. $265.2 million, or 28 cents a share, in the comparable period last year. Revenue surged to $1.05 billion from $685.3 million, as HIV product sales climbed to $762.2 million from $475.4 million for the same period in 2006. Analysts, on average, had been looking for Gilead to report a per-share profit of 39 cents on revenue of $1.02 billion, according to Thomson Financial.
Citigroup's second quarter net income rose 18%, to $6.23 billion, or, $1.24 a share, from $5.27 billion, or, $1.05 a share. Revenue rose 20%, to $26.63 billion, from $22.18 billion. Analysts polled by Thomson First Call had expected the company to earn $1.13 a share on revenue of $24.89 billion.
China announced late Friday afternoon it will raise interest rates by 0.27 percentage points, a day after data showed the economy expanded rapidly in the second quarter, putting the nation on track for its fastest annual growth in more than a decade. In a statement published on its Web site, the People's Bank of China said it will raise the one-year yuan lending rate to 6.84% from 6.57% effective from Saturday. The one-year deposit rate will rise to 3.33% from 3.06%. The move marks the fifth time since April 2006 China's central bank has lifted the benchmark lending rate.
Schlumberger Ltd's second-quarter net profit jumped 47% to $1.26 billion, or $1.02 a share, from $856.9 million, or 69 cents a share, a year earlier. Revenue grew 20% to $5.64 billion, driven by an increase in international activity, with margins also improving, helped by a favorable revenue mix from exploration services. Analysts polled by Thomson Financial had been expecting earnings of 95 cents a share on revenue of $5.53 billion. In the North American market, higher activity on land and in the Gulf Coast was more than offset by a significant downturn in Canada, the company said. Schlumberger said it remains convinced that international oilfield activity will continue to strengthen as operators combat production shortfalls. In the short term, the future natural gas activity in North America remains uncertain due to record imports of liquid natural gas, it added.
Caterpillar Inc., one of the world's largest construction equipment makers, said Friday its second-quarter profit fell 21 percent, hurt by weakness in North American construction markets. The results missed Wall Street expectations, and Caterpillar shares skidded 4 percent lower in premarket trading. Caterpillar earned $823 million, or $1.24 per share, in the three months ended June 30, down from $1.05 billion, or $1.52 per share during the same period last year. Revenue rose 7 percent to $11.36 billion from $10.61 billion last year.
Goodman Global Inc., maker of heating and air-conditioning products, said it hired Goldman, Sachs & Co. and J.P. Morgan Securities Inc.to help it explore options to help boost shareholder value. Meanwhile, Watsco reduced its 2007 earnings outlook to $2.70-$2.80 a share, from $3.25-$3.35 a share. The Coconut Grove, Fla.-based air conditioning and heating equipment distributor was expected to earn $3.17 a share, according to a survey of analysts by Thomson Financial.
The chief executive of KB Home, the No. 5 U.S. home builder, said on Thursday he does not expect the overall U.S. home market to bottom out until the end of next year and that prices will not increase until well into 2009.
Even after spending $2.7 billion in U.S. reconstruction funds, Iraq's oil sector has failed to achieve any of the goals to boost production, according to a new report by the Government Accountability Office. Indeed, the highest production levels were reached back in 2004 and have not been equaled since then. In addition, the State Department's oil data for Iraq may dramatically overstate the actual production levels by as much as $5.5 billion a year, because of inadequate metering, corruption, theft, and sabotage. Security remains the biggest of the challenges, but future investment will be difficult as well.
It costs $748,000 to protect $10 million of Tribune bonds for five years, according to CMA Datavision, indicating a 49 percent risk of default. That's up from 32 percent on May 24, based on a JPMorgan Chase & Co. pricing model.
Total SA, Europe's third-largest oil company, said output from its 240,000-barrels-a-day Dalia field was halved by a generator fault. Oil and gasoline also rose after Husky Energy Inc. said a fire cut output at its refinery in Lima, Ohio, by 75 percent.
Federal Reserve chairman Ben Bernanke has warned that the crisis in the US sub-prime lending market could cost up to $100bn.
Henry To: "While foreign investment banks, commercial banks, hedge funds, and private equity funds are still busy creating liquidity, the Federal Reserve itself has continued to remove liquidity from the global financial system. This is evident by the dismal 1.6% growth in the St. Louis Adjusted Monetary base over the last 12 months. At this point (similar to the 1995 to 1998 period), the world is being "held ransom" by both the Bank of Japan, the Japanese Ministry of Finance, and the Japanese retail investor, as these parties are now playing the role of "liquidity provider of last resort" in the form of the Yen carry trade. However, since Japan runs a current account surplus, it is to be noted that Japan is thus not a natural exporter of their currency (unlike the U.S.). Moreover, the Yen carry trade - by any measure - is now way, way, overstretched. That is - if this continues - at some point, there would be a liquidity squeeze in Yen - not unsimilar to what occurred during the Fall of 1998 (when the Yen appreciated over 10% in an hour)."
Bloomberg reported China will lift the import tax on aluminum to stem production.
If the U.S. troop buildup in Iraq is reversed before the summer of 2008, the military will risk giving up the security gains it has achieved at a cost of hundreds of American lives over the past six months, Maj. Gen. Richard Lynch, commander of the 3rd Infantry Division, said Friday. What security gains?
Under Secretary of Defense Eric S. Edelman: “Premature and public discussion of the withdrawal of U.S. forces from Iraq,” he wrote, “reinforces enemy propaganda that the United States will abandon its allies in Iraq, much as we are perceived to have done in Vietnam, Lebanon and Somalia.” How many Under Secretary of Defense are on the federal payroll?
The Bush administration and U.S. military officials predicted Thursday that a key September report would show progress in Iraq, but that it would be November before they could judge the success of the troop buildup. Lt. Gen. Raymond T. Odierno, commander of day-to-day operations in Iraq: "In order to do a good assessment, I need at least until November," Odierno said. "If I have 45 more days of looking at those trends, I'll be able to make a bit more accurate assessment — if it's something that we think is going to continue or something that was just a blip." Maybe he's unable to count the dead soldiers and the ongoing casualties. Get him an adding machine.
Treasury prices rallied sharply Friday, driving the yield on the benchmark 10-year note to its lowest in nearly seven weeks to 4.958%
August crude fell 35 cents to close at $75.57 a barrel Friday. September crude became the front-month contract at the session's end. It was down 28 cents at $75.79. August natural gas fell 26 cents, or 3.9%, to close at $6.446 per million British thermal units.
August gold climbed $6.60 to close at $684.70 an ounce Friday, its highest closing level since May 9. September silver closed at a one-month high of $13.403 an ounce, up 2.8 cents for the day and up 2.2% for the week. September copper climbed at $3.7055 an ounce, its highest level since May 4. It was up 1.2% for the session to tally a 3.1% rise for the week.
Yamana offered 2.235 of its common shares and C$3.15 ($3.02) in cash for each Meridian share.
Intuitive Surgical Inc., which makes robotic surgical instruments, said its second-quarter profit jumped 84 percent to $30.7 million, or 79 cents per share, on a 61 percent rise in revenue. The results beat analyst expectations and the company raised its full-year revenue growth outlook to between 45 percent and 50 percent growth, from an earlier forecast for 40 percent growth. Bear Stearns analyst Rick Wise said sales could approach $1 billion by 2009. That, coupled with operating expenses likely growing at a slower pace, means earnings per share should nearly double to $6 by 2009. The stock soared $48 to $198 per share!
Albert Einstein: “Insanity: doing the same thing over and over again and expecting different results.”
Google's earnings excluding the cost of stock options came in at $1.12 billion, or $3.56 per share. Revenue excluding traffic acquisition costs was $2.72 billion. Analysts had been expecting the company to post earnings of $3.59 per share on revenue of $2.68 billion, according to consensus estimates from Thomson First Call. Hiring expenses exceeded budgets. Cantor Fitzgerald on Friday increased its year-end profit target for Google Inc.to $15.11 a share from $15.06 a share. For 2008, analysts at the brokerage firm shaved their forecast to $19.45 a share from $19.56 a share. Google shares fell 7.5% in pre-market trades to $507.55 a share.
BHP Billiton is no longer considering making an offer for Alcoa, The Australian newspaper reported on Thursday, citing unnamed sources, pushing Alcoa shares down more than 7 percent.
Capital One expects full-year 2007 earnings to be towards the lower end of a previously announced range of $7 to $7.40 a share.
AMD reported a net loss of $600 million, or $1.09 a share. In the same period last year, AMD earned $89 million, or 18 cents a share. Sales rose 13% to $1.37 billion, topping Wall Street's estimate of $1.25 billion, according to analysts polled by Thomson Financial.
Microsoft Corp's fiscal fourth-quarter profit rose only slightly compared to the same period a year earlier, due to a previously-announced $1 billion charge resulting from its Xbox video game business. Net income for the period ended June 30 came in at $3.04 billion, or 31 cents a share, compared to $2.83 billion, or 28 cents a share in the period a year earlier. Meanwhile revenue rose to $13.37 billion from $11.8 billion. Excluding items such as the Xbox charge, Microsoft said earnings were 39 cents a share. Analysts polled by Thomson Financial had expected earnings excluding items of 39 cents a share on revenue of $13.27 billion. "Vista appears to be disappointing," said Israel Hernandez, analyst with Lehman Brothers, noting that revenue growth for the Windows Client division was below his expectations and at the low end of Microsoft's previous guidance. "I think it missed most Street expectations. ... One quarter after the biggest product cycle in the company's history, you'd think you'd see a little more upside," Hernandez said. Sarah Friar, analyst with Goldman Sachs — which does investment-banking business with Microsoft, as does Lehman Brothers — repeated those sentiments in a note to investors after Microsoft reported its fiscal fourth-quarter results Thursday: "Client revenue of $3.8 billion (up 14 percent year-over-year) was slightly shy of our $3.9 billion estimate — somewhat surprising given recent data on PC growth."
SanDisk said its earnings were hurt by ongoing declines in the average selling prices of NAND flash memory chips.
Gilead Sciences Inc. reported net earnings for the latest three-month period of $407.9 million, or 42 cents a share, vs. $265.2 million, or 28 cents a share, in the comparable period last year. Revenue surged to $1.05 billion from $685.3 million, as HIV product sales climbed to $762.2 million from $475.4 million for the same period in 2006. Analysts, on average, had been looking for Gilead to report a per-share profit of 39 cents on revenue of $1.02 billion, according to Thomson Financial.
Citigroup's second quarter net income rose 18%, to $6.23 billion, or, $1.24 a share, from $5.27 billion, or, $1.05 a share. Revenue rose 20%, to $26.63 billion, from $22.18 billion. Analysts polled by Thomson First Call had expected the company to earn $1.13 a share on revenue of $24.89 billion.
China announced late Friday afternoon it will raise interest rates by 0.27 percentage points, a day after data showed the economy expanded rapidly in the second quarter, putting the nation on track for its fastest annual growth in more than a decade. In a statement published on its Web site, the People's Bank of China said it will raise the one-year yuan lending rate to 6.84% from 6.57% effective from Saturday. The one-year deposit rate will rise to 3.33% from 3.06%. The move marks the fifth time since April 2006 China's central bank has lifted the benchmark lending rate.
Schlumberger Ltd's second-quarter net profit jumped 47% to $1.26 billion, or $1.02 a share, from $856.9 million, or 69 cents a share, a year earlier. Revenue grew 20% to $5.64 billion, driven by an increase in international activity, with margins also improving, helped by a favorable revenue mix from exploration services. Analysts polled by Thomson Financial had been expecting earnings of 95 cents a share on revenue of $5.53 billion. In the North American market, higher activity on land and in the Gulf Coast was more than offset by a significant downturn in Canada, the company said. Schlumberger said it remains convinced that international oilfield activity will continue to strengthen as operators combat production shortfalls. In the short term, the future natural gas activity in North America remains uncertain due to record imports of liquid natural gas, it added.
Caterpillar Inc., one of the world's largest construction equipment makers, said Friday its second-quarter profit fell 21 percent, hurt by weakness in North American construction markets. The results missed Wall Street expectations, and Caterpillar shares skidded 4 percent lower in premarket trading. Caterpillar earned $823 million, or $1.24 per share, in the three months ended June 30, down from $1.05 billion, or $1.52 per share during the same period last year. Revenue rose 7 percent to $11.36 billion from $10.61 billion last year.
Goodman Global Inc., maker of heating and air-conditioning products, said it hired Goldman, Sachs & Co. and J.P. Morgan Securities Inc.to help it explore options to help boost shareholder value. Meanwhile, Watsco reduced its 2007 earnings outlook to $2.70-$2.80 a share, from $3.25-$3.35 a share. The Coconut Grove, Fla.-based air conditioning and heating equipment distributor was expected to earn $3.17 a share, according to a survey of analysts by Thomson Financial.
The chief executive of KB Home, the No. 5 U.S. home builder, said on Thursday he does not expect the overall U.S. home market to bottom out until the end of next year and that prices will not increase until well into 2009.
Even after spending $2.7 billion in U.S. reconstruction funds, Iraq's oil sector has failed to achieve any of the goals to boost production, according to a new report by the Government Accountability Office. Indeed, the highest production levels were reached back in 2004 and have not been equaled since then. In addition, the State Department's oil data for Iraq may dramatically overstate the actual production levels by as much as $5.5 billion a year, because of inadequate metering, corruption, theft, and sabotage. Security remains the biggest of the challenges, but future investment will be difficult as well.
It costs $748,000 to protect $10 million of Tribune bonds for five years, according to CMA Datavision, indicating a 49 percent risk of default. That's up from 32 percent on May 24, based on a JPMorgan Chase & Co. pricing model.
Total SA, Europe's third-largest oil company, said output from its 240,000-barrels-a-day Dalia field was halved by a generator fault. Oil and gasoline also rose after Husky Energy Inc. said a fire cut output at its refinery in Lima, Ohio, by 75 percent.
Federal Reserve chairman Ben Bernanke has warned that the crisis in the US sub-prime lending market could cost up to $100bn.
Henry To: "While foreign investment banks, commercial banks, hedge funds, and private equity funds are still busy creating liquidity, the Federal Reserve itself has continued to remove liquidity from the global financial system. This is evident by the dismal 1.6% growth in the St. Louis Adjusted Monetary base over the last 12 months. At this point (similar to the 1995 to 1998 period), the world is being "held ransom" by both the Bank of Japan, the Japanese Ministry of Finance, and the Japanese retail investor, as these parties are now playing the role of "liquidity provider of last resort" in the form of the Yen carry trade. However, since Japan runs a current account surplus, it is to be noted that Japan is thus not a natural exporter of their currency (unlike the U.S.). Moreover, the Yen carry trade - by any measure - is now way, way, overstretched. That is - if this continues - at some point, there would be a liquidity squeeze in Yen - not unsimilar to what occurred during the Fall of 1998 (when the Yen appreciated over 10% in an hour)."
Bloomberg reported China will lift the import tax on aluminum to stem production.
If the U.S. troop buildup in Iraq is reversed before the summer of 2008, the military will risk giving up the security gains it has achieved at a cost of hundreds of American lives over the past six months, Maj. Gen. Richard Lynch, commander of the 3rd Infantry Division, said Friday. What security gains?
Under Secretary of Defense Eric S. Edelman: “Premature and public discussion of the withdrawal of U.S. forces from Iraq,” he wrote, “reinforces enemy propaganda that the United States will abandon its allies in Iraq, much as we are perceived to have done in Vietnam, Lebanon and Somalia.” How many Under Secretary of Defense are on the federal payroll?
The Bush administration and U.S. military officials predicted Thursday that a key September report would show progress in Iraq, but that it would be November before they could judge the success of the troop buildup. Lt. Gen. Raymond T. Odierno, commander of day-to-day operations in Iraq: "In order to do a good assessment, I need at least until November," Odierno said. "If I have 45 more days of looking at those trends, I'll be able to make a bit more accurate assessment — if it's something that we think is going to continue or something that was just a blip." Maybe he's unable to count the dead soldiers and the ongoing casualties. Get him an adding machine.
Treasury prices rallied sharply Friday, driving the yield on the benchmark 10-year note to its lowest in nearly seven weeks to 4.958%
August crude fell 35 cents to close at $75.57 a barrel Friday. September crude became the front-month contract at the session's end. It was down 28 cents at $75.79. August natural gas fell 26 cents, or 3.9%, to close at $6.446 per million British thermal units.
August gold climbed $6.60 to close at $684.70 an ounce Friday, its highest closing level since May 9. September silver closed at a one-month high of $13.403 an ounce, up 2.8 cents for the day and up 2.2% for the week. September copper climbed at $3.7055 an ounce, its highest level since May 4. It was up 1.2% for the session to tally a 3.1% rise for the week.
Yamana offered 2.235 of its common shares and C$3.15 ($3.02) in cash for each Meridian share.
Intuitive Surgical Inc., which makes robotic surgical instruments, said its second-quarter profit jumped 84 percent to $30.7 million, or 79 cents per share, on a 61 percent rise in revenue. The results beat analyst expectations and the company raised its full-year revenue growth outlook to between 45 percent and 50 percent growth, from an earlier forecast for 40 percent growth. Bear Stearns analyst Rick Wise said sales could approach $1 billion by 2009. That, coupled with operating expenses likely growing at a slower pace, means earnings per share should nearly double to $6 by 2009. The stock soared $48 to $198 per share!
Albert Einstein: “Insanity: doing the same thing over and over again and expecting different results.”
Thursday, July 19, 2007
Updates
7/20/07 Updates
The number of workers filing for state unemployment benefits fell by 8,000 to a seasonally 301,000 in the week ending on July 14, the Labor Department reported Thursday. The four-week moving average of new claims fell by 6,250 to 312,000, the lowest in five weeks. The number of people continuing to collect unemployment benefits rose by 20,000 in the week ending July 7 to a seasonally adjusted 2.57 million, the most in three months. The four-week average of continuing claims rose to 2.54 million, the most in four months.
Privately held European space rental firm Algeco said it's agreed to buy Williams Scotsman for $2.2 billion, or $28.25 a share in cash.
UnitedHealth's annual adjusted earnings are seen between $3.43 and $3.48 a share, which at the top end is an increase of 2 cents a share.
Citigroup downgraded European oil giants Total and Royal Dutch Shell to hold from buy as well as cutting BG Group, Statoil and Repsol to sell from hold. Citigroup said its moves were mainly due to valuation.
The pace of China's economic growth accelerated to 11.9% in the most recent quarter from a year earlier, and bettering its 11.1% expansion in the first three months of the year, government data showed Friday. Inflation climbed to 4.4% in June.
Oil and gas drilling company Noble Corp's second-quarter profit rose 66% from the period a year earlier, citing strategic placement of assets and strong execution. Sugar Land, Texas-based Noble said that net income for the quarter ended June 30 rose to $290 million, or $2.16 a share, compared to $180 million, or $1.30 a share in the period a year earlier. Meanwhile revenue rose to $726 million, from $517.5 million.
Daily Reckoning: "A looming labor strike is threatening to shut down West Coast ports. More than 750 clerks of the International Longshore and Warehouse Union say $37.50 an hour plus benefits isn't enough to keep them on the job, managing cargo imports and exports along the California coast. Their deadline to agree on a new labor contract expired Monday night."
Brad Setser: "China announced that it added $130.6b to its reserves in the second quarter, only a bit smaller than the $135.7b it added in the first quarter. Most of the increase was real: if China had 5% of its portfolio in yen and 20-25% in euros and pounds, valuation gains only explain $2b of the increase; if China had fewer yen and more euros and pounds, valuation changes could account for maybe $5b of the $130b increase. Combine strong q1 and q2 reserve growth with China's tendency to run a larger current account surplus in the second half of the year and Stephen Green's forecast that China will add $500b -- if not a bit more -- to its reserves this year looks pretty good."
Virgin America plans to announce that it will begin flying passengers Aug. 8 with five flights daily from Los Angeles to San Francisco and five return trips.
Flights between San Francisco International Airport and Los Angeles International Airport are expected to start at $44 one-way, or about half the cost of other carriers.
The airline is expected to quickly follow the launch of the San Francisco flights with nonstop daily service to New York and Washington, airline sources said.
Virgin America plans to serve as many as 10 cities within a year of operation and as many as 30 cities within five years. The cities include San Diego, San Jose, Dallas, Chicago, Atlanta and Boston.
Paints and coatings group PPG Industries has offered to buy SigmaKalon Group, a Dutch coatings producer, from Bain Capital for 2.2 billion euros ($3.0 billion).
Total SA lost production and declared force majeure at the Dalia field in Angola. Total's decision covered half the oil pumped at the offshore field, which had produced 240,000 barrels a day, said Patricia Marie, a company spokeswoman. A generator failure caused the problem.
Honeywell increased its full-year profit forecast to $3.10 to $3.16 a share from the $3 to $3.10 range it announced in April. It also raised the 2007 sales projection to $33.9 billion from $33.5 billion.
Vulcan expects earnings from continuing operations of about $144 million, or $1.46 per diluted share, compared to its previous guidance of $1.55 to $1.70 per share.
Leading economic indicators fell 0.3% in June, the fourth decline in the past six months, the Conference Board said Thursday. Over the past six months, the leading index fell at a 1.3% annual pace, suggesting that "economic growth is likely to continue, but it is likely to be at a slow pace in the near term," the private research organization said. Three of the 10 leading indicators advanced in June, led by the factory work week, capital equipment orders and stock prices. Of the five declining indicators, the biggest negatives came from falling building permits, rising jobless claims and weaker consumer expectations.
Barclay's Capital raised its 2008 price forecasts for Brent crude oil by 11 percent, citing rising demand and a lack of growth in non-OPEC production. Brent will average $73.60 a barrel next year, up $7.40 from the previous forecast, the London-based investment bank said in a report yesterday. West Texas Intermediate crude, the U.S. benchmark grade, will average $73.90, a $6.60-a-barrel increase.
Phil Davis: "This is now or never for the World banks to step in, but now I’m becoming concerned that we may be establishing a sort of dollar carry trade - where investors borrow dollars at 5%, which devalue at a rate of more than 5% a year, making them effectively better instruments than the yen for international investors. You engage in this carry trade every time you dip into your margin account to buy stocks."
Natural-gas inventories rose by 65 billion cubic feet for the week ended July 13, the Energy Department said Thursday.Total stocks now stand at 2.692 trillion cubic feet, down 63 billion cubic feet from the year-ago level, but 365 billion cubic feet above the five-year average, the government data said.
According to the report, S&P 500: Buybacks and Treasury Shares - The
Overlooked and Hidden Assets, the record $432 billion in buybacks during
2006 resulted in 56.8% of the S&P 500 issues reducing their share count.
Consistent with the values and history, these repurchased shares remain in
corporate treasuries and have not been retired. The impact of these
buybacks boosted EPS by at least 4% for more than 20% of the S&P 500 issues
in 2006.
S&P 500 treasury shares increased 19.7% in 2006 as 338 issues were
found to have treasury shares with a cost basis of $1,002 billion. If a
mark-to- market adjustment were made, the issues would have had a market
value of $1,591 billion, representing 17.6% of their market value.
"The availability of such high levels of cash and treasury shares makes
every company a potential growth issue, and with over a third of them
having more cash and treasury shares than long-term debt, a potential
takeover target," adds Silverblatt.
The U.S. military said a soldier was killed Thursday
near Rushdi Mullah. The military says a roadside bomb
killed four other U.S. soldiers and their Iraqi
interpreter Wednesday in eastern Baghdad.
Bruce Fein, a constitutional lawyer with unimpeachable conservative
credentials was on Bill Moyers Journal saying things that used to be
considered "porn" on Daily Kos. He's calling for the
impeachment of Bush AND Cheney. Immediately!
Fein was there at Watergate. Fein helped draft
the articles of impeachment for Clinton.
August crude climbed 87 cents to close at $75.92 a barrel Thursday. August natural gas climbed 2.7% to close at $6.706 per million British thermal units, the contract's strongest closing level since July 3.
August gold climbed $4.40 to close at $678.10 an ounce Thursday. September copper gained 2.8% to finish at $3.662 a pound. Silver rose 8 cents to $13.37.
Exxon Mobil rose to an all-time high.
The Philly Fed index fell to 9.2 from 18.0 in June. The new orders index slipped to 11.3 from 18.3, while the shipments index rose to 20.3 from 5.0. The prices paid index eased to 28.1 from 29.7, an indication that inflationary pressures are still high. Businesses were more optimistic about the future; the expectations index rose to 30.4 from 16.7.
Orders for U.S. wheat from overseas are up 44 percent in the marketing year that began June 1 from a year earlier, the Department of Agriculture said today. Morocco bought 243,000 metric tons today, Egypt purchased 115,000 tons and Bangladesh bought 106,000 tons.
Median weekly earnings of the nation’s 106.9 million full-time wage and
salary workers were $690 in the second quarter of 2007, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 4.7
percent higher than a year earlier compared with a gain of 2.7 percent in
the Consumer Price Index for All Urban Consumers (CPI-U) over the same
period.
The number of workers filing for state unemployment benefits fell by 8,000 to a seasonally 301,000 in the week ending on July 14, the Labor Department reported Thursday. The four-week moving average of new claims fell by 6,250 to 312,000, the lowest in five weeks. The number of people continuing to collect unemployment benefits rose by 20,000 in the week ending July 7 to a seasonally adjusted 2.57 million, the most in three months. The four-week average of continuing claims rose to 2.54 million, the most in four months.
Privately held European space rental firm Algeco said it's agreed to buy Williams Scotsman for $2.2 billion, or $28.25 a share in cash.
UnitedHealth's annual adjusted earnings are seen between $3.43 and $3.48 a share, which at the top end is an increase of 2 cents a share.
Citigroup downgraded European oil giants Total and Royal Dutch Shell to hold from buy as well as cutting BG Group, Statoil and Repsol to sell from hold. Citigroup said its moves were mainly due to valuation.
The pace of China's economic growth accelerated to 11.9% in the most recent quarter from a year earlier, and bettering its 11.1% expansion in the first three months of the year, government data showed Friday. Inflation climbed to 4.4% in June.
Oil and gas drilling company Noble Corp's second-quarter profit rose 66% from the period a year earlier, citing strategic placement of assets and strong execution. Sugar Land, Texas-based Noble said that net income for the quarter ended June 30 rose to $290 million, or $2.16 a share, compared to $180 million, or $1.30 a share in the period a year earlier. Meanwhile revenue rose to $726 million, from $517.5 million.
Daily Reckoning: "A looming labor strike is threatening to shut down West Coast ports. More than 750 clerks of the International Longshore and Warehouse Union say $37.50 an hour plus benefits isn't enough to keep them on the job, managing cargo imports and exports along the California coast. Their deadline to agree on a new labor contract expired Monday night."
Brad Setser: "China announced that it added $130.6b to its reserves in the second quarter, only a bit smaller than the $135.7b it added in the first quarter. Most of the increase was real: if China had 5% of its portfolio in yen and 20-25% in euros and pounds, valuation gains only explain $2b of the increase; if China had fewer yen and more euros and pounds, valuation changes could account for maybe $5b of the $130b increase. Combine strong q1 and q2 reserve growth with China's tendency to run a larger current account surplus in the second half of the year and Stephen Green's forecast that China will add $500b -- if not a bit more -- to its reserves this year looks pretty good."
Virgin America plans to announce that it will begin flying passengers Aug. 8 with five flights daily from Los Angeles to San Francisco and five return trips.
Flights between San Francisco International Airport and Los Angeles International Airport are expected to start at $44 one-way, or about half the cost of other carriers.
The airline is expected to quickly follow the launch of the San Francisco flights with nonstop daily service to New York and Washington, airline sources said.
Virgin America plans to serve as many as 10 cities within a year of operation and as many as 30 cities within five years. The cities include San Diego, San Jose, Dallas, Chicago, Atlanta and Boston.
Paints and coatings group PPG Industries has offered to buy SigmaKalon Group, a Dutch coatings producer, from Bain Capital for 2.2 billion euros ($3.0 billion).
Total SA lost production and declared force majeure at the Dalia field in Angola. Total's decision covered half the oil pumped at the offshore field, which had produced 240,000 barrels a day, said Patricia Marie, a company spokeswoman. A generator failure caused the problem.
Honeywell increased its full-year profit forecast to $3.10 to $3.16 a share from the $3 to $3.10 range it announced in April. It also raised the 2007 sales projection to $33.9 billion from $33.5 billion.
Vulcan expects earnings from continuing operations of about $144 million, or $1.46 per diluted share, compared to its previous guidance of $1.55 to $1.70 per share.
Leading economic indicators fell 0.3% in June, the fourth decline in the past six months, the Conference Board said Thursday. Over the past six months, the leading index fell at a 1.3% annual pace, suggesting that "economic growth is likely to continue, but it is likely to be at a slow pace in the near term," the private research organization said. Three of the 10 leading indicators advanced in June, led by the factory work week, capital equipment orders and stock prices. Of the five declining indicators, the biggest negatives came from falling building permits, rising jobless claims and weaker consumer expectations.
Barclay's Capital raised its 2008 price forecasts for Brent crude oil by 11 percent, citing rising demand and a lack of growth in non-OPEC production. Brent will average $73.60 a barrel next year, up $7.40 from the previous forecast, the London-based investment bank said in a report yesterday. West Texas Intermediate crude, the U.S. benchmark grade, will average $73.90, a $6.60-a-barrel increase.
Phil Davis: "This is now or never for the World banks to step in, but now I’m becoming concerned that we may be establishing a sort of dollar carry trade - where investors borrow dollars at 5%, which devalue at a rate of more than 5% a year, making them effectively better instruments than the yen for international investors. You engage in this carry trade every time you dip into your margin account to buy stocks."
Natural-gas inventories rose by 65 billion cubic feet for the week ended July 13, the Energy Department said Thursday.Total stocks now stand at 2.692 trillion cubic feet, down 63 billion cubic feet from the year-ago level, but 365 billion cubic feet above the five-year average, the government data said.
According to the report, S&P 500: Buybacks and Treasury Shares - The
Overlooked and Hidden Assets, the record $432 billion in buybacks during
2006 resulted in 56.8% of the S&P 500 issues reducing their share count.
Consistent with the values and history, these repurchased shares remain in
corporate treasuries and have not been retired. The impact of these
buybacks boosted EPS by at least 4% for more than 20% of the S&P 500 issues
in 2006.
S&P 500 treasury shares increased 19.7% in 2006 as 338 issues were
found to have treasury shares with a cost basis of $1,002 billion. If a
mark-to- market adjustment were made, the issues would have had a market
value of $1,591 billion, representing 17.6% of their market value.
"The availability of such high levels of cash and treasury shares makes
every company a potential growth issue, and with over a third of them
having more cash and treasury shares than long-term debt, a potential
takeover target," adds Silverblatt.
The U.S. military said a soldier was killed Thursday
near Rushdi Mullah. The military says a roadside bomb
killed four other U.S. soldiers and their Iraqi
interpreter Wednesday in eastern Baghdad.
Bruce Fein, a constitutional lawyer with unimpeachable conservative
credentials was on Bill Moyers Journal saying things that used to be
considered "porn" on Daily Kos. He's calling for the
impeachment of Bush AND Cheney. Immediately!
Fein was there at Watergate. Fein helped draft
the articles of impeachment for Clinton.
August crude climbed 87 cents to close at $75.92 a barrel Thursday. August natural gas climbed 2.7% to close at $6.706 per million British thermal units, the contract's strongest closing level since July 3.
August gold climbed $4.40 to close at $678.10 an ounce Thursday. September copper gained 2.8% to finish at $3.662 a pound. Silver rose 8 cents to $13.37.
Exxon Mobil rose to an all-time high.
The Philly Fed index fell to 9.2 from 18.0 in June. The new orders index slipped to 11.3 from 18.3, while the shipments index rose to 20.3 from 5.0. The prices paid index eased to 28.1 from 29.7, an indication that inflationary pressures are still high. Businesses were more optimistic about the future; the expectations index rose to 30.4 from 16.7.
Orders for U.S. wheat from overseas are up 44 percent in the marketing year that began June 1 from a year earlier, the Department of Agriculture said today. Morocco bought 243,000 metric tons today, Egypt purchased 115,000 tons and Bangladesh bought 106,000 tons.
Median weekly earnings of the nation’s 106.9 million full-time wage and
salary workers were $690 in the second quarter of 2007, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 4.7
percent higher than a year earlier compared with a gain of 2.7 percent in
the Consumer Price Index for All Urban Consumers (CPI-U) over the same
period.
Wednesday, July 18, 2007
Turning Point?
7/19/07 Turning Point?
China National Petroleum Corp. said it will import 30 billion cubic meters of gas each year for the next 30 years from Turkmenistan. The gas will be transported via a planned pipeline, although no time frame for the start of gas imports was given, according to a statement published on CNPC's Web site Tuesday.
Sinopec Corp., Asia's largest refiner by capacity and China's second-largest oil and gas producer, said Wednesday its produced 2.1% more crude oil and 10.6% more natural gas in the first half of this year compared to a year earlier. Oil output totaled 143.9 million barrels and natural gas production reached 139.6 billion cubic feet, up from up from 140.9 million barrels 126 billion cubic feet respectively in the year-ago period, the company said in statement published on its Web site. Sinopec also said the volume of refined crude oil rose 6.4% to 76.3 million metric tones (560.8 million barrels) in the first six months, up from 71.7 million tones in the first half of 2007. The company reported refined output of 57.9 million tones of fuel in the period, including gasoline, diesel, jet fuel and light chemicals, an increase of 6.6% from the 54.3 million tones it produced last year. Gasoline output rose 8.3% to 12.16 million tones, up from 11.2 million tones in the first half of 2006. Sinopec, which is formally known as China Petroleum & Chemical Corp., also said ethylene output rose 8% to 3.3 million tones, from 3.03 million tones in the year-ago period.
"The government(Chinese) is highly concerned about the overly rapid rise of food prices and will closely watch domestic and overseas price movements to reasonably guide rising prices." The report by the National People's Congress' Financial and Economic Affairs Committee drew its conclusions after meetings with key economic government ministries, the People's Bank of China and the National Bureau of Statistics. China will report Thursday that the economy accelerated by around 11 percent in the second quarter of this year, little changed from the 11.1 percent growth recorded in the January-March period, the statistics bureau has indicated. June consumer price inflation is also expected come in well above the government's target of three percent, after rising to 3.4 percent in May. The commmittee said the government would "moderately tighten" monetary policy to control excess liquidity and lending growth.
Pulte Homes will report a loss from continuing operations between $2 and $2.10 per share, including impairments, land-related charges and restructuring charges. The company previously expected to either break even for the quarter or report a loss of up to 10 cents per share. But, Pulte said that estimate didn't include any of the charges.
With the earnings season, unless something very unusual occurs, I will simply give a short review of the day's highlights. Pfizer had disappointing results. IBM, Altria, United Technology, Southwest Air, EBay and CSX were a bit above expectations. JP Morgan had a very good quarter. One might note that in after hours trading IBM almost rose 3 points to $113.90, a price last reached in 2001.
Southwest Airlines is dangling a major buyout package in front of a quarter of its employees as it continues its campaign to slash costs. Word of the buyout — dubbed Project Early Departure — came a day before Southwest was scheduled to report its second-quarter earnings.
The U.S. dollar index has now slipped to 80.20 with the pound above $2.05 and the euro above $1.38. Imported inflation and the subprime news are both hurting the dollar. Bear Stearns told investors in two stricken hedge funds that one fund had lost all its value and the other had about nine cents remaining for every dollar invested following bad bets on the US subprime mortgage market.
Richard Daughty: "The dollar index seems to be dropping towards that psychologically-important level of 80 as the dollar's buying power falls and falls because the Federal Reserve is creating so damned many of them. One day, soon enough, it will fall to the psychologically-important level of 70 and then the psychologically-important level of 60 on its way to that psychologically-important level of a big, fat zero, which has always been the fate of fiat currencies.
This "psychologically-important" phrase keeps popping up because, surprisingly, the dollar index is also one-for-one with an index of the effectiveness of my medications in controlling my panic and outrage at the destruction of the dollar and the American economy. At a dollar index of 80, I am able to control 80% of my panic at the monetary and fiscal stupidities that are going to eat us alive. At a dollar index of 70, pills are but 70% effective. You can see where I am going with this. The bad news is that it gets really ugly and weird from there on down."
The Dow Jones board approved the News Corp takeover. On Monday, the Bancroft family will meet and vote.
Imperial Tobacco's third bid finally got the approval from Altadis. WWD reported KKR and Goldman plan a $52 takeover for Macy's. KKR might think about the outstanding financing needed to be accomplished for some of their outstanding and unfinished deals. Qatari's Investment Fund, an owner of 25% of Sainsbury, is considering the purchase of the entire company. Canadian Pacific Railway Ltd. has received a "highly conditional inquiry" from Brookfield Asset Management Inc. seeking exclusive negotiations and due diligence. The Calgary-based company said the board considered the inquiry to be "inadequate after due deliberation and declined to enter into discussions." The company also said that it's not, at this time, in negotiations with any party regarding a possible business combination.
Thomas Au: "But the real problem is that the Fed’s policies are now hostage to those of the Administration. Such policies may be successful or not. But because they mimic those of the executive branch, they will be wise or foolish according to whether the underlying policies of the ruling Administration are wise or foolish; the Fed has resigned its earlier chaperone role. Or to paraphrase Warren Buffett, the Fed’s conduct no longer “rises to that of a responsible bartender, who, when necessary, refuses the profit from the next drink to avoid sending a drunk out on the highway.” The spirit, if not the letter of the 1951 Accord has been violated, and de facto, the Fed is no longer an independent entity."
Home sales plunged in Southern California last month, making it the worst June in 14 years and reflecting an increasingly soft housing market — especially in outlying areas such as the Inland Empire and Antelope Valley.
Overall, values are continuing to hold their own — with the median price of a Southland home rising to $502,000, up 2.4% from a year ago. But prices fell in two-thirds of the region's ZIP Codes, reflecting greater weakness in lower-cost housing markets. Riverside County posted a 6% decline in values.
According to Rigzone, Apache says the results from Julimar East-1 strengthens the belief that the ultimate reserves in the Julimar complex could exceed 1 trillion cubic feet.
A Labor Department report showed U.S. consumer prices increased 0.2% in June, a bit higher than expectations for an increase of 0.1%. Excluding volatile food and energy prices, the core consumer price index also increased 0.2%. Economists were expecting the core rate to rise 0.2%. Separately, the Commerce Department said starts of new homes rose by 2.3% to 1.467 million in June, while building permits sank by 7.5%.
Toyota Motor Co. said Wednesday it will halt production at all its factories in Japan the rest of the week due to quake-induced damage at a major parts supplier.
Michael Panzer: " In a report set to appear in Wednesday's Wall Street Journal, "Subprime Uncertainty Fans Out," reporters Kate Kelly, Serena Ng, and Michael Hudson reveal more of the ugly truth about the growing illiquidity, margin calls, and losses -- all part of a contagious financial cancer -- that is now beginning to spread throughout the credit markets."
The American Petroleum Institute reported a fall of 3.7 million barrels in crude supplies for the week ended July 13. The Energy Department had reported a decline of 500,000 barrels for the latest week. Motor gasoline supplies were up 956,000 barrels, the API said. The government reported that supplies were down 2.3 million barrels. Distillate supplies rose 312,000 barrels, the API said. The government posted a 200,000-barrel decline. Refinery utilization rose to 91.0% of capacity from 90.2% a week earlier. Following the news, August crude rose 93 cents at $74.95 a barrel. August reformulated gasoline was up 4.93 cents at $2.15 a gallon and August heating oil traded at $2.0405 a gallon, up 0.73 cent.
Following a rare, all-night session, Senate Republicans on Wednesday blocked consideration of a Democratic amendment that would have required President Bush to begin withdrawing U.S. troops from Iraq within 120 days. The Senate voted 52-47 to end debate on the measure, eight votes short of the 60 needed under the chamber's rules to make way for a vote on passage.
August crude climbed 1.4%, or $1.03, to close at $75.05 a barrel Wednesday, marking the contract's first close above $75 since Aug. 31, 2006. August natural gas gained 3.5%, or 22.1 cents, to close at $6.528 per million British thermal units.
August gold climbed 1.2%, or $7.80, to close at $673.70 an ounce Wednesday. September silver gained 2.1%, or 27.2 cents, to close at $13.29 an ounce and September copper closed at $3.563 a pound, up 1.05 cents.
Joe Duarte: "Osama bin Laden may be dead or of little use, rendering the original Al-Qaeda as a group that "likely lacks the ability to strike in any strategically meaningful way," according to intelligence web site Stratfor.com...Stratfor continues along a very contrarian line, suggesting that the war against Al-Qaeda is now all but finished, and that the U.S. is now fighting another war, that against Iran."
Iran's consumption of petrol has increased at 11 percent per year. If the present trend continues, by 2015, Iran will have become a net importer of petrol. The country's average daily use is around 70 million liters per day, roughly equal to China's daily consumption, but the latter's population is 18 times larger. Economists attribute several factors for this situation. These include gas-inefficient automobiles, high population growth, the voraciousness of consumers and its super cheap petrol prices.
China National Petroleum Corp. said it will import 30 billion cubic meters of gas each year for the next 30 years from Turkmenistan. The gas will be transported via a planned pipeline, although no time frame for the start of gas imports was given, according to a statement published on CNPC's Web site Tuesday.
Sinopec Corp., Asia's largest refiner by capacity and China's second-largest oil and gas producer, said Wednesday its produced 2.1% more crude oil and 10.6% more natural gas in the first half of this year compared to a year earlier. Oil output totaled 143.9 million barrels and natural gas production reached 139.6 billion cubic feet, up from up from 140.9 million barrels 126 billion cubic feet respectively in the year-ago period, the company said in statement published on its Web site. Sinopec also said the volume of refined crude oil rose 6.4% to 76.3 million metric tones (560.8 million barrels) in the first six months, up from 71.7 million tones in the first half of 2007. The company reported refined output of 57.9 million tones of fuel in the period, including gasoline, diesel, jet fuel and light chemicals, an increase of 6.6% from the 54.3 million tones it produced last year. Gasoline output rose 8.3% to 12.16 million tones, up from 11.2 million tones in the first half of 2006. Sinopec, which is formally known as China Petroleum & Chemical Corp., also said ethylene output rose 8% to 3.3 million tones, from 3.03 million tones in the year-ago period.
"The government(Chinese) is highly concerned about the overly rapid rise of food prices and will closely watch domestic and overseas price movements to reasonably guide rising prices." The report by the National People's Congress' Financial and Economic Affairs Committee drew its conclusions after meetings with key economic government ministries, the People's Bank of China and the National Bureau of Statistics. China will report Thursday that the economy accelerated by around 11 percent in the second quarter of this year, little changed from the 11.1 percent growth recorded in the January-March period, the statistics bureau has indicated. June consumer price inflation is also expected come in well above the government's target of three percent, after rising to 3.4 percent in May. The commmittee said the government would "moderately tighten" monetary policy to control excess liquidity and lending growth.
Pulte Homes will report a loss from continuing operations between $2 and $2.10 per share, including impairments, land-related charges and restructuring charges. The company previously expected to either break even for the quarter or report a loss of up to 10 cents per share. But, Pulte said that estimate didn't include any of the charges.
With the earnings season, unless something very unusual occurs, I will simply give a short review of the day's highlights. Pfizer had disappointing results. IBM, Altria, United Technology, Southwest Air, EBay and CSX were a bit above expectations. JP Morgan had a very good quarter. One might note that in after hours trading IBM almost rose 3 points to $113.90, a price last reached in 2001.
Southwest Airlines is dangling a major buyout package in front of a quarter of its employees as it continues its campaign to slash costs. Word of the buyout — dubbed Project Early Departure — came a day before Southwest was scheduled to report its second-quarter earnings.
The U.S. dollar index has now slipped to 80.20 with the pound above $2.05 and the euro above $1.38. Imported inflation and the subprime news are both hurting the dollar. Bear Stearns told investors in two stricken hedge funds that one fund had lost all its value and the other had about nine cents remaining for every dollar invested following bad bets on the US subprime mortgage market.
Richard Daughty: "The dollar index seems to be dropping towards that psychologically-important level of 80 as the dollar's buying power falls and falls because the Federal Reserve is creating so damned many of them. One day, soon enough, it will fall to the psychologically-important level of 70 and then the psychologically-important level of 60 on its way to that psychologically-important level of a big, fat zero, which has always been the fate of fiat currencies.
This "psychologically-important" phrase keeps popping up because, surprisingly, the dollar index is also one-for-one with an index of the effectiveness of my medications in controlling my panic and outrage at the destruction of the dollar and the American economy. At a dollar index of 80, I am able to control 80% of my panic at the monetary and fiscal stupidities that are going to eat us alive. At a dollar index of 70, pills are but 70% effective. You can see where I am going with this. The bad news is that it gets really ugly and weird from there on down."
The Dow Jones board approved the News Corp takeover. On Monday, the Bancroft family will meet and vote.
Imperial Tobacco's third bid finally got the approval from Altadis. WWD reported KKR and Goldman plan a $52 takeover for Macy's. KKR might think about the outstanding financing needed to be accomplished for some of their outstanding and unfinished deals. Qatari's Investment Fund, an owner of 25% of Sainsbury, is considering the purchase of the entire company. Canadian Pacific Railway Ltd. has received a "highly conditional inquiry" from Brookfield Asset Management Inc. seeking exclusive negotiations and due diligence. The Calgary-based company said the board considered the inquiry to be "inadequate after due deliberation and declined to enter into discussions." The company also said that it's not, at this time, in negotiations with any party regarding a possible business combination.
Thomas Au: "But the real problem is that the Fed’s policies are now hostage to those of the Administration. Such policies may be successful or not. But because they mimic those of the executive branch, they will be wise or foolish according to whether the underlying policies of the ruling Administration are wise or foolish; the Fed has resigned its earlier chaperone role. Or to paraphrase Warren Buffett, the Fed’s conduct no longer “rises to that of a responsible bartender, who, when necessary, refuses the profit from the next drink to avoid sending a drunk out on the highway.” The spirit, if not the letter of the 1951 Accord has been violated, and de facto, the Fed is no longer an independent entity."
Home sales plunged in Southern California last month, making it the worst June in 14 years and reflecting an increasingly soft housing market — especially in outlying areas such as the Inland Empire and Antelope Valley.
Overall, values are continuing to hold their own — with the median price of a Southland home rising to $502,000, up 2.4% from a year ago. But prices fell in two-thirds of the region's ZIP Codes, reflecting greater weakness in lower-cost housing markets. Riverside County posted a 6% decline in values.
According to Rigzone, Apache says the results from Julimar East-1 strengthens the belief that the ultimate reserves in the Julimar complex could exceed 1 trillion cubic feet.
A Labor Department report showed U.S. consumer prices increased 0.2% in June, a bit higher than expectations for an increase of 0.1%. Excluding volatile food and energy prices, the core consumer price index also increased 0.2%. Economists were expecting the core rate to rise 0.2%. Separately, the Commerce Department said starts of new homes rose by 2.3% to 1.467 million in June, while building permits sank by 7.5%.
Toyota Motor Co. said Wednesday it will halt production at all its factories in Japan the rest of the week due to quake-induced damage at a major parts supplier.
Michael Panzer: " In a report set to appear in Wednesday's Wall Street Journal, "Subprime Uncertainty Fans Out," reporters Kate Kelly, Serena Ng, and Michael Hudson reveal more of the ugly truth about the growing illiquidity, margin calls, and losses -- all part of a contagious financial cancer -- that is now beginning to spread throughout the credit markets."
The American Petroleum Institute reported a fall of 3.7 million barrels in crude supplies for the week ended July 13. The Energy Department had reported a decline of 500,000 barrels for the latest week. Motor gasoline supplies were up 956,000 barrels, the API said. The government reported that supplies were down 2.3 million barrels. Distillate supplies rose 312,000 barrels, the API said. The government posted a 200,000-barrel decline. Refinery utilization rose to 91.0% of capacity from 90.2% a week earlier. Following the news, August crude rose 93 cents at $74.95 a barrel. August reformulated gasoline was up 4.93 cents at $2.15 a gallon and August heating oil traded at $2.0405 a gallon, up 0.73 cent.
Following a rare, all-night session, Senate Republicans on Wednesday blocked consideration of a Democratic amendment that would have required President Bush to begin withdrawing U.S. troops from Iraq within 120 days. The Senate voted 52-47 to end debate on the measure, eight votes short of the 60 needed under the chamber's rules to make way for a vote on passage.
August crude climbed 1.4%, or $1.03, to close at $75.05 a barrel Wednesday, marking the contract's first close above $75 since Aug. 31, 2006. August natural gas gained 3.5%, or 22.1 cents, to close at $6.528 per million British thermal units.
August gold climbed 1.2%, or $7.80, to close at $673.70 an ounce Wednesday. September silver gained 2.1%, or 27.2 cents, to close at $13.29 an ounce and September copper closed at $3.563 a pound, up 1.05 cents.
Joe Duarte: "Osama bin Laden may be dead or of little use, rendering the original Al-Qaeda as a group that "likely lacks the ability to strike in any strategically meaningful way," according to intelligence web site Stratfor.com...Stratfor continues along a very contrarian line, suggesting that the war against Al-Qaeda is now all but finished, and that the U.S. is now fighting another war, that against Iran."
Iran's consumption of petrol has increased at 11 percent per year. If the present trend continues, by 2015, Iran will have become a net importer of petrol. The country's average daily use is around 70 million liters per day, roughly equal to China's daily consumption, but the latter's population is 18 times larger. Economists attribute several factors for this situation. These include gas-inefficient automobiles, high population growth, the voraciousness of consumers and its super cheap petrol prices.
Tuesday, July 17, 2007
The Acquisitions Continue
7/118/07 The Acquisitions Continue
Michael Niemira, chief economist for the ICSC, expects reported monthly industry sales will increase by about 3% for July compared with a 2.4% gain in June.
The pound rose to as high as $2.0458 vs. the dollar, while the euro was flat at $1.3773.
Basell, which is owned by U.S. industrialist Len Blavatnik's Access Industries, will pay Lyondell stockholders $48 per common share. That's a 19.6 percent premium to Monday's closing price of $40.12. The all-cash deal, valued at $12.14 billion, is based on Lyondell's shares outstanding as of March 31. The deal has a total enterprise value of about $19 billion, including the assumption of debt, the companies said in a joint statement.
Dow Jones & Co. Inc. Chief Executive Richard Zannino tentatively agreed on Monday to a $5 billion takeover bid by News Corp. , though the company's controlling Bancroft family remains divided on the deal, the Wall Street Journal reported. The agreement in principle will be put to the full Dow Jones board on Tuesday evening, said the newspaper.
Encysive Pharmaceuticals Inc. hired Morgan Stanley to evaluate its strategic alternatives to maximize stockholder value.
Keystone Automotive Industries Inc. definitively agreed to be acquired by LKQ Corp. for $48 a share, or $811 million, cash, the companies said.
Bill Bonner: "When the Fed (actually the Treasury) prints up an extra dollar bill, the gesture lacks sincerity; like a duelist who first smiles and shakes your hand, then walks back twenty paces and pulls a trigger; you know he didn't really mean it. Instead of being built on real savings, the faux boom is built on monetary inflation and credit. And when it comes to an end, people are no better off. Their money is worth less than it used to be. And the average fellow has dug himself deeper into debt in order to enjoy the boom years."
U.S. wholesale prices fell 0.2% in June on lower energy prices, but prices rose 0.3%, more than expected, outside of the volatile food and energy sectors.
Faced with a steady decline in revenue and cash flow, Tribune Co. plans to run advertisements on the front pages of most of its daily newspapers, breaking a long-standing tradition of keeping Page 1 of its biggest dailies ad-free.
Chicago Tribune Publisher Scott Smith said Monday that his paper will offer select advertisers a 1.5-inch strip along the bottom of the Tribune's front page, a format that will be duplicated across Tribune Co.'s other papers.
America's first Muslim congressman has provoked outrage by apparently comparing President George W Bush to Adolf Hitler and hinting that he might have been responsible for the September 11 attacks.
Addressing a gathering of atheists in his home state of Minnesota, Keith Ellison, a Democrat, compared the 9/11 atrocities to the destruction of the Reichstag, the German parliament, in 1933. This was probably burned down by the Nazis in order to justify Hitler's later seizure of emergency powers.
"It's almost like the Reichstag fire, kind of reminds me of that," Mr Ellison said. "After the Reichstag was burned, they blamed the Communists for it, and it put the leader [Hitler] of that country in a position where he could basically have authority to do whatever he wanted."
U.S. industrial production rose 0.5% in June, the Federal Reserve reported Tuesday. Capacity utilization rose to 81.7% from 81.4%.
Plains Exploration & Production Company will buy Pogo Producing Company in a deal valued at $3.6 billion. Under terms of the deal,Pogo stockholders will receive 0.68201 shares of Plains Exploration common stock and $24.88 of cash for each share of Pogo common stock which represents a total consideration of approximately $60 per Pogo share.
Monthly capital flows to the U.S. rose to $105.9 billion in May, up from a revised $97.8 billion in April, the Treasury Department reported Tuesday. Chinese holdings of Treasury securities fell for the second straight month, to $407.4 billion from $414 billion in April.
Demand for oil from OPEC will likely rise by about 100,000 barrels per day to 31.1 million bpd by the fourth quarter.
"Mediocre margins in Intel led to moderate disappointment for investors looking for breakout growth, said Tom Sosnoff, president of online brokerage Sinkorswim. "Traders thought the revenue growth was OK but there was not enough contraction on the expense side." Gross margin in the second quarter was 46.9 percent, short of the company's forecast of 48 percent. Intel said it expected margin to be 52 percent, plus or minus "a few points" in the third quarter. "We did see more pricing pressure than we expected, and that depressed margin by 1 point," Intel Chief Financial Officer Andy Bryant said, adding that weakness in flash memory also contributed to the low margin.
Yahoo Inc. reported a dip in quarterly profit in line with previously lowered expectations, weighed down by weak brand advertising and recent management turmoil. Gross revenue rose 8 percent to $1.70 billion. Excluding the cost of payments to advertising partners, revenue rose 11 percent to $1.24 billion.
August crude fell 13 cents to close at $74.02 a barrel Tuesday. August reformulated gasoline fell 1.2% to end at $2.1007 a gallon. August natural gas lost 6.9 cents to end at $6.307 per million British thermal units.
August gold fell 40 cents to close at $665.90 an ounce Tuesday. September silver fell 4.7 cents to close at $13.018 an ounce and September copper fell 0.95 cent to end at $3.5525 a pound.
U.S. home builders' confidence in the housing market plunged further in July, according to a monthly survey released by the National Association of Home Builders. The NAHB/Wells Fargo housing market index dropped four points to 24 in July, the lowest since the 20 recorded in January 1991 and the third lowest reading in the 22-year history of the survey.
Michael Niemira, chief economist for the ICSC, expects reported monthly industry sales will increase by about 3% for July compared with a 2.4% gain in June.
The pound rose to as high as $2.0458 vs. the dollar, while the euro was flat at $1.3773.
Basell, which is owned by U.S. industrialist Len Blavatnik's Access Industries, will pay Lyondell stockholders $48 per common share. That's a 19.6 percent premium to Monday's closing price of $40.12. The all-cash deal, valued at $12.14 billion, is based on Lyondell's shares outstanding as of March 31. The deal has a total enterprise value of about $19 billion, including the assumption of debt, the companies said in a joint statement.
Dow Jones & Co. Inc. Chief Executive Richard Zannino tentatively agreed on Monday to a $5 billion takeover bid by News Corp. , though the company's controlling Bancroft family remains divided on the deal, the Wall Street Journal reported. The agreement in principle will be put to the full Dow Jones board on Tuesday evening, said the newspaper.
Encysive Pharmaceuticals Inc. hired Morgan Stanley to evaluate its strategic alternatives to maximize stockholder value.
Keystone Automotive Industries Inc. definitively agreed to be acquired by LKQ Corp. for $48 a share, or $811 million, cash, the companies said.
Bill Bonner: "When the Fed (actually the Treasury) prints up an extra dollar bill, the gesture lacks sincerity; like a duelist who first smiles and shakes your hand, then walks back twenty paces and pulls a trigger; you know he didn't really mean it. Instead of being built on real savings, the faux boom is built on monetary inflation and credit. And when it comes to an end, people are no better off. Their money is worth less than it used to be. And the average fellow has dug himself deeper into debt in order to enjoy the boom years."
U.S. wholesale prices fell 0.2% in June on lower energy prices, but prices rose 0.3%, more than expected, outside of the volatile food and energy sectors.
Faced with a steady decline in revenue and cash flow, Tribune Co. plans to run advertisements on the front pages of most of its daily newspapers, breaking a long-standing tradition of keeping Page 1 of its biggest dailies ad-free.
Chicago Tribune Publisher Scott Smith said Monday that his paper will offer select advertisers a 1.5-inch strip along the bottom of the Tribune's front page, a format that will be duplicated across Tribune Co.'s other papers.
America's first Muslim congressman has provoked outrage by apparently comparing President George W Bush to Adolf Hitler and hinting that he might have been responsible for the September 11 attacks.
Addressing a gathering of atheists in his home state of Minnesota, Keith Ellison, a Democrat, compared the 9/11 atrocities to the destruction of the Reichstag, the German parliament, in 1933. This was probably burned down by the Nazis in order to justify Hitler's later seizure of emergency powers.
"It's almost like the Reichstag fire, kind of reminds me of that," Mr Ellison said. "After the Reichstag was burned, they blamed the Communists for it, and it put the leader [Hitler] of that country in a position where he could basically have authority to do whatever he wanted."
U.S. industrial production rose 0.5% in June, the Federal Reserve reported Tuesday. Capacity utilization rose to 81.7% from 81.4%.
Plains Exploration & Production Company will buy Pogo Producing Company in a deal valued at $3.6 billion. Under terms of the deal,Pogo stockholders will receive 0.68201 shares of Plains Exploration common stock and $24.88 of cash for each share of Pogo common stock which represents a total consideration of approximately $60 per Pogo share.
Monthly capital flows to the U.S. rose to $105.9 billion in May, up from a revised $97.8 billion in April, the Treasury Department reported Tuesday. Chinese holdings of Treasury securities fell for the second straight month, to $407.4 billion from $414 billion in April.
Demand for oil from OPEC will likely rise by about 100,000 barrels per day to 31.1 million bpd by the fourth quarter.
"Mediocre margins in Intel led to moderate disappointment for investors looking for breakout growth, said Tom Sosnoff, president of online brokerage Sinkorswim. "Traders thought the revenue growth was OK but there was not enough contraction on the expense side." Gross margin in the second quarter was 46.9 percent, short of the company's forecast of 48 percent. Intel said it expected margin to be 52 percent, plus or minus "a few points" in the third quarter. "We did see more pricing pressure than we expected, and that depressed margin by 1 point," Intel Chief Financial Officer Andy Bryant said, adding that weakness in flash memory also contributed to the low margin.
Yahoo Inc. reported a dip in quarterly profit in line with previously lowered expectations, weighed down by weak brand advertising and recent management turmoil. Gross revenue rose 8 percent to $1.70 billion. Excluding the cost of payments to advertising partners, revenue rose 11 percent to $1.24 billion.
August crude fell 13 cents to close at $74.02 a barrel Tuesday. August reformulated gasoline fell 1.2% to end at $2.1007 a gallon. August natural gas lost 6.9 cents to end at $6.307 per million British thermal units.
August gold fell 40 cents to close at $665.90 an ounce Tuesday. September silver fell 4.7 cents to close at $13.018 an ounce and September copper fell 0.95 cent to end at $3.5525 a pound.
U.S. home builders' confidence in the housing market plunged further in July, according to a monthly survey released by the National Association of Home Builders. The NAHB/Wells Fargo housing market index dropped four points to 24 in July, the lowest since the 20 recorded in January 1991 and the third lowest reading in the 22-year history of the survey.
Monday, July 16, 2007
More M&A
7/17/07 More M&A
Christopher Bancroft has been meeting with hedge funds, private-equity firms and others in a campaign to block the $5 billion acquisition of Dow Jones & Co. by Rupert Murdoch's News Corp., The Wall Street Journal reported on Monday.
Eaton Corp. raised its net income guidance fore the year by 30 cents a share to a range of $6.50 to $6.70.
IHOP Corp.has agreed to acquire Applebee's International Inc. for $25.50 a share in cash, the companies said. The investment banker for this culinary fiasco is TUMS.
ReAble Therapeutics, a company controlled by The Blackstone Group, has agreed to buy DJO Incorporated for $1.6 billion, or $50.25 a share in cash.
Sterling tapped fresh highs against the dollar Monday, hitting its highest level in 26 years at $2.0393 as the greenback remained under pressure from worries over the subprime market and weak economic data. The dollar was also weaker against other major currencies.
A consortium led by Royal Bank of Scotland is launching a fresh 71.1 billion euro ($97.9 billion) offer for ABN Amro following a court ruling that allowed the Dutch bank to sell its U.S. LaSalle business. The consortium, which also includes Banco Santander and Fortis said the per-share value of the new offer remains unchanged at 38.40 euros, but preconditions related to LaSalle have been removed. The cash portion of the offer has been increased to around 93%, with the bid comprising 35.60 euros a share in cash and 0.296 new RBS shares.
John Hussman: "Frankly, I don't know whether investors will drive the market even higher in the weeks ahead. My opinion is that whatever gains emerge (and indeed, much of what has already emerged) will ultimately prove quite temporary. What I do know is that certain factors have reliably identified egregiously bad times to accept market risk, and that every historical instance similar to the present has been a disaster. The current instance may very well prove to be the exception, but I do not invest shareholder assets on the hope that the future will be entirely at odds with all available historical evidence."
The WSJ reported world oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.
According to the July edition of Oilwatch Monthly:
"1) Crude oil - Production of crude oil increased by 181,000 b/d from March to April. Total production in April was estimated at 73.40 million b/d by the Energy Information Administration (EIA), which is 850,000 b/d lower than all time high crude oil production of 74.25 million b/d reached in December 2005.
2) Total Liquids - Production of all Liquid fuels decreased by 560,000 barrels per day in May from April according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 84.94 million b/d, which is 136,000 b/d higher year on year from May 2006 to May 2007 but 1.17 million b/d lower than all time maximum liquids production of 86.11 million b/d reached in July 2006.
3) OPEC - Total crude oil production of the OPEC cartel decreased by 420,000 b/d to a level of 30.07 million b/d, from April to May, according to the latest estimates of the IEA. Preliminary figures from the EIA show a further decrease of 120,000 b/d from May to June resulting in OPEC crude production of 29.94 million b/d. Since July 2006 production from the OPEC cartel has declined with 1.2 million b/d.
4) Non-OPEC - Total liquids production of non-OPEC decreased by 150,000 b/d, from April to May, according to the latest figures of the IEA. Production has dropped from 50.57 million b/d in February to 50.09 million b/d in May. Large production decreases in that period came from Canada, Norway, the United Kingdom and Norway of in total 630.000 b/d. Production in other countries remained relatively stable. The decline in Mexican production has halted for now, staying near 3.55 mb/d since January."
The World Food Program said its purchasing costs had risen “almost 50 per cent in the last five years”. The UN organisation said the price it pays for maize had risen up to 120 per cent in the past sixth months in some countries.
Biofuel demand is soaking up grain production as is rising consumption in emerging countries for animal feed.
“We face the tightest agriculture markets in decades and, in same cases, on record,” Ms Sheeran, WFP executive director, said. Global wheat stocks have fallen to the lowest level in 25 years, according to the US Department of Agriculture. Ms Sheeran added: “We are no longer in a surplus world.”
U.K. natural gas rose to its highest in almost seven months as supply reductions cut deliveries of the fuel. Prices rose above corresponding U.S. contracts, suggesting more cargoes may be delivered to Britain.
Spot Brent crude traded above $80 a barrel
China National Offshore Oil Corp., the nation’s largest offshore oil explorer, has won permission from Somalia’s government to explore for oil in the African country.
The Federal Reserve Bank of New York's general economic index rose to 26.5, the highest since June 2006, from 25.8 the prior month, the bank said. The measure of new orders rose to 26.5 in July, the highest since March 2006, from 17.2 the prior month. A gauge of shipments fell to 29.2 from 29.8, the report showed. The index of inventories dropped to minus 19.8, the lowest since July 2002, from 3.2. The index of prices paid for raw materials decreased to 34.6 from 42.6 the prior month. A measure of prices received fell to 8.6 from 9.6. The index measuring the manufacturing outlook for six months from now rose to 48.2 from 44.1, today's report showed.
The balance in the internal White House debate over Iran has shifted back in favour of military action before President George Bush leaves office in 18 months, the London Guardian has learned. The shift follows an internal review involving the White House, the Pentagon and the state department over the last month. Although the Bush administration is in deep trouble over Iraq, it remains focused on Iran. A well-placed source in Washington said: "Bush is not going to leave office with Iran still in limbo."
"The outlook for the oil market in 2008 is shaping up to be quite similar to the current year, with continued tightness in the downstream supporting high product prices and frequent refinery outages exerting further upward pressure, despite the healthy crude oil market," OPEC's report said. The Organization of the Petroleum Exporting Countries said oil demand in 2008 would rise by 1.34 million barrels per day, or 1.6 percent, to 86.94 million bpd, slowed in part by conservation and use of other fuels.
Chinese statistics due this week are likely to show that the country is on track to leapfrog Germany as the third-biggest national economy this year, sooner than expected.
U.S. crude price could top $90 a barrel this autumn and hit $95 by the end of the year if OPEC keeps oil production capped at current levels, Goldman Sachs said in a report issued on Monday.
August gold fell $1 to close at $666.30 an ounce Monday. September silver fell 4.5 cents to end at $13.065 an ounce and September copper closed at $3.562 a pound, down 3.1 cents.
Houghton Mifflin Co. agreed to acquire Reed Elsevier's Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions for $3.7 billion in cash and $300 million in stock of parent company Houghton Mifflin Riverdeep Group PLC.
Lear Corp.said Monday that its shareholders have rejected the $37.25-a-share takeover bid by American Real Estate Partners L.P., an affiliate of Carl Icahn.
The ABX "BBB" 07-1 index, which gauges risk in the subprime mortgage lending industry, sank to near-record lows Monday, amid persistent worries about deteriorating loans in that industry. The index measures the performance of loans made dueing the second half of 2006, when many home purchase loans were made to buyers with shaky credit standings. The index traded around 44, nearly its weakest level ever.
August crude rose 22 cents to close at $74.15 a barrel Monday. August reformulated gasoline dropped 4.4%, or 9.86 cents, to close at a one-month low of $2.1262. Most analysts expect the Energy Department on Wednesday to report a rise in U.S. refinery utilization along with a climb in motor gasoline supplies. Natural gas closed 29 cents lower at $6.38.
Christopher Bancroft has been meeting with hedge funds, private-equity firms and others in a campaign to block the $5 billion acquisition of Dow Jones & Co. by Rupert Murdoch's News Corp., The Wall Street Journal reported on Monday.
Eaton Corp. raised its net income guidance fore the year by 30 cents a share to a range of $6.50 to $6.70.
IHOP Corp.has agreed to acquire Applebee's International Inc. for $25.50 a share in cash, the companies said. The investment banker for this culinary fiasco is TUMS.
ReAble Therapeutics, a company controlled by The Blackstone Group, has agreed to buy DJO Incorporated for $1.6 billion, or $50.25 a share in cash.
Sterling tapped fresh highs against the dollar Monday, hitting its highest level in 26 years at $2.0393 as the greenback remained under pressure from worries over the subprime market and weak economic data. The dollar was also weaker against other major currencies.
A consortium led by Royal Bank of Scotland is launching a fresh 71.1 billion euro ($97.9 billion) offer for ABN Amro following a court ruling that allowed the Dutch bank to sell its U.S. LaSalle business. The consortium, which also includes Banco Santander and Fortis said the per-share value of the new offer remains unchanged at 38.40 euros, but preconditions related to LaSalle have been removed. The cash portion of the offer has been increased to around 93%, with the bid comprising 35.60 euros a share in cash and 0.296 new RBS shares.
John Hussman: "Frankly, I don't know whether investors will drive the market even higher in the weeks ahead. My opinion is that whatever gains emerge (and indeed, much of what has already emerged) will ultimately prove quite temporary. What I do know is that certain factors have reliably identified egregiously bad times to accept market risk, and that every historical instance similar to the present has been a disaster. The current instance may very well prove to be the exception, but I do not invest shareholder assets on the hope that the future will be entirely at odds with all available historical evidence."
The WSJ reported world oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.
According to the July edition of Oilwatch Monthly:
"1) Crude oil - Production of crude oil increased by 181,000 b/d from March to April. Total production in April was estimated at 73.40 million b/d by the Energy Information Administration (EIA), which is 850,000 b/d lower than all time high crude oil production of 74.25 million b/d reached in December 2005.
2) Total Liquids - Production of all Liquid fuels decreased by 560,000 barrels per day in May from April according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 84.94 million b/d, which is 136,000 b/d higher year on year from May 2006 to May 2007 but 1.17 million b/d lower than all time maximum liquids production of 86.11 million b/d reached in July 2006.
3) OPEC - Total crude oil production of the OPEC cartel decreased by 420,000 b/d to a level of 30.07 million b/d, from April to May, according to the latest estimates of the IEA. Preliminary figures from the EIA show a further decrease of 120,000 b/d from May to June resulting in OPEC crude production of 29.94 million b/d. Since July 2006 production from the OPEC cartel has declined with 1.2 million b/d.
4) Non-OPEC - Total liquids production of non-OPEC decreased by 150,000 b/d, from April to May, according to the latest figures of the IEA. Production has dropped from 50.57 million b/d in February to 50.09 million b/d in May. Large production decreases in that period came from Canada, Norway, the United Kingdom and Norway of in total 630.000 b/d. Production in other countries remained relatively stable. The decline in Mexican production has halted for now, staying near 3.55 mb/d since January."
The World Food Program said its purchasing costs had risen “almost 50 per cent in the last five years”. The UN organisation said the price it pays for maize had risen up to 120 per cent in the past sixth months in some countries.
Biofuel demand is soaking up grain production as is rising consumption in emerging countries for animal feed.
“We face the tightest agriculture markets in decades and, in same cases, on record,” Ms Sheeran, WFP executive director, said. Global wheat stocks have fallen to the lowest level in 25 years, according to the US Department of Agriculture. Ms Sheeran added: “We are no longer in a surplus world.”
U.K. natural gas rose to its highest in almost seven months as supply reductions cut deliveries of the fuel. Prices rose above corresponding U.S. contracts, suggesting more cargoes may be delivered to Britain.
Spot Brent crude traded above $80 a barrel
China National Offshore Oil Corp., the nation’s largest offshore oil explorer, has won permission from Somalia’s government to explore for oil in the African country.
The Federal Reserve Bank of New York's general economic index rose to 26.5, the highest since June 2006, from 25.8 the prior month, the bank said. The measure of new orders rose to 26.5 in July, the highest since March 2006, from 17.2 the prior month. A gauge of shipments fell to 29.2 from 29.8, the report showed. The index of inventories dropped to minus 19.8, the lowest since July 2002, from 3.2. The index of prices paid for raw materials decreased to 34.6 from 42.6 the prior month. A measure of prices received fell to 8.6 from 9.6. The index measuring the manufacturing outlook for six months from now rose to 48.2 from 44.1, today's report showed.
The balance in the internal White House debate over Iran has shifted back in favour of military action before President George Bush leaves office in 18 months, the London Guardian has learned. The shift follows an internal review involving the White House, the Pentagon and the state department over the last month. Although the Bush administration is in deep trouble over Iraq, it remains focused on Iran. A well-placed source in Washington said: "Bush is not going to leave office with Iran still in limbo."
"The outlook for the oil market in 2008 is shaping up to be quite similar to the current year, with continued tightness in the downstream supporting high product prices and frequent refinery outages exerting further upward pressure, despite the healthy crude oil market," OPEC's report said. The Organization of the Petroleum Exporting Countries said oil demand in 2008 would rise by 1.34 million barrels per day, or 1.6 percent, to 86.94 million bpd, slowed in part by conservation and use of other fuels.
Chinese statistics due this week are likely to show that the country is on track to leapfrog Germany as the third-biggest national economy this year, sooner than expected.
U.S. crude price could top $90 a barrel this autumn and hit $95 by the end of the year if OPEC keeps oil production capped at current levels, Goldman Sachs said in a report issued on Monday.
August gold fell $1 to close at $666.30 an ounce Monday. September silver fell 4.5 cents to end at $13.065 an ounce and September copper closed at $3.562 a pound, down 3.1 cents.
Houghton Mifflin Co. agreed to acquire Reed Elsevier's Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions for $3.7 billion in cash and $300 million in stock of parent company Houghton Mifflin Riverdeep Group PLC.
Lear Corp.said Monday that its shareholders have rejected the $37.25-a-share takeover bid by American Real Estate Partners L.P., an affiliate of Carl Icahn.
The ABX "BBB" 07-1 index, which gauges risk in the subprime mortgage lending industry, sank to near-record lows Monday, amid persistent worries about deteriorating loans in that industry. The index measures the performance of loans made dueing the second half of 2006, when many home purchase loans were made to buyers with shaky credit standings. The index traded around 44, nearly its weakest level ever.
August crude rose 22 cents to close at $74.15 a barrel Monday. August reformulated gasoline dropped 4.4%, or 9.86 cents, to close at a one-month low of $2.1262. Most analysts expect the Energy Department on Wednesday to report a rise in U.S. refinery utilization along with a climb in motor gasoline supplies. Natural gas closed 29 cents lower at $6.38.
Sunday, July 15, 2007
The New Week
7/16/07 The New Week
Mission West Properties said it has begun negotiations with a leading real estate private equity fund for the acquisition of all of Mission West's outstanding common stock at $13.55 a share in cash, lower than the company's closing price of $13.69 a share on Friday.
Action Economics has lowered its third-quarter GDP estimate to a 2.8% rate in response to a surprising drop in June sales data.
A Marine corporal testifying in a court-martial said Marines in his unit began routinely beating Iraqis after officers ordered them to ''crank up the violence level.'' Cpl. Saul H. Lopezromo testified Saturday at the murder trial of Cpl. Trent D. Thomas. ''We were told to crank up the violence level,'' said Lopezromo, testifying for the defense. When a juror asked for further explanation, Lopezromo said: ''We beat people, sir.''
TheOilDrum: "Last year Exxon didn't replace its reserves through the drill-bit for the first time, according to Oppenheimer research. That's because more of the world's oil reserves have become off limits to Exxon and other private drillers. Many are controlled by national oil companies, such as Saudi Arabia's Aramco or Mexico's Pemex. Expropriation by governments like Russia and Venezuela took other reserves off the market."
Food prices are up nearly 4 percent in the past year, according to the Consumer Price Index -- and may climb even higher. A gallon of milk, for example, now costs more than $4 at many groceries in Central Florida, an increase of more than 10 percent from just two months ago.
Although Bush administration officials have frequently lashed out at Syria and Iran, accusing it of helping insurgents and militias here, the largest number of foreign fighters and suicide bombers in Iraq come from a third neighbor, Saudi Arabia, according to a senior U.S. military officer and Iraqi lawmakers.
About 45% of all foreign militants targeting U.S. troops and Iraqi civilians and security forces are from Saudi Arabia; 15% are from Syria and Lebanon; and 10% are from North Africa, according to official U.S. military figures made available to The Times by the senior officer. Nearly half of the 135 foreigners in U.S. detention facilities in Iraq are Saudis, he said.
Brett Steenbarger: "I notice that the 3-day Arms Index (AKA TRIN) for the NYSE ended the week at .57. That's the third lowest level since the start of 2004 (N = 878 trading days), suggesting volume chasing the strong stocks. When the 3-day TRIN has been below .70 (N = 20), next day results in the S&P 500 Index (SPY) have been weak, averaging a loss of -.22% (6 up, 14 down). That weakness has carried over to subnormal (and negative) returns over the next three trading sessions."
A tumor paint developed by
researchers at Seattle Children's Hospital Research Institute and Fred
Hutchinson Cancer Research Center will help surgeons see where a tumor
begins and ends more precisely by illuminating the cancerous cells. The
study, published in the July 15, 2007 issue of Cancer Research, shows that
the tumor paint can help surgeons distinguish between cancer cells and
normal brain tissue in the operating room. The paint is a scorpion-derived
peptide called chlorotoxin that is linked to the molecular beacon Cy5.5.
Until now there has been no way to allow surgeons to see tumors "live"
during surgery.
Chlorotoxin:Cy5.5 is a fluorescent molecular beacon that emits photons
in the near infrared spectrum. This illumination gives surgeons a better
chance of removing cancerous cells during surgery without injuring
surrounding healthy tissue. This is particularly significant in the brain,
where approximately 80% of malignant cancers recur at the edges of the
surgical site. Current technology, such as magnetic resonance imaging (MRI)
can distinguish tumors from healthy tissue only if more than 1 million
cancer cells are present. But Cy5.5 can identify tumors with fewer than
2000 cancer cells, making it 500 times more sensitive than MRI under
operating conditions.
Natural gas for August delivery rose 16.5 cents, or 2.5
percent, to $6.662 per million British thermal units at the
2:50 p.m. settlement of trading on the New York Mercantile
Exchange. Intraday trading rose to $6.752 per million Btu
and fell as low as $6.521.The current price is ahead of a
year ago. On July 13, 2006, gas settled at $6.129 per
million Btu before surging to $8.211 on July 31, 2006.
Sugar in New York rose to the highest price since March on
signs that processors in Brazil, the world's largest grower,
are churning out more ethanol and less sweetener.
Mills in the center-south region, where 85 percent of Brazil's sugar cane is grown, cut sweetener output by 8.7 percent from last year to 7.34 million metric tons, the Center South Sugar and Ethanol Industry Association, known as Unica, said yesterday in a statement. Ethanol output rose 11 percent to 5.56 billion liters (1.5 billion gallons), the group said.
While the average Costco warehouse rings up a staggering $129 million annually, one stands out for its sheer volume of business:
The Iwilei (pronounced ee-VEE-lay) Costco — the largest among the company's three Oahu locations — posted $300 million in sales last year. Nearly one in every four island residents — more than 190,000 — joined the club at this store. Tack on the other two locations — Waipio and Hawaii Kai — and half the residents carry a Costco card.
Interestingly, Costco is the largest retailer of wine in the country. Last fiscal year it sold $390 million in wine, or nearly half the U.S. total.
I have said this many times over the years. If one aspires to have a long-term growth portfolio, Costco should be in there as a permanent fixture. It's a great company with terrific management.
RIM now has a market value of US$42.3 billion compared to Motorola's US$41.4 billion.
Applying multiples from the Alcan -Rio Tinto takeover deal to rival Alcoa, implies a takeout price of roughly US$54 per share, according to Canaccord Adams analyst Orest Wowkodaw.
Mike Burk: "The market is overbought and many of the short term volume indicators turned negative on Friday. Seasonality is another short term negative.I expect the major indices to be lower on Friday July 20 than they were on Friday July 13."
Oroborean: "The bottom line is that Bernanke's speech was exactly the sort of rhetoric you'd expect from a man prepared to undertake a massive devaluation to try and stave off a credit crisis."
Tim Wood: "The Dow Jones Home Construction Index is now down some 50% from its peak...Note that 6 of these previous 4-year cycle tops have been preceded by a contraction in housing prices. The fact that we have now seen yet another cyclical violation in the Dow Jones Home Construction Index along with the ongoing contraction in housing starts continues to indicate that the equities markets have a major downturn ahead...Let me also point out that from any given 4-year cycle low there has never been a contraction in housing that did not lead to the next 4-year cycle low in equities. The lead times between the duration of the contraction in housing and the ultimate downturn in the stock market has obviously varied. But, the end result has nonetheless always been the same. The ongoing contraction in housing also suggests that my long-term data on the 4-year cycle continues to be correct in that this is a very over extended 4-year cycle, just as I have been saying all along. In the meantime, the equity markets continue to hold up and stretch even further."
Mission West Properties said it has begun negotiations with a leading real estate private equity fund for the acquisition of all of Mission West's outstanding common stock at $13.55 a share in cash, lower than the company's closing price of $13.69 a share on Friday.
Action Economics has lowered its third-quarter GDP estimate to a 2.8% rate in response to a surprising drop in June sales data.
A Marine corporal testifying in a court-martial said Marines in his unit began routinely beating Iraqis after officers ordered them to ''crank up the violence level.'' Cpl. Saul H. Lopezromo testified Saturday at the murder trial of Cpl. Trent D. Thomas. ''We were told to crank up the violence level,'' said Lopezromo, testifying for the defense. When a juror asked for further explanation, Lopezromo said: ''We beat people, sir.''
TheOilDrum: "Last year Exxon didn't replace its reserves through the drill-bit for the first time, according to Oppenheimer research. That's because more of the world's oil reserves have become off limits to Exxon and other private drillers. Many are controlled by national oil companies, such as Saudi Arabia's Aramco or Mexico's Pemex. Expropriation by governments like Russia and Venezuela took other reserves off the market."
Food prices are up nearly 4 percent in the past year, according to the Consumer Price Index -- and may climb even higher. A gallon of milk, for example, now costs more than $4 at many groceries in Central Florida, an increase of more than 10 percent from just two months ago.
Although Bush administration officials have frequently lashed out at Syria and Iran, accusing it of helping insurgents and militias here, the largest number of foreign fighters and suicide bombers in Iraq come from a third neighbor, Saudi Arabia, according to a senior U.S. military officer and Iraqi lawmakers.
About 45% of all foreign militants targeting U.S. troops and Iraqi civilians and security forces are from Saudi Arabia; 15% are from Syria and Lebanon; and 10% are from North Africa, according to official U.S. military figures made available to The Times by the senior officer. Nearly half of the 135 foreigners in U.S. detention facilities in Iraq are Saudis, he said.
Brett Steenbarger: "I notice that the 3-day Arms Index (AKA TRIN) for the NYSE ended the week at .57. That's the third lowest level since the start of 2004 (N = 878 trading days), suggesting volume chasing the strong stocks. When the 3-day TRIN has been below .70 (N = 20), next day results in the S&P 500 Index (SPY) have been weak, averaging a loss of -.22% (6 up, 14 down). That weakness has carried over to subnormal (and negative) returns over the next three trading sessions."
A tumor paint developed by
researchers at Seattle Children's Hospital Research Institute and Fred
Hutchinson Cancer Research Center will help surgeons see where a tumor
begins and ends more precisely by illuminating the cancerous cells. The
study, published in the July 15, 2007 issue of Cancer Research, shows that
the tumor paint can help surgeons distinguish between cancer cells and
normal brain tissue in the operating room. The paint is a scorpion-derived
peptide called chlorotoxin that is linked to the molecular beacon Cy5.5.
Until now there has been no way to allow surgeons to see tumors "live"
during surgery.
Chlorotoxin:Cy5.5 is a fluorescent molecular beacon that emits photons
in the near infrared spectrum. This illumination gives surgeons a better
chance of removing cancerous cells during surgery without injuring
surrounding healthy tissue. This is particularly significant in the brain,
where approximately 80% of malignant cancers recur at the edges of the
surgical site. Current technology, such as magnetic resonance imaging (MRI)
can distinguish tumors from healthy tissue only if more than 1 million
cancer cells are present. But Cy5.5 can identify tumors with fewer than
2000 cancer cells, making it 500 times more sensitive than MRI under
operating conditions.
Natural gas for August delivery rose 16.5 cents, or 2.5
percent, to $6.662 per million British thermal units at the
2:50 p.m. settlement of trading on the New York Mercantile
Exchange. Intraday trading rose to $6.752 per million Btu
and fell as low as $6.521.The current price is ahead of a
year ago. On July 13, 2006, gas settled at $6.129 per
million Btu before surging to $8.211 on July 31, 2006.
Sugar in New York rose to the highest price since March on
signs that processors in Brazil, the world's largest grower,
are churning out more ethanol and less sweetener.
Mills in the center-south region, where 85 percent of Brazil's sugar cane is grown, cut sweetener output by 8.7 percent from last year to 7.34 million metric tons, the Center South Sugar and Ethanol Industry Association, known as Unica, said yesterday in a statement. Ethanol output rose 11 percent to 5.56 billion liters (1.5 billion gallons), the group said.
While the average Costco warehouse rings up a staggering $129 million annually, one stands out for its sheer volume of business:
The Iwilei (pronounced ee-VEE-lay) Costco — the largest among the company's three Oahu locations — posted $300 million in sales last year. Nearly one in every four island residents — more than 190,000 — joined the club at this store. Tack on the other two locations — Waipio and Hawaii Kai — and half the residents carry a Costco card.
Interestingly, Costco is the largest retailer of wine in the country. Last fiscal year it sold $390 million in wine, or nearly half the U.S. total.
I have said this many times over the years. If one aspires to have a long-term growth portfolio, Costco should be in there as a permanent fixture. It's a great company with terrific management.
RIM now has a market value of US$42.3 billion compared to Motorola's US$41.4 billion.
Applying multiples from the Alcan -Rio Tinto takeover deal to rival Alcoa, implies a takeout price of roughly US$54 per share, according to Canaccord Adams analyst Orest Wowkodaw.
Mike Burk: "The market is overbought and many of the short term volume indicators turned negative on Friday. Seasonality is another short term negative.I expect the major indices to be lower on Friday July 20 than they were on Friday July 13."
Oroborean: "The bottom line is that Bernanke's speech was exactly the sort of rhetoric you'd expect from a man prepared to undertake a massive devaluation to try and stave off a credit crisis."
Tim Wood: "The Dow Jones Home Construction Index is now down some 50% from its peak...Note that 6 of these previous 4-year cycle tops have been preceded by a contraction in housing prices. The fact that we have now seen yet another cyclical violation in the Dow Jones Home Construction Index along with the ongoing contraction in housing starts continues to indicate that the equities markets have a major downturn ahead...Let me also point out that from any given 4-year cycle low there has never been a contraction in housing that did not lead to the next 4-year cycle low in equities. The lead times between the duration of the contraction in housing and the ultimate downturn in the stock market has obviously varied. But, the end result has nonetheless always been the same. The ongoing contraction in housing also suggests that my long-term data on the 4-year cycle continues to be correct in that this is a very over extended 4-year cycle, just as I have been saying all along. In the meantime, the equity markets continue to hold up and stretch even further."
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