9/2/07 Welcome To September
Ameriquest Mortgage Co, the largest U.S. subprime lender as recently as 2005, is closing, the latest home loan provider to shut down amid the nation's housing market slump. Citigroup Inc agreed to buy the wholesale mortgage lending and payment collection assets of Ameriquest's parent, ACC Capital Holdings, for an undisclosed price.
Toyota plans to sell 10.4 million vehicles globally in 2009, well above the auto industry's current 30-year-old record and another sign of the Japanese automaker's momentum toward displacing industry kingpin General Motors.
"There are hopeful, positive signals," IAEA chief Mohamed ElBaradei said in an interview with the weekly Der Spiegel, released ahead of its publication Sunday. "For the first time, we have agreed with the Iranians on a kind of road map, a timetable according to which the outstanding questions should be cleared up." "By November, at the latest December, we should be able to see whether the Iranians are keeping the promises they gave," he said. "If they did not do that, a great chance - perhaps the last one - would be lost for Tehran."
The Bush administration can go ahead with a pilot program to allow as many as 100 Mexican trucking companies to freely haul their cargo anywhere within the U.S. for the next year, a federal appeals court ruled Friday. The 9th U.S. Circuit Court of Appeals denied a request made by the Teamsters union, the Sierra Club and the nonprofit Public Citizen to halt the program.
Cosmos Bank, the Taiwanese lender, narrowly avoided a takeover by the government on Friday by agreeing to sell a controlling stake to SAC Capital, a US hedge fund group, and GE Money at a steep discount. Taiwan’s largest issuer of cash-advance cards signed a memorandum of understanding with SAC’s private equity arm and GE Money, a finance arm of General Electric, under which the two investors would pay $900m for a combined 80 per cent stake in Cosmos.
Zman: " Gas Inventories Are Now 12% Above The Five Year Average (down from 13% last week), and 2% Above Last Year's Record Levels."
Boeing is expected to announce Wednesday a further delay in the first flight of its 787 Dreamliner jet — one that could push that milestone into late October or beyond, according to a person close to the program...Replacing thousands of temporary fasteners with permanent ones has taken longer than anticipated, and the installation of wiring and other systems has hardly begun, according to the source.
According to rigzone, the government of Kazakhstan expects compensation for what it sees as "tens of billions of dollars" of economic harm due to massive cost overruns and delays at the Kashagan oil project, led by Italy's Eni, a government official said Friday.
Dr. Jeff Miller (courtesy of Seeking Alpha):
# Fed funds have averaged 5.25% over the past five days, and 5.00% over the past fifteen, since the crisis began.
# The Fed’s last permanent injection of liquidity was May 3rd. That’s a pretty long time for no injection, even in a tightening cycle.
# The monetary base is flat, growing little over the last year. If policy changed recently, I can’t see it.
# Policy change doesn’t show up in the monetary aggregates either, but lag effects dominate here.
# 3 month LIBOR is back around 5.60%, and the 3-month T-bill around 4% (rallying today). A TED spread at 1.6% indicates a lot of fear. Kinda surprised that swap spreads have not budged much.
According to the FT, investment banks are set to cut 10-15 per cent of their staff across the board as turmoil in the markets takes its toll on revenues. The bulk of cuts are expected in structured credit and leveraged finance, though recruitment experts said other investment banking areas could be affected.
The Times: "The banks that underwrote the $45 billion acquisition of TXU Corp, the world’s biggest buyout, have offered to pay the $1 billion (£495 million) break fee in a desperate attempt to convince the private equity backers to drop their bid. It is understood that the banks asked Kohlberg Kravis Roberts and TPG to consider withdrawing their offer after the turmoil in the credit markets meant that the banks would have little or no chance of syndicating the record-breaking $37 billion loan to investors. The banks include Goldman Sachs, Morgan Stanley, Citigroup, Lehman Brothers and JPMorgan.”
According to the WSJ, a survey by the Mortgage Bankers Association found that mortgages on properties that aren’t occupied by the owner -- mostly investment homes -- account for between 21% and 32% of the defaults on prime-quality home loans in Arizona, California, Florida and Nevada, states where overdue payments are mounting fast. Defaults were high on both prime and subprime loans.
George W. Bush: " You can fool some of the people all the time, and those are the ones you want to concentrate on."
Saturday, September 01, 2007
Friday, August 31, 2007
The Speech And Government Numbers
9/1/07 The Speech And Gov't Numbers
Orders for U.S.-made factory goods rose by 3.7% in July, the Commerce Department reported Friday. Excluding transportation, however, orders rose by 2.4%. Shipments rose by 2.6%. Orders for durable goods rose 6.0% in July. In a preliminary report last week, they were reported to rise by 5.9%. Shipments of durable goods rose by 3.9% in July, revised up slightly from the 3.8% reported last week. Orders for core capital goods rose by 1.7% in July. In June, those orders fell by 0.2%.
Bernanke said the central bank will be paying "particularly close attention to the timeliest indicators" to assess how the recent credit crisis and financial market turmoil is impacting the real economy. Bernanke said the economy continued to expand into the summer despite the weakness in housing but "in light of recent financial developments, economic data bearing on past months or quarters may be less useful than usual for our forecasts of economic activity and inflation." Bernanke repeated the Federal Open Market Committee pledge to act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets. He said it is not the responsibility of the Fed to protect lenders and investors from the consequences of their financial decisions, but quickly added that "developments in financial markets can have broad economic effects felt by many outside the markets and the Fed must take those effects into account when determining policy. Bernanke said the central bank stands ready to take additional steps to provide liquidity and promote the orderly functioning or markets. Bernanke offered no clear signal that the Fed is poised to cut interest rates in a speech to central bankers. In other words, pretty vanilla remarks in my view.
The Chicago purchasing managers index was relatively unchanged at 53.8% in August vs. 53.4% in July. The new orders index rose to 58.4% vs. 53.4% in July.
Inflation was milder than expected in July, with total inflation rising 0.1%, matching the 0.1% gain for core inflation excluding food and energy costs. In the past year, the Federal Reserve's preferred measure of core inflation has risen 1.9%, just within the Fed's unofficial target zone. Nominal incomes increased 0.5%, the best since March after rising 0.4% in June. After adjusting for inflation and taking out taxes, real disposable incomes grew 0.5%, the best since February. Inflation-adjusted spending rose 0.3% in July after two tepid months of spending. Savings was up 0.7%.
Accredited Home Lenders surged 32% to $8.35 in pre-open trade as Lone Star Funds said in a letter late Thursday it is willing to offer $214 million, or $8.50 a share for the firm. Lone Star is tabling 44% less than it first offered for the troubled subprime lender.
India's economy expanded at a higher-than-expected 9.3% during fiscal first quarter ended June from a year ago on robust growth in the manufacturing and services sectors, according to official data released Friday. Economists polled by both Dow Jones Newswires and Reuters estimated growth of 8.9%. India's gross domestic product rose 9.1% during the January-March period.
Barclays on Friday threw a $1.4bn lifeline to a structured debt vehicle the bank helped set up with Cairn Capital, the London-based hedge fund, and is considering similar moves for other vehicles.
Borrowing from the Fed's discount window dropped to $1.101 billion as of Wednesday, about half the $2.001 billion level reported a week earlier, the central bank disclosed yesterday.
Oct. crude climbed 68 cents to close at $74.04 a barrel. October natural gas fell 3% Friday to close at $5.468 per million British thermal units, down 4.7% from a week ago and down 14.8% from a month ago. Gold closed up $8 for the session.
In the short trading session on Friday the month ended on a strong note with the Dow up 157, the Nasdaq up 32 and the S&P 500 up almost 20 points. We now enter September, which is historically the worst month of the year.
Orders for U.S.-made factory goods rose by 3.7% in July, the Commerce Department reported Friday. Excluding transportation, however, orders rose by 2.4%. Shipments rose by 2.6%. Orders for durable goods rose 6.0% in July. In a preliminary report last week, they were reported to rise by 5.9%. Shipments of durable goods rose by 3.9% in July, revised up slightly from the 3.8% reported last week. Orders for core capital goods rose by 1.7% in July. In June, those orders fell by 0.2%.
Bernanke said the central bank will be paying "particularly close attention to the timeliest indicators" to assess how the recent credit crisis and financial market turmoil is impacting the real economy. Bernanke said the economy continued to expand into the summer despite the weakness in housing but "in light of recent financial developments, economic data bearing on past months or quarters may be less useful than usual for our forecasts of economic activity and inflation." Bernanke repeated the Federal Open Market Committee pledge to act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets. He said it is not the responsibility of the Fed to protect lenders and investors from the consequences of their financial decisions, but quickly added that "developments in financial markets can have broad economic effects felt by many outside the markets and the Fed must take those effects into account when determining policy. Bernanke said the central bank stands ready to take additional steps to provide liquidity and promote the orderly functioning or markets. Bernanke offered no clear signal that the Fed is poised to cut interest rates in a speech to central bankers. In other words, pretty vanilla remarks in my view.
The Chicago purchasing managers index was relatively unchanged at 53.8% in August vs. 53.4% in July. The new orders index rose to 58.4% vs. 53.4% in July.
Inflation was milder than expected in July, with total inflation rising 0.1%, matching the 0.1% gain for core inflation excluding food and energy costs. In the past year, the Federal Reserve's preferred measure of core inflation has risen 1.9%, just within the Fed's unofficial target zone. Nominal incomes increased 0.5%, the best since March after rising 0.4% in June. After adjusting for inflation and taking out taxes, real disposable incomes grew 0.5%, the best since February. Inflation-adjusted spending rose 0.3% in July after two tepid months of spending. Savings was up 0.7%.
Accredited Home Lenders surged 32% to $8.35 in pre-open trade as Lone Star Funds said in a letter late Thursday it is willing to offer $214 million, or $8.50 a share for the firm. Lone Star is tabling 44% less than it first offered for the troubled subprime lender.
India's economy expanded at a higher-than-expected 9.3% during fiscal first quarter ended June from a year ago on robust growth in the manufacturing and services sectors, according to official data released Friday. Economists polled by both Dow Jones Newswires and Reuters estimated growth of 8.9%. India's gross domestic product rose 9.1% during the January-March period.
Barclays on Friday threw a $1.4bn lifeline to a structured debt vehicle the bank helped set up with Cairn Capital, the London-based hedge fund, and is considering similar moves for other vehicles.
Borrowing from the Fed's discount window dropped to $1.101 billion as of Wednesday, about half the $2.001 billion level reported a week earlier, the central bank disclosed yesterday.
Oct. crude climbed 68 cents to close at $74.04 a barrel. October natural gas fell 3% Friday to close at $5.468 per million British thermal units, down 4.7% from a week ago and down 14.8% from a month ago. Gold closed up $8 for the session.
In the short trading session on Friday the month ended on a strong note with the Dow up 157, the Nasdaq up 32 and the S&P 500 up almost 20 points. We now enter September, which is historically the worst month of the year.
Thursday, August 30, 2007
Where Do I Begin?
8/31/07 Where Do I Begin?
Outstanding volumes of commercial paper fell $62.8 billion last week, or 3.1%, to $1.98 trillion, the Federal Reserve reported Thursday. Asset-backed paper fell by $59.4 billion, or 5.6%, to $998 billion. The total decline in short-term securities over the past three weeks has totaled $244 billion, or 11%.
Thornburg Mortgage Inc. priced a public offering of 20 million shares of its 10% Series F cumulative convertible redeemable preferred stock at $25 each, generating net proceeds of $473 million. The shares are convertible into common stock at the option of the holder at any time at a conversion price of $11.50 each. Thornburg said the proceeds will be primarily used to improve its liquidity position and to resume its origination of mortgage loans and acquisition of mortgage-backed securities.
Freddie Mac reported its second quarter net income declined 45% primarily due to a higher provision for credit losses and mark-to-market losses on credit-related items.
As of Aug. 24, the Bank of Montreal had bought $1 billion of paper from eight of its mutual funds, $90 million from six funds operated by Altamira Investment Services Inc. and $560 million from pooled funds. It said it expect to buy the rest of the $2 billion of paper shortly. National Bank said it "is in contact with other customers who hold [asset-backed commercial paper] acquired through the bank or its subsidiaries and is working with them to attempt to resolve their liquidity and other issues in the context of their overall banking relationship."
Initial jobless claims for the week ended Aug. 25 rose by 9,000 to 334,000, the highest since April 14, the Labor Department reported Thursday. The four-week average of those claims climbed by 6,250 to 324,500. It was the highest since April 28. The number of people continuing to collect unemployment benefits climbed by 13,000, reaching 2.60 million in the week ended Aug. 18. It marked the highest level since April 14. The four-week average of continuing claims rose by 11,250 to 2.56 million, the highest level since mid-January 2006.
Analysts at Lehman Brothers on Thursday lowered their profit estimates for the largest U.S. brokerage firms, citing the uncertainty in the credit markets. "We believe that third-quarter earnings will be significantly impacted by the dislocation in the credit and asset-backed/mortgage markets, only partially offset by strength in currencies, rates and commodities as well as decent equities comparisons and favorable investment banking conditions at least through July," the analysts wrote in a research note.
H&R Block Inc said it was trying to renegotiate the sale of its Option One Mortgage Corp unit and would get out subprime lending after its quarterly loss more than doubled.
The municipal government of Beijing plans to build underground natural gas reserves by 2010 to ensure supplies will meet soaring demand, the city's economic planner said in a 2006-2010 plan for urban gas development. The city's natural gas demand is expected to reach 7 billion-8 billion cubic meters a year by 2010, compared with 2.6 billion cubic meters in 2004, according to the plan posted Wednesday by the Beijing Development and Reform Commission on its Web site. A comparable figure for last year wasn't provided.
The U.N. nuclear agency said Thursday that Iran was producing less nuclear fuel than expected and praised Tehran for ''a significant step forward'' in explaining past atomic actions that have raised suspicions. The assessment is expected to make it more difficult for the United States to rally support for a new round of sanctions against Tehran.
Sears Holdings Corp. reported fiscal second-quarter earnings that were down 40 percent, reflecting softer results from the Chicago retail company's Kmart and domestic Sears operations. Profit margins came under pressure because sales declined 4 percent to $12.24 billion from $12.79 billion.
Turkmen President Gurbanguly Berdymukhamedov has inaugurated construction of a 7,000-kilometer gas pipeline to China to be completed by 2009, the official Turkmen newspaper said.
Iraq has failed to meet all but three of 18 congressionally mandated benchmarks for political and military progress, according to a draft of a Government Accountability Office report. The document questions whether some aspects of a more positive assessment by the White House last month adequately reflected the range of views the GAO found within the administration.
Gasoline prices rose to a near six- week high in Europe on speculation falling stockpiles will increase demand for exports.
A company does not make an application with the FDA to proceed to phase III
trials unless they are confident that they will in fact be able to proceed.( This is a May 2007 release: "We are extremely pleased with the positive reception that our Phase 2B studies received at the AUA meeting," stated Dr. Trevor Hallam, Palatin's Executive Vice President of R&D. Dr. Hallam further commented, "We are looking forward to discussing these results with the FDA at an end of Phase
2 meeting later this year and moving to Phase 3 trials as soon as
possible." What took place? Do I feel stupid? No need to ask. It will not be the last time I look stupid! "Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today that they have delayed plans for the initiation of Phase 3 clinical trials with bremelanotide, a first in class melanocortin agonist drug candidate, for the treatment of male erectile dysfunction (ED). The decision follows responses from representatives of the U.S. Food and Drug Administration (FDA), which raised serious concerns about the acceptable benefit/risk ratio to support the progression of the proposed program into Phase 3 studies for ED. After reviewing the data generated in the Phase 1 and 2 studies, the FDA questioned the overall efficacy results and the clinical benefit of this product in both the general and diabetic ED populations, and cited blood pressure increases as its greatest safety concern. Though not supportive of the proposed Phase 3 studies for ED with bremelanotide, the FDA stated that it was amenable to proposals for a different drug development pathway, such as for a second-line therapy in non-responders to currently approved PDE-5 inhibitors."The safety of patients in our clinical program has always been our number one priority and we will work closely with the FDA, King, and our advisors to determine the next steps for the program," stated Carl Spana, Ph.D., President and Chief Executive Officer of Palatin. Palatin and King plan to review the FDA comments in the overall context of the program in order to determine next steps related to the further development of bremelanotide for the treatment of ED." Just an aside. In all the research documentation, I have not seen a mention of high blood pressure as a side effect.
According to Bloomberg, "Standard & Poor's said business conditions for securities firms are worse than in the second half of 1998 and revenue from investment banking and trading could fall 47 percent in the final six months of this year."
Henry To: "Approximately 90% of all subprime mortgages that were originated from 2004 to 2006 will be eventually subjected to resets - with a peak of sometime in the spring of next year. Given that 1) less than 50% are "full doc" loans, 2) About 25% to 30% are interest-only ARM loans, and that 3) the average combined loan-to-value ratio is about 92% to 95% - when the 2004 to 2006 vintages reset over the next 18 months, it is going to be vicious. Of course, all the above won't matter too much if we are still in an era of rising house prices and easy financing - but as everyone and his neighbor should now know, that era is now over."
Gold for December delivery fell $1.50, or 0.2%, to $673.90 an ounce on the New York Mercantile Exchange. Copper futures closed nearly unchanged at $3.35 a pound. Among precious metals, silver for September delivery slipped 5 cents to $11.791 an ounce. October platinum lost $6.70 a pound to close at $1,260.10 an ounce, while palladium slipped 20 cents to close at $335.60 an ounce.
``There's that fear of commercial paper that's driving people into the bills market,'' said Nasri Toutoungi, who oversees $23 billion of bonds in Hartford, Connecticut, at Hartford Investment Management Co. ``It's becoming irrational.'' The yield on the three-month Treasury bill fell 21 basis points, or 0.21 percentage point, to 3.80 percent at 3:45 p.m. in New York, according to Bloomberg data. The yield has dropped 114 basis points since Aug. 8.
According to FT, Barclays rushed to reassure investors and depositors on Thursday night after it was forced by what it said was a technical glitch to borrow from the Bank of England’s emergency reserves for the second time in just over a week.The UK bank issued a statement after it emerged it had borrowed £1.6bn (€2.4bn) from the central bank’s emergency facility on Wednesday evening. The facility, which carries a penalty rate of interest, has become the subject of intense scrutiny by investors as they search for signs of distress as a result of the recent turmoil in the capital markets.
In the week ending Aug. 29, primary credit borrowing at the discount window averaged $1.3 billion, up from an average of $1.2 billion a week ago. On Wednesday alone, primary credits totaled $1.1 billion, down from $2 billion a week earlier. The data show that, aside from the previously announced loans by five major money center banks, little or no new borrowing from the discount window has taken place.
Outstanding volumes of commercial paper fell $62.8 billion last week, or 3.1%, to $1.98 trillion, the Federal Reserve reported Thursday. Asset-backed paper fell by $59.4 billion, or 5.6%, to $998 billion. The total decline in short-term securities over the past three weeks has totaled $244 billion, or 11%.
Thornburg Mortgage Inc. priced a public offering of 20 million shares of its 10% Series F cumulative convertible redeemable preferred stock at $25 each, generating net proceeds of $473 million. The shares are convertible into common stock at the option of the holder at any time at a conversion price of $11.50 each. Thornburg said the proceeds will be primarily used to improve its liquidity position and to resume its origination of mortgage loans and acquisition of mortgage-backed securities.
Freddie Mac reported its second quarter net income declined 45% primarily due to a higher provision for credit losses and mark-to-market losses on credit-related items.
As of Aug. 24, the Bank of Montreal had bought $1 billion of paper from eight of its mutual funds, $90 million from six funds operated by Altamira Investment Services Inc. and $560 million from pooled funds. It said it expect to buy the rest of the $2 billion of paper shortly. National Bank said it "is in contact with other customers who hold [asset-backed commercial paper] acquired through the bank or its subsidiaries and is working with them to attempt to resolve their liquidity and other issues in the context of their overall banking relationship."
Initial jobless claims for the week ended Aug. 25 rose by 9,000 to 334,000, the highest since April 14, the Labor Department reported Thursday. The four-week average of those claims climbed by 6,250 to 324,500. It was the highest since April 28. The number of people continuing to collect unemployment benefits climbed by 13,000, reaching 2.60 million in the week ended Aug. 18. It marked the highest level since April 14. The four-week average of continuing claims rose by 11,250 to 2.56 million, the highest level since mid-January 2006.
Analysts at Lehman Brothers on Thursday lowered their profit estimates for the largest U.S. brokerage firms, citing the uncertainty in the credit markets. "We believe that third-quarter earnings will be significantly impacted by the dislocation in the credit and asset-backed/mortgage markets, only partially offset by strength in currencies, rates and commodities as well as decent equities comparisons and favorable investment banking conditions at least through July," the analysts wrote in a research note.
H&R Block Inc said it was trying to renegotiate the sale of its Option One Mortgage Corp unit and would get out subprime lending after its quarterly loss more than doubled.
The municipal government of Beijing plans to build underground natural gas reserves by 2010 to ensure supplies will meet soaring demand, the city's economic planner said in a 2006-2010 plan for urban gas development. The city's natural gas demand is expected to reach 7 billion-8 billion cubic meters a year by 2010, compared with 2.6 billion cubic meters in 2004, according to the plan posted Wednesday by the Beijing Development and Reform Commission on its Web site. A comparable figure for last year wasn't provided.
The U.N. nuclear agency said Thursday that Iran was producing less nuclear fuel than expected and praised Tehran for ''a significant step forward'' in explaining past atomic actions that have raised suspicions. The assessment is expected to make it more difficult for the United States to rally support for a new round of sanctions against Tehran.
Sears Holdings Corp. reported fiscal second-quarter earnings that were down 40 percent, reflecting softer results from the Chicago retail company's Kmart and domestic Sears operations. Profit margins came under pressure because sales declined 4 percent to $12.24 billion from $12.79 billion.
Turkmen President Gurbanguly Berdymukhamedov has inaugurated construction of a 7,000-kilometer gas pipeline to China to be completed by 2009, the official Turkmen newspaper said.
Iraq has failed to meet all but three of 18 congressionally mandated benchmarks for political and military progress, according to a draft of a Government Accountability Office report. The document questions whether some aspects of a more positive assessment by the White House last month adequately reflected the range of views the GAO found within the administration.
Gasoline prices rose to a near six- week high in Europe on speculation falling stockpiles will increase demand for exports.
A company does not make an application with the FDA to proceed to phase III
trials unless they are confident that they will in fact be able to proceed.( This is a May 2007 release: "We are extremely pleased with the positive reception that our Phase 2B studies received at the AUA meeting," stated Dr. Trevor Hallam, Palatin's Executive Vice President of R&D. Dr. Hallam further commented, "We are looking forward to discussing these results with the FDA at an end of Phase
2 meeting later this year and moving to Phase 3 trials as soon as
possible." What took place? Do I feel stupid? No need to ask. It will not be the last time I look stupid! "Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today that they have delayed plans for the initiation of Phase 3 clinical trials with bremelanotide, a first in class melanocortin agonist drug candidate, for the treatment of male erectile dysfunction (ED). The decision follows responses from representatives of the U.S. Food and Drug Administration (FDA), which raised serious concerns about the acceptable benefit/risk ratio to support the progression of the proposed program into Phase 3 studies for ED. After reviewing the data generated in the Phase 1 and 2 studies, the FDA questioned the overall efficacy results and the clinical benefit of this product in both the general and diabetic ED populations, and cited blood pressure increases as its greatest safety concern. Though not supportive of the proposed Phase 3 studies for ED with bremelanotide, the FDA stated that it was amenable to proposals for a different drug development pathway, such as for a second-line therapy in non-responders to currently approved PDE-5 inhibitors."The safety of patients in our clinical program has always been our number one priority and we will work closely with the FDA, King, and our advisors to determine the next steps for the program," stated Carl Spana, Ph.D., President and Chief Executive Officer of Palatin. Palatin and King plan to review the FDA comments in the overall context of the program in order to determine next steps related to the further development of bremelanotide for the treatment of ED." Just an aside. In all the research documentation, I have not seen a mention of high blood pressure as a side effect.
According to Bloomberg, "Standard & Poor's said business conditions for securities firms are worse than in the second half of 1998 and revenue from investment banking and trading could fall 47 percent in the final six months of this year."
Henry To: "Approximately 90% of all subprime mortgages that were originated from 2004 to 2006 will be eventually subjected to resets - with a peak of sometime in the spring of next year. Given that 1) less than 50% are "full doc" loans, 2) About 25% to 30% are interest-only ARM loans, and that 3) the average combined loan-to-value ratio is about 92% to 95% - when the 2004 to 2006 vintages reset over the next 18 months, it is going to be vicious. Of course, all the above won't matter too much if we are still in an era of rising house prices and easy financing - but as everyone and his neighbor should now know, that era is now over."
Gold for December delivery fell $1.50, or 0.2%, to $673.90 an ounce on the New York Mercantile Exchange. Copper futures closed nearly unchanged at $3.35 a pound. Among precious metals, silver for September delivery slipped 5 cents to $11.791 an ounce. October platinum lost $6.70 a pound to close at $1,260.10 an ounce, while palladium slipped 20 cents to close at $335.60 an ounce.
``There's that fear of commercial paper that's driving people into the bills market,'' said Nasri Toutoungi, who oversees $23 billion of bonds in Hartford, Connecticut, at Hartford Investment Management Co. ``It's becoming irrational.'' The yield on the three-month Treasury bill fell 21 basis points, or 0.21 percentage point, to 3.80 percent at 3:45 p.m. in New York, according to Bloomberg data. The yield has dropped 114 basis points since Aug. 8.
According to FT, Barclays rushed to reassure investors and depositors on Thursday night after it was forced by what it said was a technical glitch to borrow from the Bank of England’s emergency reserves for the second time in just over a week.The UK bank issued a statement after it emerged it had borrowed £1.6bn (€2.4bn) from the central bank’s emergency facility on Wednesday evening. The facility, which carries a penalty rate of interest, has become the subject of intense scrutiny by investors as they search for signs of distress as a result of the recent turmoil in the capital markets.
In the week ending Aug. 29, primary credit borrowing at the discount window averaged $1.3 billion, up from an average of $1.2 billion a week ago. On Wednesday alone, primary credits totaled $1.1 billion, down from $2 billion a week earlier. The data show that, aside from the previously announced loans by five major money center banks, little or no new borrowing from the discount window has taken place.
Wednesday, August 29, 2007
Not Quiet On The Western Front
8/30/07 Not Quiet On The Western Front
In a bid to expand its presence in Europe, Kazakhstan's state-controlled oil and gas company KazMunayGas has agreed to buy a 75% equity stake in oil firm Rompetrol Group N.V. in an acquisition estimated to be worth $2.7 billion.
The key asset of Netherlands-based Rompetrol Group N.V. is refiner Rompetrol Rafinare SA in Romania, whose shares surged 14% on the Bucharest Stock Exchange Tuesday. In a bid to expand its presence in Europe, Kazakhstan's state-controlled oil and gas company KazMunayGas has agreed to buy a 75% equity stake in oil firm Rompetrol Group N.V. in an acquisition estimated to be worth $2.7 billion.
The key asset of Netherlands-based Rompetrol Group N.V. is refiner Rompetrol Rafinare SA in Romania, whose shares surged 14% on the Bucharest Stock Exchange Tuesday.
The Daily Reckoning: “The Bush regime says it is going to designate part of Iran’s military – the Revolutionary Guards – a terrorist organization, whose bases and facilities Bush intends to bomb along with Iran’s nuclear energy sites. Three U.S. aircraft carrier strike forces are deployed off Iran. B-2 Stealth bombers are being fitted to carry 30,000 pound ‘bunker-buster’ bombs to use against hardened sites. Politicized U.S. generals assert that Iran is providing arms and aid to the Iraqi resistance to the U.S. occupation. The media are feeding the U.S. population the same propaganda about nonexistent Iranian weapons of mass destruction that they fed us about nonexistent Iraqi weapons of mass destruction. A former CIA Middle East field officer, Robert Baer, has written in Time magazine that the Bush regime has decided to attack the Revolutionary Guards within the next six months. Remember the ‘cakewalk war’? Well, this time the neocons think that an attack on the Revolutionary Guards will free Iran from Islamic influence and cause Iranians to back the U.S. against their own government.
“Lies, unprovoked aggression, and delusional expectations – the same ingredients that produced the Iraq catastrophe – all over again. The entire Bush regime and both political parties are complicit, along with the media and U.S. allies.”
"According to our analysis, although more measures have been taken to control the inflation, the (increase in the consumer price index) this year will likely be above 3 percent," Su Ning, a vice governor of the People's Bank of China, said at a news conference in Beijing.
Kate Incontrera: "Auto sales have been weak this year - and if the data from August, which is reported on September 4, is negative, it will be the sixth month this year and the third month in a row that sales have been down."
Washington Post:" President Bush plans to ask Congress next month for up to $50 billion in additional funding for the war in Iraq, a White House official said yesterday, a move that appears to reflect increasing administration confidence that it can fend off congressional calls for a rapid drawdown of U.S. forces.The request -- which would come on top of about $460 billion in the fiscal 2008 defense budget and $147 billion in a pending supplemental bill to fund the wars in Afghanistan and Iraq -- is expected to be announced after congressional hearings scheduled for mid-September featuring the two top U.S. officials in Iraq. Army Gen. David H. Petraeus and Ambassador Ryan C. Crocker will assess the state of the war and the effect of the new strategy the U.S. military has pursued this year."
In California, where the median home price is well above $500,000, jumbo mortgages are as much as 44 percent of all mortgages issued in certain metro areas, according to data from First American LoanPerformance. In and around San Francisco, where the median home price is about $1.1 million, the tougher financing environment has created a "hesitancy" and has led to some canceled escrows for buyers around the $1 million range, said Rick Turley, president of the San Francisco and Peninsula Region for Coldwell Banker Residential Brokerage.
According to Bloomberg, Cheyne Capital Management Ltd., whose Queen's Walk mortgage bond fund reported losses in June, may be forced to sell assets backing a $6 billion commercial paper program after a global credit market rout. The Cheyne Finance LLC fund has been selling investments and has enough cash to repay commercial paper due through November, London-based hedge fund company Cheyne Capital Management said in a statement. Standard & Poor's cut Cheyne Finance's ratings yesterday, citing the deteriorating market value of its assets.
Investor confidence in high-risk, high-yield loans worsened today, according to traders of credit- default swaps. The iTraxx LevX Index of contracts on loans to 35 European companies fell 0.125 to 95.75, according to Deutsche Bank AG. The index dropped to 92.5 on July 30, the lowest since it started trading in October.
When Interstate Bakeries Corp. announced Tuesday that it was withdrawing from the Southland bread market, it meant that after Oct. 20, local shoppers no longer will be able to buy Wonder Bread. Interstate is closing four bakeries - in Pomona, Glendale, Los Angeles and San Diego - as well as eliminating 325 distribution routes and closing 17 distribution centers and 19 outlet stores.
The hardest-hit area will be Pomona, home of the largest of the four bakeries. Company spokeswoman Maya Pogoda said 768 of the 1,300 jobs are either directly or indirectly related to the Pomona plant.
"Interstate Bakeries has been in Chapter 11 bankruptcy since September 2004 and the company made the decision they can't afford to have losing markets if they hope to get back to profitability," Pogoda said. "We will stop baking and selling bread after Oct. 20 and the plant will close Oct. 29."
T. Rowe Price New Era"s Manager Charles Ober: ExxonMobil and Schlumberger are blue chips that Ober still likes. Among the major oil companies, he also likes France's Total and England's BP. He also recommends energy service firms Baker Hughes and BJ Services.
On Thursday morning, equities shot up strongly right at the opening but not the financials, such as, Countrywide and Goldman Sachs.
The American Petroleum Institute reported a fall of 4.9 million barrels in crude supplies for the week ended August 24. The Energy Department had reported a decline of 3.5 million barrels for the latest week. Motor gasoline supplies were down 2.4 million barrels, the API said. The government reported that supplies were down 3.6 million barrels. Distillate supplies climbed 1.7 million barrels, the API said. They were up 900,000 barrels, according to the Energy Department. Refinery utilization, meanwhile, slipped 1.3 percentage points to 90.3 percent of capacity.
Altria Group Inc. said Wednesday that it will pursue a spinoff of Philip Morris International unit to its shareholders and the precise timing will be announced in January.
Enzio von Pfiel: "The yen is going to strengthen massively, we reckon from 116 now to about 100 within three months. Reason: the US market is headed for an October crash,and that implies that there is going to be plenty of blood on the streets as regards yen carry trades. They will get unwound, so people who previously sold yen and bought higher-yielding assets on margin will find their bankers calling them to cover yen positions. In our piece of 7th July we suggested continuing with the yen carry trade; now we suggest that you get out of the yen carry trade.
The yield on the three-month Treasury bill was yield was down 34 basis points at 3.987%, while the yield on the six-month bill was down 44 basis points at 4.244%.
Moody's believes that the firms, Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Bros and Bear Stearns, have sufficient earnings strength and diversification to be able to absorb the necessary mark-downs on the loan pipeline while still generating positive, albeit depressed, earnings and a respectable level of profitability.
Samsung has edged Motorola aside to become the world's second-largest maker of cell phones.
The average rate on a one-year adjustable mortgage surged to 6.51 percent, the highest since January 2001, from 5.84 percent the prior week. The rate also surpassed the cost of a 30-year fixed loan for the first time.
The Federal Reserve will probably cut its benchmark interest rate to 4 percent as slowing U.S. economic growth restrains inflation, said Edward Hyman, chairman of International Strategy and Investment Group.
According to Bloomberg, wheat rose to a record, extending a rally that began in March, on signs dry weather in Ukraine and Australia may hurt production, reducing world supplies already expected to be the lowest in 26 years. Ukraine, the world's seventh-largest wheat exporter, will ship 58 percent less grain this year after a three-month drought, the country's agriculture minister said. Hotter- than-normal weather may reduce production in Australia, a country that was expected to be the second-largest exporter in the marketing year that started June 1, analysts said.
Gold has gained 5.9 percent this year as the dollar has fallen 3.4 percent against the euro. Silver has dropped 7.2 percent this year. One might consider accumulating a position in silver at these levels.
December gold climbed $1.90 to close at $675.40 an ounce Wednesday. September silver gained 8 cents to end at $11.845 an ounce and September copper finished at $3.35 a pound, up 1.2%.
Oct. crude up 2.5%, or $1.78, to close at $73.51 a barrel. Natural gas dipped 12 cents to $5.47.
The Teamsters Union said it will ask a federal appeals court to block the Bush administration's plan to begin allowing Mexican trucks to carry cargo anywhere in the United States. The union said it has been told by officials in the Transportation Department's Federal Motor Carrier Safety Administration that the first Mexican trucks will be coming across the border on Saturday. Teamsters leaders said they planned to seek an emergency injunction today from the Ninth Circuit U.S. Court of Appeals in San Francisco.
Kevin Duffy: "The current credit meltdown is a solvency crisis. Cheap and plentiful credit is what caused the current mess. More of the same can only make it worse. It is only a matter of time before this shot of credit heroine wears off. As with all drugs, at some point simply increasing the dosage has little or no stimulative effect. Sometimes the best medicine is withdrawal."
The VIX took it on the chin on Wednesday and dropped back to the 23.50 level as the Dow jumped 247 points, the Nasdaq 62, and the S&P about 32. The financial sector did a bit better but nothing better than mediocre.
Dry bulk vessel costs, measured by the London-based Baltic Dry Index, on Wednesday reached an all-time high of 7,474 points, up almost 100 per cent over the past 12 months, pushing the cost of a Panamax to almost $60,000 a day.
These burgeoning costs are significantly higher than what was anticipated just 6 months ago. According to the FT, the International Grain Council, the industry body, last week said several important grain routes, notably from the US to Asia, had double the transit volume in the past year, contributing to rising dry bulk carrier freight costs.
In a bid to expand its presence in Europe, Kazakhstan's state-controlled oil and gas company KazMunayGas has agreed to buy a 75% equity stake in oil firm Rompetrol Group N.V. in an acquisition estimated to be worth $2.7 billion.
The key asset of Netherlands-based Rompetrol Group N.V. is refiner Rompetrol Rafinare SA in Romania, whose shares surged 14% on the Bucharest Stock Exchange Tuesday. In a bid to expand its presence in Europe, Kazakhstan's state-controlled oil and gas company KazMunayGas has agreed to buy a 75% equity stake in oil firm Rompetrol Group N.V. in an acquisition estimated to be worth $2.7 billion.
The key asset of Netherlands-based Rompetrol Group N.V. is refiner Rompetrol Rafinare SA in Romania, whose shares surged 14% on the Bucharest Stock Exchange Tuesday.
The Daily Reckoning: “The Bush regime says it is going to designate part of Iran’s military – the Revolutionary Guards – a terrorist organization, whose bases and facilities Bush intends to bomb along with Iran’s nuclear energy sites. Three U.S. aircraft carrier strike forces are deployed off Iran. B-2 Stealth bombers are being fitted to carry 30,000 pound ‘bunker-buster’ bombs to use against hardened sites. Politicized U.S. generals assert that Iran is providing arms and aid to the Iraqi resistance to the U.S. occupation. The media are feeding the U.S. population the same propaganda about nonexistent Iranian weapons of mass destruction that they fed us about nonexistent Iraqi weapons of mass destruction. A former CIA Middle East field officer, Robert Baer, has written in Time magazine that the Bush regime has decided to attack the Revolutionary Guards within the next six months. Remember the ‘cakewalk war’? Well, this time the neocons think that an attack on the Revolutionary Guards will free Iran from Islamic influence and cause Iranians to back the U.S. against their own government.
“Lies, unprovoked aggression, and delusional expectations – the same ingredients that produced the Iraq catastrophe – all over again. The entire Bush regime and both political parties are complicit, along with the media and U.S. allies.”
"According to our analysis, although more measures have been taken to control the inflation, the (increase in the consumer price index) this year will likely be above 3 percent," Su Ning, a vice governor of the People's Bank of China, said at a news conference in Beijing.
Kate Incontrera: "Auto sales have been weak this year - and if the data from August, which is reported on September 4, is negative, it will be the sixth month this year and the third month in a row that sales have been down."
Washington Post:" President Bush plans to ask Congress next month for up to $50 billion in additional funding for the war in Iraq, a White House official said yesterday, a move that appears to reflect increasing administration confidence that it can fend off congressional calls for a rapid drawdown of U.S. forces.The request -- which would come on top of about $460 billion in the fiscal 2008 defense budget and $147 billion in a pending supplemental bill to fund the wars in Afghanistan and Iraq -- is expected to be announced after congressional hearings scheduled for mid-September featuring the two top U.S. officials in Iraq. Army Gen. David H. Petraeus and Ambassador Ryan C. Crocker will assess the state of the war and the effect of the new strategy the U.S. military has pursued this year."
In California, where the median home price is well above $500,000, jumbo mortgages are as much as 44 percent of all mortgages issued in certain metro areas, according to data from First American LoanPerformance. In and around San Francisco, where the median home price is about $1.1 million, the tougher financing environment has created a "hesitancy" and has led to some canceled escrows for buyers around the $1 million range, said Rick Turley, president of the San Francisco and Peninsula Region for Coldwell Banker Residential Brokerage.
According to Bloomberg, Cheyne Capital Management Ltd., whose Queen's Walk mortgage bond fund reported losses in June, may be forced to sell assets backing a $6 billion commercial paper program after a global credit market rout. The Cheyne Finance LLC fund has been selling investments and has enough cash to repay commercial paper due through November, London-based hedge fund company Cheyne Capital Management said in a statement. Standard & Poor's cut Cheyne Finance's ratings yesterday, citing the deteriorating market value of its assets.
Investor confidence in high-risk, high-yield loans worsened today, according to traders of credit- default swaps. The iTraxx LevX Index of contracts on loans to 35 European companies fell 0.125 to 95.75, according to Deutsche Bank AG. The index dropped to 92.5 on July 30, the lowest since it started trading in October.
When Interstate Bakeries Corp. announced Tuesday that it was withdrawing from the Southland bread market, it meant that after Oct. 20, local shoppers no longer will be able to buy Wonder Bread. Interstate is closing four bakeries - in Pomona, Glendale, Los Angeles and San Diego - as well as eliminating 325 distribution routes and closing 17 distribution centers and 19 outlet stores.
The hardest-hit area will be Pomona, home of the largest of the four bakeries. Company spokeswoman Maya Pogoda said 768 of the 1,300 jobs are either directly or indirectly related to the Pomona plant.
"Interstate Bakeries has been in Chapter 11 bankruptcy since September 2004 and the company made the decision they can't afford to have losing markets if they hope to get back to profitability," Pogoda said. "We will stop baking and selling bread after Oct. 20 and the plant will close Oct. 29."
T. Rowe Price New Era"s Manager Charles Ober: ExxonMobil and Schlumberger are blue chips that Ober still likes. Among the major oil companies, he also likes France's Total and England's BP. He also recommends energy service firms Baker Hughes and BJ Services.
On Thursday morning, equities shot up strongly right at the opening but not the financials, such as, Countrywide and Goldman Sachs.
The American Petroleum Institute reported a fall of 4.9 million barrels in crude supplies for the week ended August 24. The Energy Department had reported a decline of 3.5 million barrels for the latest week. Motor gasoline supplies were down 2.4 million barrels, the API said. The government reported that supplies were down 3.6 million barrels. Distillate supplies climbed 1.7 million barrels, the API said. They were up 900,000 barrels, according to the Energy Department. Refinery utilization, meanwhile, slipped 1.3 percentage points to 90.3 percent of capacity.
Altria Group Inc. said Wednesday that it will pursue a spinoff of Philip Morris International unit to its shareholders and the precise timing will be announced in January.
Enzio von Pfiel: "The yen is going to strengthen massively, we reckon from 116 now to about 100 within three months. Reason: the US market is headed for an October crash,and that implies that there is going to be plenty of blood on the streets as regards yen carry trades. They will get unwound, so people who previously sold yen and bought higher-yielding assets on margin will find their bankers calling them to cover yen positions. In our piece of 7th July we suggested continuing with the yen carry trade; now we suggest that you get out of the yen carry trade.
The yield on the three-month Treasury bill was yield was down 34 basis points at 3.987%, while the yield on the six-month bill was down 44 basis points at 4.244%.
Moody's believes that the firms, Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Bros and Bear Stearns, have sufficient earnings strength and diversification to be able to absorb the necessary mark-downs on the loan pipeline while still generating positive, albeit depressed, earnings and a respectable level of profitability.
Samsung has edged Motorola aside to become the world's second-largest maker of cell phones.
The average rate on a one-year adjustable mortgage surged to 6.51 percent, the highest since January 2001, from 5.84 percent the prior week. The rate also surpassed the cost of a 30-year fixed loan for the first time.
The Federal Reserve will probably cut its benchmark interest rate to 4 percent as slowing U.S. economic growth restrains inflation, said Edward Hyman, chairman of International Strategy and Investment Group.
According to Bloomberg, wheat rose to a record, extending a rally that began in March, on signs dry weather in Ukraine and Australia may hurt production, reducing world supplies already expected to be the lowest in 26 years. Ukraine, the world's seventh-largest wheat exporter, will ship 58 percent less grain this year after a three-month drought, the country's agriculture minister said. Hotter- than-normal weather may reduce production in Australia, a country that was expected to be the second-largest exporter in the marketing year that started June 1, analysts said.
Gold has gained 5.9 percent this year as the dollar has fallen 3.4 percent against the euro. Silver has dropped 7.2 percent this year. One might consider accumulating a position in silver at these levels.
December gold climbed $1.90 to close at $675.40 an ounce Wednesday. September silver gained 8 cents to end at $11.845 an ounce and September copper finished at $3.35 a pound, up 1.2%.
Oct. crude up 2.5%, or $1.78, to close at $73.51 a barrel. Natural gas dipped 12 cents to $5.47.
The Teamsters Union said it will ask a federal appeals court to block the Bush administration's plan to begin allowing Mexican trucks to carry cargo anywhere in the United States. The union said it has been told by officials in the Transportation Department's Federal Motor Carrier Safety Administration that the first Mexican trucks will be coming across the border on Saturday. Teamsters leaders said they planned to seek an emergency injunction today from the Ninth Circuit U.S. Court of Appeals in San Francisco.
Kevin Duffy: "The current credit meltdown is a solvency crisis. Cheap and plentiful credit is what caused the current mess. More of the same can only make it worse. It is only a matter of time before this shot of credit heroine wears off. As with all drugs, at some point simply increasing the dosage has little or no stimulative effect. Sometimes the best medicine is withdrawal."
The VIX took it on the chin on Wednesday and dropped back to the 23.50 level as the Dow jumped 247 points, the Nasdaq 62, and the S&P about 32. The financial sector did a bit better but nothing better than mediocre.
Dry bulk vessel costs, measured by the London-based Baltic Dry Index, on Wednesday reached an all-time high of 7,474 points, up almost 100 per cent over the past 12 months, pushing the cost of a Panamax to almost $60,000 a day.
These burgeoning costs are significantly higher than what was anticipated just 6 months ago. According to the FT, the International Grain Council, the industry body, last week said several important grain routes, notably from the US to Asia, had double the transit volume in the past year, contributing to rising dry bulk carrier freight costs.
Tuesday, August 28, 2007
State Of Flux
8/29/07 State Of Flux
Market conditions for vendors of dynamic random access memory components are set to worsen in September after prices for the oversupplied chips stabilized in July, which brought an end to severe price erosion that has rocked the industry this year, according to technology researcher iSuppli.
Previously, iSuppli hadn't expected DRAM prices to face pressure until October.
The researcher cuts it 2007 global DRAM revenue forecast to $34.6 billion, equating to growth of 2% over 2006. In April, iSuppli had projected that revenue would grow 8.6% on the year, reaching $36.9 billion.
Home Depot said it netted $7.9 billion from the sale of its Supply division. Hughes Supply is the crown jewel of this division. I was a stockholder in Hughes before it was sold to Home Depot for cash. Hughes is well run and a good business. I think Home Depot made a foolish decision to dump this division for so low a price.
EarthLink Inc. outlined a corporate restructuring plan, including the elimination of about 900 jobs.
The number of Americans without health insurance rose to 47 million from 44.8 million, 15.8% of the population. How many with insurance do not have catastrophic insurance?
The consumer confidence index fell from 111.9 in July to 105.0, its lowest level since last August.
The yen continues to gain strength versus the dollar.
The TICKS were really weak from Tuesday's opening of trading. The same is true for the advance/decline ratio. The VIX has rebounded to the 26 level, while the Nasdaq has plummeted 60 points, the S&P about 35, and the Dow fell 280 points. It's another wipe out day. The market closed at the low of the day, a bad sign for tomorrow.
Number-one U.S. drug benefit manager Medco Health Solutions will buy diabetes-care provider PolyMedica Corp. for $1.5 billion. The $53/share all-cash offer represents a 17% premium over Monday's $45.29 close.
U.S. national home prices in the second quarter slid a record 3.2% from a year earlier, according to Standard & Poor's S&P/Case-Shiller Home Price Index. “The year-over-year decline reported in the 2nd quarter of 2007 for the National Home Price Index is the lowest point in its reported history, which dates back to January 1987. On a regional level 17 of the 20 metro areas are showing declines in their annual growth rate from what was reported in May.”
Rob Kirby: "The Fed’s Open Market Operations have lately been almost exclusively REPOS of both Agency and Mortgaged-Backed paper. The temporary ‘funding’ being provided to the holders of this debt IN NO WAY resolves the underlying problem which is one of solvency, not liquidity. Unfortunately, increased liquidity and/or lower interest rates will not improve an insolvent counterparty’s creditworthiness. What the unprecedented ‘liquidity add’ amounts to is the “MUSIC” in a game of musical chairs. If as and when the MUSIC stops, it’s a pretty safe bet that chairs are going to be harder to find than hen’s teeth – because there are none."
The natural gas contract for September delivery expires Wednesday.
Gold for December delivery fell $2.70 to close at $673.50 an ounce on the New York Mercantile Exchange. October platinum rose $8.30 to end at $1,260.60 an ounce. December palladium fell $4.40, or 1.3%, to close at $332.55 an ounce and September copper dropped 3.80 cents to $3.3115 a pound.
TimesOnLine: "State Street, the American bank, has been identified as having $22 billion (£10.9 billion) of exposure to asset-backed commercial paper conduits, the off-balance sheet vehicles that have caused severe problems for rivals in recent weeks amid turmoil in credit markets. According to regulatory filings, the Boston-based bank has credit lines to at least six conduits, which account for 17 per cent of its total assets. That proportion makes State Street the most highly exposed bank to conduits among its European and American peers."
The benchmark 10-year Treasury note was up 11/32 at 101 24/32 with a yield of 4.531%. The 30-year long bond was up 1/32 at 102 5/32, with a yield of 4.863%. The two-year note was up 6/32 at 100 30/32 with a yield of 4.119%. The dollar remains under pressure as it nears the 80 level.
"The political power of the occupiers is collapsing rapidly," Iran's Ahmadinejad said at a news conference, referring to U.S. troops in Iraq. "Soon, we will see a huge power vacuum in the region. Of course, we are prepared to fill the gap, with the help of neighbors and regional friends like Saudi Arabia, and with the help of the Iraqi nation."
Crude-oil for October delivery traded on the New York Mercantile Exchange finished with a 19-cent loss at $71.74 a barrel. Natural gas for September gained 25.5-cent, or 4.7%, to $5.635 per million British thermal units.
Market conditions for vendors of dynamic random access memory components are set to worsen in September after prices for the oversupplied chips stabilized in July, which brought an end to severe price erosion that has rocked the industry this year, according to technology researcher iSuppli.
Previously, iSuppli hadn't expected DRAM prices to face pressure until October.
The researcher cuts it 2007 global DRAM revenue forecast to $34.6 billion, equating to growth of 2% over 2006. In April, iSuppli had projected that revenue would grow 8.6% on the year, reaching $36.9 billion.
Home Depot said it netted $7.9 billion from the sale of its Supply division. Hughes Supply is the crown jewel of this division. I was a stockholder in Hughes before it was sold to Home Depot for cash. Hughes is well run and a good business. I think Home Depot made a foolish decision to dump this division for so low a price.
EarthLink Inc. outlined a corporate restructuring plan, including the elimination of about 900 jobs.
The number of Americans without health insurance rose to 47 million from 44.8 million, 15.8% of the population. How many with insurance do not have catastrophic insurance?
The consumer confidence index fell from 111.9 in July to 105.0, its lowest level since last August.
The yen continues to gain strength versus the dollar.
The TICKS were really weak from Tuesday's opening of trading. The same is true for the advance/decline ratio. The VIX has rebounded to the 26 level, while the Nasdaq has plummeted 60 points, the S&P about 35, and the Dow fell 280 points. It's another wipe out day. The market closed at the low of the day, a bad sign for tomorrow.
Number-one U.S. drug benefit manager Medco Health Solutions will buy diabetes-care provider PolyMedica Corp. for $1.5 billion. The $53/share all-cash offer represents a 17% premium over Monday's $45.29 close.
U.S. national home prices in the second quarter slid a record 3.2% from a year earlier, according to Standard & Poor's S&P/Case-Shiller Home Price Index. “The year-over-year decline reported in the 2nd quarter of 2007 for the National Home Price Index is the lowest point in its reported history, which dates back to January 1987. On a regional level 17 of the 20 metro areas are showing declines in their annual growth rate from what was reported in May.”
Rob Kirby: "The Fed’s Open Market Operations have lately been almost exclusively REPOS of both Agency and Mortgaged-Backed paper. The temporary ‘funding’ being provided to the holders of this debt IN NO WAY resolves the underlying problem which is one of solvency, not liquidity. Unfortunately, increased liquidity and/or lower interest rates will not improve an insolvent counterparty’s creditworthiness. What the unprecedented ‘liquidity add’ amounts to is the “MUSIC” in a game of musical chairs. If as and when the MUSIC stops, it’s a pretty safe bet that chairs are going to be harder to find than hen’s teeth – because there are none."
The natural gas contract for September delivery expires Wednesday.
Gold for December delivery fell $2.70 to close at $673.50 an ounce on the New York Mercantile Exchange. October platinum rose $8.30 to end at $1,260.60 an ounce. December palladium fell $4.40, or 1.3%, to close at $332.55 an ounce and September copper dropped 3.80 cents to $3.3115 a pound.
TimesOnLine: "State Street, the American bank, has been identified as having $22 billion (£10.9 billion) of exposure to asset-backed commercial paper conduits, the off-balance sheet vehicles that have caused severe problems for rivals in recent weeks amid turmoil in credit markets. According to regulatory filings, the Boston-based bank has credit lines to at least six conduits, which account for 17 per cent of its total assets. That proportion makes State Street the most highly exposed bank to conduits among its European and American peers."
The benchmark 10-year Treasury note was up 11/32 at 101 24/32 with a yield of 4.531%. The 30-year long bond was up 1/32 at 102 5/32, with a yield of 4.863%. The two-year note was up 6/32 at 100 30/32 with a yield of 4.119%. The dollar remains under pressure as it nears the 80 level.
"The political power of the occupiers is collapsing rapidly," Iran's Ahmadinejad said at a news conference, referring to U.S. troops in Iraq. "Soon, we will see a huge power vacuum in the region. Of course, we are prepared to fill the gap, with the help of neighbors and regional friends like Saudi Arabia, and with the help of the Iraqi nation."
Crude-oil for October delivery traded on the New York Mercantile Exchange finished with a 19-cent loss at $71.74 a barrel. Natural gas for September gained 25.5-cent, or 4.7%, to $5.635 per million British thermal units.
Monday, August 27, 2007
Justice
8/28/07 Justice
Justice can arrive late. But better late than never. Alberto Gonzalez finally resigned.
Yahoo announced two real-time communication features that are the first of their kind from a leading Web mail service. These include the ability to send free text messages from Yahoo! Mail to mobile phone numbers in the US, Canada, India, and the Philippines, and the ability to send instant messages (IM) from Yahoo! Mail to members of the world's largest combined IM community, including users of Yahoo! Messenger and Windows Live® Messenger(2).
Home Depot's board agreed to sell Home Depot Supply for $8.5 billion to Bain Capital, Carlyle Group and Clayton, Dubilier & Rice, about 18% less than the price hammered out in June. In addition, Home Depot itself will hold about 12.5% of the unit's equity and guarantee some of the debt issued by the banks to finance the acquisition. Basically, it cost about $8+ billion to buy the components of the Supply division. The only ones to get rich on this will be lawyers and possibly the private equity guys and possibly the investment bankers putting the debt package together. This is, in my view, a lousy deal for the shareholders.
The Home Depot has launched its bid to sell to the world's most populous nation.
At a ceremony Sunday in Beijing that included drummers and dragon dancers — a traditional Chinese symbol for luck — Annette Verschuren, Home Depot's president for Asia and Canada, called the company's investment in 12 stores a "historic milestone" for the world's largest home improvement retailer.
U.S. Steel Corp is to acquire Stelco Inc for about $1.1 billion to strengthen its position as a supplier of flat-rolled steel products in North America, the companies said. U.S. Steel will acquire Stelco for C$38.50 per share, amounting to about $1.1 billion, based on about 30 million fully diluted shares, according to the companies.
Nasdaq may sell its stake in the London Stock Exchange to Borse Dubai and make a joint bid with the Gulf exchange for Nordic exchange owner OMX , The Daily Telegraph said on Monday.
Kazakhstan on Monday called a three-month halt to work at the giant Kashagan oilfield, claiming that a consortium led by Italy's ENI had broken environmental rules at the project and evaded customs duties on imported equipment.
Bad credit has supplanted terrorism as the gravest immediate risk threatening the economy, a key national research group reported Monday.
Borrowers' withering ability to pay their bills and the subsequent fallout in the credit markets this summer topped the list of short-term risks on peoples' minds, according to a survey of 258 members conducted by the National Association of Business Economics.
Indian companies that process U.S. mortgages are reporting fewer work orders and diminishing revenue because of the subprime loan fallout overseas. Several companies have moved employees once assigned to mortgage documentation and related services to other areas. There is a fear of layoffs should the crisis in the United States continue.
John Hussman: " Indeed, there is no evidence that historically reliable valuation measures have lost their validity. Though the stock market has maintained relatively high multiples since the late 1990's, those multiples have thus far been associated with poor extended returns. Specifically, based on the most recent, reasonably long-term period available, the S&P 500 has (predictably) lagged Treasury bills for not just seven years, but now more than eight-and-a-half years. Investors will place themselves in quite a bit of danger if they believe that the “echo bubble” from the 2002 lows is some sort of new era for market valuations."
In the Bay Area, home sales volume has fallen to the lowest level in 12 years. Although prices in certain higher-end communities are holding steady, they are decreasing in neighborhoods with a large number of new or entry-level homes. Houses are lingering on the market much longer.
Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany."It would be far too premature to judge this crisis over," Mr Summers said. "I would say the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11."
Acer said it would pay $1.90 per Gateway share, representing a premium of 57 percent over Gateway's last closing price.
Sales of existing homes dropped for a fifth straight month in July, falling to the slowest pace in nearly five years, while home prices fell for a record 12th consecutive month. The National Association of Realtors reported that sales of existing homes dipped by 0.2 percent last month to a seasonally adjusted annual rate of 5.75 million units.The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined compared with a year ago, an all-time high. The supply of homes for sale at the end of the month climbed 5.1 percent to 4.59 million. At the current sales pace, that represented 9.6 months' worth, up from 9.1 months' worth at the end of the prior month. The inventory of single-family homes represented a 9.2 months' supply, the most since October 1991.
Lyle Gramley, a former Fed governor and now senior economic adviser to the Stanford Group Co. in Washington:``The economist who has done the seminal work on the impact of credit crunches on the economy is named Ben S. Bernanke. He's well aware of the fact that this situation could pose serious downside risks for the U.S. economy. His views are the ones that are going to ultimately prevail.''
Hilaire Belloc: “Statistics are the triumph of the quantitative method, and the quantitative method is the victory of sterility and death”
Southwest is offering three round-trip, non-stop flights a day between San Francisco and Chicago's Midway Airport, eight non-stop daily flights to San Diego and seven daily non-stop flights to Las Vegas. They had stopped flying from SF in 2001.
European Central Bank President Jean- Claude Trichet stepped back from his earlier signal that interest rates will be increased next week, saying policy makers plan to wait before deciding whether financial market turbulence is hurting economic growth.
The collapse of the subprime home mortgage market is infecting the U.S. auto industry. Car and truck buyers, especially those with lower credit scores, often are finding it harder to get financing. Vehicle-loan delinquencies are rising among higher-risk customers. And as budget-squeezed consumers put off vehicle purchases, industry forecasters are cutting their sales predictions for 2007.
Iran's envoy to Beijing, Javad Mansouri, says the volume of trade exchange between Iran and China is to reach 18 billion dollars in 2007, which is a rise of about twenty percent.
Gold for December delivery fell $1.30 to close at $676.20 an ounce on the New York Mercantile Exchange. Lead, aluminum, and copper were standout winners on Monday. According to Bloomberg, refined-copper imports in China, the world's biggest consumer of the metal, jumped 65 percent last month and have more than doubled in the January-through-July period. The country has bought more of the metal in the past seven months than in the whole of 2006.
China, the world's biggest aluminum producer and consumer, is likely to go back to being a net importer of the metal in a few years, despite its surging production, a senior industry official said Monday. "(To shift back to being a net importer) is entirely possible. It will probably come after 2010," Pan Jiazhu, secretary general of China Nonferrous Metals Industry Association, told Dow Jones Newswires in an interview.
Crude oil for October delivery rose 88 cents to close at $71.97 a barrel on the New York Mercantile Exchange, marking the contract's highest closing level since August 15. September reformulated gasoline rose 5.79 cents, or nearly 3%, to close at $2.0393 a gallon. ``Gasoline is very tight in the harbor,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``Traders believe the strength in September gasoline will spill over into the October contract.'' Natural gas closed off the day's low but still declined 16 cents to $5.37.
The yen snapped a three-day decline against the dollar and euro as traders pared riskier investments funded by loans in Japan.
Brett Steenbarger:"Recently, the gap in yields between 3 month Treasury bills and 3 month commercial paper widened significantly... The resulting run for the safety of T-bills depressed their yields, creating a gap last week of 1.92%. To put that into perspective, I went back to 1980 (N = 1444 trading weeks) and found that this was the widest gap during that time. Indeed, the second widest gap was 1.43%, registered during the market panic in October, 1987. The median gap since 1980 has been 1.09%."
Justice can arrive late. But better late than never. Alberto Gonzalez finally resigned.
Yahoo announced two real-time communication features that are the first of their kind from a leading Web mail service. These include the ability to send free text messages from Yahoo! Mail to mobile phone numbers in the US, Canada, India, and the Philippines, and the ability to send instant messages (IM) from Yahoo! Mail to members of the world's largest combined IM community, including users of Yahoo! Messenger and Windows Live® Messenger(2).
Home Depot's board agreed to sell Home Depot Supply for $8.5 billion to Bain Capital, Carlyle Group and Clayton, Dubilier & Rice, about 18% less than the price hammered out in June. In addition, Home Depot itself will hold about 12.5% of the unit's equity and guarantee some of the debt issued by the banks to finance the acquisition. Basically, it cost about $8+ billion to buy the components of the Supply division. The only ones to get rich on this will be lawyers and possibly the private equity guys and possibly the investment bankers putting the debt package together. This is, in my view, a lousy deal for the shareholders.
The Home Depot has launched its bid to sell to the world's most populous nation.
At a ceremony Sunday in Beijing that included drummers and dragon dancers — a traditional Chinese symbol for luck — Annette Verschuren, Home Depot's president for Asia and Canada, called the company's investment in 12 stores a "historic milestone" for the world's largest home improvement retailer.
U.S. Steel Corp is to acquire Stelco Inc for about $1.1 billion to strengthen its position as a supplier of flat-rolled steel products in North America, the companies said. U.S. Steel will acquire Stelco for C$38.50 per share, amounting to about $1.1 billion, based on about 30 million fully diluted shares, according to the companies.
Nasdaq may sell its stake in the London Stock Exchange to Borse Dubai and make a joint bid with the Gulf exchange for Nordic exchange owner OMX , The Daily Telegraph said on Monday.
Kazakhstan on Monday called a three-month halt to work at the giant Kashagan oilfield, claiming that a consortium led by Italy's ENI had broken environmental rules at the project and evaded customs duties on imported equipment.
Bad credit has supplanted terrorism as the gravest immediate risk threatening the economy, a key national research group reported Monday.
Borrowers' withering ability to pay their bills and the subsequent fallout in the credit markets this summer topped the list of short-term risks on peoples' minds, according to a survey of 258 members conducted by the National Association of Business Economics.
Indian companies that process U.S. mortgages are reporting fewer work orders and diminishing revenue because of the subprime loan fallout overseas. Several companies have moved employees once assigned to mortgage documentation and related services to other areas. There is a fear of layoffs should the crisis in the United States continue.
John Hussman: " Indeed, there is no evidence that historically reliable valuation measures have lost their validity. Though the stock market has maintained relatively high multiples since the late 1990's, those multiples have thus far been associated with poor extended returns. Specifically, based on the most recent, reasonably long-term period available, the S&P 500 has (predictably) lagged Treasury bills for not just seven years, but now more than eight-and-a-half years. Investors will place themselves in quite a bit of danger if they believe that the “echo bubble” from the 2002 lows is some sort of new era for market valuations."
In the Bay Area, home sales volume has fallen to the lowest level in 12 years. Although prices in certain higher-end communities are holding steady, they are decreasing in neighborhoods with a large number of new or entry-level homes. Houses are lingering on the market much longer.
Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany."It would be far too premature to judge this crisis over," Mr Summers said. "I would say the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11."
Acer said it would pay $1.90 per Gateway share, representing a premium of 57 percent over Gateway's last closing price.
Sales of existing homes dropped for a fifth straight month in July, falling to the slowest pace in nearly five years, while home prices fell for a record 12th consecutive month. The National Association of Realtors reported that sales of existing homes dipped by 0.2 percent last month to a seasonally adjusted annual rate of 5.75 million units.The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined compared with a year ago, an all-time high. The supply of homes for sale at the end of the month climbed 5.1 percent to 4.59 million. At the current sales pace, that represented 9.6 months' worth, up from 9.1 months' worth at the end of the prior month. The inventory of single-family homes represented a 9.2 months' supply, the most since October 1991.
Lyle Gramley, a former Fed governor and now senior economic adviser to the Stanford Group Co. in Washington:``The economist who has done the seminal work on the impact of credit crunches on the economy is named Ben S. Bernanke. He's well aware of the fact that this situation could pose serious downside risks for the U.S. economy. His views are the ones that are going to ultimately prevail.''
Hilaire Belloc: “Statistics are the triumph of the quantitative method, and the quantitative method is the victory of sterility and death”
Southwest is offering three round-trip, non-stop flights a day between San Francisco and Chicago's Midway Airport, eight non-stop daily flights to San Diego and seven daily non-stop flights to Las Vegas. They had stopped flying from SF in 2001.
European Central Bank President Jean- Claude Trichet stepped back from his earlier signal that interest rates will be increased next week, saying policy makers plan to wait before deciding whether financial market turbulence is hurting economic growth.
The collapse of the subprime home mortgage market is infecting the U.S. auto industry. Car and truck buyers, especially those with lower credit scores, often are finding it harder to get financing. Vehicle-loan delinquencies are rising among higher-risk customers. And as budget-squeezed consumers put off vehicle purchases, industry forecasters are cutting their sales predictions for 2007.
Iran's envoy to Beijing, Javad Mansouri, says the volume of trade exchange between Iran and China is to reach 18 billion dollars in 2007, which is a rise of about twenty percent.
Gold for December delivery fell $1.30 to close at $676.20 an ounce on the New York Mercantile Exchange. Lead, aluminum, and copper were standout winners on Monday. According to Bloomberg, refined-copper imports in China, the world's biggest consumer of the metal, jumped 65 percent last month and have more than doubled in the January-through-July period. The country has bought more of the metal in the past seven months than in the whole of 2006.
China, the world's biggest aluminum producer and consumer, is likely to go back to being a net importer of the metal in a few years, despite its surging production, a senior industry official said Monday. "(To shift back to being a net importer) is entirely possible. It will probably come after 2010," Pan Jiazhu, secretary general of China Nonferrous Metals Industry Association, told Dow Jones Newswires in an interview.
Crude oil for October delivery rose 88 cents to close at $71.97 a barrel on the New York Mercantile Exchange, marking the contract's highest closing level since August 15. September reformulated gasoline rose 5.79 cents, or nearly 3%, to close at $2.0393 a gallon. ``Gasoline is very tight in the harbor,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``Traders believe the strength in September gasoline will spill over into the October contract.'' Natural gas closed off the day's low but still declined 16 cents to $5.37.
The yen snapped a three-day decline against the dollar and euro as traders pared riskier investments funded by loans in Japan.
Brett Steenbarger:"Recently, the gap in yields between 3 month Treasury bills and 3 month commercial paper widened significantly... The resulting run for the safety of T-bills depressed their yields, creating a gap last week of 1.92%. To put that into perspective, I went back to 1980 (N = 1444 trading weeks) and found that this was the widest gap during that time. Indeed, the second widest gap was 1.43%, registered during the market panic in October, 1987. The median gap since 1980 has been 1.09%."
Sunday, August 26, 2007
Numbers
8/27/07 Numbers
When you read numbers, it is imperative to know how they have been compiled. Take home sales from the Commerce Dept. Upbeat numbers were released on Friday.
How is that possible? Easy. The Commerce Department numbers count home sales when the contract is signed between the homeowner and the builder, and they do not capture cancellations. Many builders recently have reported high cancellation rates. Numbers, especially from the government, can lead to wrong conclusions. "Closings that are scheduled to take place are not taking place," says Marvin Moss, a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts.
In 2006, the number of new condominium units completed jumped 145% to 102,800, from 41,900 in 2003, according to the U.S. Census Bureau. Last year was the highest level since 1985, when 135,800 units were built. So far this year, 48,354 units have been built and another 72,000 are under construction, according to New York research firm Reis Inc.
The percentage of bank construction loans overall that are in default has risen to 2.3% in the second quarter of 2007 from 1.0% at the end of 2005 . "Condos are a significant share of defaults and delinquencies going on," says Matthew Anderson of Foresight Analytics, an Oakland, Calif., research firm. His analysis shows condo lending ballooned to $31.3 billion in 2006 from $8.4 billion in 2003. These figures don't include the large amounts flowing into condos from hedge funds and investment banks.
Consider actions taken in the so-called public interest (Ayn Rand would puke).
As Fortune Magazine noted, certain banking regulations in question effectively limit a bank's funding exposure to an affiliate to 10% of the bank's capital. But the Fed has allowed Citibank and Bank of America to blow through that level. Citigroup and Bank of America are able to lend up to $25 billion apiece under this exemption, according to the Fed. If Citibank used the full amount, "that represents about 30% of Citibank's total regulatory capital, which is no small exemption," says Charlie Peabody, banks analyst at Portales Partners. The Fed says that it made the exemption in the public interest, because it allows Citibank to get liquidity to the brokerage in "the most rapid and cost-effective manner possible." Using 30% of total regulatory capital for mortgages is prudent?
According to the WSJ, Sachsen LB, the second German bank to become embroiled in the credit-liquidity crunch, voted to sell itself to another German bank amid a souring investment in a London hedge fund also hurt by the fallout. The Eastern German state of Saxony's cabinet Sunday voted to sell Sachsen, the struggling state lender, to Landesbank Baden-Württemberg, another state-owned bank based in Stuttgart, a spokesman for the state cabinet said. The cabinet will call an extraordinary meeting to inform the state's parliament. The sale also requires the approval of Sachsen LB's other owners, set to meet later Sunday. The state of Saxony owns about 37% of Sachsen, with Sachsen-Finanzgruppe, which represents local savings banks and municipal authorities, holding the rest.
According to the SF Chronicle, in recent years, commercial real estate prices have been driven up by buyers such as Blackstone and Tishman, who were able to bid up prices as long as lenders of commercial mortgage-backed securities were offering low-rate, interest-only financing for as much as 95 percent of the purchase price. But in the future, if the only financing available is for interest and principal loans at 75 percent of the market value, with an interest rate a percentage point higher than before, the price that investors would be willing to pay for a building, given the same market conditions, could be 20 to 25 percent less.
Concerns over asset-backed paper has not affected government money funds. Their assets have grown by $118 billion to $589.5 billion over the past two weeks, according to iMoneyNet. By comparison, assets of prime money funds - a much larger category - have grown by only $3.7 billion to $1.7 trillion.
The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950. On an inflation-adjusted basis, the national median price — the level at which half of all homes are more expensive and half are less — is not likely to return to its 2007 peak for more than a decade, according to Moody’s Economy.com, a research firm. Global Insight expects a decline of 4 percent, or roughly 10 percent in inflation-adjusted terms, between the peak earlier this year and the projected low point in 2009. In California, prices are expected to decline 16 percent — or about 20 percent after taking inflation into account.
The Oil Drum: "To rebuild its environmental image in America, BP has refused to take up the increased pollution limits it has been offered in order to upgrade a refinery near Chicago. But unless there are unexpected technological breakthroughs, the $3.8bn plan will be scrapped, and a US refining capacity shortage will grow more acute."
Target Corp. reported its profit from credit cards rose 34 percent in the second quarter, although same-store sales rose by only 4.9 percent.
"The real problem lies in the basics: Median-earning families simply don't have enough money to pay the mortgage, buy health insurance, pay for transportation and day care and still put groceries on the table," said Elizabeth Warren, a Harvard law professor and author of "The Two-Income Trap." "Others can make it day to day, but when a child gets sick or the transmission falls out of the car or there's a cutback in overtime, their cushion is so small that they can't manage even the smallest mismatch between expenses and income.
"Families have been making up the shortfall with credit and someday, perhaps someday very soon, the credit music will stop."
Brett Steenbarger: "You can see clearly that new highs have consistently expanded during the recent market rally. Interestingly, going back to the start of 2004 (N = 908 trading days) when new highs have exceeded new lows by more than 20 issues (N = 30), the next ten days in SPY have averaged a loss of -.56% (14 up, 16 down). That is considerably weaker than the average 10 day gain in SPY for the remainder of the sample of .32%.
This suggests that, by the time a solid majority of issues are making new short-term highs, the buyers have generally gotten their business done and there has been no bullish edge in the near term."
Since their Aug. 16 intraday lows, the Dow is now up 7.4%, the S&P is up 5.3%, and the Nasdaq has risen 7.8%.
Singapore's state-owned Temasek Holdings has approached Nasdaq to buy its 30 percent stake in the London Stock Exchange , a newspaper reported on Sunday. The Sunday Times said in an unsourced report that Temasek had made the approach in recent days and the deal could lead to a full takeover of the LSE by the Singaporean investor.
Gen. Petraeus: "We will be in Iraq in some way for nine to 10 years."
Thomas Paine: "He who is the author of a war lets loose the whole contagion of hell and opens a vein that bleeds a nation to death."
"Funding sources have dried up for all loan products except for conforming loan product," explains Erik Hand, president of Bellevue,WA-based Response Mortgage. "Anything outside of those product types and your options are limited because there's no investor appetite for those loans anymore."
Caroline Baum: " When things get dicey, the lack of transparency contributes to risk aversion. At times like these, the formula is simple: Don't ask + don't tell = sell."
“Global financial markets need Japan’s interest rate to be returned to normal,” said Bank of Australia chief Glenn Stevens on August 17th. “It’s fundamentally a distortion to have Japan’s interest rates as low as they are. The sooner the Japanese interest rates are able to be normal again, the better from the point of view of the global-financial system,” he declared.
South Korean Finance Minister Kwon O-kyu: "The yen-carry trade and misalignment among major currencies are not good for the global economy."
Early Tuesday, there will be a total lunar eclipse, the second this year. It will be visible in North and South America, especially in the West. People in the Pacific islands, eastern Asia, Australia and New Zealand also will be able to view it if skies are clear.
Iran vowed on Sunday to use a new 2 000-pound "smart" bomb against its enemies and unveiled mass production of the new weapon, state television reported. "We will use these (bombs) against our enemies when the time comes," Defence Minister Mostafa Mohammad Najjar said on state television on Sunday.
Psychiatrist Justin Frank noted in a July 27 memorandum updating his book, "Bush on the Couch": "We are left with a president who cannot actually govern, because he is incapable of reasoned thought in coping with events outside his control, like those in the Middle East. "This makes it a monumental challenge — as urgent as it is difficult — not only to get him to stop the carnage in the Middle East, but also to prevent him from undertaking a new, perhaps even more disastrous adventure — like going to war with Iran, in order to embellish the image he so proudly created for himself after 9/11 as the commander in chief of "the first war of the 21st century.'"
James Madison: "All men having power ought to be mistrusted."
Robert Higgs of the Independent Institute: "The trillion-dollar defense budget is already here." Higgs calculated that U.S. military-related spending in 2006 was actually $934.9 billion if we figure in Homeland Security ($69.1bln), the Dept. of Energy, which oversees nuclear weapons ($16.6 bln) and the Dept. of Veterans Affairs ($69.8 bln), as well as other juicy pork chops. In May, the Democrat-controlled House and Senate approved almost $95 billion for the ongoing wars in Afghanistan and Iraq through September.
In a recent climate change report, Citigroup noted that every 1 billion gallons of additional ethanol production would require 28 billion cubic feet of natural gas to fire the ethanol distilleries.
Between 7/13 and 8/15, the short interest in Yahoo declined by 8.5 million shares.
Karl Marx: "The development of civilization and industry in general has always shown itself so active in the destruction of forests that everything that has been done for their conservation and production is completely insignificant in comparison."
When you read numbers, it is imperative to know how they have been compiled. Take home sales from the Commerce Dept. Upbeat numbers were released on Friday.
How is that possible? Easy. The Commerce Department numbers count home sales when the contract is signed between the homeowner and the builder, and they do not capture cancellations. Many builders recently have reported high cancellation rates. Numbers, especially from the government, can lead to wrong conclusions. "Closings that are scheduled to take place are not taking place," says Marvin Moss, a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts.
In 2006, the number of new condominium units completed jumped 145% to 102,800, from 41,900 in 2003, according to the U.S. Census Bureau. Last year was the highest level since 1985, when 135,800 units were built. So far this year, 48,354 units have been built and another 72,000 are under construction, according to New York research firm Reis Inc.
The percentage of bank construction loans overall that are in default has risen to 2.3% in the second quarter of 2007 from 1.0% at the end of 2005 . "Condos are a significant share of defaults and delinquencies going on," says Matthew Anderson of Foresight Analytics, an Oakland, Calif., research firm. His analysis shows condo lending ballooned to $31.3 billion in 2006 from $8.4 billion in 2003. These figures don't include the large amounts flowing into condos from hedge funds and investment banks.
Consider actions taken in the so-called public interest (Ayn Rand would puke).
As Fortune Magazine noted, certain banking regulations in question effectively limit a bank's funding exposure to an affiliate to 10% of the bank's capital. But the Fed has allowed Citibank and Bank of America to blow through that level. Citigroup and Bank of America are able to lend up to $25 billion apiece under this exemption, according to the Fed. If Citibank used the full amount, "that represents about 30% of Citibank's total regulatory capital, which is no small exemption," says Charlie Peabody, banks analyst at Portales Partners. The Fed says that it made the exemption in the public interest, because it allows Citibank to get liquidity to the brokerage in "the most rapid and cost-effective manner possible." Using 30% of total regulatory capital for mortgages is prudent?
According to the WSJ, Sachsen LB, the second German bank to become embroiled in the credit-liquidity crunch, voted to sell itself to another German bank amid a souring investment in a London hedge fund also hurt by the fallout. The Eastern German state of Saxony's cabinet Sunday voted to sell Sachsen, the struggling state lender, to Landesbank Baden-Württemberg, another state-owned bank based in Stuttgart, a spokesman for the state cabinet said. The cabinet will call an extraordinary meeting to inform the state's parliament. The sale also requires the approval of Sachsen LB's other owners, set to meet later Sunday. The state of Saxony owns about 37% of Sachsen, with Sachsen-Finanzgruppe, which represents local savings banks and municipal authorities, holding the rest.
According to the SF Chronicle, in recent years, commercial real estate prices have been driven up by buyers such as Blackstone and Tishman, who were able to bid up prices as long as lenders of commercial mortgage-backed securities were offering low-rate, interest-only financing for as much as 95 percent of the purchase price. But in the future, if the only financing available is for interest and principal loans at 75 percent of the market value, with an interest rate a percentage point higher than before, the price that investors would be willing to pay for a building, given the same market conditions, could be 20 to 25 percent less.
Concerns over asset-backed paper has not affected government money funds. Their assets have grown by $118 billion to $589.5 billion over the past two weeks, according to iMoneyNet. By comparison, assets of prime money funds - a much larger category - have grown by only $3.7 billion to $1.7 trillion.
The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950. On an inflation-adjusted basis, the national median price — the level at which half of all homes are more expensive and half are less — is not likely to return to its 2007 peak for more than a decade, according to Moody’s Economy.com, a research firm. Global Insight expects a decline of 4 percent, or roughly 10 percent in inflation-adjusted terms, between the peak earlier this year and the projected low point in 2009. In California, prices are expected to decline 16 percent — or about 20 percent after taking inflation into account.
The Oil Drum: "To rebuild its environmental image in America, BP has refused to take up the increased pollution limits it has been offered in order to upgrade a refinery near Chicago. But unless there are unexpected technological breakthroughs, the $3.8bn plan will be scrapped, and a US refining capacity shortage will grow more acute."
Target Corp. reported its profit from credit cards rose 34 percent in the second quarter, although same-store sales rose by only 4.9 percent.
"The real problem lies in the basics: Median-earning families simply don't have enough money to pay the mortgage, buy health insurance, pay for transportation and day care and still put groceries on the table," said Elizabeth Warren, a Harvard law professor and author of "The Two-Income Trap." "Others can make it day to day, but when a child gets sick or the transmission falls out of the car or there's a cutback in overtime, their cushion is so small that they can't manage even the smallest mismatch between expenses and income.
"Families have been making up the shortfall with credit and someday, perhaps someday very soon, the credit music will stop."
Brett Steenbarger: "You can see clearly that new highs have consistently expanded during the recent market rally. Interestingly, going back to the start of 2004 (N = 908 trading days) when new highs have exceeded new lows by more than 20 issues (N = 30), the next ten days in SPY have averaged a loss of -.56% (14 up, 16 down). That is considerably weaker than the average 10 day gain in SPY for the remainder of the sample of .32%.
This suggests that, by the time a solid majority of issues are making new short-term highs, the buyers have generally gotten their business done and there has been no bullish edge in the near term."
Since their Aug. 16 intraday lows, the Dow is now up 7.4%, the S&P is up 5.3%, and the Nasdaq has risen 7.8%.
Singapore's state-owned Temasek Holdings has approached Nasdaq to buy its 30 percent stake in the London Stock Exchange , a newspaper reported on Sunday. The Sunday Times said in an unsourced report that Temasek had made the approach in recent days and the deal could lead to a full takeover of the LSE by the Singaporean investor.
Gen. Petraeus: "We will be in Iraq in some way for nine to 10 years."
Thomas Paine: "He who is the author of a war lets loose the whole contagion of hell and opens a vein that bleeds a nation to death."
"Funding sources have dried up for all loan products except for conforming loan product," explains Erik Hand, president of Bellevue,WA-based Response Mortgage. "Anything outside of those product types and your options are limited because there's no investor appetite for those loans anymore."
Caroline Baum: " When things get dicey, the lack of transparency contributes to risk aversion. At times like these, the formula is simple: Don't ask + don't tell = sell."
“Global financial markets need Japan’s interest rate to be returned to normal,” said Bank of Australia chief Glenn Stevens on August 17th. “It’s fundamentally a distortion to have Japan’s interest rates as low as they are. The sooner the Japanese interest rates are able to be normal again, the better from the point of view of the global-financial system,” he declared.
South Korean Finance Minister Kwon O-kyu: "The yen-carry trade and misalignment among major currencies are not good for the global economy."
Early Tuesday, there will be a total lunar eclipse, the second this year. It will be visible in North and South America, especially in the West. People in the Pacific islands, eastern Asia, Australia and New Zealand also will be able to view it if skies are clear.
Iran vowed on Sunday to use a new 2 000-pound "smart" bomb against its enemies and unveiled mass production of the new weapon, state television reported. "We will use these (bombs) against our enemies when the time comes," Defence Minister Mostafa Mohammad Najjar said on state television on Sunday.
Psychiatrist Justin Frank noted in a July 27 memorandum updating his book, "Bush on the Couch": "We are left with a president who cannot actually govern, because he is incapable of reasoned thought in coping with events outside his control, like those in the Middle East. "This makes it a monumental challenge — as urgent as it is difficult — not only to get him to stop the carnage in the Middle East, but also to prevent him from undertaking a new, perhaps even more disastrous adventure — like going to war with Iran, in order to embellish the image he so proudly created for himself after 9/11 as the commander in chief of "the first war of the 21st century.'"
James Madison: "All men having power ought to be mistrusted."
Robert Higgs of the Independent Institute: "The trillion-dollar defense budget is already here." Higgs calculated that U.S. military-related spending in 2006 was actually $934.9 billion if we figure in Homeland Security ($69.1bln), the Dept. of Energy, which oversees nuclear weapons ($16.6 bln) and the Dept. of Veterans Affairs ($69.8 bln), as well as other juicy pork chops. In May, the Democrat-controlled House and Senate approved almost $95 billion for the ongoing wars in Afghanistan and Iraq through September.
In a recent climate change report, Citigroup noted that every 1 billion gallons of additional ethanol production would require 28 billion cubic feet of natural gas to fire the ethanol distilleries.
Between 7/13 and 8/15, the short interest in Yahoo declined by 8.5 million shares.
Karl Marx: "The development of civilization and industry in general has always shown itself so active in the destruction of forests that everything that has been done for their conservation and production is completely insignificant in comparison."
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