9/30/07 You Be The Judge
The Office of Thrift Supervision has closed Alpharetta, Georgia-based NetBank Inc., and named the FDIC receiver of its assets. "The failed bank was an Internet bank and did not have any physical branches," the FDIC said in a statement posted online Friday, "Depositors of NetBank will automatically become depositors of ING Bank."
Overnight lending rates in Russia climbed to 10%, the highest since mid-2005. The Russian Standard Bank said last week it was suspending the issuance of cash loans and mortgages while tightening requirements for credit card and point-of-sale lending, though it denied any big cutback in overall lending.
The 19-commodity Reuters/Jefferies CRB Index was up 8.7% this month, the most since July 1975. The Goldman Sachs Commodity Index is up 25% in 2007.
The Chicago Tribune: In an atmosphere of price pressures, reminiscent of 1978, the seemingly riskiest move the Federal Reserve could make would be to further reduce interest rates. But numerous economists believe the central bank will do exactly that at its next scheduled meeting.
Fed funds futures now imply an 84% chance of a 25-basis-point fed funds rate cut at the October meeting.
Charter rates for tankers have more than doubled in the past year.
The Financial Times: Mr Gates said the Pentagon needed another $42bn for the conflicts on top of the $147bn outlined earlier this year. The request would bring total US military spending for fiscal 2008, which begins in October, to $671bn. If approved, the budget would equate to spending almost $21,300 a second and would rank the Pentagon ahead of the Dutch economy, the 16th largest in the world, in terms of size.
The California Association of Realtors reported that unsold Inventory Index for existing, single-family detached homes in August 2007 was 11.8 months, compared with 5.9 months (revised) for the same period a year ago." C.A.R.'s unsold inventory stood at 2.6 months in August 2005.
Defaults on privately insured U.S. mortgages climbed 30% last month from year-earlier levels.
David Tice and Doug Noland: "A classic real estate bust will feed on itself, ensuring further havoc throughout mortgage finance and imperiling the over-borrowed consumer sector...There are now literally trillions - and growing - of suspect debt instruments and many multiples more in problematic derivative instruments. We suspect that the proliferation of sophisticated leveraged strategies created considerable demand for high-yielding mortgage products, and now these vehicles are trapped with losses and illiquidity. Worse yet, Credit insurance and guarantees in the Trillions have been written and, as the downside of the Credit cycle gains momentum, we expect this exposure to become a major systemic issue. In short, we see Credit “insurance” as a bull market phenomenon that will not stand the test of the impending Credit and economic downturns. In too many cases, Credit guarantees, “insurance,” and myriad other exposures have been “written” by thinly-capitalized speculators and financial operators. They will have little wherewithal in the event of a serious Credit event. This is a major evolving issue. We fear the entire Wall Street risk intermediation mechanism is at considerable risk...Likely, liquidity issues and faltering asset markets will instigate problematic de-leveraging upon highly over-leveraged Credit and economic systems. We expect significant unfolding tumult in the securitization, derivatives, and risk “insurance” marketplaces. We view ballooning Credit insurance and derivatives markets as a bull market phenomenon that won’t withstand the test of the downside of the Credit Cycle. We believe the stock market has of late benefited from a combination of complacency, misperceptions with respect to Fed capabilities, and its newfound status, by default, as favored asset class. We see US equities, in particular, highly susceptible to unfolding detrimental financial and economic forces. We expect the economy to soon succumb to recession. California and other inflated real estate Bubble markets are now poised to suffer severe price declines – residential and commercial. And we expect contemporary “Wall Street Finance” to face a crisis of confidence – to suffer on all fronts – liquidity, Credit losses and regulatory. Our faltering currency is, as well, a major issue."
Michael Ball, a professor of property at Reading University, England, and an adviser to the UK government, said holiday homes in many parts of Europe were exposed to a correction.
The Cubs are back in the post season for the first time since 2003.
According to the LA Times, the federal government's border fencing effort has accelerated rapidly in recent weeks with barriers rising in towns from California to New Mexico and workers completing the longest stretch of continuous fencing on the U.S.-Mexico frontier. The Department of Homeland Security reached its goal of completing 70 miles of new fencing by the end of this month, nearly doubling the length of barriers on the border to about 145 miles.
Countrywide's CEO Mozilo initiated a stock selling plan Oct. 27, 2006 that called for selling 350,000 shares a month. That replaced a previous trading plan that had expired in May. The plan was filed three days after Countrywide reported that its earnings from mortgage banking had fallen 40% in the third quarter ended Sept. 30. On Dec. 12, Mozilo filed a new stock trading plan that allowed Mozilo to sell an additional 115,000 shares each month. On Feb. 2, Mozilo revised the trading plan he had adopted less than two months earlier, doubling the number of additional shares Mozilo was authorized to sell under his second plan to 230,000 a month. Between the two plans now in effect, Mozilo could sell 580,000 shares each month. The plan was filed the same day Countrywide shares closed at an all-time high of $45.03. I don't have to tell you where the stock is presently.
"The chances are we're going to have more snow than normal, but there's no guarantee," said Clifford Mass, a professor at the UW's Department of Atmospheric Sciences. "We do get significantly more snow in La Niña years."
Due to droughts and poor crop harvests, inflation is becoming a front page problem in China. It would not be surprising to see inflation numbers for September to exceed 5.5%.
With reduced volatility and volume, the equity market is getting more difficult to read. Is it the calm before the storm or is this new environment the current norm for the near term? It reminds me of an individual walking around on sedatives and as lively and clear thinking as a zombie.
Jesse Toprak, chief economist for the auto information site Edmunds.com, predicts Honda Motor Co. will be the only automaker to report an increase in sales for the month of September, helped by the arrival of the new 2008 Honda Accord. Automakers are scheduled to report September sales Tuesday.
"No one is immune to this general weakness we have in the marketplace," Toprak said.
ALMOST 200 Alcoa employees will lose their jobs when the US aluminium giant shuts down its foil operations under the weight of offshore competition and the high Australian dollar. In all, Alcoa will shed 194 jobs, the bulk of which will be lost when it shuts its aluminium foil and coil plant at its Yennora site in western Sydney. The knock-on affect will force Alcoa to cut back aluminium ingot production at its Point Henry metal-making operations in Geelong, with the loss of 56 jobs.
Stocks had their best September since 1997. At the same time, the dollar fell 5.1% against the Euro and 6.7% against the yen. In sum, foreign investors took it on the chin. The buying power for Americans continues to dwindle. That combined with inflation at the pump and at the food markets creates a cash flow nightmare on Main Street.
Peter Schiff: "Many economists acknowledge that a falling dollar will put upward pressure on import prices, but few consider its effects on domestically produced goods. For one thing, a weak dollar by definition raises the prices of globally traded, dollar-denominated commodities, such as oil, causing raw material costs for domestic manufacturers to rise. Also, as a weaker dollar causes foreigners to demand higher interest rates on the money they lend us, domestic capital cost will rise as well."
Saturday, September 29, 2007
Friday, September 28, 2007
The R Word
9/29/07 The R Word
Greenspan said Friday that the chances of a U.S. recession have increased as the housing market slump has hit consumer spending power, though he added the odds "are still less than 50-50."
His comments followed an increasingly bearish assessment of the global economy by Goldman Sachs, whose chief economist Jim O'Neill now puts the chances of a Japanese recession at nearly two-in-three.
This is irresponsible. The Senate voted 53-42 on Thursday to raise the federal debt limit by $850 billion, putting the ceiling at $9.815 trillion.The move marks the fifth increase in the debt limit since President Bush took office. Who is going to buy this $850 billion with the dollar plunging? Not China. Not India. Not the other Mideast countries. Not Russia. You market a product that is no longer a safe haven. You can't have a safe haven when the currency depreciation wipes out the interest. The dollar has fallen against all but two of the 16 most- active currencies this quarter.
Epictetus: “What concerns me is not the way things are, but rather the way people think things are.”
According to the WSJ, 3Com will announce a sale of itself to Bain Capital and Huawei for north of $2 billion, or more than $5 a share. 3Com says shareholders to get $5.30/share in cash.
In early Friday trading, gold sold at the highest price since 1980. This is one more result of the lower dollar and the Fed's reduction in interest rates. Why lower rates when your hand is out there begging for funds from foreigners to offset the nation's deficits? The New York Board of Trade's dollar index fell to 77.66, the weakest since the index began in 1973. The Fed's trade- weighted index comparing the dollar with major currencies fell on Sept. 25 to the lowest since its inception in 1971.
Cicero: “The enemy is within the gates; it is with our own luxury, our own folly, our own criminality that we have to contend."
The US economy faces a 40 to 45 per cent risk of recession induced by the housing market downturn, the chief executive of Freddie Mac warned on Thursday as data showed sales of new homes hit a seven-year low in August.
This year the prices of Illinois corn and soybeans are up 40% and 75%, respectively, from a year ago. Kansas wheat is up 70% or more. In U.S. cities last month, the average retail price of a pound loaf of whole-wheat bread was up 24% from a year ago, according to the Bureau of Labor Statistics. Whole milk hit $3.807 a gallon, up 26%. These are the fastest-rising food prices in 17 years. The average American family spends 10% of its annual income on food. With these huge price increases, that percentage is a good deal higher and squeezing the cash flow on Main Street.
TheOilDrum: "EIA data show a small decline in world net oil exports from 2005 to 2006, led by a 3.3% per year decline rate in net exports from the top three net oil exporters--Saudi Arabia, Russia and Norway. Furthermore, recent data suggest that the net export decline is continuing, and probably accelerating."
The London interbank offered rate that banks charge each other for overnight loans in pounds rose 20 basis points to 6 percent today, according to the British Bankers' Association. The corresponding rate for dollars rose 21 basis points to 5.30 percent, and the euro rate climbed 6 basis points to 4.23 percent.``Coming up to quarter-end you would expect to see a small spike in Libor, but with the market so short on cash it's particularly vulnerable at the moment,'' said Oliver Mangan, chief bond economist in Dublin at AIB Capital Markets, a unit of Ireland's second-biggest bank. ``People are reluctant to lend cash while banks are scrambling to hoard as much of it as possible. This is keeping rates elevated.''
On Friday, the European Union's statistical agency estimated that inflation in the euro zone would hit 2.1 percent in September — jumping from 1.7 percent in August, and putting inflation above the ECB's guideline of just under 2 percent.
Don't you love our gov't figures? Boosted by good deals on the auto lots and steady prices for consumer goods, U.S. real consumer spending increased 0.6% in August, the fastest growth in two years, the Commerce Department reported Friday. Inflation-adjusted spending on durable goods rose 2.8%, the biggest increase in two years. Consumer prices fell 0.1% on the month, the government said. Prices for durable goods fell 0.4%, while prices of nondurable goods fell 0.5%. Prices for services rose 0.2%.You want me to believe this stuff? When was the last time you bought something when the price declined? When was the last time your spending increased--other than paying more for gas and food and education and health care? To get a real laugh here are more gov't numbers on inflation: "Core consumer price inflation, which excludes food and energy prices, rose 0.1% in August, bringing core inflation over the past year down to 1.8%, the lowest since early 2004." Now for the crying:"Personal incomes increased 0.3% in August, the slowest growth since April, held back by weak employment and wage growth." In other words, your spending increased while your income barely rose and the value of your home crumbled?
George Ure: "You can tell with a half a second of thought, that a 20% collapse of home prices in many areas over the past two years makes an increase in personal savings impossible - falling home equity (most folks biggest savings account) ensures that. The statistical trick shot is this: You only count underlying change in house values when its convenient - you don't want a 20% decline in home equity showing up because that would 'color' reports of prosperity! See? I'm a gloomster for even mentioning it. I'm so ashamed.
Home equity really is savings, in that with a refi you can pull money out. But rather than admit to the decline in home equity, (which would make DPI more reflective of changes in personal net worth) seems the stats (at least as I read them) only look at home equity when a refi is done, and THAT was only changed when refi's dried up. How convenient!"
Bear Stearns sold $2.5 billion of 10-year global notes as the sole manager of the deal. The 6.40 percent notes, due Oct. 2, 2017, were priced to yield 1.875 percentage points more than U.S. Treasuries. Would you buy these notes? You can get a bigger yield on NZ gov't bonds with less risk.
Paccar of Canada Ltd. is poised to lay off 250 workers this fall, despite being offered more than $1 million in public funds last year to create new jobs at its Ste. Thérèse plant.The big-rig manufacturer, which assembles Peterbilt and Kenworth trucks, is letting half of its afternoon shift workers go on Oct. 12. The other half will join the company's morning shift, leaving the factory with a workforce of about 700.
In early Friday trading, the dollar index fell 0.4%, with the euro rising to 0.3% to a fresh record of $1.4207.
Chinese stocks surged to a record high close Friday.
It's hard to believe the VIX has dropped 20 points to 17. I guess contentment not volatility is king.
Wheat futures headed for the biggest two-month gain in 34 years after adverse weather in Australia, Canada and Ukraine crimped harvests. Prices have risen 59 percent since July 1, the biggest two- month gain since an 85 percent advance to Aug. 31, 1973, prompting Ukraine and Russia to consider export curbs. Global reserves are headed for a 26-year low as a drought in Australia, initially forecast by the U.S. to be the world's second-biggest wheat exporter, threatens the crop for a second year in a row.
The bottom of the housing market may not be reached until the second half of 2008, or later, said Dennis Lockhart, the new president of the Atlanta Federal Reserve Bank on Friday.
Robert McHugh: "Weighing heavy against this recent rally is a Bearish Divergence between the 10 day average Advance/Decline Line and prices in both the NASDAQ 100 and the S&P 500. Such divergences should not be taken lightly. They inevitably lead to declines as there are fewer and fewer stocks advancing, index prices being lifted by a narrowing breadth of stocks. In other words, the underlying strength of the market is weakening. The key point tonight is that volume is drying up on this rally - Bearish. We would not be surprised to see another Hindenburg Omen observation over the next week or two, perhaps several observations, as conditions are ripening for another signal. What is the big deal with Hindenburg Omens? It means underlying weakness is occurring in the market, to a severe degree, a forerunner to significant declines. The recent price strength in the NASDAQ 100, which exceeded its July highs this week, is not being confirmed by breadth. In other words, a few issues are doing the heavy lifting, AAPL in particular, along with GOOG, GRMN, RIMM, and WYNN doing the heavy lifting. Not much to brag about from the other 90 some stocks."
Spending on private nonresidential construction projects rose 2.3% in August, the biggest gain since February. Nonresidential outlays are up 15.2% in the past year.
Jim Shepherd, editor of the Shepherd Investment Strategist newsletter, says that the economy is "going into a significant recessionary period" and recommends that investors head for the safety of Treasury bonds now to avoid the pain.
“The housing market is just horrible, and it’s going to get worse,” said Stuart Hoffman, chief economist at PNC Financial Services.
Actual sales may be lower because the figures are based on contract signings, not closings.
Crude for November delivery dropped $1.22, or 1.5%, to end at $81.66 a barrel on the New York Mercantile Exchange. The contract gained 4 cents on the week from last Friday's closing level of $81.62.
Gold futures rallied to a 27-year high on Friday. Gold for December delivery surged $10.10, or 1.5%, to end at $750 an ounce on the New York Mercantile Exchange.
Marcus Aurelius: “The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.”
Greenspan said Friday that the chances of a U.S. recession have increased as the housing market slump has hit consumer spending power, though he added the odds "are still less than 50-50."
His comments followed an increasingly bearish assessment of the global economy by Goldman Sachs, whose chief economist Jim O'Neill now puts the chances of a Japanese recession at nearly two-in-three.
This is irresponsible. The Senate voted 53-42 on Thursday to raise the federal debt limit by $850 billion, putting the ceiling at $9.815 trillion.The move marks the fifth increase in the debt limit since President Bush took office. Who is going to buy this $850 billion with the dollar plunging? Not China. Not India. Not the other Mideast countries. Not Russia. You market a product that is no longer a safe haven. You can't have a safe haven when the currency depreciation wipes out the interest. The dollar has fallen against all but two of the 16 most- active currencies this quarter.
Epictetus: “What concerns me is not the way things are, but rather the way people think things are.”
According to the WSJ, 3Com will announce a sale of itself to Bain Capital and Huawei for north of $2 billion, or more than $5 a share. 3Com says shareholders to get $5.30/share in cash.
In early Friday trading, gold sold at the highest price since 1980. This is one more result of the lower dollar and the Fed's reduction in interest rates. Why lower rates when your hand is out there begging for funds from foreigners to offset the nation's deficits? The New York Board of Trade's dollar index fell to 77.66, the weakest since the index began in 1973. The Fed's trade- weighted index comparing the dollar with major currencies fell on Sept. 25 to the lowest since its inception in 1971.
Cicero: “The enemy is within the gates; it is with our own luxury, our own folly, our own criminality that we have to contend."
The US economy faces a 40 to 45 per cent risk of recession induced by the housing market downturn, the chief executive of Freddie Mac warned on Thursday as data showed sales of new homes hit a seven-year low in August.
This year the prices of Illinois corn and soybeans are up 40% and 75%, respectively, from a year ago. Kansas wheat is up 70% or more. In U.S. cities last month, the average retail price of a pound loaf of whole-wheat bread was up 24% from a year ago, according to the Bureau of Labor Statistics. Whole milk hit $3.807 a gallon, up 26%. These are the fastest-rising food prices in 17 years. The average American family spends 10% of its annual income on food. With these huge price increases, that percentage is a good deal higher and squeezing the cash flow on Main Street.
TheOilDrum: "EIA data show a small decline in world net oil exports from 2005 to 2006, led by a 3.3% per year decline rate in net exports from the top three net oil exporters--Saudi Arabia, Russia and Norway. Furthermore, recent data suggest that the net export decline is continuing, and probably accelerating."
The London interbank offered rate that banks charge each other for overnight loans in pounds rose 20 basis points to 6 percent today, according to the British Bankers' Association. The corresponding rate for dollars rose 21 basis points to 5.30 percent, and the euro rate climbed 6 basis points to 4.23 percent.``Coming up to quarter-end you would expect to see a small spike in Libor, but with the market so short on cash it's particularly vulnerable at the moment,'' said Oliver Mangan, chief bond economist in Dublin at AIB Capital Markets, a unit of Ireland's second-biggest bank. ``People are reluctant to lend cash while banks are scrambling to hoard as much of it as possible. This is keeping rates elevated.''
On Friday, the European Union's statistical agency estimated that inflation in the euro zone would hit 2.1 percent in September — jumping from 1.7 percent in August, and putting inflation above the ECB's guideline of just under 2 percent.
Don't you love our gov't figures? Boosted by good deals on the auto lots and steady prices for consumer goods, U.S. real consumer spending increased 0.6% in August, the fastest growth in two years, the Commerce Department reported Friday. Inflation-adjusted spending on durable goods rose 2.8%, the biggest increase in two years. Consumer prices fell 0.1% on the month, the government said. Prices for durable goods fell 0.4%, while prices of nondurable goods fell 0.5%. Prices for services rose 0.2%.You want me to believe this stuff? When was the last time you bought something when the price declined? When was the last time your spending increased--other than paying more for gas and food and education and health care? To get a real laugh here are more gov't numbers on inflation: "Core consumer price inflation, which excludes food and energy prices, rose 0.1% in August, bringing core inflation over the past year down to 1.8%, the lowest since early 2004." Now for the crying:"Personal incomes increased 0.3% in August, the slowest growth since April, held back by weak employment and wage growth." In other words, your spending increased while your income barely rose and the value of your home crumbled?
George Ure: "You can tell with a half a second of thought, that a 20% collapse of home prices in many areas over the past two years makes an increase in personal savings impossible - falling home equity (most folks biggest savings account) ensures that. The statistical trick shot is this: You only count underlying change in house values when its convenient - you don't want a 20% decline in home equity showing up because that would 'color' reports of prosperity! See? I'm a gloomster for even mentioning it. I'm so ashamed.
Home equity really is savings, in that with a refi you can pull money out. But rather than admit to the decline in home equity, (which would make DPI more reflective of changes in personal net worth) seems the stats (at least as I read them) only look at home equity when a refi is done, and THAT was only changed when refi's dried up. How convenient!"
Bear Stearns sold $2.5 billion of 10-year global notes as the sole manager of the deal. The 6.40 percent notes, due Oct. 2, 2017, were priced to yield 1.875 percentage points more than U.S. Treasuries. Would you buy these notes? You can get a bigger yield on NZ gov't bonds with less risk.
Paccar of Canada Ltd. is poised to lay off 250 workers this fall, despite being offered more than $1 million in public funds last year to create new jobs at its Ste. Thérèse plant.The big-rig manufacturer, which assembles Peterbilt and Kenworth trucks, is letting half of its afternoon shift workers go on Oct. 12. The other half will join the company's morning shift, leaving the factory with a workforce of about 700.
In early Friday trading, the dollar index fell 0.4%, with the euro rising to 0.3% to a fresh record of $1.4207.
Chinese stocks surged to a record high close Friday.
It's hard to believe the VIX has dropped 20 points to 17. I guess contentment not volatility is king.
Wheat futures headed for the biggest two-month gain in 34 years after adverse weather in Australia, Canada and Ukraine crimped harvests. Prices have risen 59 percent since July 1, the biggest two- month gain since an 85 percent advance to Aug. 31, 1973, prompting Ukraine and Russia to consider export curbs. Global reserves are headed for a 26-year low as a drought in Australia, initially forecast by the U.S. to be the world's second-biggest wheat exporter, threatens the crop for a second year in a row.
The bottom of the housing market may not be reached until the second half of 2008, or later, said Dennis Lockhart, the new president of the Atlanta Federal Reserve Bank on Friday.
Robert McHugh: "Weighing heavy against this recent rally is a Bearish Divergence between the 10 day average Advance/Decline Line and prices in both the NASDAQ 100 and the S&P 500. Such divergences should not be taken lightly. They inevitably lead to declines as there are fewer and fewer stocks advancing, index prices being lifted by a narrowing breadth of stocks. In other words, the underlying strength of the market is weakening. The key point tonight is that volume is drying up on this rally - Bearish. We would not be surprised to see another Hindenburg Omen observation over the next week or two, perhaps several observations, as conditions are ripening for another signal. What is the big deal with Hindenburg Omens? It means underlying weakness is occurring in the market, to a severe degree, a forerunner to significant declines. The recent price strength in the NASDAQ 100, which exceeded its July highs this week, is not being confirmed by breadth. In other words, a few issues are doing the heavy lifting, AAPL in particular, along with GOOG, GRMN, RIMM, and WYNN doing the heavy lifting. Not much to brag about from the other 90 some stocks."
Spending on private nonresidential construction projects rose 2.3% in August, the biggest gain since February. Nonresidential outlays are up 15.2% in the past year.
Jim Shepherd, editor of the Shepherd Investment Strategist newsletter, says that the economy is "going into a significant recessionary period" and recommends that investors head for the safety of Treasury bonds now to avoid the pain.
“The housing market is just horrible, and it’s going to get worse,” said Stuart Hoffman, chief economist at PNC Financial Services.
Actual sales may be lower because the figures are based on contract signings, not closings.
Crude for November delivery dropped $1.22, or 1.5%, to end at $81.66 a barrel on the New York Mercantile Exchange. The contract gained 4 cents on the week from last Friday's closing level of $81.62.
Gold futures rallied to a 27-year high on Friday. Gold for December delivery surged $10.10, or 1.5%, to end at $750 an ounce on the New York Mercantile Exchange.
Marcus Aurelius: “The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.”
Thursday, September 27, 2007
Window Dressing
9/28/07 Window Dressing
Today is the last day of trading for the third quarter. That means window dressing. That means rumors, such as, Buffett and Bear Stearns. Who would pay a 33% premium over book value, and one that looks like a moving target? Not me.
The dollar fell to a new all-time low against the euro Thursday.
South Korean consumer confidence climbed to a five-year high in the third quarter, according to a survey released by the South Korean central bank Thursday. The Bank of Korea consumer survey index climbed to 112 in the third quarter, up from 108 in the preceding quarter, its highest level since the index recorded 119 in the third quarter of 2002, Dow Jones Newswires reported.
According to the WSJ, several bidding groups have expressed an interest in Wendy's.
The home building industry added 518,000 jobs from January 2003 to February 2006, when employment hit its peak, according to Moody's Economy.com, an economic consulting firm that is a unit of Moody's Corp. . Since the peak through the end of August, 142,500 have been lost, with the deepest layoffs occurring among construction workers.
According to Bloomberg, the European Central Bank lent the most money at its penalty rate in almost three years, suggesting at least one bank is still being shut out of credit markets.The ECB loaned 3.9 billion euros ($5.5 billion) at its marginal rate of 5 percent yesterday, the most since October 2004, the Frankfurt-based central bank said in a daily borrowing-requirement statement today. It didn't provide details of which bank or banks asked for the money.
Cia. Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd., the world's three largest iron-ore exporters, may increase prices by 30 percent next year as demand driven by steelmakers in China outpaces growth in supply.
Prices for benchmark shipments from Australia will rise to a record $66.40 a ton next year from $51.47 in 2007, according to the median forecast of eight analysts surveyed by Bloomberg. Sales may climb 11 percent this year as supplies gain 8 percent, Merrill Lynch & Co. estimates. Mining companies and customers begin annual contract talks next month for shipments from April.
Private equity funds devoted to investing in the Middle East and North Africa grew to $5.2 billion in 2006, from $316 million in 2004, according to Zawya Private Equity Monitor.
Henry To: "Should the Dow Industrials make another all-time high - preferably in the 14,200 to 14,500 area, and should this be accompanied by weak breadth and divergences among many market indices, then there is a chance that we will establish an initial 50% short position in our DJIA Timing System."
U.S. District Judge Ann Aiken ruled that the Patriot Act violates the Constitution because it "permits the executive branch of government to conduct surveillance and searches of American citizens without satisfying the probable cause requirements of the Fourth Amendment."
With 6mo treasury bills yielding more than 2 & 3 yr notes, interbank rates continuing to rise, and uneven breath in equities, I would be an aggressive seller of large cap stocks as well as the few parabolic techs, such as RIMM, going into Friday's close.
KB Home said total quarterly revenue fell 32% from a year earlier to $1.54 billion. Including the French discontinued operations, KB Home said it posted a third-quarter net loss of $35.6 million, or 46 cents a share, compared with net income of $153.2 million, or $1.90 a share in the year-ago period. At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins," commented CEO Jeffrey Mezger.
The average rate on fixed-rate 30-year mortgages rose to 6.49% this week from 6.32% last week, reported Bankrate Inc., which operates personal-finance Web site Bankrate.com, on Thursday. The average 15-year fixed mortgage rose to 6.16% from 6.00%. The average rate on 30-year jumbo loans -- above $417,000 -- also rose to 7.31%
The number of initial claims in the week ending September 22 fell 15,000 to 298,000. It's the lowest level since the week ended May 12. The four-week average of initial claims fell 9,750 to 311,500. Meanwhile, the number of Americans receiving state jobless benefits rose 11,000 to 2.55 million in the week ending September 15. The four-week moving average of continuing claims fell 5,500 to 2.57 million.
Palatin announced positive results from an at-home Phase 2 trial evaluating bremelanotide for the treatment of female sexual arousal disorder (FSAD). The objective of this exploratory study was to identify potential efficacy endpoints for future studies and to evaluate the safety of intranasal (IN) bremelanotide, relative to placebo and under the conditions of home use, for the treatment of FSAD in pre- and postmenopausal women. "We are pleased with the overall data from this exploratory trial. The efficacy response was consistent and robust across all domains, particularly desire and arousal. We look forward to discussing the program's further development with the FDA, including future dose-ranging studies to improve the drug's benefit/risk profile," stated Dr. Trevor Hallam, Executive Vice President of Research & Development for Palatin. Based on these data, Palatin is encouraged about the use of bremelanotide for FSAD and believes that future studies in patients with FSAD are warranted. Future dose-ranging studies at 10 mg and lower will be necessary to improve the drug's benefit/risk ratio. Palatin plans to engage the FDA in discussions regarding future development later this calendar year. Dr. Eileen Palace, The Center for Sexual Health, Metairie, LA, stated, "With no approved medical therapies to treat patients with FSAD, I believe the results of the clinical trials with bremelanotide warrant further development." Dr. Palace is an investigator who enrolled patients in the study and a member of the Bremelanotide Scientific Advisory Board.
Sales of new homes dropped 8.3% in August to a seasonally adjusted annual rate of 795,000, the slowest sales since June 2000, the Commerce Department estimated Thursday. Sales are now down 21.2% in the past year. The median sales price fell 7.5% to $225,700 in August compared with a year earlier, the largest year-over-year decline in 37 years. The inventory of unsold homes fell by 1.5% to 529,000, the fifth straight decline as builders struggle to bring their inventories down. The inventory represents an 8.2-month supply at the August sales pace, the highest since March.
Brad Setser: "IF the US trade deficit really is declining sharply, and IF the recycling of the US trade deficit really was the industrial-strength punch that kept this party going for so long, who is most likely to be hurt when the punchbowl is taken away?"
Natural gas supplies rose by 74 billion cubic feet to 3,206 billion cubic feet during the week ending Sept. 21, the Energy Department said Thursday.
Oil supplies in Cushing, Oklahoma, the delivery point for the U.S. benchmark grade, fell to the lowest in 21 months. Crude has rebounded to $83 and natural gas is just under $7. October heating oil rose 6.95 cents, or 3.2%, to finish at $2.2521 a gallon. October reformulated gasoline surged 6.65 cents, or over 3%, at $2.0939 a gallon.
Gold for December delivery rose $4.40 to close at $739.90 an ounce on the New York Mercantile Exchange. December silver gained 10 cents at $13.645 an ounce. October platinum rose $13.20 to finish at $1,364.70 an ounce and December palladium gained $2.95 at $347.75 an ounce. December copper rose 3.40 cents at $3.6480 a pound.
More than 150 mortgage lenders have now quit the industry or declared bankruptcy due to rising delinquencies and tighter capital markets .
Borrowing at the Federal Reserve's discount window has completely dried up, Fed data released Thursday show. For the first time in a more than a month, there were no outstanding loans through the Fed's primary credit facility, also known as the discount window, as of Wednesday. A week ago, $1.1 billion was outstanding. The average daily balance of loans in the week ending Wednesday was $88 million, down from $2.2 billion in the prior week.
According to AMG Data Services, for the latest week, equity outflows $6.8 billion; taxable bond fund inflows $1.7 billion xETFs; equity bond outflows $1.2 billion; and taxable bond inflows $1.5 billion.
Today is the last day of trading for the third quarter. That means window dressing. That means rumors, such as, Buffett and Bear Stearns. Who would pay a 33% premium over book value, and one that looks like a moving target? Not me.
The dollar fell to a new all-time low against the euro Thursday.
South Korean consumer confidence climbed to a five-year high in the third quarter, according to a survey released by the South Korean central bank Thursday. The Bank of Korea consumer survey index climbed to 112 in the third quarter, up from 108 in the preceding quarter, its highest level since the index recorded 119 in the third quarter of 2002, Dow Jones Newswires reported.
According to the WSJ, several bidding groups have expressed an interest in Wendy's.
The home building industry added 518,000 jobs from January 2003 to February 2006, when employment hit its peak, according to Moody's Economy.com, an economic consulting firm that is a unit of Moody's Corp. . Since the peak through the end of August, 142,500 have been lost, with the deepest layoffs occurring among construction workers.
According to Bloomberg, the European Central Bank lent the most money at its penalty rate in almost three years, suggesting at least one bank is still being shut out of credit markets.The ECB loaned 3.9 billion euros ($5.5 billion) at its marginal rate of 5 percent yesterday, the most since October 2004, the Frankfurt-based central bank said in a daily borrowing-requirement statement today. It didn't provide details of which bank or banks asked for the money.
Cia. Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd., the world's three largest iron-ore exporters, may increase prices by 30 percent next year as demand driven by steelmakers in China outpaces growth in supply.
Prices for benchmark shipments from Australia will rise to a record $66.40 a ton next year from $51.47 in 2007, according to the median forecast of eight analysts surveyed by Bloomberg. Sales may climb 11 percent this year as supplies gain 8 percent, Merrill Lynch & Co. estimates. Mining companies and customers begin annual contract talks next month for shipments from April.
Private equity funds devoted to investing in the Middle East and North Africa grew to $5.2 billion in 2006, from $316 million in 2004, according to Zawya Private Equity Monitor.
Henry To: "Should the Dow Industrials make another all-time high - preferably in the 14,200 to 14,500 area, and should this be accompanied by weak breadth and divergences among many market indices, then there is a chance that we will establish an initial 50% short position in our DJIA Timing System."
U.S. District Judge Ann Aiken ruled that the Patriot Act violates the Constitution because it "permits the executive branch of government to conduct surveillance and searches of American citizens without satisfying the probable cause requirements of the Fourth Amendment."
With 6mo treasury bills yielding more than 2 & 3 yr notes, interbank rates continuing to rise, and uneven breath in equities, I would be an aggressive seller of large cap stocks as well as the few parabolic techs, such as RIMM, going into Friday's close.
KB Home said total quarterly revenue fell 32% from a year earlier to $1.54 billion. Including the French discontinued operations, KB Home said it posted a third-quarter net loss of $35.6 million, or 46 cents a share, compared with net income of $153.2 million, or $1.90 a share in the year-ago period. At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins," commented CEO Jeffrey Mezger.
The average rate on fixed-rate 30-year mortgages rose to 6.49% this week from 6.32% last week, reported Bankrate Inc., which operates personal-finance Web site Bankrate.com, on Thursday. The average 15-year fixed mortgage rose to 6.16% from 6.00%. The average rate on 30-year jumbo loans -- above $417,000 -- also rose to 7.31%
The number of initial claims in the week ending September 22 fell 15,000 to 298,000. It's the lowest level since the week ended May 12. The four-week average of initial claims fell 9,750 to 311,500. Meanwhile, the number of Americans receiving state jobless benefits rose 11,000 to 2.55 million in the week ending September 15. The four-week moving average of continuing claims fell 5,500 to 2.57 million.
Palatin announced positive results from an at-home Phase 2 trial evaluating bremelanotide for the treatment of female sexual arousal disorder (FSAD). The objective of this exploratory study was to identify potential efficacy endpoints for future studies and to evaluate the safety of intranasal (IN) bremelanotide, relative to placebo and under the conditions of home use, for the treatment of FSAD in pre- and postmenopausal women. "We are pleased with the overall data from this exploratory trial. The efficacy response was consistent and robust across all domains, particularly desire and arousal. We look forward to discussing the program's further development with the FDA, including future dose-ranging studies to improve the drug's benefit/risk profile," stated Dr. Trevor Hallam, Executive Vice President of Research & Development for Palatin. Based on these data, Palatin is encouraged about the use of bremelanotide for FSAD and believes that future studies in patients with FSAD are warranted. Future dose-ranging studies at 10 mg and lower will be necessary to improve the drug's benefit/risk ratio. Palatin plans to engage the FDA in discussions regarding future development later this calendar year. Dr. Eileen Palace, The Center for Sexual Health, Metairie, LA, stated, "With no approved medical therapies to treat patients with FSAD, I believe the results of the clinical trials with bremelanotide warrant further development." Dr. Palace is an investigator who enrolled patients in the study and a member of the Bremelanotide Scientific Advisory Board.
Sales of new homes dropped 8.3% in August to a seasonally adjusted annual rate of 795,000, the slowest sales since June 2000, the Commerce Department estimated Thursday. Sales are now down 21.2% in the past year. The median sales price fell 7.5% to $225,700 in August compared with a year earlier, the largest year-over-year decline in 37 years. The inventory of unsold homes fell by 1.5% to 529,000, the fifth straight decline as builders struggle to bring their inventories down. The inventory represents an 8.2-month supply at the August sales pace, the highest since March.
Brad Setser: "IF the US trade deficit really is declining sharply, and IF the recycling of the US trade deficit really was the industrial-strength punch that kept this party going for so long, who is most likely to be hurt when the punchbowl is taken away?"
Natural gas supplies rose by 74 billion cubic feet to 3,206 billion cubic feet during the week ending Sept. 21, the Energy Department said Thursday.
Oil supplies in Cushing, Oklahoma, the delivery point for the U.S. benchmark grade, fell to the lowest in 21 months. Crude has rebounded to $83 and natural gas is just under $7. October heating oil rose 6.95 cents, or 3.2%, to finish at $2.2521 a gallon. October reformulated gasoline surged 6.65 cents, or over 3%, at $2.0939 a gallon.
Gold for December delivery rose $4.40 to close at $739.90 an ounce on the New York Mercantile Exchange. December silver gained 10 cents at $13.645 an ounce. October platinum rose $13.20 to finish at $1,364.70 an ounce and December palladium gained $2.95 at $347.75 an ounce. December copper rose 3.40 cents at $3.6480 a pound.
More than 150 mortgage lenders have now quit the industry or declared bankruptcy due to rising delinquencies and tighter capital markets .
Borrowing at the Federal Reserve's discount window has completely dried up, Fed data released Thursday show. For the first time in a more than a month, there were no outstanding loans through the Fed's primary credit facility, also known as the discount window, as of Wednesday. A week ago, $1.1 billion was outstanding. The average daily balance of loans in the week ending Wednesday was $88 million, down from $2.2 billion in the prior week.
According to AMG Data Services, for the latest week, equity outflows $6.8 billion; taxable bond fund inflows $1.7 billion xETFs; equity bond outflows $1.2 billion; and taxable bond inflows $1.5 billion.
Wednesday, September 26, 2007
GM Strike Settled
9/27/07 GM Strike Settled
In an historic move, there is a shifting of a $51 billion liability for retiree health care to a union-run trust fund.
The effect on the economy from financial disruptions is "highly uncertain," said former Treasury Secretary Robert Rubin on Wednesday. Rubin said it's possible the economy could achieve a soft landing, but "serious difficulty" is also a possible outcome.
A top executive at Toyota Motor Corp said on Wednesday that achieving a rise in U.S. sales in September might be tough because of a spike in sales in the same month a year earlier. "We had an especially strong month last September, with growth of around 25 percent, so it may be difficult for sales to rise," Executive Vice President Mitsuo Kinoshita told a small group of reporters.
Los Angeles County supervisors were warned Tuesday that the cooling housing market could cut into property tax revenue, which funds local services including public safety, health services and foster care. Expressing concern, board members requested that the county chief executive update them in January on the fiscal outlook for the county's $22.4-billion budget.
The Federal Reserve's interest rate cut was a mistake that will prompt ``skyrocketing'' agricultural prices worldwide, exacerbate a decline in the dollar and quicken inflation, investor Jim Rogers said. The ``clowns in Washington'' have ``signaled to the world they don't care about the U.S. dollar,'' Rogers said.
Carlyle Capital Corp., the publicly traded credit fund backed by private-equity firm Carlyle Group, fell 24 percent in August as it sold assets and global debt prices declined.
"Food is going to be like oil," a product that gets more expensive as China and India get richer, said Chris Williamson, chief economist at NTC Economics in London. "There is a growing population that is improving its standard of living and wants to eat more," Williamson said.
Bond insurers owned by Ambac Financial Group Inc. and FGIC Corp. may need to raise capital to maintain their top credit ratings if losses worsen on subprime mortgage securities, Moody's Investors Service said.
According to China Daily, China’s central bank may raise the interest rate on mortgage loans this week to curb rising home prices and property speculation. The People’s Bank of China may increase the rate to 1.1 times the nation’s 7.29% benchmark one-year lending rate. The rate for a five-year mortgage loan could reach as high as 8.61%.
Sandler O'Neill analyst Jeff Harte lowered his third-quarter earnings-per-share estimate for Merrill to $1.56 from $1.93. Analysts on average look for the world's largest brokerage to earn $1.82 a share, according to Reuters Estimates. Harte figures Merrill Lynch's subprime mortgage unit, First Franklin Financial, could cut about $100 million from the brokerage's third-quarter profit on an impairment charge.
Nouriel Roubini: "But it turned out that I was way too optimistic about housing, not too pessimistic. As recently reported housing starts have now fallen by 42% and now JP Morgan – one of the most respected research houses on Wall Street and a persistent proponent until recently of the view that the housing recession would bottom out – is predicting that housing starts will fall another 25% to a cumulative fall of 56% from peak and will bottom out at 999 thousand units some time in 2008. Compared to my initial March prediction of a bottom at 1.1 million I turn out to be an optimist. And indeed many other research firms (including Goldman Sachs, Citibank and others) are now predicting the bottom of housing starts at 1 million to 1.1 million units. So what in March was considered as borderline lunatic is now becoming conventional wisdom."
Timberland Co. cut its full-year revenue guidance Wednesday on some upcoming store closings, softer market trends and costs related to a voluntary product recall. The company, which makes footwear and apparel, said it now expects 2007 revenue to decline in the 5 percent range. It previously said sales were likely to decline by low single digits.Timberland said it will close about 40 specialty retail stores in the United States, Europe and Asia as well as several under performing U.S. outlet stores likely within the first several months of 2008. The company said the closures are consistent with its strategy to transition to smaller, footwear-focused stores in the United States and in certain international markets.
New Orders New orders for manufactured durable goods in August decreased $11.3 billion or 4.9 percent to $219.5 billion, the U.S. Census Bureau announced today. This decrease followed two consecutive monthly increases, including a 6.1 percent July increase. Excluding transportation, new orders decreased 1.8 percent. Excluding defense, new orders decreased 5.9 percent. Shipments Shipments of manufactured durable goods in August, down two of the last three months, decreased $3.4 billion or 1.6 percent to $216.7 billion. This followed a 4.0 percent July increase. Businesses reduced their orders for capital equipment from U.S. factories in August by 0.7%.
The Financial Times: The European Central Bank faced a fresh surge in demand for liquidity on Tuesday when it allocated weekly refinancing funds at an average of 4.29 per cent, the highest spread over the minimum bid rate for almost five years. The unexpectedly strong appetite suggests the ECB is again facing difficulties bringing interest rates in line with its 4 per cent main rate. Tuesday’s auction bids totalled €369bn compared with its estimated “benchmark” requirement of €157bn.The pattern is likely to trigger unease among policy makers since it suggests the mood in the global money markets remains nervous, irrespective of the emergency actions taken by central banks in recent days.
The Bank of England said Wednesday that it hasn't received any bids for three-month loans under its new emergency facility, Dow Jones Newswires reported. Last week, the bank said that it would lend up to 10 billion pounds through the facility at a rate of at least 6.75%, which is one percentage point above its base rate. Three month sterling libor slipped to 6.31625% on Wednesday, from 6.34375% recorded on Tuesday.
Chevron Corp. set plans to buy back up to $15 billion in stock.
Kazakh lawmakers on Wednesday allowed their government to change or break contracts with foreign companies, in a move that will alarm already jittery investors in the Central Asian state. Under the law, the oil-rich state could force retrospective changes to any contracts or break their terms altogether with foreign and domestic companies, if it deemed a threat existed to the country's national security. "This draft law aims to strengthen the national interests of our country in the sphere of natural resources," said Yerlan Nigmatulin, a member of parliament who has spearheaded the law.
Palatin Technologies Inc said it will reduce its workforce by 30 percent, a month after U.S. health regulators raised concerns on the efficacy of the company's drug to treat male erectile dysfunction. The biopharmaceutical company expects to incur a charge of $500,000 for severance payments in the quarter ending Sept. 30. Palatin, which will be left with 64 employees after the layoff, said the reduction will result in annual savings of $4 million.
Newmont Mining: "The large-scale, mature and low grade nature of its gold deposits may limit its ability to replace, net of depletion, its proven and probable gold reserves in 2007."
Bank of America Corp. and its partners in the $25 billion buyout of student lender SLM Corp. are looking at whether the deal's agreed price needs to be adjusted in light of recent changes to lending laws, Chief Executive Ken Lewis said in an interview with the Charlotte Observer. Lewis, in an interview published Wednesday, said the two sides remain in talks about the deal, which was agreed to in April and which SLM expected to close by October. "We obviously have seen the change in the (education lending) laws," Lewis said, according to the newspaper. "We are trying to assess the impact that might have on the price." "We're still talking. That's about all I can say," he added. (Sallie Mae itself estimated Wednesday that the new law will cut between 1.8% and 2.1% of its net income over the next five years.)
The American Petroleum Institute reported a climb of 895,000 barrels in crude supplies for the week ended Sept. 21. The Energy Department had reported a climb of 1.8 million barrels for the latest week. Motor gasoline supplies were up 1 million barrels, the API said. The government had reported that supplies were up 600,000 barrels. Distillate supplies fell by 1.9 million barrels, the API said. But they were up 1.6 million barrels, according to the Energy Department.
Bear Stearns, which has been hit hard by the mortgage turmoil, is in "serious talks" with several investors, including billionaire Warren Buffett and B of A, about selling as much as 20% of the company, the New York Times reported on its Web site, citing people familiar with the matter. With BSC at $123, I'd be a seller. Buffett had his hands full with Salomon Bros. and B of A just made an investment in CFC, and that one I question too.
Crude oil for November delivery closed up 77 cents at $80.30 a barrel on the New York Mercantile Exchange.
Gold for December delivery dropped $3.30 to end at $735.50 an ounce on the New York Mercantile Exchange.
In an historic move, there is a shifting of a $51 billion liability for retiree health care to a union-run trust fund.
The effect on the economy from financial disruptions is "highly uncertain," said former Treasury Secretary Robert Rubin on Wednesday. Rubin said it's possible the economy could achieve a soft landing, but "serious difficulty" is also a possible outcome.
A top executive at Toyota Motor Corp said on Wednesday that achieving a rise in U.S. sales in September might be tough because of a spike in sales in the same month a year earlier. "We had an especially strong month last September, with growth of around 25 percent, so it may be difficult for sales to rise," Executive Vice President Mitsuo Kinoshita told a small group of reporters.
Los Angeles County supervisors were warned Tuesday that the cooling housing market could cut into property tax revenue, which funds local services including public safety, health services and foster care. Expressing concern, board members requested that the county chief executive update them in January on the fiscal outlook for the county's $22.4-billion budget.
The Federal Reserve's interest rate cut was a mistake that will prompt ``skyrocketing'' agricultural prices worldwide, exacerbate a decline in the dollar and quicken inflation, investor Jim Rogers said. The ``clowns in Washington'' have ``signaled to the world they don't care about the U.S. dollar,'' Rogers said.
Carlyle Capital Corp., the publicly traded credit fund backed by private-equity firm Carlyle Group, fell 24 percent in August as it sold assets and global debt prices declined.
"Food is going to be like oil," a product that gets more expensive as China and India get richer, said Chris Williamson, chief economist at NTC Economics in London. "There is a growing population that is improving its standard of living and wants to eat more," Williamson said.
Bond insurers owned by Ambac Financial Group Inc. and FGIC Corp. may need to raise capital to maintain their top credit ratings if losses worsen on subprime mortgage securities, Moody's Investors Service said.
According to China Daily, China’s central bank may raise the interest rate on mortgage loans this week to curb rising home prices and property speculation. The People’s Bank of China may increase the rate to 1.1 times the nation’s 7.29% benchmark one-year lending rate. The rate for a five-year mortgage loan could reach as high as 8.61%.
Sandler O'Neill analyst Jeff Harte lowered his third-quarter earnings-per-share estimate for Merrill to $1.56 from $1.93. Analysts on average look for the world's largest brokerage to earn $1.82 a share, according to Reuters Estimates. Harte figures Merrill Lynch's subprime mortgage unit, First Franklin Financial, could cut about $100 million from the brokerage's third-quarter profit on an impairment charge.
Nouriel Roubini: "But it turned out that I was way too optimistic about housing, not too pessimistic. As recently reported housing starts have now fallen by 42% and now JP Morgan – one of the most respected research houses on Wall Street and a persistent proponent until recently of the view that the housing recession would bottom out – is predicting that housing starts will fall another 25% to a cumulative fall of 56% from peak and will bottom out at 999 thousand units some time in 2008. Compared to my initial March prediction of a bottom at 1.1 million I turn out to be an optimist. And indeed many other research firms (including Goldman Sachs, Citibank and others) are now predicting the bottom of housing starts at 1 million to 1.1 million units. So what in March was considered as borderline lunatic is now becoming conventional wisdom."
Timberland Co. cut its full-year revenue guidance Wednesday on some upcoming store closings, softer market trends and costs related to a voluntary product recall. The company, which makes footwear and apparel, said it now expects 2007 revenue to decline in the 5 percent range. It previously said sales were likely to decline by low single digits.Timberland said it will close about 40 specialty retail stores in the United States, Europe and Asia as well as several under performing U.S. outlet stores likely within the first several months of 2008. The company said the closures are consistent with its strategy to transition to smaller, footwear-focused stores in the United States and in certain international markets.
New Orders New orders for manufactured durable goods in August decreased $11.3 billion or 4.9 percent to $219.5 billion, the U.S. Census Bureau announced today. This decrease followed two consecutive monthly increases, including a 6.1 percent July increase. Excluding transportation, new orders decreased 1.8 percent. Excluding defense, new orders decreased 5.9 percent. Shipments Shipments of manufactured durable goods in August, down two of the last three months, decreased $3.4 billion or 1.6 percent to $216.7 billion. This followed a 4.0 percent July increase. Businesses reduced their orders for capital equipment from U.S. factories in August by 0.7%.
The Financial Times: The European Central Bank faced a fresh surge in demand for liquidity on Tuesday when it allocated weekly refinancing funds at an average of 4.29 per cent, the highest spread over the minimum bid rate for almost five years. The unexpectedly strong appetite suggests the ECB is again facing difficulties bringing interest rates in line with its 4 per cent main rate. Tuesday’s auction bids totalled €369bn compared with its estimated “benchmark” requirement of €157bn.The pattern is likely to trigger unease among policy makers since it suggests the mood in the global money markets remains nervous, irrespective of the emergency actions taken by central banks in recent days.
The Bank of England said Wednesday that it hasn't received any bids for three-month loans under its new emergency facility, Dow Jones Newswires reported. Last week, the bank said that it would lend up to 10 billion pounds through the facility at a rate of at least 6.75%, which is one percentage point above its base rate. Three month sterling libor slipped to 6.31625% on Wednesday, from 6.34375% recorded on Tuesday.
Chevron Corp. set plans to buy back up to $15 billion in stock.
Kazakh lawmakers on Wednesday allowed their government to change or break contracts with foreign companies, in a move that will alarm already jittery investors in the Central Asian state. Under the law, the oil-rich state could force retrospective changes to any contracts or break their terms altogether with foreign and domestic companies, if it deemed a threat existed to the country's national security. "This draft law aims to strengthen the national interests of our country in the sphere of natural resources," said Yerlan Nigmatulin, a member of parliament who has spearheaded the law.
Palatin Technologies Inc said it will reduce its workforce by 30 percent, a month after U.S. health regulators raised concerns on the efficacy of the company's drug to treat male erectile dysfunction. The biopharmaceutical company expects to incur a charge of $500,000 for severance payments in the quarter ending Sept. 30. Palatin, which will be left with 64 employees after the layoff, said the reduction will result in annual savings of $4 million.
Newmont Mining: "The large-scale, mature and low grade nature of its gold deposits may limit its ability to replace, net of depletion, its proven and probable gold reserves in 2007."
Bank of America Corp. and its partners in the $25 billion buyout of student lender SLM Corp. are looking at whether the deal's agreed price needs to be adjusted in light of recent changes to lending laws, Chief Executive Ken Lewis said in an interview with the Charlotte Observer. Lewis, in an interview published Wednesday, said the two sides remain in talks about the deal, which was agreed to in April and which SLM expected to close by October. "We obviously have seen the change in the (education lending) laws," Lewis said, according to the newspaper. "We are trying to assess the impact that might have on the price." "We're still talking. That's about all I can say," he added. (Sallie Mae itself estimated Wednesday that the new law will cut between 1.8% and 2.1% of its net income over the next five years.)
The American Petroleum Institute reported a climb of 895,000 barrels in crude supplies for the week ended Sept. 21. The Energy Department had reported a climb of 1.8 million barrels for the latest week. Motor gasoline supplies were up 1 million barrels, the API said. The government had reported that supplies were up 600,000 barrels. Distillate supplies fell by 1.9 million barrels, the API said. But they were up 1.6 million barrels, according to the Energy Department.
Bear Stearns, which has been hit hard by the mortgage turmoil, is in "serious talks" with several investors, including billionaire Warren Buffett and B of A, about selling as much as 20% of the company, the New York Times reported on its Web site, citing people familiar with the matter. With BSC at $123, I'd be a seller. Buffett had his hands full with Salomon Bros. and B of A just made an investment in CFC, and that one I question too.
Crude oil for November delivery closed up 77 cents at $80.30 a barrel on the New York Mercantile Exchange.
Gold for December delivery dropped $3.30 to end at $735.50 an ounce on the New York Mercantile Exchange.
Tuesday, September 25, 2007
The Customers
9/26/07 The Customers
"The industry continues to struggle on a weekly basis as performance was uneven by retailer with some market share shifting between retailers," said Michael Niemira, chief economist for the ICSC. "With this recent softness, we have pared down our sales expectation for September to 2.0% to 2.5% from the previous estimate of 2.5%, on a year-over-year comparable-store basis."
Lennar's valuation adjustments and write-offs of option deposits and pre-acquisition costs, goodwill and financial-services notes receivable totaled $856.8 million in the latest quarter, equating to $3.33 a share, Lennar said. On an adjusted basis, gross margins on home sales narrowed to 14.0% from 19.5%, primarily reflecting higher incentives. Home deliveries dropped 41% in the latest quarter, with the average sales price of homes delivered off 6%. CEO Stuart Miller said Lennar's cut the size of its work force by 35% and expects to make further reductions during the fourth quarter.
Target Corp. cut its forecast for September sales at stores open more than a year to an increase of 1.5% to 2.5%, down from its previous forecast of 4% to 6%. In a recorded message, the Minneapolis-based discount retailer said there was weaker guest traffic in September than expected, and it said that sales in the northeast were particularly weak.
China will increase its government reserves of soybeans and vegetable oil and limit exports of oilseeds and edible vegetable oil, as part of a strategy to ensure stable supplies amid rising demand, according to media reports.
The average U.S. household will pay $992 in heating costs this winter, up $94, or 10.5%, from last winter, says the National Energy Assistance Directors' Association (NEADA), a group of state energy aid officials. Fortunately, inflation is not a problem!
Lowe's now projects fiscal-year earnings at the low end or slightly below its prior forecast, citing lower-than-expected sales trends. Lowe's said drought conditions in the mid-Atlantic, Southeastern and Western regions of the country have hurt performance in its outdoor segment. The company is concerned about the severe contraction of available credit and how it might impact consumers on a national scale.The company had predicted earnings between $1.97 and $2.01 per share. Analysts polled by Thomson Financial predict a profit of $1.99 per share.
BP's CEO delivered a blunt warning that third-quarter revenues would be “dreadful”.
Michael Swanson: "The problem is real estate is still overvalued just as tech stocks became overvalued in 2000. One would think that real estate will have to drop and return to a normal valuation before it can bottom out, so simply lowering interest rates may not have the wonderful effects that Mishkin and Bernanke hope they will."
The Chicago Fed National Activity Index dropped to -0.57 in August, from +0.03 in July, which was revised up from -0.10. The August figure is the lowest mark for the index since January.
Bank of America said it will lay off about 2,500 employees in Illinois over the next two years as part of its planned purchase of LaSalle Bank.
German business confidence fell more than economists forecast in September, reaching a 19-month low, on concern the strength of the euro and increasing cost of credit will sap economic growth.
Barron's writes that AmTech research indicates that headcount growth is slowing at Google.
The decline in U.S. home prices accelerated nationwide in July, with prices posting the steepest drop in 16 years, according to the S&P/Case-Shiller home price index released Tuesday. Home prices have fallen by more every month since the beginning of the year. An index of 10 U.S. cities fell 4.5 percent in July from a year ago. That was the biggest drop since July 1991.
McCormick & Schmick's Seafood Restaurants Inc. cut its third-quarter earnings view to about 16 cents a share from a prior earnings view of 21 cents to 23 cents a share, due in part to weakness in September traffic. The Portland seafood restaurant operator also decreased its revenue outlook to about $88 million from a previous forecast of $90 million to $91 million. In addition, the company now expects third-quarter same-store sales to be flat. McCormick & Schmick's had previously expected same-store sales to rise 1.5% to 2.5%.
Nationstar Mortgage, the subprime unit of Fortress Investment Group LLC, said it is no longer accepting new loan applications from brokers, a signal the lender is winding down operations.
U.S. sales of existing homes fell 4.3% to a seasonally adjusted annual rate of 5.50 million in August, the lowest since August 2002, the National Association of Realtors reported Tuesday. Sales in August were down 12.8% compared with August 2006. Inventories of unsold homes on the market rose by 0.4% to 4.58 million, representing a 10-month supply at the August sales rate. For single-family homes alone, the inventory represents a 9.8-month supply, the most since May 1989.
U.S. consumer confidence weakened in September, the Conference Board said Tuesday. The consumer confidence index fell to 99.8 in September from a revised 105.6 in August. This is the lowest level of the index since November 2005.The present situation index fell to 121.7 from 130.1, while the expectations index fell to 85.2 from 89.2.
Gold for December delivery finished down 50 cents at $738.80 an ounce on the New York Mercantile Exchange.
The U.S. dollar index now rests at 78.16, a new low.
Crude oil for November delivery closed down $1.42 at $79.53 a barrel on the New York Mercantile Exchange.
"The industry continues to struggle on a weekly basis as performance was uneven by retailer with some market share shifting between retailers," said Michael Niemira, chief economist for the ICSC. "With this recent softness, we have pared down our sales expectation for September to 2.0% to 2.5% from the previous estimate of 2.5%, on a year-over-year comparable-store basis."
Lennar's valuation adjustments and write-offs of option deposits and pre-acquisition costs, goodwill and financial-services notes receivable totaled $856.8 million in the latest quarter, equating to $3.33 a share, Lennar said. On an adjusted basis, gross margins on home sales narrowed to 14.0% from 19.5%, primarily reflecting higher incentives. Home deliveries dropped 41% in the latest quarter, with the average sales price of homes delivered off 6%. CEO Stuart Miller said Lennar's cut the size of its work force by 35% and expects to make further reductions during the fourth quarter.
Target Corp. cut its forecast for September sales at stores open more than a year to an increase of 1.5% to 2.5%, down from its previous forecast of 4% to 6%. In a recorded message, the Minneapolis-based discount retailer said there was weaker guest traffic in September than expected, and it said that sales in the northeast were particularly weak.
China will increase its government reserves of soybeans and vegetable oil and limit exports of oilseeds and edible vegetable oil, as part of a strategy to ensure stable supplies amid rising demand, according to media reports.
The average U.S. household will pay $992 in heating costs this winter, up $94, or 10.5%, from last winter, says the National Energy Assistance Directors' Association (NEADA), a group of state energy aid officials. Fortunately, inflation is not a problem!
Lowe's now projects fiscal-year earnings at the low end or slightly below its prior forecast, citing lower-than-expected sales trends. Lowe's said drought conditions in the mid-Atlantic, Southeastern and Western regions of the country have hurt performance in its outdoor segment. The company is concerned about the severe contraction of available credit and how it might impact consumers on a national scale.The company had predicted earnings between $1.97 and $2.01 per share. Analysts polled by Thomson Financial predict a profit of $1.99 per share.
BP's CEO delivered a blunt warning that third-quarter revenues would be “dreadful”.
Michael Swanson: "The problem is real estate is still overvalued just as tech stocks became overvalued in 2000. One would think that real estate will have to drop and return to a normal valuation before it can bottom out, so simply lowering interest rates may not have the wonderful effects that Mishkin and Bernanke hope they will."
The Chicago Fed National Activity Index dropped to -0.57 in August, from +0.03 in July, which was revised up from -0.10. The August figure is the lowest mark for the index since January.
Bank of America said it will lay off about 2,500 employees in Illinois over the next two years as part of its planned purchase of LaSalle Bank.
German business confidence fell more than economists forecast in September, reaching a 19-month low, on concern the strength of the euro and increasing cost of credit will sap economic growth.
Barron's writes that AmTech research indicates that headcount growth is slowing at Google.
The decline in U.S. home prices accelerated nationwide in July, with prices posting the steepest drop in 16 years, according to the S&P/Case-Shiller home price index released Tuesday. Home prices have fallen by more every month since the beginning of the year. An index of 10 U.S. cities fell 4.5 percent in July from a year ago. That was the biggest drop since July 1991.
McCormick & Schmick's Seafood Restaurants Inc. cut its third-quarter earnings view to about 16 cents a share from a prior earnings view of 21 cents to 23 cents a share, due in part to weakness in September traffic. The Portland seafood restaurant operator also decreased its revenue outlook to about $88 million from a previous forecast of $90 million to $91 million. In addition, the company now expects third-quarter same-store sales to be flat. McCormick & Schmick's had previously expected same-store sales to rise 1.5% to 2.5%.
Nationstar Mortgage, the subprime unit of Fortress Investment Group LLC, said it is no longer accepting new loan applications from brokers, a signal the lender is winding down operations.
U.S. sales of existing homes fell 4.3% to a seasonally adjusted annual rate of 5.50 million in August, the lowest since August 2002, the National Association of Realtors reported Tuesday. Sales in August were down 12.8% compared with August 2006. Inventories of unsold homes on the market rose by 0.4% to 4.58 million, representing a 10-month supply at the August sales rate. For single-family homes alone, the inventory represents a 9.8-month supply, the most since May 1989.
U.S. consumer confidence weakened in September, the Conference Board said Tuesday. The consumer confidence index fell to 99.8 in September from a revised 105.6 in August. This is the lowest level of the index since November 2005.The present situation index fell to 121.7 from 130.1, while the expectations index fell to 85.2 from 89.2.
Gold for December delivery finished down 50 cents at $738.80 an ounce on the New York Mercantile Exchange.
The U.S. dollar index now rests at 78.16, a new low.
Crude oil for November delivery closed down $1.42 at $79.53 a barrel on the New York Mercantile Exchange.
Monday, September 24, 2007
Liquidity?
9/25/07 Liquidity?
John Hussman: "Investors were cheered last week when the Federal Reserve lowered its target for the Federal Funds Rate by 50 basis points, and lowered the Discount Rate (the interest rate it charges on loans to the banking system) by 50 basis points as well. It's important to emphasize that the impact of these changes is mainly psychological, and outside of a pool of a few billion dollars, won't have any effective bearing on the “liquidity” of the banking system, nor on the solvency of $3.4 trillion in real estate loans, and $6.3 trillion in total bank lending...If you examine the data you'll find that the total level of “liquidity” that the FOMC deals with is minuscule in relation to a $13.8 trillion economy, and the variation is even smaller. The total reserves of the U.S. banking system are about $40-$45 billion, and are very stable. The Fed simply does not “inject” meaningful amounts of “liquidity” to the banking system. Indeed, the latest cuts in Fed controlled interest rates were effected without any injection of “liquidity” into the banking system at all. Total borrowings by depository institutions from the Federal Reserve (i.e. borrowings at the Discount Rate) actually fell last week to $2.421 billion, from $3.158 billion the preceding week. That couple of billion dollars is the sum total of all outstanding borrowings at the Discount Rate. Though these figures are still higher than the typical level of discount window borrowing (a few hundred million), they are minuscule. Yet these are the figures that investors are revved up about as if this “liquidity” will save the mortgage market...The simple fact is that while the Federal Reserve lowered the Fed Funds Rate and the Discount Rate last week, it did not do so by “injecting” any new funds at all into the banking system. Rather, the Fed lowered these rates strictly by announcing they were now lower."
SAIC unit gets SPAWAR Systems contract for up to $459 mln.
Yamana Gold Inc. boosted its offer to acquire Meridian Gold Inc. by C$0.50 a share to C$7, in addition to the previously agreed-on 2.235 shares for each share of Yamana. Yamana, based in Toronto, said the new offer represents a spot premium of 38% based on the closing prices of Yamana and Meridian shares June 27, the date of Yamana's original proposal. Yamana Gold Inc. and Meridian Gold Inc. said Monday that they have reached an agreement in which Yamana will sweeten its bid and Meridian's board will endorse the new offer.
Euro-zone industrial orders fell a worse-than-forecast 4% in July compared to June, the Eurostat statistics agency said Monday, following a 4.5% rise in June. Excluding ships, railway and aerospace equipment, industrial new orders fell by 0.1% in the euro area.
There is a report that miner BHP Billiton has has uncovered what is potentially the world’s largest gold resources at its Olympic Dam mine in South Australia.
Deutsche Bank's profit could be hurt by up to 1.7 billion euros ($2.4 billion) when it revalues loans that have declined during the credit crunch, Reuters reported Monday, citing sources familiar with the situation. These loans would normally be farmed out to other banks, but they're on the German bank's books because of the credit crunch.
C-Cor Inc. definitively agreed to be acquired by Arris Group for $13.75 a share, or $730 million, creating what the companies said would be the largest pure-play provider of equipment and solutions to the cable-TV industry.
China's imports of crude oil climbed 18.7% in August from the same month a year earlier, the Chinese government said Monday. Crude oil imports totaled 14.04 million metric tones in August, equivalent to 3.32 million barrels a day, according to Dow Jones Newswires, which cited data published Monday by the General Administration of Customs.
Iran closed major border crossings with northern Iraq on Monday to protest the U.S. detention of an Iranian official the military accused of weapons smuggling, a Kurdish official said. At least four border gates have been closed and one remains open, the governor of the Kurdish province of Sulaimaniyah, Dana Ahmed Majeed, told The Associated Press. The move threatens the economy of Iraq's northern region — one of the country's few success stories.
In a partial interview transcript released on Sunday by al-Jazeera, the television news service based in Qatar, Admiral William Fallon, head of US Central Command, gave one of the strongest indications yet that the US military is deeply reluctant to consider military action against Tehran. “This constant drum beat of conflict is what strikes me, which is not helpful and not useful,” he told al-Jazeera, according to the transcript. “I expect that there will be no war and that is what we ought to be working for.”
The dollar traded at $1.4130, the third day it has fallen to an all-time low against the European currency. In addition, the U.S. dollar weakened against 13 of the 16 most-active currencies.
Most of the impact of the global credit crunch will be felt in 2008 and the United States will be hardest hit, International Monetary Fund Managing Director Rodrigo Rato said on Monday.
Reuters reported that from October 2 to November 7 at more than 10,000 U.S. Starbucks locations, customers can receive "Song of the Day" cards redeemable on Apple's iTunes store for a complimentary song hand-selected by Starbucks Entertainment. At the standard iTunes rate of $.99 a song, the deal could cost Starbucks $50 million. And, it is giving away a WiFi connection that it usually charges for through T-Mobile.
Brett Steenbarger: "The 10 yr interest rate is up to 4.66%; we still have a bit of inversion in the yield curve, with 6mo bills > 2 yr notes."
U.K. natural gas rose on forecasts for lower supplies of the fuel, after Nederlandse Gasunie NV delayed the start of Dutch exports to the U.K. via the BBL pipeline and deliveries at British sub-terminals fell. Gas for same-day delivery rose as much as 6.8 percent to 43 pence a therm, according to prices on Bloomberg from the broker ICAP Plc. It traded at 42.5 pence a therm at 8:45 a.m. in London. That's equivalent to $8.61 a million British thermal units. A therm is 100,000 Btus.
First Data Corp. on Monday said it expects to close its acquisition by affiliates of Kohlberg Kravis Roberts & Co. later in the day.
"Mortgage rates won't stimulate demand,'' said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. ``The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages.''
The Movement for the Emancipation of the Niger Delta said it's ending a ceasefire.
John Hussman: "Investors will likely be reminded of how the market has historically performed following two consecutive cuts in the Discount Rate. We've observed 11 instances of this since 1950, with average total returns in the S&P 500 of 6.18% over the following 3 months, 12.48% over the following 6 months, and 21.05% over the following year. The difficulty with these averages is that the cuts almost invariably occurred well into bear markets, where valuations were already depressed. Specifically, the average P/E on the S&P 500 (based on trailing net earnings) was only 14 (with a median closer to 12), while the average dividend yield was 3.75% and the average price/revenue multiple was just 0.90. Presently, the trailing net P/E on the S&P 500 is 17.9, with a dividend yield of just 1.84 and a price/revenue multiple of 1.55. Indeed, only two of those “second Discount Rate cuts” occurred with the S&P 500 P/E above 15 and advisory bullishness running over 50%. Those instances were December 1971 and January 2001. The average subsequent performance of the S&P 500 following those cuts was -1.22 over 3 months, 0.92% over 6 months, and 3.17% over the following year."
The market cap for Petrochina is only slightly below the combined market caps for Chevron and ConocoPhillips. For those willing to assume the risk of the hedge, it sounds like an opportunity to me.
The UAW called a strike against General Motors today after UAW President Ron Gettelfinger said he was "shocked and disappointed" by GM's positions at the bargaining table.
An official at UAW Local 652 in Lansing, Mich., confirmed the walkout at 11:06 a.m. EDT. The UAW said it set the strike deadline over the "failure of GM to address job security and other mandatory issues of bargaining."
The strike against GM includes about 73,000 UAW-represented employees throughout the United States.
It is the first stoppage against GM since 1998 when a 54-day strike at parts-making operations in Flint, Mich., shut GM production nationally costing the company more than $3 billion.
Crude oil for November delivery fell by 67 cents, or 0.8%, to close at $80.95 a barrel on the New York Mercantile Exchange. October natural gas closed 28.7 cents, or 4.7%, higher at $6.367 per million British thermal units. It lost more than 3% last week.
Microsoft Corp. is in talks to make an investment in Facebook Inc. that would value the popular online social networking company at $10 billion or more, according to a story Monday in The Wall Street Journal's online edition. Microsoft's proposed investment in Facebook would grant it a stake of as much as 5%, worth between $300 million and $500 million, the report said, citing unnamed sources.
December gold closed at $739.30 an ounce Monday in New York, up 40 cents from the session. December silver climbed 2 cents to close at $13.64 an ounce and December copper ended at $3.645 a pound, up 1.5%.
Fitch Ratings in a special report Monday said limited access to capital is pressuring U.S. mortgage real estate investment trusts, "thus worsening funding profiles and growth prospects and leading to increased ratings pressure in the last several weeks." Problems in the mortgage and credit markets have triggered margin calls and reduced liquidity for mortgage REITs, the ratings agency said.
PrimeWest Energy Trust agreed to be acquired by Abu Dhabi's state-owned energy company for $2.4 billion plus the assumption of debt.
PrimeWest holders will get $26.75 for each unit they own.
Calgary-based PrimeWest is a conventional oil and gas royalty trust that acquires, develops, produces and sells natural gas, crude oil and natural gas liquids.
Metal Management Inc., a top U.S. metal recycler, said it agreed to be acquired by Australia's Sims Group Ltd. for $1.5 billion in stock.The transaction creates the world's largest publicly traded recycler, annually processing and trading more than 15 million tons of metal, the companies said. Under the agreement, Metal Management shareholders will receive 2.05 Sims American depositary shares for each of their shares.
John Hussman: "Investors were cheered last week when the Federal Reserve lowered its target for the Federal Funds Rate by 50 basis points, and lowered the Discount Rate (the interest rate it charges on loans to the banking system) by 50 basis points as well. It's important to emphasize that the impact of these changes is mainly psychological, and outside of a pool of a few billion dollars, won't have any effective bearing on the “liquidity” of the banking system, nor on the solvency of $3.4 trillion in real estate loans, and $6.3 trillion in total bank lending...If you examine the data you'll find that the total level of “liquidity” that the FOMC deals with is minuscule in relation to a $13.8 trillion economy, and the variation is even smaller. The total reserves of the U.S. banking system are about $40-$45 billion, and are very stable. The Fed simply does not “inject” meaningful amounts of “liquidity” to the banking system. Indeed, the latest cuts in Fed controlled interest rates were effected without any injection of “liquidity” into the banking system at all. Total borrowings by depository institutions from the Federal Reserve (i.e. borrowings at the Discount Rate) actually fell last week to $2.421 billion, from $3.158 billion the preceding week. That couple of billion dollars is the sum total of all outstanding borrowings at the Discount Rate. Though these figures are still higher than the typical level of discount window borrowing (a few hundred million), they are minuscule. Yet these are the figures that investors are revved up about as if this “liquidity” will save the mortgage market...The simple fact is that while the Federal Reserve lowered the Fed Funds Rate and the Discount Rate last week, it did not do so by “injecting” any new funds at all into the banking system. Rather, the Fed lowered these rates strictly by announcing they were now lower."
SAIC unit gets SPAWAR Systems contract for up to $459 mln.
Yamana Gold Inc. boosted its offer to acquire Meridian Gold Inc. by C$0.50 a share to C$7, in addition to the previously agreed-on 2.235 shares for each share of Yamana. Yamana, based in Toronto, said the new offer represents a spot premium of 38% based on the closing prices of Yamana and Meridian shares June 27, the date of Yamana's original proposal. Yamana Gold Inc. and Meridian Gold Inc. said Monday that they have reached an agreement in which Yamana will sweeten its bid and Meridian's board will endorse the new offer.
Euro-zone industrial orders fell a worse-than-forecast 4% in July compared to June, the Eurostat statistics agency said Monday, following a 4.5% rise in June. Excluding ships, railway and aerospace equipment, industrial new orders fell by 0.1% in the euro area.
There is a report that miner BHP Billiton has has uncovered what is potentially the world’s largest gold resources at its Olympic Dam mine in South Australia.
Deutsche Bank's profit could be hurt by up to 1.7 billion euros ($2.4 billion) when it revalues loans that have declined during the credit crunch, Reuters reported Monday, citing sources familiar with the situation. These loans would normally be farmed out to other banks, but they're on the German bank's books because of the credit crunch.
C-Cor Inc. definitively agreed to be acquired by Arris Group for $13.75 a share, or $730 million, creating what the companies said would be the largest pure-play provider of equipment and solutions to the cable-TV industry.
China's imports of crude oil climbed 18.7% in August from the same month a year earlier, the Chinese government said Monday. Crude oil imports totaled 14.04 million metric tones in August, equivalent to 3.32 million barrels a day, according to Dow Jones Newswires, which cited data published Monday by the General Administration of Customs.
Iran closed major border crossings with northern Iraq on Monday to protest the U.S. detention of an Iranian official the military accused of weapons smuggling, a Kurdish official said. At least four border gates have been closed and one remains open, the governor of the Kurdish province of Sulaimaniyah, Dana Ahmed Majeed, told The Associated Press. The move threatens the economy of Iraq's northern region — one of the country's few success stories.
In a partial interview transcript released on Sunday by al-Jazeera, the television news service based in Qatar, Admiral William Fallon, head of US Central Command, gave one of the strongest indications yet that the US military is deeply reluctant to consider military action against Tehran. “This constant drum beat of conflict is what strikes me, which is not helpful and not useful,” he told al-Jazeera, according to the transcript. “I expect that there will be no war and that is what we ought to be working for.”
The dollar traded at $1.4130, the third day it has fallen to an all-time low against the European currency. In addition, the U.S. dollar weakened against 13 of the 16 most-active currencies.
Most of the impact of the global credit crunch will be felt in 2008 and the United States will be hardest hit, International Monetary Fund Managing Director Rodrigo Rato said on Monday.
Reuters reported that from October 2 to November 7 at more than 10,000 U.S. Starbucks locations, customers can receive "Song of the Day" cards redeemable on Apple's iTunes store for a complimentary song hand-selected by Starbucks Entertainment. At the standard iTunes rate of $.99 a song, the deal could cost Starbucks $50 million. And, it is giving away a WiFi connection that it usually charges for through T-Mobile.
Brett Steenbarger: "The 10 yr interest rate is up to 4.66%; we still have a bit of inversion in the yield curve, with 6mo bills > 2 yr notes."
U.K. natural gas rose on forecasts for lower supplies of the fuel, after Nederlandse Gasunie NV delayed the start of Dutch exports to the U.K. via the BBL pipeline and deliveries at British sub-terminals fell. Gas for same-day delivery rose as much as 6.8 percent to 43 pence a therm, according to prices on Bloomberg from the broker ICAP Plc. It traded at 42.5 pence a therm at 8:45 a.m. in London. That's equivalent to $8.61 a million British thermal units. A therm is 100,000 Btus.
First Data Corp. on Monday said it expects to close its acquisition by affiliates of Kohlberg Kravis Roberts & Co. later in the day.
"Mortgage rates won't stimulate demand,'' said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. ``The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages.''
The Movement for the Emancipation of the Niger Delta said it's ending a ceasefire.
John Hussman: "Investors will likely be reminded of how the market has historically performed following two consecutive cuts in the Discount Rate. We've observed 11 instances of this since 1950, with average total returns in the S&P 500 of 6.18% over the following 3 months, 12.48% over the following 6 months, and 21.05% over the following year. The difficulty with these averages is that the cuts almost invariably occurred well into bear markets, where valuations were already depressed. Specifically, the average P/E on the S&P 500 (based on trailing net earnings) was only 14 (with a median closer to 12), while the average dividend yield was 3.75% and the average price/revenue multiple was just 0.90. Presently, the trailing net P/E on the S&P 500 is 17.9, with a dividend yield of just 1.84 and a price/revenue multiple of 1.55. Indeed, only two of those “second Discount Rate cuts” occurred with the S&P 500 P/E above 15 and advisory bullishness running over 50%. Those instances were December 1971 and January 2001. The average subsequent performance of the S&P 500 following those cuts was -1.22 over 3 months, 0.92% over 6 months, and 3.17% over the following year."
The market cap for Petrochina is only slightly below the combined market caps for Chevron and ConocoPhillips. For those willing to assume the risk of the hedge, it sounds like an opportunity to me.
The UAW called a strike against General Motors today after UAW President Ron Gettelfinger said he was "shocked and disappointed" by GM's positions at the bargaining table.
An official at UAW Local 652 in Lansing, Mich., confirmed the walkout at 11:06 a.m. EDT. The UAW said it set the strike deadline over the "failure of GM to address job security and other mandatory issues of bargaining."
The strike against GM includes about 73,000 UAW-represented employees throughout the United States.
It is the first stoppage against GM since 1998 when a 54-day strike at parts-making operations in Flint, Mich., shut GM production nationally costing the company more than $3 billion.
Crude oil for November delivery fell by 67 cents, or 0.8%, to close at $80.95 a barrel on the New York Mercantile Exchange. October natural gas closed 28.7 cents, or 4.7%, higher at $6.367 per million British thermal units. It lost more than 3% last week.
Microsoft Corp. is in talks to make an investment in Facebook Inc. that would value the popular online social networking company at $10 billion or more, according to a story Monday in The Wall Street Journal's online edition. Microsoft's proposed investment in Facebook would grant it a stake of as much as 5%, worth between $300 million and $500 million, the report said, citing unnamed sources.
December gold closed at $739.30 an ounce Monday in New York, up 40 cents from the session. December silver climbed 2 cents to close at $13.64 an ounce and December copper ended at $3.645 a pound, up 1.5%.
Fitch Ratings in a special report Monday said limited access to capital is pressuring U.S. mortgage real estate investment trusts, "thus worsening funding profiles and growth prospects and leading to increased ratings pressure in the last several weeks." Problems in the mortgage and credit markets have triggered margin calls and reduced liquidity for mortgage REITs, the ratings agency said.
PrimeWest Energy Trust agreed to be acquired by Abu Dhabi's state-owned energy company for $2.4 billion plus the assumption of debt.
PrimeWest holders will get $26.75 for each unit they own.
Calgary-based PrimeWest is a conventional oil and gas royalty trust that acquires, develops, produces and sells natural gas, crude oil and natural gas liquids.
Metal Management Inc., a top U.S. metal recycler, said it agreed to be acquired by Australia's Sims Group Ltd. for $1.5 billion in stock.The transaction creates the world's largest publicly traded recycler, annually processing and trading more than 15 million tons of metal, the companies said. Under the agreement, Metal Management shareholders will receive 2.05 Sims American depositary shares for each of their shares.
Sunday, September 23, 2007
A Possibility?
9/24/07 A Possibility?
The Houston Chronicle reported the abrupt departure of Noble Corp.'s chief executive, Mark Jackson, may leave the company ripe for an acquisition. Noble disclosed the resignation of Jackson, 51, in a short news release late Thursday. The company offered no additional information Friday.The sudden move triggered speculation by stock analysts Friday that Jackson may have disagreed with the board of directors regarding mergers or takeovers. "Clearly, Noble and other companies in offshore drilling have been subject to rumors of acquisition, and it is plausible the CEO and board could have seen different ways on different transactions," said Roger Read, an oil-field-services analyst for Netexis Bleichroeder. "Our general thought process on it is: Noble being without a CEO probably makes it easier, more likely, to effect a merger going forward."
On Friday, the currency of the 13 euro nations, which have more than 317 million residents and account for more than 15 percent of global gross domestic product, surged as high as $1.4119 before falling back to $1.4083 by late afternoon, above the $1.4076 it bought in New York on Thursday.
One Canadian dollar bought $1.0068 in U.S. currency at its highest point Friday before edging down to 99.95 U.S. cents in late New York trading, barely beating 99.93 U.S. cents late Thursday. Doug Porter, deputy chief economist at the Bank of Montreal, released a study Friday that indicates Canadians are paying roughly 24 percent more than Americans on identical goods despite parity in the U.S and Canadian dollars. Porter compared 17 goods sold in Canada and the U.S., finding that retail prices in Canada have not yet responded because most are set a year in advance. (That's hard to swallow)
Mike Burk: "All of the major indices were at multi year or all time highs in late July. Less than a month later we saw near record numbers of new lows. Last week we had an interest rate cut while the most of the major indices were less than 5% from their all time highs. These are unusual times. I expect the major indices to be lower on Friday September 28 than they were on Friday September 21."
Puget Sound Business Journal: "FAA testing may delay Boeing's 787."
The Houston Chronicle reported the abrupt departure of Noble Corp.'s chief executive, Mark Jackson, may leave the company ripe for an acquisition. Noble disclosed the resignation of Jackson, 51, in a short news release late Thursday. The company offered no additional information Friday.The sudden move triggered speculation by stock analysts Friday that Jackson may have disagreed with the board of directors regarding mergers or takeovers. "Clearly, Noble and other companies in offshore drilling have been subject to rumors of acquisition, and it is plausible the CEO and board could have seen different ways on different transactions," said Roger Read, an oil-field-services analyst for Netexis Bleichroeder. "Our general thought process on it is: Noble being without a CEO probably makes it easier, more likely, to effect a merger going forward."
On Friday, the currency of the 13 euro nations, which have more than 317 million residents and account for more than 15 percent of global gross domestic product, surged as high as $1.4119 before falling back to $1.4083 by late afternoon, above the $1.4076 it bought in New York on Thursday.
One Canadian dollar bought $1.0068 in U.S. currency at its highest point Friday before edging down to 99.95 U.S. cents in late New York trading, barely beating 99.93 U.S. cents late Thursday. Doug Porter, deputy chief economist at the Bank of Montreal, released a study Friday that indicates Canadians are paying roughly 24 percent more than Americans on identical goods despite parity in the U.S and Canadian dollars. Porter compared 17 goods sold in Canada and the U.S., finding that retail prices in Canada have not yet responded because most are set a year in advance. (That's hard to swallow)
Mike Burk: "All of the major indices were at multi year or all time highs in late July. Less than a month later we saw near record numbers of new lows. Last week we had an interest rate cut while the most of the major indices were less than 5% from their all time highs. These are unusual times. I expect the major indices to be lower on Friday September 28 than they were on Friday September 21."
Puget Sound Business Journal: "FAA testing may delay Boeing's 787."
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