11/24/07 The Goings On
H&R Block said Greenwich Capital Financial Products has increased its funding to $750 million from $400 million. The funding is for H&R's Option One Mortgage Corp.
Indications are that UAL Corp. remains open to the idea of a merger with another carrier, accord to a Business Week report.
Retailers worry U.S. shoppers may reduce spending in the face of higher food and fuel costs, the slowing housing market and the credit market crunch.
Walmart.com CEO Raul Vazquez said traffic to the retailer's Web site has been rising headed into the Thanksgiving holiday shopping weekend.
United Utilities is going to sell its electricity distribution assets for 1.78 billion pounds ($3.66 billion) -- or 1.14 billion pounds of cash and 642 million pounds of assumed debt -- to a consortium of Commonwealth Bank of Australia's Colonial First State Global Asset Management and the JPMorgan Asset Management Infrastructure Investments of J.P. Morgan Chase.
Freddie Mac, the second-largest U.S. mortgage-finance company, may report wider losses than it forecast as the slump in credit markets worsens, Moody's Investors Service said.
E-Trade has hired investment banks to help it consider selling itself, CNBC reported, citing unidentified people familiar with the situation.
Consultancy firm Oil Movements estimated Friday the Organization of Petroleum Exporting Countries will increase its exports to 24.5 million barrels a day in the four weeks ending Dec. 8, compared with 23.8 million barrels in the month ended Nov. 10. It will be OPEC's 14th consecutive increase and the biggest this year, according to Oil Movements.
Cold weather will move into the northern states starting Nov. 28. The weather will become colder through Dec. 3, according to MDA Federal Inc.'s EarthSat Energy Weather. The cooler temperatures may reduce the near-record U.S. inventories that had worked to depress prices of natural gas.
The energy sector was strong with crude closing at $98.18 and natural gas at $7.70.
Gold futures for December delivery gained $26.10 to $824.70 an ounce on the Comex division of the New York Mercantile Exchange. The metal surged 4.8 percent this week, the most since the week ended July 14, 2006. The percentage gain today was the biggest for a most-active contract since Feb. 21. Silver futures for December delivery climbed 31.5 cents, or 2.2 percent, to $14.735 an ounce. The metal is up 14 percent this year.
The dollar dropped to a record $1.4967 against the euro, the weakest since the single European currency's debut in 1999.
Soybeans surged above $11 a bushel to the highest in 34 years as China increased purchases of dwindling U.S. supplies.
Industrial and Commercial Bank of China Ltd. has ``insufficient'' assets overseas and seeks more investments abroad, President Yang Kaisheng said, even as he denied the lender plans to buy a stake in Standard Chartered Plc.
According to the WSJ, interest rates will rise, or "reset," on $362 billion of adjustable-rate subprime mortgages in 2008, adding to housing woes. The reset peak will likely add to political pressure to help borrowers who can't afford to pay the higher interest rates.
Not surprisingly, Australian Prime Minister John Howard suffered a humiliating defeat in national elections Saturday, according to preliminary results. Another Bushie bites the dust.
Doug Noland: "The Greenspan Fed’s fingerprints are all over the housing Bubble – at home and abroad. And they’re everywhere when it comes to heightened global dollar and currency market tumult. Our much revered former Fed Chairman is making a fool of himself, a spectacle not all too supportive of confidence in our policymakers, Credit system, or currency.
Whether he will admit it or not, mortgage Credit inflation was central to the Federal Reserve’s post-tech Bubble reflationary strategy. It really was a “Great Experiment” in inflationist monetary policy and, predictably, it failed miserably. The Fed and some notable Wall Street “strategists” feigned a system-wide “price level” that the Fed was obligated to adeptly manipulate to ensure that that evil “deflation” was not allowed to take root. What a crock. The risk was, then as it is now, U.S. Credit Collapse and not a somewhat deflating price level. Accommodating history’s most reckless Credit expansion over the past six years then ensured that the risk of collapse grew significantly greater while countermeasures turned increasingly unavailing...Moreover, it was our Credit system that led the world in the proliferation of securitizations, derivatives, leveraged speculation, Credit guarantees/insurance and highly tangled debt structures. And throughout his 18-year reign, Mr. Greenspan was the most vocal proponent of “Wall Street finance.” He was the head cheerleader for securities-based risk intermediation, derivatives, dynamic hedging strategies, leveraged speculation and, generally, Credit Bubble Turned Global Financial Fiasco. If he were any kind of statesman he would at least be willing to admit where mistake were made.
U.S. mortgage excesses blighted the world. Credit systems around the globe adopted Wall Street securitization and derivatives practices, while incorporating uniform “risk management” strategies. Wall Street cut loose leveraged speculation to overrun financial systems around the world, while our Current Account Deficits were often “Recycled” back to high-yielding “structured products.” And while not commonly recognized, U.S. mortgage Credit excesses and attendant Current Account Deficits concurrently debased the dollar while unleashing Credit systems globally. A complete lack of discipline - evolving into outright recklessness - at the Core nurtured rampant Credit and speculative excesses at the Periphery. Bad “money” for the “reserve currency” equated to bad “money” proliferating throughout. And, let there be no doubt, monetary toxicity has progressed to the point where it has severely affected global economic structures. The situation will not be rectified by central bankers and an even greater bout of Credit inflation."
According to the Chicago Tribune, the subprime crisis, which has claimed the jobs of three chief executives and prompted more than $45 billion in write-downs at the world's biggest banks, could end up spilling into 2009. "These events tend to become deeper and play out longer than most people initially expect," said Michael Mayo, an analyst who covers securities firms at Deutsche Bank AG in New York. "This is one of the slowest-moving train wrecks we've seen."
The tumbling U.S. housing market will continue to inflict the damage. Mortgage-backed securities and collateralized debt obligations containing those securities are falling in price and won't find their footing anytime soon.
That's because most of the subprime mortgages, which provide collateral for $800 billion in securities, have yet to go bad, says Christopher Whalen of Hawthorne, Calif.-based Institutional Risk Analytics.
"The collateral is not yet problematic," Whalen said. "That's the next big shoe to drop."
Mike Shedlock: "Rising delinquency and foreclosure rates, which are very predictably in the early stages because the spike in mortgage resets only started in October of this year, suggesting that the real surge of delinquencies won't be seen until the first quarter of 2008, with foreclosures surging even later. Despite hopes that the Fed can reverse these pressures, the fact is that the entire amount of "liquidity" added to the banking system by the Fed in the past four months amounts to about $15 billion (in a banking system with a thousand times that in loans and assets). On Thursday, several news stories reported that the Fed "pumped $47.25 billion of liquidity into the banking system," the highest total since September 2001 - but you'll find once again that $40.5 billion of that was pure rollovers of existing repos (which Thomson Financial noted in a news story the day before as my ballpark expectation). The rest is pre-holiday liquidity to accommodate demand for cash. Investors are deluding themselves when they count each rollover of a 3-day, 7-day or 14-day repo as new money. It's the same stuff, rolled over to retire the maturing stuff. The amount of outstanding repos is currently only about $15 billion more than its lowest 30-day average over the past year...Whether or not one believes the Fed is pouring on liquidity, whatever they are doing (mostly yapping nonsense about risks being balanced while proving otherwise by cutting the Fed Funds rate) sure is not working. 75 basis points in interest rate cuts and an additional 25 basis point cut in the discount rate have not helped. I am willing to bet that further cuts of another 100 basis points will not help either. Slashing rates to 1% was what created this mess. Cutting them to 1% again can hardly be the solution. It will be interesting to watch how fast Bernanke fires his blanks."
A story in the FT: "Although Thursday is typically slow because of the US Thanksgiving holiday, bankers said the week had been unusually light because of the growing fears that a big bank could go under as a result of losses in the US subprime mortgage and structured finance markets."
According to the FT, fresh emergency action to pump funds into the money markets was announced by the European Central Bank amid renewed fears that liquidity in the credit markets is again starting to dry up.
For you sport fans, the Mayorga (victor in 12 rounds)-Vegas brawl was a beauty and the Arkansas triple overtime win (50 to 48) over LSU was as exciting as it gets. For my money, both beat shopping on Black Friday any day.
Saturday, November 24, 2007
Friday, November 23, 2007
Dow Theory Sell Signal
11/23/07 Dow Theory Sell Signal
Robert McHugh: "Welcome to the first Bear Market since 2000 through 2002. We got an official Dow Theory Primary Trend Bear Market Signal today, Wednesday, November 21st, 2007, the day before Thanksgiving. Amazing. This is the first Dow Theory Primary Trend Bear Market Signal since September 23rd, 1999.
But the true impact of the Bear Market signal was not felt until several months later. In fact, from September 23rd, 1999's close at 10,318.59, the Dow Industrials rose 1,404.39 points over the next three and a half months to an all-time high of 11,722.98 on January 14th, 2000. It was then that the Bear market in stocks began, four months after the Dow Theory Primary Trend Bear Market signal. What followed was a two and three/quarter year Bear market that saw the Industrials plunge a Fibonacci 38 percent, to 7,181.47 on October 10th, 2002."
Scott Burns: "Consider the proud trumpeting that came from Washington at the close of fiscal 2007. The deficit for the unified budget was, politicians crowed, down to a mere $162.8 billion. In fact, our government is overspending at a far greater rate. The total federal debt actually increased by $497.1 billion over the same period...the gross federal debt has increased in each of the past eight years, even in the two years when surpluses were reported... the gross federal debt, which includes the obligations held by the Social Security and Medicare trust funds, has increased much faster than the deficits -- about $3.3 trillion over the same eight years. That's $2 trillion more than the reported $1.3 trillion in deficits over the period. Can you spell "Enron"?"
The dollar hit a fresh all-time low against the euro Friday. The dollar continued to slide against the Japanese yen, giving up 0.6% at 107.86 yen. The greenback also fell to its lowest level against China's yuan since its revaluation in July 2005.
Forbes: "Harley itself finances half the hogs it sells. This year defaults on its loans have risen nearly half a percentage point to 1.65%. Harley's fortunes largely ride on its skill at selling bikes. But its ability to size up a good credit risk matters a lot, too. Last quarter 13% of its pretax earnings came from loans and leases."
Howard Davidowitz sees a retail season train wreck. He sees a tapped out consumer and predicts a consumer-led recession in 2008. At the same time, he sees the ultra wealthy individual providing a better season for Neiman Marcus and Nordstrom's and Bloomingdale's.
Friday is a half-day trading for the markets. In pre-market activity, the Dow is up about 80 points, the S&P about 9, and the Nasdaq about 14. Gold is up $12 to $811 and silver has rallied to $14.59. Oil is down a buck at $96+. The U.S. Dollar Index is about flat at 75.11. Natural gas is up a bit at $7.64. U.S. interest rates are about unchanged. The 3-month Libor is 5.04%.
Robert McHugh: "Welcome to the first Bear Market since 2000 through 2002. We got an official Dow Theory Primary Trend Bear Market Signal today, Wednesday, November 21st, 2007, the day before Thanksgiving. Amazing. This is the first Dow Theory Primary Trend Bear Market Signal since September 23rd, 1999.
But the true impact of the Bear Market signal was not felt until several months later. In fact, from September 23rd, 1999's close at 10,318.59, the Dow Industrials rose 1,404.39 points over the next three and a half months to an all-time high of 11,722.98 on January 14th, 2000. It was then that the Bear market in stocks began, four months after the Dow Theory Primary Trend Bear Market signal. What followed was a two and three/quarter year Bear market that saw the Industrials plunge a Fibonacci 38 percent, to 7,181.47 on October 10th, 2002."
Scott Burns: "Consider the proud trumpeting that came from Washington at the close of fiscal 2007. The deficit for the unified budget was, politicians crowed, down to a mere $162.8 billion. In fact, our government is overspending at a far greater rate. The total federal debt actually increased by $497.1 billion over the same period...the gross federal debt has increased in each of the past eight years, even in the two years when surpluses were reported... the gross federal debt, which includes the obligations held by the Social Security and Medicare trust funds, has increased much faster than the deficits -- about $3.3 trillion over the same eight years. That's $2 trillion more than the reported $1.3 trillion in deficits over the period. Can you spell "Enron"?"
The dollar hit a fresh all-time low against the euro Friday. The dollar continued to slide against the Japanese yen, giving up 0.6% at 107.86 yen. The greenback also fell to its lowest level against China's yuan since its revaluation in July 2005.
Forbes: "Harley itself finances half the hogs it sells. This year defaults on its loans have risen nearly half a percentage point to 1.65%. Harley's fortunes largely ride on its skill at selling bikes. But its ability to size up a good credit risk matters a lot, too. Last quarter 13% of its pretax earnings came from loans and leases."
Howard Davidowitz sees a retail season train wreck. He sees a tapped out consumer and predicts a consumer-led recession in 2008. At the same time, he sees the ultra wealthy individual providing a better season for Neiman Marcus and Nordstrom's and Bloomingdale's.
Friday is a half-day trading for the markets. In pre-market activity, the Dow is up about 80 points, the S&P about 9, and the Nasdaq about 14. Gold is up $12 to $811 and silver has rallied to $14.59. Oil is down a buck at $96+. The U.S. Dollar Index is about flat at 75.11. Natural gas is up a bit at $7.64. U.S. interest rates are about unchanged. The 3-month Libor is 5.04%.
Thursday, November 22, 2007
Black Friday
11/23/07 Black Friday
Dozens of retailers are opening earlier and offering special deals during pre-dawn hours on Black Friday. I continue to believe the public will do a greater percentage of their holiday buying on the internet. Wal-Mart Stores Inc. and Best Buy Co. will mark Thanksgiving today with online promotions aimed at jump starting the holiday sales season.
The notional amount of outstanding over-the-counter derivatives -- derivatives that do not trade on an exchange -- were $516 trillion at the end of June, which corresponds to annualized growth of 33%, according to the Bank for International Settlements. That's higher than the 20% average annual rate of increases since the BIS first started tracking derivatives in 1995. Credit derivatives grew ten-fold, the BIS said, with credit-default swaps by far the dominant instrument in this category.
China is worried that BHP Billiton Ltd will have too much power in setting iron ore prices if it takes over rival Rio Tinto Ltd/Plc but recognizes that a tie-up could help secure long-term supplies, a manager at the country's No. 2 steel maker said on Thursday. The two mining giants together account for just under two-fifths of China's imports of the commodity, the main feedstock for steel.
Caisse d'Epargne and Banque Populaire, two French mutual banks, have pledged to inject $1.5bn into CIFG, a bond insurer, to enable it to weather the collapse of the subprime mortgage debt market.
LM Ericsson AB said Thursday it is extending its deadline to pay its supplier bills in a move to improve cash-flow. Ericsson will extend the deadline to 90 days from 60 days as part of its global policy, spokeswoman Ase Lindskog said.
China's stocks plunged to their lowest close since mid-August.
A takeover of Germany's BASF AG is not impossible, the chief executive of the world's largest chemicals company by sales said. "BASF is not that big that it can't be taken over," Juergen Hambrecht told reporters in Stuttgart late on Wednesday.
The dollar fell to a record against the euro, extending its decline this year to 11 percent. Gold for immediate delivery climbed $1.98, or 0.3 percent, to $802.30 an ounce as of 9:25 a.m. in London. Gold has gained 26 percent this year outpacing last year's 23 percent rise. Silver rose 6.5 cents, or 0.5 percent, to $14.495 an ounce.
Freddie Mac reported that two-thirds of the reserves it has set aside for bad loans come from loans given in 2006 and 2007. Anthony Piszel, chief financial officer of Freddie Mac: "As long as house prices were going up, it cured all evils."
Henry To: "A slowing global economy has nearly always meant a decline in commodity prices, and to a lesser extent, equity prices. Given that the consensus view is that commodities (and gold) will continue to rise going forward as the Fed cut rates, there is a now a good chance that the commodity markets could actually surprise us and turn down instead over the next 3 to 6 months. For us to become more bullish on commodity prices, both the Bank of England and the European Central Bank will need to change their policy stances - with the former easing as early as December and the latter at least shifting from a neutral to an easing bias. Given the turmoil in the financial markets, and given the high dependence of the banking sector in the UK, I would not be surprised if this occurs - but my guess is that commodity prices will still need to correct from current levels before they can make a sustainable move higher."
I agree with Henry's commentary. In fact, on Wednesday I hedged my long crude position. That's the one dating back to the early part of 2007 with an average cost of $53 a barrel.
Wednesday's Dow close was below its August closing low of 12,846 and triggered a Dow Theory sell signal.
The markets are closed in the U.S. for the Thanksgiving holiday; however, it still affords every serious investor the opportunity to recount Hyman Minsky's emphasis on the fragility of the monetary system and its propensity to disaster.
As he noted, losses on speculative assets prompt lenders to call in their loans and "This is likely to lead to a collapse of asset values," Mr. Minsky wrote.
The average cost of 12 items typically served during the Nov. 22 holiday in the U.S. rose to $42.26 from $38.10 last year, the American Farm Bureau Federation said.
Jim Rogers: ""This is worse than the S&L crisis. This is the first time - this is the worst credit bubble we've ever had in American history. No - never in American history have people been able to buy a house with no money down…never. That's never happened anytime in the world. So, we have the worst credit bubble. It's going to take a long time to work its way out. You don't cure a bubble in five or six months… It takes five or six years."
Market research firm comScore Inc said Google's core Web search properties captured 58.5 percent of the U.S. market in October, up from 57.0 percent in September. The top five providers of Web search all showed at least 5 percent growth in the number of searches in October. Yahoo Inc was number two after Google, followed by Microsoft Corp , IAC/InterActiveCorp's Ask.com and Time Warner Inc's network of sites, including AOL.
ElBaradei, believed to be concerned by U.S.-led criticism of the transparency plan's limitations and resolve to isolate Iran with harsher sanctions, said the plan was on track -- after some Western powers suggested Iran was dragging its heels. "It is proceeding according to schedule ... There has been good progress," he said, in getting Iran to own up after years of stonewalling about secret 1980s and '90s efforts to acquire centrifuge enrichment technology from nuclear smugglers. "Our progress over the past two months has been made possible by an increased level of Iranian cooperation.
Carl Icahn increased his stake in Temple Inland, the paper-packaging maker, to 9.7 percent from 8.9 percent, according to a Securities and Exchange Commission filing. In recent weeks, the stock has declined from 56 to 41. With a $10.25 cash distribution to be made in December and the company being split into three parts, one might consider selling the $40 puts.
Alcoa is reconsidering a A$1.2 billion ($1 billion) aluminum smelter expansion in Australia because of rising power costs, the Australian Financial Review reported.
Troubled bond insurer ACA Capital Holdings may have its credit rating cut, a move that would set off a chain reaction leading banks to take on an estimated $60 billion of CDO obligations, JP Morgan analyst Andrew Wessel said Wednesday.
"The world economic growth may experience a slowdown next year, but it is likely to have only mild effect on China's growth," Xinhua said, citing a Wednesday interview with Zhou. It said he was in South Africa for a conference on global financial stability. China's rapid economic growth, expected to top 11 percent this year, has been driven by exports, but Beijing is trying to reduce reliance on foreign markets by encouraging its own consumers to spend more.
Brett Steenbarger: "The challenge of dealing with anxiety in trading is that, very often, the times of heightened threat are also times of enhanced opportunity. Becoming the deer in the headlights can destroy us if we're trapped in a losing position, and it can also prevent us from acting upon those enhanced opportunities."
Aesop: “A crust eaten in peace is better than a banquet partaken in anxiety.”
Nouriel Roubini: "I now see the risk of a severe and worsening liquidity and credit crunch leading to a generalized meltdown of the financial system of a severity and magnitude like we have never observed before. In this extreme scenario whose likelihood is increasing we could see a generalized run on some banks; and runs on a couple of weaker (non-bank) broker dealers that may go bankrupt with severe and systemic ripple effects on a mass of highly leveraged derivative instruments that will lead to a seizure of the derivatives markets (think of LTCM to the power of three); a collapse of the ABCP market and a disorderly collapse of the SIVs and conduits; massive losses on money market funds with a run on both those sponsored by banks and those not sponsored by banks (with the latter at even more severe risk as the recent effective bailout of the formers’ losses by theirs sponsoring banks is not available to those not being backed by banks); ever growing defaults and losses ($500 billion plus) in subprime, near prime and prime mortgages with severe known-on effect on the RMBS and CDOs market; massive losses in consumer credit (auto loans, credit cards); severe problems and losses in commercial real estate and related CMBS; the drying up of liquidity and credit in a variety of asset backed securities putting the entire model of securitization at risk; runs on hedge funds and other financial institutions that do not have access to the Fed’s lender of last resort support; a sharp increase in corporate defaults and credit spreads; and a massive process of re-intermediation into the banking system of activities that were until now altogether securitized."
Borsi Giosue: “The great thought, the great concern, the great anxiety of men is to restrict, as much as possible, the limits of their own responsibility”
Dozens of retailers are opening earlier and offering special deals during pre-dawn hours on Black Friday. I continue to believe the public will do a greater percentage of their holiday buying on the internet. Wal-Mart Stores Inc. and Best Buy Co. will mark Thanksgiving today with online promotions aimed at jump starting the holiday sales season.
The notional amount of outstanding over-the-counter derivatives -- derivatives that do not trade on an exchange -- were $516 trillion at the end of June, which corresponds to annualized growth of 33%, according to the Bank for International Settlements. That's higher than the 20% average annual rate of increases since the BIS first started tracking derivatives in 1995. Credit derivatives grew ten-fold, the BIS said, with credit-default swaps by far the dominant instrument in this category.
China is worried that BHP Billiton Ltd will have too much power in setting iron ore prices if it takes over rival Rio Tinto Ltd/Plc but recognizes that a tie-up could help secure long-term supplies, a manager at the country's No. 2 steel maker said on Thursday. The two mining giants together account for just under two-fifths of China's imports of the commodity, the main feedstock for steel.
Caisse d'Epargne and Banque Populaire, two French mutual banks, have pledged to inject $1.5bn into CIFG, a bond insurer, to enable it to weather the collapse of the subprime mortgage debt market.
LM Ericsson AB said Thursday it is extending its deadline to pay its supplier bills in a move to improve cash-flow. Ericsson will extend the deadline to 90 days from 60 days as part of its global policy, spokeswoman Ase Lindskog said.
China's stocks plunged to their lowest close since mid-August.
A takeover of Germany's BASF AG is not impossible, the chief executive of the world's largest chemicals company by sales said. "BASF is not that big that it can't be taken over," Juergen Hambrecht told reporters in Stuttgart late on Wednesday.
The dollar fell to a record against the euro, extending its decline this year to 11 percent. Gold for immediate delivery climbed $1.98, or 0.3 percent, to $802.30 an ounce as of 9:25 a.m. in London. Gold has gained 26 percent this year outpacing last year's 23 percent rise. Silver rose 6.5 cents, or 0.5 percent, to $14.495 an ounce.
Freddie Mac reported that two-thirds of the reserves it has set aside for bad loans come from loans given in 2006 and 2007. Anthony Piszel, chief financial officer of Freddie Mac: "As long as house prices were going up, it cured all evils."
Henry To: "A slowing global economy has nearly always meant a decline in commodity prices, and to a lesser extent, equity prices. Given that the consensus view is that commodities (and gold) will continue to rise going forward as the Fed cut rates, there is a now a good chance that the commodity markets could actually surprise us and turn down instead over the next 3 to 6 months. For us to become more bullish on commodity prices, both the Bank of England and the European Central Bank will need to change their policy stances - with the former easing as early as December and the latter at least shifting from a neutral to an easing bias. Given the turmoil in the financial markets, and given the high dependence of the banking sector in the UK, I would not be surprised if this occurs - but my guess is that commodity prices will still need to correct from current levels before they can make a sustainable move higher."
I agree with Henry's commentary. In fact, on Wednesday I hedged my long crude position. That's the one dating back to the early part of 2007 with an average cost of $53 a barrel.
Wednesday's Dow close was below its August closing low of 12,846 and triggered a Dow Theory sell signal.
The markets are closed in the U.S. for the Thanksgiving holiday; however, it still affords every serious investor the opportunity to recount Hyman Minsky's emphasis on the fragility of the monetary system and its propensity to disaster.
As he noted, losses on speculative assets prompt lenders to call in their loans and "This is likely to lead to a collapse of asset values," Mr. Minsky wrote.
The average cost of 12 items typically served during the Nov. 22 holiday in the U.S. rose to $42.26 from $38.10 last year, the American Farm Bureau Federation said.
Jim Rogers: ""This is worse than the S&L crisis. This is the first time - this is the worst credit bubble we've ever had in American history. No - never in American history have people been able to buy a house with no money down…never. That's never happened anytime in the world. So, we have the worst credit bubble. It's going to take a long time to work its way out. You don't cure a bubble in five or six months… It takes five or six years."
Market research firm comScore Inc said Google's core Web search properties captured 58.5 percent of the U.S. market in October, up from 57.0 percent in September. The top five providers of Web search all showed at least 5 percent growth in the number of searches in October. Yahoo Inc was number two after Google, followed by Microsoft Corp , IAC/InterActiveCorp's Ask.com and Time Warner Inc's network of sites, including AOL.
ElBaradei, believed to be concerned by U.S.-led criticism of the transparency plan's limitations and resolve to isolate Iran with harsher sanctions, said the plan was on track -- after some Western powers suggested Iran was dragging its heels. "It is proceeding according to schedule ... There has been good progress," he said, in getting Iran to own up after years of stonewalling about secret 1980s and '90s efforts to acquire centrifuge enrichment technology from nuclear smugglers. "Our progress over the past two months has been made possible by an increased level of Iranian cooperation.
Carl Icahn increased his stake in Temple Inland, the paper-packaging maker, to 9.7 percent from 8.9 percent, according to a Securities and Exchange Commission filing. In recent weeks, the stock has declined from 56 to 41. With a $10.25 cash distribution to be made in December and the company being split into three parts, one might consider selling the $40 puts.
Alcoa is reconsidering a A$1.2 billion ($1 billion) aluminum smelter expansion in Australia because of rising power costs, the Australian Financial Review reported.
Troubled bond insurer ACA Capital Holdings may have its credit rating cut, a move that would set off a chain reaction leading banks to take on an estimated $60 billion of CDO obligations, JP Morgan analyst Andrew Wessel said Wednesday.
"The world economic growth may experience a slowdown next year, but it is likely to have only mild effect on China's growth," Xinhua said, citing a Wednesday interview with Zhou. It said he was in South Africa for a conference on global financial stability. China's rapid economic growth, expected to top 11 percent this year, has been driven by exports, but Beijing is trying to reduce reliance on foreign markets by encouraging its own consumers to spend more.
Brett Steenbarger: "The challenge of dealing with anxiety in trading is that, very often, the times of heightened threat are also times of enhanced opportunity. Becoming the deer in the headlights can destroy us if we're trapped in a losing position, and it can also prevent us from acting upon those enhanced opportunities."
Aesop: “A crust eaten in peace is better than a banquet partaken in anxiety.”
Nouriel Roubini: "I now see the risk of a severe and worsening liquidity and credit crunch leading to a generalized meltdown of the financial system of a severity and magnitude like we have never observed before. In this extreme scenario whose likelihood is increasing we could see a generalized run on some banks; and runs on a couple of weaker (non-bank) broker dealers that may go bankrupt with severe and systemic ripple effects on a mass of highly leveraged derivative instruments that will lead to a seizure of the derivatives markets (think of LTCM to the power of three); a collapse of the ABCP market and a disorderly collapse of the SIVs and conduits; massive losses on money market funds with a run on both those sponsored by banks and those not sponsored by banks (with the latter at even more severe risk as the recent effective bailout of the formers’ losses by theirs sponsoring banks is not available to those not being backed by banks); ever growing defaults and losses ($500 billion plus) in subprime, near prime and prime mortgages with severe known-on effect on the RMBS and CDOs market; massive losses in consumer credit (auto loans, credit cards); severe problems and losses in commercial real estate and related CMBS; the drying up of liquidity and credit in a variety of asset backed securities putting the entire model of securitization at risk; runs on hedge funds and other financial institutions that do not have access to the Fed’s lender of last resort support; a sharp increase in corporate defaults and credit spreads; and a massive process of re-intermediation into the banking system of activities that were until now altogether securitized."
Borsi Giosue: “The great thought, the great concern, the great anxiety of men is to restrict, as much as possible, the limits of their own responsibility”
Wednesday, November 21, 2007
Happy Thanksgiving
11/22/07 Happy Thanksgiving
I wish all my readers to have a happy and healthy and safe Thanksgiving. Sharing a special time with love ones is a gift.
Epictetus: "He is a wise man who does not grieve for the things which he has not, but rejoices for those which he has."
It is not every day before Thanksgiving that the pre-market trading is so weak. The futures indicate the Dow-120, the S&P -17, and the Nasdaq -21. Meanwhile, oil is trading in the $98-99 range and gold is knocking on the $800 door. The Dollar Index is 75.08, another new low. The yen is much stronger at 108.24 and the yen carry trade is about to carry some folks out. The rates in the U.K. were left unchanged. At the same time, the 10-year Treasury bond yields have dropped to 4%. I never would have thought this and didn't. I should stick to equities.
Japan's trade surplus increased as much as 66.1% in October from a year ago, as the growth in exports outstripped the rise in imports. The surplus rose to 1.02 trillion yen ($9.34 billion) from 613.38 billion yen a year ago, and was aided by higher exports to China, Japan's largest trading partner in Asia, and to western European countries such as Belgium, Netherlands and the U.K. Japan's trade surplus with the U.S., its largest trading partner, narrowed 8.5% as the growth in its imports from the U.S. exceeded the rise in its exports.
Overall losses from the U.S. mortgage market crisis could be up to $300 billion but financial firms and policymakers need to buy time to ensure an orderly work-out, the Organization for Economic Co-operation and Development said on Wednesday.
More than one in 10 of all hedge funds will go out of business this year as the rate of failure doubles, the head of Man Group, the world’s biggest listed hedge fund manager, has predicted.
For those who believe in the U.S. dollar, here's a little holiday cheer from Richard Daughty: "And since I am always on the lookout for ways to illustrate how inflation causes the loss of buying power of dollars, it is fortunate for me that MoneyandMarkets.com happened to come along and writes, "Suppose you put $500,000 into a money market account earning 4% a year back on November 7, 2002. Compounded daily, you'd have $610,694.69 as of yesterday." Immediately I know that he and I travel in totally different circles, as all my hoodlum friends and me TOGETHER couldn't come up with $500,000 to put into some stinking money market fund. So I was getting ready to say "Bah!" and leave, when he says, "But wait! Over that same five years, the dollar has lost another 28% of its purchasing power. So, what one dollar bought in 2002, will only buy $0.72 worth of goods and services today." At that, I start sensing something sinister and important here, but I know that I am too stupid to understand exactly what, so I will keep my mouth shut and my hand inching towards the pistol I have under my jacket, just in case. This "freezing like an armed deer in the headlights" tactic turned out to be very fortuitous, as he was somehow persuaded to go on to explain "So that $610,694.69 in savings that you accumulated and thought you protected so wisely in a money market fund? Well it will only purchase $439,700 worth of goods and services - 28% less than you thought!" It's a frightening Twilight Zone moment when you realize that you started with $500,000 in buying power, and you ended up with, after waiting five long years, with only $439,700 in buying power! That's $60,300 LESS than what you started with! And that is before you pay the capital gains/income taxes on the phantom "gains" on that additional $110, 694.69 in account value, turning your total real loss in buying power into a bigger, much bigger net loss! Hahahaha! Ugh." Not to worry. The Administration believes in a strong dollar policy. If you believe that, then you are a poster child for Charmin.
The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 3.6 percent to 681.7 in the week ended November 16.
"Countrywide's survival strategy has depended on access to the secondary markets" -- the companies that, like Fannie Mae and Freddie Mac, buy loans and bundle them into securities for sale, Fox-Pitt Kelton analyst Howard Shapiro wrote. The approach won't work so well when Freddie Mac and Fannie Mae "are capital-constrained and may need to shrink."
In a note to investors Monday, Lehman Brothers analyst Brian Johnson said his study of auto-loan-backed securities sold by Ford Motor Credit and GMAC Financial Services showed some higher delinquency rates for October and September compared with recent years. "As unemployment remains low, this deterioration ... may be evidence of a likely spillover of the mortgage woes onto the auto credit world," Johnson wrote.
Deere & Co., the world's largest maker of tractors and harvesters, said fourth-quarter profit climbed 52 percent, beating analyst estimates, as demand outside North America countered slowing sales of construction equipment. Net income rose to $422.1 million, or $1.88 a share, from $277.3 million, or $1.20, a year earlier, the Moline, Illinois- based company said in a statement. Sales gained 20 percent to $6.14 billion for the quarter ended Oct. 31. Looking forward, the company expects sales to increase by about 12% for the full year and up about 25% for the first quarter of 2008. Deere sees 2008 earnings of about $2.1 billion and earnings about $325 million in first quarter.
According to comScore, online sales are up 17% for the period from November 1 to November 18, hitting $7.04 billion.
The Wall Street Journal writes India firm Mahindra will bid for Ford's Jaguar and Rover units.
Bush on Musharraf: "Truly is somebody who believes in democracy." Is Bush familiar with the constitutional rights of all Americans?
Brett Steenbarger: "We're seeing an expansion in the number of stocks making new lows, not a contraction. We're seeing weak sectors get weaker, not attracting longer-term value-oriented buyers. Advance-decline lines are making new lows, not sustaining divergences...When weak markets don't attract sustained buying--and continue to weaken--my foremost concern is capital preservation."
Abercrombie & Fitch said Wednesday that its profits rose 15 percent in the third quarter, despite comparable-store sales that were nearly flat. The company expects net income of $3.63 to $3.67 a share in the second half of the fiscal 2007 ending Jan. 1.
An offshore oil well in Mexico's Campeche Sound caught fire Tuesday morning while workers were trying to plug an oil and natural gas leak, reported state oil company Petroleos Mexicanos.
Petroliam Nasional Bhd., Malaysia's national oil company, expects production to return to normal at South Africa's third-largest oil refinery within 24 hours following a fire.
Initial jobless claims decreased by 11,000 to 330,000 in the week that ended Nov. 17, the Labor Department said today in Washington. The four-week moving average dropped to 329,750 from 330,500. Meanwhile, seasonally adjusted number of Americans receiving state jobless benefits increased 7,000 to 2.57 million in the week ending Nov. 10. The four-week seasonally adjusted moving average of continuing claims rose 10,750 to 2.57 million.
Tesoro Corp. said it's neutral on whether stockholders should participate in a tender offer by Kirk Kerkorian's Tracinda Corp. to buy up to 16% of the company via 21.88 million shares at $64 a share. Kerkorian made the offer on Nov. 7. Tesoro's board also OK'd a shareholder rights plan, or poison pill, which will get triggered if anyone buys more than 20% of the company in the open market.
Former White House Press Secretary Scott McClellan blames George Bush for the Valerie Plame leak deceit.
Crude stocks rose by 1.4 million barrels to 318 million barrels in the week ending Nov. 16, American Petroleum Institute reported on Wednesday. Distillate stocks fell by 3.6 million barrels to 132 million barrels in the same period, while gasoline stocks rose by 2.6 million barrels to 197.9 million barrels, API said. Also on Wednesday, Crude inventories fell by 1.1 million barrels in the week ending Nov. 16, the Energy Department's Energy Information Administration said. Gasoline supplies rose by 200,000 barrels in the latest week, while distillate fuel stocks decreased by 2.4 million barrels, EIA said.
The Conference Board stated that a gauge of future economic growth fell 0.5% in October. Only three of the 10 leading economic indicators rose in October, with the largest positive contribution from stock prices. Building permits were the largest negative contributor. "Business confidence could edge lower, with unrelenting concerns about price increases not keeping up with wage pressures," said Ken Goldstein, labor economist at the Conference Board. "At the same time, consumers worry about wages not keeping up with price increases."
Seeking Alpha: "The spreads on two-year U.S. interest rate swaps widened to record levels Tuesday on growing credit fears and rising short-term interbank loan rates. The two-year swap spread traded as wide as 101.25 basis points before settling at 97 basis points versus 96 on Monday. The last record spread was 97 basis points in March 1989, during the savings-and-loan crisis. The five-year spread widened six basis points to 95.75 and the 10-year spread seven basis points to 80.75. "The widening of swap spreads is a function of tight lending and a de-leveraging in the financial system and the high cost of money," said William O'Donnell of UBS Securities. "The last two times we saw these meteor-like spikes in swap spreads in the U.S., they were followed by a recession."
In a weak market it is easier to pick out unusual activity. Such was the buying in the Tribune Jan.$30 and Jan. $32.50 calls.
The Dow Jones Industrial Average finished down 211 points at 12,799, with all but one of its 30 stocks ending in the red. The S&P 500 index lost 22 points to 1,416, while the Nasdaq Composite dropped 34 points to 2,562.
December crude-oil futures closed down 74 cents, or 0.8%, at $97.29 a barrel on the New York Mercantile Exchange. Natural gas rose 7 cents to $7.55. Gold for December delivery rose $7.20 to end at $798.60 an ounce on the New York Mercantile Exchange. In contrast, copper for December delivery dropped 13.90 cents, or over 4%, to end at $2.8880 a pound.
Teddy Roosevelt: "Let us remember that, as much has been given us, much will be expected from us, and that true homage comes from the heart as well as from the lips, and shows itself in deeds."
I wish all my readers to have a happy and healthy and safe Thanksgiving. Sharing a special time with love ones is a gift.
Epictetus: "He is a wise man who does not grieve for the things which he has not, but rejoices for those which he has."
It is not every day before Thanksgiving that the pre-market trading is so weak. The futures indicate the Dow-120, the S&P -17, and the Nasdaq -21. Meanwhile, oil is trading in the $98-99 range and gold is knocking on the $800 door. The Dollar Index is 75.08, another new low. The yen is much stronger at 108.24 and the yen carry trade is about to carry some folks out. The rates in the U.K. were left unchanged. At the same time, the 10-year Treasury bond yields have dropped to 4%. I never would have thought this and didn't. I should stick to equities.
Japan's trade surplus increased as much as 66.1% in October from a year ago, as the growth in exports outstripped the rise in imports. The surplus rose to 1.02 trillion yen ($9.34 billion) from 613.38 billion yen a year ago, and was aided by higher exports to China, Japan's largest trading partner in Asia, and to western European countries such as Belgium, Netherlands and the U.K. Japan's trade surplus with the U.S., its largest trading partner, narrowed 8.5% as the growth in its imports from the U.S. exceeded the rise in its exports.
Overall losses from the U.S. mortgage market crisis could be up to $300 billion but financial firms and policymakers need to buy time to ensure an orderly work-out, the Organization for Economic Co-operation and Development said on Wednesday.
More than one in 10 of all hedge funds will go out of business this year as the rate of failure doubles, the head of Man Group, the world’s biggest listed hedge fund manager, has predicted.
For those who believe in the U.S. dollar, here's a little holiday cheer from Richard Daughty: "And since I am always on the lookout for ways to illustrate how inflation causes the loss of buying power of dollars, it is fortunate for me that MoneyandMarkets.com happened to come along and writes, "Suppose you put $500,000 into a money market account earning 4% a year back on November 7, 2002. Compounded daily, you'd have $610,694.69 as of yesterday." Immediately I know that he and I travel in totally different circles, as all my hoodlum friends and me TOGETHER couldn't come up with $500,000 to put into some stinking money market fund. So I was getting ready to say "Bah!" and leave, when he says, "But wait! Over that same five years, the dollar has lost another 28% of its purchasing power. So, what one dollar bought in 2002, will only buy $0.72 worth of goods and services today." At that, I start sensing something sinister and important here, but I know that I am too stupid to understand exactly what, so I will keep my mouth shut and my hand inching towards the pistol I have under my jacket, just in case. This "freezing like an armed deer in the headlights" tactic turned out to be very fortuitous, as he was somehow persuaded to go on to explain "So that $610,694.69 in savings that you accumulated and thought you protected so wisely in a money market fund? Well it will only purchase $439,700 worth of goods and services - 28% less than you thought!" It's a frightening Twilight Zone moment when you realize that you started with $500,000 in buying power, and you ended up with, after waiting five long years, with only $439,700 in buying power! That's $60,300 LESS than what you started with! And that is before you pay the capital gains/income taxes on the phantom "gains" on that additional $110, 694.69 in account value, turning your total real loss in buying power into a bigger, much bigger net loss! Hahahaha! Ugh." Not to worry. The Administration believes in a strong dollar policy. If you believe that, then you are a poster child for Charmin.
The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 3.6 percent to 681.7 in the week ended November 16.
"Countrywide's survival strategy has depended on access to the secondary markets" -- the companies that, like Fannie Mae and Freddie Mac, buy loans and bundle them into securities for sale, Fox-Pitt Kelton analyst Howard Shapiro wrote. The approach won't work so well when Freddie Mac and Fannie Mae "are capital-constrained and may need to shrink."
In a note to investors Monday, Lehman Brothers analyst Brian Johnson said his study of auto-loan-backed securities sold by Ford Motor Credit and GMAC Financial Services showed some higher delinquency rates for October and September compared with recent years. "As unemployment remains low, this deterioration ... may be evidence of a likely spillover of the mortgage woes onto the auto credit world," Johnson wrote.
Deere & Co., the world's largest maker of tractors and harvesters, said fourth-quarter profit climbed 52 percent, beating analyst estimates, as demand outside North America countered slowing sales of construction equipment. Net income rose to $422.1 million, or $1.88 a share, from $277.3 million, or $1.20, a year earlier, the Moline, Illinois- based company said in a statement. Sales gained 20 percent to $6.14 billion for the quarter ended Oct. 31. Looking forward, the company expects sales to increase by about 12% for the full year and up about 25% for the first quarter of 2008. Deere sees 2008 earnings of about $2.1 billion and earnings about $325 million in first quarter.
According to comScore, online sales are up 17% for the period from November 1 to November 18, hitting $7.04 billion.
The Wall Street Journal writes India firm Mahindra will bid for Ford's Jaguar and Rover units.
Bush on Musharraf: "Truly is somebody who believes in democracy." Is Bush familiar with the constitutional rights of all Americans?
Brett Steenbarger: "We're seeing an expansion in the number of stocks making new lows, not a contraction. We're seeing weak sectors get weaker, not attracting longer-term value-oriented buyers. Advance-decline lines are making new lows, not sustaining divergences...When weak markets don't attract sustained buying--and continue to weaken--my foremost concern is capital preservation."
Abercrombie & Fitch said Wednesday that its profits rose 15 percent in the third quarter, despite comparable-store sales that were nearly flat. The company expects net income of $3.63 to $3.67 a share in the second half of the fiscal 2007 ending Jan. 1.
An offshore oil well in Mexico's Campeche Sound caught fire Tuesday morning while workers were trying to plug an oil and natural gas leak, reported state oil company Petroleos Mexicanos.
Petroliam Nasional Bhd., Malaysia's national oil company, expects production to return to normal at South Africa's third-largest oil refinery within 24 hours following a fire.
Initial jobless claims decreased by 11,000 to 330,000 in the week that ended Nov. 17, the Labor Department said today in Washington. The four-week moving average dropped to 329,750 from 330,500. Meanwhile, seasonally adjusted number of Americans receiving state jobless benefits increased 7,000 to 2.57 million in the week ending Nov. 10. The four-week seasonally adjusted moving average of continuing claims rose 10,750 to 2.57 million.
Tesoro Corp. said it's neutral on whether stockholders should participate in a tender offer by Kirk Kerkorian's Tracinda Corp. to buy up to 16% of the company via 21.88 million shares at $64 a share. Kerkorian made the offer on Nov. 7. Tesoro's board also OK'd a shareholder rights plan, or poison pill, which will get triggered if anyone buys more than 20% of the company in the open market.
Former White House Press Secretary Scott McClellan blames George Bush for the Valerie Plame leak deceit.
Crude stocks rose by 1.4 million barrels to 318 million barrels in the week ending Nov. 16, American Petroleum Institute reported on Wednesday. Distillate stocks fell by 3.6 million barrels to 132 million barrels in the same period, while gasoline stocks rose by 2.6 million barrels to 197.9 million barrels, API said. Also on Wednesday, Crude inventories fell by 1.1 million barrels in the week ending Nov. 16, the Energy Department's Energy Information Administration said. Gasoline supplies rose by 200,000 barrels in the latest week, while distillate fuel stocks decreased by 2.4 million barrels, EIA said.
The Conference Board stated that a gauge of future economic growth fell 0.5% in October. Only three of the 10 leading economic indicators rose in October, with the largest positive contribution from stock prices. Building permits were the largest negative contributor. "Business confidence could edge lower, with unrelenting concerns about price increases not keeping up with wage pressures," said Ken Goldstein, labor economist at the Conference Board. "At the same time, consumers worry about wages not keeping up with price increases."
Seeking Alpha: "The spreads on two-year U.S. interest rate swaps widened to record levels Tuesday on growing credit fears and rising short-term interbank loan rates. The two-year swap spread traded as wide as 101.25 basis points before settling at 97 basis points versus 96 on Monday. The last record spread was 97 basis points in March 1989, during the savings-and-loan crisis. The five-year spread widened six basis points to 95.75 and the 10-year spread seven basis points to 80.75. "The widening of swap spreads is a function of tight lending and a de-leveraging in the financial system and the high cost of money," said William O'Donnell of UBS Securities. "The last two times we saw these meteor-like spikes in swap spreads in the U.S., they were followed by a recession."
In a weak market it is easier to pick out unusual activity. Such was the buying in the Tribune Jan.$30 and Jan. $32.50 calls.
The Dow Jones Industrial Average finished down 211 points at 12,799, with all but one of its 30 stocks ending in the red. The S&P 500 index lost 22 points to 1,416, while the Nasdaq Composite dropped 34 points to 2,562.
December crude-oil futures closed down 74 cents, or 0.8%, at $97.29 a barrel on the New York Mercantile Exchange. Natural gas rose 7 cents to $7.55. Gold for December delivery rose $7.20 to end at $798.60 an ounce on the New York Mercantile Exchange. In contrast, copper for December delivery dropped 13.90 cents, or over 4%, to end at $2.8880 a pound.
Teddy Roosevelt: "Let us remember that, as much has been given us, much will be expected from us, and that true homage comes from the heart as well as from the lips, and shows itself in deeds."
Tuesday, November 20, 2007
Some Bright News And Some Negative News
11/21/07 Some Bright News And Some Negative News
For fiscal 2008, Nordstrom's expects earnings of $2.87 to $2.91 and analysts expect $2.76 per share. Shares in Nordstrom's jumped more than 11 percent in after-hours trading Monday and traded up to $34 after being as low as $30+ in regular trading.
HP issued a bullish forecast and posted a 28% increase in net income on a 15% rise in sales.
In addition to the good news mentioned above, there were early Tuesday market rumors that the Fed was going to hold an emergency meeting to deal with the rising credit problems as well as lowering rates. The indications were for the Dow to be up 100 points at the opening. The market has already lowered rates. The Fed follows. They don't lead. In addition, rumors only stir short covering rallies and don't build a foundation for lasting gains. Rumors are a reflection of weakness and frustration. As a generality, traders have trouble dealing with losses on the books.
As it turned out, the Dow rose well above 100 points and turned negative after 2 1/2 hours of trading. At the end of the day a small rally took the Dow up 51 and the Nasdaq about 3 points.
Housing starts in the U.S. unexpectedly rose in October as a jump in work on condominium projects outstripped the weakest construction of single-family homes in 16 years. Builders broke ground on 1.229 million homes at an annual rate last month, up 3 percent from September, the Commerce Department said in Washington today. Construction of single- family homes fell 7.3 percent to the lowest since October 1991. Multi-family home building surged 44 percent. However, building permits fell 6.6% to a 1.178 million annual rate, their lowest level since July 2003, indicating less home building ahead.
Wynn Resorts Ltd. said Tuesday that its board declared a cash distribution of $6 a share on outstanding common stock, which will be payable Dec. 10 to holders of record Nov. 30
Now for the bad news: FREDDIE MAC SAYS FAIR VALUE OF NET ASSETS DOWN $8.1 BILLION, POSTS BIG THIRD-QUARTER LOSS. "Given the continuation of the same market trends that produced these results through October and November, it is likely that the fourth quarter will prove difficult as well," he said in a conference call to investors. Freddie Mac said it has hired Goldman Sachs and Lehman Brothers to help it raise capital in the "very near term" as its soaring losses force it to build reserves that will satisfy its regulator.
The stock sold down to an 11-year low.
The euro hit a new record high on Tuesday on speculation that the Federal Reserve may make another interest rate cut.
Home builder D.R. Horton said it lost $50.1 million, or 16 cents a share in its fourth quarter ended Sept. 30, compared to a year-ago gain of $277.7 million, or 88 cents a share. The latest period included pre-tax charges of $278.3 million for inventory impairments and $40.3 million of write-offs of deposits and pre-acquisition costs related to land option contracts that the company does not intend to pursue. Revenue fell to $3.1 billion from $4.8 billion. Backlog of homes under contract fell to $2.7 billion from $5.2 billion. The Fort Worth, Texas company said housing conditions remain "challenging."
McClatchy Newspapers Inc. said consolidated advertising revenue fell 9.9% in October vs. the same month a year ago. The company said advertising at its newspapers in California and Florida has continued to be hit by the downturn in real estate. The company said it is working to cut costs and expects cash expenses "to be down in the mid-single digits in the fourth quarter."
Goldman Sachs Group Inc.'s Global Alpha hedge fund may show a $6 billion asset loss this year -- a 60% decline -- due to trades that went awry and clients withdrawals, Bloomberg news reported citing two investors. Global Alpha started the year with more than $10 billion in assets, according to the report.
Obviously, Goldman Sachs does not have a monopoly on brains.
Pope & Talbot Inc., the Portland, Ore., pulp and wood-products company founded in 1849, said late on Monday that it filed a petition to reorganize under Chapter 11 of U.S. bankruptcy law. "Persistent record low demand for lumber, high-priced pulp chips and sawdust, the appreciation of the Canadian dollar, and the high cost of debt service have combined for an untenable business environment," the company said in a statement.
Shares in specialist lender Paragon slumped 50.1% in London on Tuesday after the firm said that "deep turmoil" in the credit markets is affecting normal financing activities.
The $4 billion sale of loans connected with Cerberus Capital's August purchase of Chrysler is likely to be postponed from this week amid sluggish demand, the Wall Street Journal reported.
Rising delinquency rates on car and truck loans have some industry analysts concerned that subprime mortgage troubles could spill into the automotive finance business.
In a note to investors Monday, Lehman Brothers analyst Brian Johnson said his analysis of auto loan-backed securities sold by Ford Motor Credit Co. and GMAC Financial Services showed some higher delinquency rates for October and September compared with recent years. "As unemployment remains low, this deterioration in the auto ... credit conditions might be evidence of a likely spillover of the mortgage woes onto the auto credit world," Johnson wrote.
Goldman Sachs issued a gloomy report on the U.S. financial services sector, saying housing prices are likely to fall a lot further, write-downs will mount and some mortgage insurers and guarantors will be forced to raise capital just to survive.
"There's growing evidence that the economy will become a dominant, if not the dominant issue of 2008," says independent pollster John Zogby. "It's even to the point where the numbers of people who say Iraq is the No. 1 issue are starting to decline."
Morgan Stanley said that the recent jump in the benchmark London Interbank Offered Rate, which Tuesday rose to a three month sterling libor rate of 6.48625%,a level not seen since Sep. 19., was not merely a seasonal blip but a major warning sign of pain ahead. Libor rates, which indicate how willing banks are to lend to each other, have risen sharply during the past week, after spending almost two months close to the 6.3pc level - a worrying sign since it was Libor's increase in August that signaled the initial impact of the credit crunch.
Rep. Ron Paul: "If $3.5 trillion is the true cost of these military adventures, $11,500 is the amount every man, woman and child in this country pays. So, a family of four would pay $46,000 just for this war. This is an especially painful number to me, as the median household income of my constituency in Texas is just $43,000 a year. In other words, war has cost more than an entire year's worth of income from each middle class Texas family."
Paul Kasriel: "With the 3.9% “first print” of annualized real gross domestic product (GDP) growth for the third quarter and expectations that the “second print” will be close to 5%, some have compared the U.S. economy to the Energizer Bunny. Well, we believe the Bunny’s recent sprint has drained its battery and it is on the verge slowing to a crawl, if not actually falling over backwards. That is, we believe real GDP over the five quarters ended fourth quarter 2008 will grow at a compound annual rate of just 1.6%. And even that slow growth is dependent on a Fed battery recharge of about 100 basis points. For the record, we have scaled back our real GDP growth forecast for 2008 from last month’s 2.0% on a fourth quarter-to-fourth quarter basis to 1.7%. And we have lowered our terminal federal funds rate forecast from 4.25% to 3.50%."
Bill Bonner: "And in India, the tourist board has gotten tired of watching its dollar receipts fall in value - against the rupee, no less. Henceforth, it said, visitors to the Taj Mahal and other tourist sites must have rupees to gain admittance."
Office Depot Inc., the nation's second biggest office-supply store chain, said Tuesday its third-quarter profit fell 9 percent, hurt by lower consumer spending, an economic slowdown in the U.K. and higher costs in North America.
Rio Tinto is considering joint ventures with BHP Billiton as an alternative to the proposed merger of the two companies, the Daily Telegraph said on Tuesday.
Brad Setser: "Once the adjustment for principal payment is made and short-term flows are added in, net flows were negative in September. Negative $14.7 to be precise. And once short-term flows are added in, net (private) flows were really negative in September. Negative $27.8b. That is better than the negative $129.6b net private flow in August, but it is still a rather substantial outflow of private funds from the US. Bottom line: private demand for US financial assets has disappeared. In emerging market terms, the US has experienced a sudden stop."
Brett Steenbarger: "As I mentioned in the Weblog, one of the things that concerned me about Friday's market action was the expansion of stocks making fresh 65 day lows. Of course, those expanded further with Monday's weakness. Across the major exchanges, we had 138 new 65 day highs against 1742 new lows. Going back to September, 2002, which is when I first began collecting the data on 65-day new highs and lows, we've had only 22 occasions in which those new lows have exceeded 1500. Forty days later, the S&P 500 Index (SPY) was up every single time, by an average of 5.33%. That is much stronger than the average 40-day gain of 1.83% (845 up, 398 down) for the remainder of the sample. The bear case is that this time is different, owing to dynamics of housing, credit, etc. If that's the case, we should see new lows expand from here and beyond the levels registered in August of this year. The bull case rests on a drying up of new lows and then an expansion of new highs going forward. I'll be tracking that measure closely."
Alaska's legislature on Friday approved a bill that imposes a 25% tax on the net profits of oil companies operating in the state, raising the tax from the current rate of 22.5%. The tax is expected to bring in an additional $1.5 billion annually to the state's treasury.
"Housing has not really hit the bottom ... and we're not going to hit the bottom for a while yet," said Jim Wunderman, president and chief executive of the Bay Area Council, a pro-business group based in San Francisco. Most experts reckon that 2008 could prove to be a rough year on both housing prices and sales counts because the next big wave of mortgage interest rate resets is due around the middle of the year. Rate resets occur when the introductory term on an adjustable rate mortgage expires.
George Ure: "The problem presently faced by government is this: The US dollar as been "found out" by investors all over the world who have awakened (and are still doing so) to the idea that the Buck is backed by little more than more paper. Gone are the words "Full Faith and Credit" of the US government off our currency, and what remains is the assertion "This note is legal tender for all debts public and private". "Sez who?" many are asking."
Target Corp posted a surprise drop in quarterly profit on Tuesday after weak sales of higher-margin merchandise like clothing hurt its results heading into the holidays, and the discount retailer announced a new $10 billion share repurchase program. "Our third-quarter earnings were disappointing due to soft sales in our higher margin categories, leading to lower-than-expected gross margin in our core retail operations," said Chairman Bob Ulrich in a statement.
The dollar peg has "served the economy...very well in the past," said Sultan Nasser al-Suweidi, the governor of the United Arab Emirates' central bank, last week. "However, we have reached a crossroads."
The long Nordstrom's short GameStop trade is beginning to work out nicely.
The dollar index was at 75.28, down from 75.785 late Monday.
The United States has accepted an Iraqi proposal to hold new talks with Iran about the security situation in Iraq, the State Department said Tuesday.
Irwin Kellner: "This reduction in confidence is spreading beyond the financial markets and residential real estate to commercial real estate as well.
To the extent the banks are involved (by holding on to some of these securities), their capital is being reduced and thus their ability to make new loans.
I need not remind you that the ability to borrow money is the lifeblood of not just business --but consumers, too.
Not surprisingly, the combination of lower real estate values and reduced availability of funding is beginning to reduce business spending on new plants and equipment. This is overwhelming the positive effect that the lower-valued dollar is having on our exports.
So while the Fed is preoccupied with communications and forecasting, the financial markets remain frozen while the economy is melting down."
Crude is trading above $98 a barrel. Gasoline is approaching $4 a gallon in some locations. There was a fire at an Alberta oil sands plant owned by Royal Dutch Shell PLC. The plant, which converts tarry bitumen into 155,000 barrels a day of synthetic crude oil, was temporarily shut down.
Ericsson AB, the world's largest maker of wireless networks, said sales in the fourth quarter will ``likely'' be at the low end of its forecast range as demand slumps in Europe and North America.
United Auto Workers union President Ron Gettelfinger said on Tuesday he was concerned by General Motors Corp's exposure to the mortgage lending arm of former finance unit GMAC and would seek a meeting with executives at the automaker for more information. "It's a concern," Gettelfinger told the Reuters Autos Summit in Detroit. "It's a pretty big concern. There's no question it's an issue."
Whole Foods Markets Inc.'s fourth-quarter profit fell compared to the same period a year earlier. Whole Foods said net income for the period ended in September fell to $33.9 million, or 24 cents a share, from $39.8 million, or 28 cents a share in the period a year earlier. Meanwhile revenue rose to $1.74 billion from $1.29 billion.
Countrywide Financial Corp believes it has ample capital and liquidity to stay in business, and it expects to benefit from ongoing consolidation in the industry. "Countrywide Bank, the Company's primary operating entity, has sufficient liquidity available to meet its projected operating and growth needs and has accumulated significant contingent liquidity in response to evolving market conditions.
Gold for December delivery rose $13.40 to end at $791.40 an ounce on the New York Mercantile Exchange. In after-hours, electronic trading, December gold was last up $22.60 at $800.60 an ounce.
Fed officials said growth would slow to a range of 1.8% to 2.5% next year, down from growth around 2.45% in 2007. Some Fed officials were more pessimistic, putting growth down as low as 1.6% next year. The unemployment rate is expected to tick up to about 4.9% in the fourth quarter of 2008, up from the latest reading in October. Inflation is expected to remain contained. Headline inflation, as measured by the PCE index, is expected to slow to 1.8%-2.1% in 2008, down from around 2.95% this year. Core inflation will remain steady in a range of 1.7%-1.9%. The Fed forecasts go out to 2010. The Fed sees the economy growing at a moderate pace in the neighborhood of 2.6% in 2009 and 2010, with a steady unemployment rate and continued low inflation.
Johnny Depp: “The only gossip I'm interested in is things from the Weekly World News - 'Woman's bra bursts, 11 injured'. That kind of thing.”
For fiscal 2008, Nordstrom's expects earnings of $2.87 to $2.91 and analysts expect $2.76 per share. Shares in Nordstrom's jumped more than 11 percent in after-hours trading Monday and traded up to $34 after being as low as $30+ in regular trading.
HP issued a bullish forecast and posted a 28% increase in net income on a 15% rise in sales.
In addition to the good news mentioned above, there were early Tuesday market rumors that the Fed was going to hold an emergency meeting to deal with the rising credit problems as well as lowering rates. The indications were for the Dow to be up 100 points at the opening. The market has already lowered rates. The Fed follows. They don't lead. In addition, rumors only stir short covering rallies and don't build a foundation for lasting gains. Rumors are a reflection of weakness and frustration. As a generality, traders have trouble dealing with losses on the books.
As it turned out, the Dow rose well above 100 points and turned negative after 2 1/2 hours of trading. At the end of the day a small rally took the Dow up 51 and the Nasdaq about 3 points.
Housing starts in the U.S. unexpectedly rose in October as a jump in work on condominium projects outstripped the weakest construction of single-family homes in 16 years. Builders broke ground on 1.229 million homes at an annual rate last month, up 3 percent from September, the Commerce Department said in Washington today. Construction of single- family homes fell 7.3 percent to the lowest since October 1991. Multi-family home building surged 44 percent. However, building permits fell 6.6% to a 1.178 million annual rate, their lowest level since July 2003, indicating less home building ahead.
Wynn Resorts Ltd. said Tuesday that its board declared a cash distribution of $6 a share on outstanding common stock, which will be payable Dec. 10 to holders of record Nov. 30
Now for the bad news: FREDDIE MAC SAYS FAIR VALUE OF NET ASSETS DOWN $8.1 BILLION, POSTS BIG THIRD-QUARTER LOSS. "Given the continuation of the same market trends that produced these results through October and November, it is likely that the fourth quarter will prove difficult as well," he said in a conference call to investors. Freddie Mac said it has hired Goldman Sachs and Lehman Brothers to help it raise capital in the "very near term" as its soaring losses force it to build reserves that will satisfy its regulator.
The stock sold down to an 11-year low.
The euro hit a new record high on Tuesday on speculation that the Federal Reserve may make another interest rate cut.
Home builder D.R. Horton said it lost $50.1 million, or 16 cents a share in its fourth quarter ended Sept. 30, compared to a year-ago gain of $277.7 million, or 88 cents a share. The latest period included pre-tax charges of $278.3 million for inventory impairments and $40.3 million of write-offs of deposits and pre-acquisition costs related to land option contracts that the company does not intend to pursue. Revenue fell to $3.1 billion from $4.8 billion. Backlog of homes under contract fell to $2.7 billion from $5.2 billion. The Fort Worth, Texas company said housing conditions remain "challenging."
McClatchy Newspapers Inc. said consolidated advertising revenue fell 9.9% in October vs. the same month a year ago. The company said advertising at its newspapers in California and Florida has continued to be hit by the downturn in real estate. The company said it is working to cut costs and expects cash expenses "to be down in the mid-single digits in the fourth quarter."
Goldman Sachs Group Inc.'s Global Alpha hedge fund may show a $6 billion asset loss this year -- a 60% decline -- due to trades that went awry and clients withdrawals, Bloomberg news reported citing two investors. Global Alpha started the year with more than $10 billion in assets, according to the report.
Obviously, Goldman Sachs does not have a monopoly on brains.
Pope & Talbot Inc., the Portland, Ore., pulp and wood-products company founded in 1849, said late on Monday that it filed a petition to reorganize under Chapter 11 of U.S. bankruptcy law. "Persistent record low demand for lumber, high-priced pulp chips and sawdust, the appreciation of the Canadian dollar, and the high cost of debt service have combined for an untenable business environment," the company said in a statement.
Shares in specialist lender Paragon slumped 50.1% in London on Tuesday after the firm said that "deep turmoil" in the credit markets is affecting normal financing activities.
The $4 billion sale of loans connected with Cerberus Capital's August purchase of Chrysler is likely to be postponed from this week amid sluggish demand, the Wall Street Journal reported.
Rising delinquency rates on car and truck loans have some industry analysts concerned that subprime mortgage troubles could spill into the automotive finance business.
In a note to investors Monday, Lehman Brothers analyst Brian Johnson said his analysis of auto loan-backed securities sold by Ford Motor Credit Co. and GMAC Financial Services showed some higher delinquency rates for October and September compared with recent years. "As unemployment remains low, this deterioration in the auto ... credit conditions might be evidence of a likely spillover of the mortgage woes onto the auto credit world," Johnson wrote.
Goldman Sachs issued a gloomy report on the U.S. financial services sector, saying housing prices are likely to fall a lot further, write-downs will mount and some mortgage insurers and guarantors will be forced to raise capital just to survive.
"There's growing evidence that the economy will become a dominant, if not the dominant issue of 2008," says independent pollster John Zogby. "It's even to the point where the numbers of people who say Iraq is the No. 1 issue are starting to decline."
Morgan Stanley said that the recent jump in the benchmark London Interbank Offered Rate, which Tuesday rose to a three month sterling libor rate of 6.48625%,a level not seen since Sep. 19., was not merely a seasonal blip but a major warning sign of pain ahead. Libor rates, which indicate how willing banks are to lend to each other, have risen sharply during the past week, after spending almost two months close to the 6.3pc level - a worrying sign since it was Libor's increase in August that signaled the initial impact of the credit crunch.
Rep. Ron Paul: "If $3.5 trillion is the true cost of these military adventures, $11,500 is the amount every man, woman and child in this country pays. So, a family of four would pay $46,000 just for this war. This is an especially painful number to me, as the median household income of my constituency in Texas is just $43,000 a year. In other words, war has cost more than an entire year's worth of income from each middle class Texas family."
Paul Kasriel: "With the 3.9% “first print” of annualized real gross domestic product (GDP) growth for the third quarter and expectations that the “second print” will be close to 5%, some have compared the U.S. economy to the Energizer Bunny. Well, we believe the Bunny’s recent sprint has drained its battery and it is on the verge slowing to a crawl, if not actually falling over backwards. That is, we believe real GDP over the five quarters ended fourth quarter 2008 will grow at a compound annual rate of just 1.6%. And even that slow growth is dependent on a Fed battery recharge of about 100 basis points. For the record, we have scaled back our real GDP growth forecast for 2008 from last month’s 2.0% on a fourth quarter-to-fourth quarter basis to 1.7%. And we have lowered our terminal federal funds rate forecast from 4.25% to 3.50%."
Bill Bonner: "And in India, the tourist board has gotten tired of watching its dollar receipts fall in value - against the rupee, no less. Henceforth, it said, visitors to the Taj Mahal and other tourist sites must have rupees to gain admittance."
Office Depot Inc., the nation's second biggest office-supply store chain, said Tuesday its third-quarter profit fell 9 percent, hurt by lower consumer spending, an economic slowdown in the U.K. and higher costs in North America.
Rio Tinto is considering joint ventures with BHP Billiton as an alternative to the proposed merger of the two companies, the Daily Telegraph said on Tuesday.
Brad Setser: "Once the adjustment for principal payment is made and short-term flows are added in, net flows were negative in September. Negative $14.7 to be precise. And once short-term flows are added in, net (private) flows were really negative in September. Negative $27.8b. That is better than the negative $129.6b net private flow in August, but it is still a rather substantial outflow of private funds from the US. Bottom line: private demand for US financial assets has disappeared. In emerging market terms, the US has experienced a sudden stop."
Brett Steenbarger: "As I mentioned in the Weblog, one of the things that concerned me about Friday's market action was the expansion of stocks making fresh 65 day lows. Of course, those expanded further with Monday's weakness. Across the major exchanges, we had 138 new 65 day highs against 1742 new lows. Going back to September, 2002, which is when I first began collecting the data on 65-day new highs and lows, we've had only 22 occasions in which those new lows have exceeded 1500. Forty days later, the S&P 500 Index (SPY) was up every single time, by an average of 5.33%. That is much stronger than the average 40-day gain of 1.83% (845 up, 398 down) for the remainder of the sample. The bear case is that this time is different, owing to dynamics of housing, credit, etc. If that's the case, we should see new lows expand from here and beyond the levels registered in August of this year. The bull case rests on a drying up of new lows and then an expansion of new highs going forward. I'll be tracking that measure closely."
Alaska's legislature on Friday approved a bill that imposes a 25% tax on the net profits of oil companies operating in the state, raising the tax from the current rate of 22.5%. The tax is expected to bring in an additional $1.5 billion annually to the state's treasury.
"Housing has not really hit the bottom ... and we're not going to hit the bottom for a while yet," said Jim Wunderman, president and chief executive of the Bay Area Council, a pro-business group based in San Francisco. Most experts reckon that 2008 could prove to be a rough year on both housing prices and sales counts because the next big wave of mortgage interest rate resets is due around the middle of the year. Rate resets occur when the introductory term on an adjustable rate mortgage expires.
George Ure: "The problem presently faced by government is this: The US dollar as been "found out" by investors all over the world who have awakened (and are still doing so) to the idea that the Buck is backed by little more than more paper. Gone are the words "Full Faith and Credit" of the US government off our currency, and what remains is the assertion "This note is legal tender for all debts public and private". "Sez who?" many are asking."
Target Corp posted a surprise drop in quarterly profit on Tuesday after weak sales of higher-margin merchandise like clothing hurt its results heading into the holidays, and the discount retailer announced a new $10 billion share repurchase program. "Our third-quarter earnings were disappointing due to soft sales in our higher margin categories, leading to lower-than-expected gross margin in our core retail operations," said Chairman Bob Ulrich in a statement.
The dollar peg has "served the economy...very well in the past," said Sultan Nasser al-Suweidi, the governor of the United Arab Emirates' central bank, last week. "However, we have reached a crossroads."
The long Nordstrom's short GameStop trade is beginning to work out nicely.
The dollar index was at 75.28, down from 75.785 late Monday.
The United States has accepted an Iraqi proposal to hold new talks with Iran about the security situation in Iraq, the State Department said Tuesday.
Irwin Kellner: "This reduction in confidence is spreading beyond the financial markets and residential real estate to commercial real estate as well.
To the extent the banks are involved (by holding on to some of these securities), their capital is being reduced and thus their ability to make new loans.
I need not remind you that the ability to borrow money is the lifeblood of not just business --but consumers, too.
Not surprisingly, the combination of lower real estate values and reduced availability of funding is beginning to reduce business spending on new plants and equipment. This is overwhelming the positive effect that the lower-valued dollar is having on our exports.
So while the Fed is preoccupied with communications and forecasting, the financial markets remain frozen while the economy is melting down."
Crude is trading above $98 a barrel. Gasoline is approaching $4 a gallon in some locations. There was a fire at an Alberta oil sands plant owned by Royal Dutch Shell PLC. The plant, which converts tarry bitumen into 155,000 barrels a day of synthetic crude oil, was temporarily shut down.
Ericsson AB, the world's largest maker of wireless networks, said sales in the fourth quarter will ``likely'' be at the low end of its forecast range as demand slumps in Europe and North America.
United Auto Workers union President Ron Gettelfinger said on Tuesday he was concerned by General Motors Corp's exposure to the mortgage lending arm of former finance unit GMAC and would seek a meeting with executives at the automaker for more information. "It's a concern," Gettelfinger told the Reuters Autos Summit in Detroit. "It's a pretty big concern. There's no question it's an issue."
Whole Foods Markets Inc.'s fourth-quarter profit fell compared to the same period a year earlier. Whole Foods said net income for the period ended in September fell to $33.9 million, or 24 cents a share, from $39.8 million, or 28 cents a share in the period a year earlier. Meanwhile revenue rose to $1.74 billion from $1.29 billion.
Countrywide Financial Corp believes it has ample capital and liquidity to stay in business, and it expects to benefit from ongoing consolidation in the industry. "Countrywide Bank, the Company's primary operating entity, has sufficient liquidity available to meet its projected operating and growth needs and has accumulated significant contingent liquidity in response to evolving market conditions.
Gold for December delivery rose $13.40 to end at $791.40 an ounce on the New York Mercantile Exchange. In after-hours, electronic trading, December gold was last up $22.60 at $800.60 an ounce.
Fed officials said growth would slow to a range of 1.8% to 2.5% next year, down from growth around 2.45% in 2007. Some Fed officials were more pessimistic, putting growth down as low as 1.6% next year. The unemployment rate is expected to tick up to about 4.9% in the fourth quarter of 2008, up from the latest reading in October. Inflation is expected to remain contained. Headline inflation, as measured by the PCE index, is expected to slow to 1.8%-2.1% in 2008, down from around 2.95% this year. Core inflation will remain steady in a range of 1.7%-1.9%. The Fed forecasts go out to 2010. The Fed sees the economy growing at a moderate pace in the neighborhood of 2.6% in 2009 and 2010, with a steady unemployment rate and continued low inflation.
Johnny Depp: “The only gossip I'm interested in is things from the Weekly World News - 'Woman's bra bursts, 11 injured'. That kind of thing.”
Monday, November 19, 2007
Extreme Conditions
11/20/07 Extreme Conditions
John Hussman: "The level of my concern should (and is intended to) strike long-time readers of these comments as unusually high. Over the years, I've consistently emphasized that my discussion of the market's return/risk profile generally does not imply any “forecast.” Historically, every Market Climate we identify includes both positive and negative returns – it's just that the mean and variance (the average return and risk) are different enough to justify varying exposures to market fluctuations. When we adhere to those various exposures over the complete market cycle, our expectation is that we will achieve higher overall returns and smaller periodic drawdowns than a passive buy-and-hold approach. Since we focus on the average return and risk associated with each Market Climate, individual short-term forecasts aren't required, so I usually avoid them. Still, there are occasionally situations where the set of conditions becomes so extreme that we observe them only before significant shocks. In the past few months, I've emphasized two such “Aunt Minnies;” one related to stock market risk, and one related to recession risk. Accordingly, I've used the term “warning” in recent weeks, which I don't take lightly...Overall, however, the return/risk profile on both stocks and the economy as a whole appear increasingly lopsided toward bad outcomes."
Freddie Mac may report a loss of between $1 billion to $5 billion on its subprime AAA portfolio, Credit Suisse said on Monday
In an attempt to cool down inflation and frenzied investing, Chinese authorities are ordering a freeze bank lending."
According to a report from Moody's, due to the credit crunch, the value of commercial real estate is beginning to decline.
Musharraf dismissed a request from a U.S. envoy to lift emergency rule. I hope no one is surprised.
Celgene agreed to acquire Pharmion, a maker of blood-cancer treatments, for $72 in a $2.9 billion in a cash and stock deal.
Citigroup was downgraded to sell from neutral at Goldman Sachs, with the broker seeing up to $15 billion in write-downs from collateralized debt obligations over the next two quarters.
Yahoo was raised to Buy from Neutral at Merrill Lynch.
SABMiller Plc, the London brewer, proposed to pay 48.25 euros ($70.57) a share, or 816 milllion euros ($1.19 billion), for Royal Grolsch, the Dutch brewer.
U.K. lender Northern Rock has received indicative expressions of interest covering a range of options for the business and expects to receive further expressions of interest in the next few days. Based on the information it has so far, the bank said that the range of values for the existing equity implied by the proposals is materially below its market price at the close on November 16. The bank said that its strategic review will be completed by February 2008 and that existing deposit guarantee arrangements remain in place.
Swiss Re reported a 1.2 billion Swiss franc ($1.07 billion) writedown due to the subprime crisis, sending its shares down sharply and making it the first reinsurer to suffer a big, direct hit from the crisis.
Lowe's Cos Inc's third-quarter profit fell as the softer U.S. housing market hurt sales. Earnings came to $643 million, or 43 cents a diluted share, compared with $716 million, or 46 cents a share, a year earlier. Sales at stores open at least a year fell 4.3 percent. The company said comparable store sales would be off 3% to 5% in the next quarter. "Based on our results and the significant losses and write-downs announced this quarter in the banking and mortgage industries, it's clear that the pressures on our industry and the home improvement consumer are greater than we previously anticipated and are likely to last longer than we expected," Lowe's CEO said.
Here's another dumb dumb quote from Greenspan: ``So long as the dollar weakness does not create inflation, which is a major concern around the globe for everyone who watches the exchange rate, then I think it's a market phenomenon, which aside from those who travel the world, has no real fundamental economic consequences,'' he said today. The dollar has dropped like a rock while food, energy, and material prices have gone through the roof.
“They get our oil and give us a worthless piece of paper,” Mahmoud Ahmadi-Nejad, Iran’s president, said, quoted by the FT “We all know that the US dollar has no economic value.” Iranian President Mahmoud Ahmadinejad said Sunday that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar.
Iran is far from acquiring a nuclear weapon, and despite U.S. fears about its atomic intentions, an American military strike against the Islamic Republic is unlikely, former Secretary of State Colin Powell said Sunday.
Head of the US Central Command Admiral William Fallon has reiterated that Washington will not seek 'a military strategy' against Iran.
The credit crunch has shrunk the pool of potential buyers in a market that was already struggling with excess inventory and developers are pushing to clear their books by the end of the year. That has sent new home prices in the Bay Area down by as much as 20 percent from their highs two years ago, according to Joseph Perkins, chief executive of the Home Builders Association of Northern California.
U.S. light vehicle sales industry-wide were likely to slip below 16 million vehicles next year as the housing market continues to slow through 2008, billionaire investor Wilbur Ross said on Sunday. This would mark the second consecutive annual decline in U.S. auto sales and the lowest tally since 1998.
Impac Mortgage Holdings Inc. said it will ``significantly'' increase its loan-loss provisions. The California home lender suspended some operations in August and said Sept. 18 it planned to cease almost all lending and scrap dividends for the rest of 2007 after ``disruptions'' caused by rising defaults.
Genentech Inc.(DNA), the largest US maker of cancer drugs, said its Avastin medicine slowed the spread of brain tumors in a study, offering a potential option against a disease that has resisted therapy for 25 years.
The global market for dry-bulk cargo shipping will probably remain ``tight'' next year, supported by congestion at ports and rising demand for commodities in Asia, London-based Simpson, Spence and Young Ltd. said. The level of bottlenecks at Australian ports will be a ``key factor'' in the balance between supply and demand for dry- bulk freight services, Derek Langston, a market analyst at the shipbrokers, said today at a conference in Sydney.
The national average price for gasoline rose about 13 cents over the last two weeks, according to a survey released Sunday. The average price of regular gasoline on Friday was $3.09 a gallon, mid-grade was $3.21, and premium was $3.32, oil industry analyst Trilby Lundberg said.
Shadow Government Statistics sees real annual inflation at approximately 11% with the M3 money supply rising at close to a 16% annual rate. John Williams does really valuable work. These numbers should set off alarm bells.
Mike Shedlock: "Fannie Mae is a company that should not exist in the first place. The government has no business sponsoring corporations, promoting housing over rentals, or spewing nonsense about the ownership society. All of the above, in conjunction with the Fed bailing out banks in 2001 by slashing interest rates to 1% is what created the housing bubble.
Allowing Fannie Mae to take on larger loans is not the answer. Fannie Mae should be dissolved. Here is the irony of the situation: The government wants "affordable housing" but is doing everything under the sun to prop up home prices."
Gannett October ad revenue down 5.3%.
Dubai is looking for bargains in U.S. property, telecom and energy assets after the mortgage crisis depressed prices, the governor of the Dubai International Financial Centre said on Monday, according to Reuters.
Quanex Corp. will spin off its Building Products business to its shareholders as a stand-alone company called Quanex Building Products in a taxable distribution. All Quanex shareholders of record will receive one share of Quanex Building Products' stock for each share of Quanex stock. The remaining units, mostly its Vehicular Products business, including its Macsteel division, will merge with a wholly-owned subsidiary of Gerdau S.A. for $39.20 a share in cash. At this price, Vehicular Products' total enterprise value will be approximately $1.67 billion. Quanex has entered into a definitive agreement with Gerdau S.A. with respect to the merger. The transactions are expected to be completed by the end of the first quarter of calendar 2008.
Calyon Securities (USA) on Monday upgraded shares of Bronco Drillingto add from neutral and raised its price target to $17 a share. The move came after Bronco said late Thursday it would buy a 25% equity interest in Challenger Limited, which has operations in Libya, for $5 million in cash plus six drilling rigs. Challenger will also purchase four rigs and other equipment from Bronco for $12 million. Analyst Mark S. Urness said the deal marks a "smart strategic move for a small company" and it "provides both growth and diversification benefits."
Marshall & Ilsley Corp said that it has a $282 million total credit exposure to Franklin Credit Management Corp., a troubled New York-based residential mortgage company.
Despite the slow start, the company said it expects the soup business to "deliver better performance as the year progresses." Campbell stood by its earnings forecast for fiscal 2008, saying it still expects earnings per share from continuing operations to grow 5 percent to 7 percent from fiscal 2007's $1.95.
United Rentals Inc. has filed a lawsuit in Delaware Court of Chancery against RAM Holdings Inc. and RAM Acquisition Corp., acquisition vehicles of Cerberus Capital Management L.P. The lawsuit seeks to compel the Cerberus vehicles to consummate the deal. Last week, Cerberus Capital informed the company that Cerberus was not prepared to proceed with the purchase of United Rentals on the terms agreed on July 22. Under the agreement, Cerberus had agreed to buy United Rentals for $34.50 a share, for a total of about $7 billion.
Robert McHugh: "We now have confirmation that Minuette wave v down is underway, as the Dow Industrials have broken below November 9th's wave iii bottom, 13,017.30, hitting 13,015.83 a few minutes ago. (early Monday morning)This suggests there is serious risk that the 12,845.78 closing bottom from August 16th could be breached, setting off the first Dow Theory Primary Trend "sell" signal in 8 years, the last one occurring in September 1999. It was followed by a multi-year, Fibonacci 38 percent decline."
Gold for December delivery dropped $9 to finish at $778 an ounce on the New York Mercantile Exchange. Crude oil for January delivery gained 80 cents to end at $94.64 a barrel on the New York Mercantile Exchange.
The National Association of Home Builders said Monday its housing market index held steady at a record-low 19 in November.
China on Monday expressed concern at the decline in the dollar. Premier Wen Jiabao told a business audience in Singapore it was becoming difficult to manage China's $1,430bn foreign exchange reserves, saying that their value was under unprecedented pressure. "We have never been experiencing such big pressure," Mr Wen said, according to Reuters. "We are worried about how to preserve the value of our reserves."
The Dow closed down 218, the Nasdaq down 44, and the S&P down 25. It was another ugly day for the long side.
Sam Houston: “All new states are invested, more or less, by a class of noisy, second-rate men who are always in favor of rash and extreme measures, but Texas was absolutely overrun by such men.”
John Hussman: "The level of my concern should (and is intended to) strike long-time readers of these comments as unusually high. Over the years, I've consistently emphasized that my discussion of the market's return/risk profile generally does not imply any “forecast.” Historically, every Market Climate we identify includes both positive and negative returns – it's just that the mean and variance (the average return and risk) are different enough to justify varying exposures to market fluctuations. When we adhere to those various exposures over the complete market cycle, our expectation is that we will achieve higher overall returns and smaller periodic drawdowns than a passive buy-and-hold approach. Since we focus on the average return and risk associated with each Market Climate, individual short-term forecasts aren't required, so I usually avoid them. Still, there are occasionally situations where the set of conditions becomes so extreme that we observe them only before significant shocks. In the past few months, I've emphasized two such “Aunt Minnies;” one related to stock market risk, and one related to recession risk. Accordingly, I've used the term “warning” in recent weeks, which I don't take lightly...Overall, however, the return/risk profile on both stocks and the economy as a whole appear increasingly lopsided toward bad outcomes."
Freddie Mac may report a loss of between $1 billion to $5 billion on its subprime AAA portfolio, Credit Suisse said on Monday
In an attempt to cool down inflation and frenzied investing, Chinese authorities are ordering a freeze bank lending."
According to a report from Moody's, due to the credit crunch, the value of commercial real estate is beginning to decline.
Musharraf dismissed a request from a U.S. envoy to lift emergency rule. I hope no one is surprised.
Celgene agreed to acquire Pharmion, a maker of blood-cancer treatments, for $72 in a $2.9 billion in a cash and stock deal.
Citigroup was downgraded to sell from neutral at Goldman Sachs, with the broker seeing up to $15 billion in write-downs from collateralized debt obligations over the next two quarters.
Yahoo was raised to Buy from Neutral at Merrill Lynch.
SABMiller Plc, the London brewer, proposed to pay 48.25 euros ($70.57) a share, or 816 milllion euros ($1.19 billion), for Royal Grolsch, the Dutch brewer.
U.K. lender Northern Rock has received indicative expressions of interest covering a range of options for the business and expects to receive further expressions of interest in the next few days. Based on the information it has so far, the bank said that the range of values for the existing equity implied by the proposals is materially below its market price at the close on November 16. The bank said that its strategic review will be completed by February 2008 and that existing deposit guarantee arrangements remain in place.
Swiss Re reported a 1.2 billion Swiss franc ($1.07 billion) writedown due to the subprime crisis, sending its shares down sharply and making it the first reinsurer to suffer a big, direct hit from the crisis.
Lowe's Cos Inc's third-quarter profit fell as the softer U.S. housing market hurt sales. Earnings came to $643 million, or 43 cents a diluted share, compared with $716 million, or 46 cents a share, a year earlier. Sales at stores open at least a year fell 4.3 percent. The company said comparable store sales would be off 3% to 5% in the next quarter. "Based on our results and the significant losses and write-downs announced this quarter in the banking and mortgage industries, it's clear that the pressures on our industry and the home improvement consumer are greater than we previously anticipated and are likely to last longer than we expected," Lowe's CEO said.
Here's another dumb dumb quote from Greenspan: ``So long as the dollar weakness does not create inflation, which is a major concern around the globe for everyone who watches the exchange rate, then I think it's a market phenomenon, which aside from those who travel the world, has no real fundamental economic consequences,'' he said today. The dollar has dropped like a rock while food, energy, and material prices have gone through the roof.
“They get our oil and give us a worthless piece of paper,” Mahmoud Ahmadi-Nejad, Iran’s president, said, quoted by the FT “We all know that the US dollar has no economic value.” Iranian President Mahmoud Ahmadinejad said Sunday that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar.
Iran is far from acquiring a nuclear weapon, and despite U.S. fears about its atomic intentions, an American military strike against the Islamic Republic is unlikely, former Secretary of State Colin Powell said Sunday.
Head of the US Central Command Admiral William Fallon has reiterated that Washington will not seek 'a military strategy' against Iran.
The credit crunch has shrunk the pool of potential buyers in a market that was already struggling with excess inventory and developers are pushing to clear their books by the end of the year. That has sent new home prices in the Bay Area down by as much as 20 percent from their highs two years ago, according to Joseph Perkins, chief executive of the Home Builders Association of Northern California.
U.S. light vehicle sales industry-wide were likely to slip below 16 million vehicles next year as the housing market continues to slow through 2008, billionaire investor Wilbur Ross said on Sunday. This would mark the second consecutive annual decline in U.S. auto sales and the lowest tally since 1998.
Impac Mortgage Holdings Inc. said it will ``significantly'' increase its loan-loss provisions. The California home lender suspended some operations in August and said Sept. 18 it planned to cease almost all lending and scrap dividends for the rest of 2007 after ``disruptions'' caused by rising defaults.
Genentech Inc.(DNA), the largest US maker of cancer drugs, said its Avastin medicine slowed the spread of brain tumors in a study, offering a potential option against a disease that has resisted therapy for 25 years.
The global market for dry-bulk cargo shipping will probably remain ``tight'' next year, supported by congestion at ports and rising demand for commodities in Asia, London-based Simpson, Spence and Young Ltd. said. The level of bottlenecks at Australian ports will be a ``key factor'' in the balance between supply and demand for dry- bulk freight services, Derek Langston, a market analyst at the shipbrokers, said today at a conference in Sydney.
The national average price for gasoline rose about 13 cents over the last two weeks, according to a survey released Sunday. The average price of regular gasoline on Friday was $3.09 a gallon, mid-grade was $3.21, and premium was $3.32, oil industry analyst Trilby Lundberg said.
Shadow Government Statistics sees real annual inflation at approximately 11% with the M3 money supply rising at close to a 16% annual rate. John Williams does really valuable work. These numbers should set off alarm bells.
Mike Shedlock: "Fannie Mae is a company that should not exist in the first place. The government has no business sponsoring corporations, promoting housing over rentals, or spewing nonsense about the ownership society. All of the above, in conjunction with the Fed bailing out banks in 2001 by slashing interest rates to 1% is what created the housing bubble.
Allowing Fannie Mae to take on larger loans is not the answer. Fannie Mae should be dissolved. Here is the irony of the situation: The government wants "affordable housing" but is doing everything under the sun to prop up home prices."
Gannett October ad revenue down 5.3%.
Dubai is looking for bargains in U.S. property, telecom and energy assets after the mortgage crisis depressed prices, the governor of the Dubai International Financial Centre said on Monday, according to Reuters.
Quanex Corp. will spin off its Building Products business to its shareholders as a stand-alone company called Quanex Building Products in a taxable distribution. All Quanex shareholders of record will receive one share of Quanex Building Products' stock for each share of Quanex stock. The remaining units, mostly its Vehicular Products business, including its Macsteel division, will merge with a wholly-owned subsidiary of Gerdau S.A. for $39.20 a share in cash. At this price, Vehicular Products' total enterprise value will be approximately $1.67 billion. Quanex has entered into a definitive agreement with Gerdau S.A. with respect to the merger. The transactions are expected to be completed by the end of the first quarter of calendar 2008.
Calyon Securities (USA) on Monday upgraded shares of Bronco Drillingto add from neutral and raised its price target to $17 a share. The move came after Bronco said late Thursday it would buy a 25% equity interest in Challenger Limited, which has operations in Libya, for $5 million in cash plus six drilling rigs. Challenger will also purchase four rigs and other equipment from Bronco for $12 million. Analyst Mark S. Urness said the deal marks a "smart strategic move for a small company" and it "provides both growth and diversification benefits."
Marshall & Ilsley Corp said that it has a $282 million total credit exposure to Franklin Credit Management Corp., a troubled New York-based residential mortgage company.
Despite the slow start, the company said it expects the soup business to "deliver better performance as the year progresses." Campbell stood by its earnings forecast for fiscal 2008, saying it still expects earnings per share from continuing operations to grow 5 percent to 7 percent from fiscal 2007's $1.95.
United Rentals Inc. has filed a lawsuit in Delaware Court of Chancery against RAM Holdings Inc. and RAM Acquisition Corp., acquisition vehicles of Cerberus Capital Management L.P. The lawsuit seeks to compel the Cerberus vehicles to consummate the deal. Last week, Cerberus Capital informed the company that Cerberus was not prepared to proceed with the purchase of United Rentals on the terms agreed on July 22. Under the agreement, Cerberus had agreed to buy United Rentals for $34.50 a share, for a total of about $7 billion.
Robert McHugh: "We now have confirmation that Minuette wave v down is underway, as the Dow Industrials have broken below November 9th's wave iii bottom, 13,017.30, hitting 13,015.83 a few minutes ago. (early Monday morning)This suggests there is serious risk that the 12,845.78 closing bottom from August 16th could be breached, setting off the first Dow Theory Primary Trend "sell" signal in 8 years, the last one occurring in September 1999. It was followed by a multi-year, Fibonacci 38 percent decline."
Gold for December delivery dropped $9 to finish at $778 an ounce on the New York Mercantile Exchange. Crude oil for January delivery gained 80 cents to end at $94.64 a barrel on the New York Mercantile Exchange.
The National Association of Home Builders said Monday its housing market index held steady at a record-low 19 in November.
China on Monday expressed concern at the decline in the dollar. Premier Wen Jiabao told a business audience in Singapore it was becoming difficult to manage China's $1,430bn foreign exchange reserves, saying that their value was under unprecedented pressure. "We have never been experiencing such big pressure," Mr Wen said, according to Reuters. "We are worried about how to preserve the value of our reserves."
The Dow closed down 218, the Nasdaq down 44, and the S&P down 25. It was another ugly day for the long side.
Sam Houston: “All new states are invested, more or less, by a class of noisy, second-rate men who are always in favor of rash and extreme measures, but Texas was absolutely overrun by such men.”
Sunday, November 18, 2007
Holiday Week
11/19/07 Holiday Week
Mike Burk: "The Good News: The market is oversold going into a seasonally strong period...The patterns we are seeing are consistent with a developing top...the week of Thanksgiving during the 3rd year of the Presidential Cycle has been up about 2/3's of the time with average gains of a little over 0.5%...I expect the major indices to be higher on Friday November 23 than they were on Friday November 16."
Ayn Rand: “Only the man who does not need it, is fit to inherit wealth, the man who would make his fortune no matter where he started.”
China has pulled out of a meeting to discuss new sanctions on Iran, European diplomats said on Friday, highlighting the obstacles western powers face in their quest to increase pressure on Tehran over its nuclear program.
n his opening address of a rare OPEC summit, Venezuelan President Hugo Chavez warned the United States on Saturday that oil prices would further surge if the U.S. contemplates an attack against his country or Iran.
A proposal to change the value of the currencies will be considered at the heads of state summit in Doha, Qatar, on Dec. 3-4, al-Attiyah said. ``This case will be presented to the leaders for them to study,'' he said. The leaders may then pass it on to an advisory committee, al-Attiyah said. Gulf states face record inflation, caused partly by the weakening dollar that has made imports from Europe more expensive. Consumer prices rose a record 4.9 percent in Saudi Arabia in August and inflation in the United Arab Emirates accelerated to a record 9.3 percent last year. Qatar has the highest inflation rate in the region, reaching 14.8 percent in the first quarter.
As I have stated over the past two years, it is only a matter of time until the Gulf states create a petrodollar currency not pegged to the U.S. dollar.
``OPEC is in a price paralysis conundrum,'' said John Sfakianakis, chief economist at Saudi British Bank, a unit of HSBC Bank Plc. ``They do care about the dollar, but if they say publicly they worry it will show they care even more.''
According to a Maritz Poll of about 1,000 people, the typical consumer will spend $637 this holiday season, down 10 percent from last year.
A.J. Reb Materi: “So many people spend their health gaining wealth, and then have to spend their wealth to regain their health.”
A problem at the key cat cracker unit of the 200,000 barrels per day Puerto la Cruz refinery has hurt gasoline supply to the Venezuelan market since Friday, the state oil company PDVSA said on Saturday. An unspecified "event" at what is a refinery's most important unit prevented PDVSA mixing gasoline at the refinery for 48 hours, the company said in a statement.
According to the SF Chronicle, next month, United Airlines and American Airlines will strip frequent-flier miles from accounts that have been inactive for 18 months, half the time they had been letting accounts sit idle previously. Infrequent fliers can preserve their miles by taking action that adds to or subtracts from their account balance before the deadlines. American and United are among many airlines that are cracking down on casual customers by shortening the time an account can remain dormant before miles disappear.
China's largest oil and gas company CNPC and Russian gas giant Gazprom have reported a major progress in their natural gas negotiations, Gazpom's deputy chairman Alexander Medvedev said .
Iran aims to increase its oil output capacity to 4.5 million barrels per day (bpd) by the end of 2010, Iran's Oil Minister Gholam Hussein Nozari told reporters on the sidelines of the Organization of Petroleum Exporting Countries (OPEC) summit in Riyadh, the Tehran Times reported.
Iran is currently producing around 4 million bpd. According to Nozari, increasing oil production to such an extent would require a $15 billion investment.
"We are interested in foreign companies' participation… but we are able to boost oil production capacity to 4.5 million bpd even without foreign investors," Nozari asserted.
Canada.com: "No matter what, with experts in agreement that the demand for natural gas from North American residential and business consumers alike is scheduled to far outstrip supplies over the next 30 years, there is little argument that a cavernous future market exists for whomever is first to market with natural gas. After that, the jury will be out. Given the economic, philosophical and environmental complexities that have swirled around the Mackenzie Valley since its inception, its a relatively safe bet that the pipeline is at best a decade away. Construction alone is expected to take three to five years. And there is a growing chorus of naysayers who say that in today's soaring cost environment, getting gas down the Mackenzie may be little more than a proverbial pipe dream. Not so getting natural gas into Canada via LNG - although, ironically, that too seemed little more than a pipe dream only a few short years ago, fuelled largely by the belief that importing natural gas was absurd in light of North America's aggressive land and offshore drillers, and that getting permits and permission might prove unduly difficult, even though LNG has been transported around the world for decades."
Soren Kierkegaard: “If I were to wish for anything, I should not wish for wealth and power, but for the passionate sense of potential -- for the eye which, ever young and ardent, sees the possible. Pleasure disappoints; possibility never.”
Mike Burk: "The Good News: The market is oversold going into a seasonally strong period...The patterns we are seeing are consistent with a developing top...the week of Thanksgiving during the 3rd year of the Presidential Cycle has been up about 2/3's of the time with average gains of a little over 0.5%...I expect the major indices to be higher on Friday November 23 than they were on Friday November 16."
Ayn Rand: “Only the man who does not need it, is fit to inherit wealth, the man who would make his fortune no matter where he started.”
China has pulled out of a meeting to discuss new sanctions on Iran, European diplomats said on Friday, highlighting the obstacles western powers face in their quest to increase pressure on Tehran over its nuclear program.
n his opening address of a rare OPEC summit, Venezuelan President Hugo Chavez warned the United States on Saturday that oil prices would further surge if the U.S. contemplates an attack against his country or Iran.
A proposal to change the value of the currencies will be considered at the heads of state summit in Doha, Qatar, on Dec. 3-4, al-Attiyah said. ``This case will be presented to the leaders for them to study,'' he said. The leaders may then pass it on to an advisory committee, al-Attiyah said. Gulf states face record inflation, caused partly by the weakening dollar that has made imports from Europe more expensive. Consumer prices rose a record 4.9 percent in Saudi Arabia in August and inflation in the United Arab Emirates accelerated to a record 9.3 percent last year. Qatar has the highest inflation rate in the region, reaching 14.8 percent in the first quarter.
As I have stated over the past two years, it is only a matter of time until the Gulf states create a petrodollar currency not pegged to the U.S. dollar.
``OPEC is in a price paralysis conundrum,'' said John Sfakianakis, chief economist at Saudi British Bank, a unit of HSBC Bank Plc. ``They do care about the dollar, but if they say publicly they worry it will show they care even more.''
According to a Maritz Poll of about 1,000 people, the typical consumer will spend $637 this holiday season, down 10 percent from last year.
A.J. Reb Materi: “So many people spend their health gaining wealth, and then have to spend their wealth to regain their health.”
A problem at the key cat cracker unit of the 200,000 barrels per day Puerto la Cruz refinery has hurt gasoline supply to the Venezuelan market since Friday, the state oil company PDVSA said on Saturday. An unspecified "event" at what is a refinery's most important unit prevented PDVSA mixing gasoline at the refinery for 48 hours, the company said in a statement.
According to the SF Chronicle, next month, United Airlines and American Airlines will strip frequent-flier miles from accounts that have been inactive for 18 months, half the time they had been letting accounts sit idle previously. Infrequent fliers can preserve their miles by taking action that adds to or subtracts from their account balance before the deadlines. American and United are among many airlines that are cracking down on casual customers by shortening the time an account can remain dormant before miles disappear.
China's largest oil and gas company CNPC and Russian gas giant Gazprom have reported a major progress in their natural gas negotiations, Gazpom's deputy chairman Alexander Medvedev said .
Iran aims to increase its oil output capacity to 4.5 million barrels per day (bpd) by the end of 2010, Iran's Oil Minister Gholam Hussein Nozari told reporters on the sidelines of the Organization of Petroleum Exporting Countries (OPEC) summit in Riyadh, the Tehran Times reported.
Iran is currently producing around 4 million bpd. According to Nozari, increasing oil production to such an extent would require a $15 billion investment.
"We are interested in foreign companies' participation… but we are able to boost oil production capacity to 4.5 million bpd even without foreign investors," Nozari asserted.
Canada.com: "No matter what, with experts in agreement that the demand for natural gas from North American residential and business consumers alike is scheduled to far outstrip supplies over the next 30 years, there is little argument that a cavernous future market exists for whomever is first to market with natural gas. After that, the jury will be out. Given the economic, philosophical and environmental complexities that have swirled around the Mackenzie Valley since its inception, its a relatively safe bet that the pipeline is at best a decade away. Construction alone is expected to take three to five years. And there is a growing chorus of naysayers who say that in today's soaring cost environment, getting gas down the Mackenzie may be little more than a proverbial pipe dream. Not so getting natural gas into Canada via LNG - although, ironically, that too seemed little more than a pipe dream only a few short years ago, fuelled largely by the belief that importing natural gas was absurd in light of North America's aggressive land and offshore drillers, and that getting permits and permission might prove unduly difficult, even though LNG has been transported around the world for decades."
Soren Kierkegaard: “If I were to wish for anything, I should not wish for wealth and power, but for the passionate sense of potential -- for the eye which, ever young and ardent, sees the possible. Pleasure disappoints; possibility never.”
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