1/14/08 The Presses Are Working Overtime
Doug Noland: "Bank Credit expanded $23.3bn during the most recent data week (1/2) to a record $9.280 TN (3-wk gain of $115bn). Bank Credit posted a 24-week surge of $636bn (15.9% annualized) and a 52-week rise of $987bn, or 11.9%. For the week, Securities Credit surged $48.1bn. Loans & Leases dropped $24.7bn to $6.806 TN (24-wk gain of $481bn). C&I loans added $3.6bn, with one-year growth of 21.6%. Real Estate loans increased $0.5bn (up 7.9% y-o-y). Consumer loans fell $5.0bn. Securities loans declined $9.3bn, and Other loans dropped $14.4bn. On the liability side, (previous M3) Large Time Deposits rose $12.6bn. M2 (narrow) "money" supply increased $4.3bn to a record $7.472 TN (week of 12/31). Narrow "money" expanded $411bn during 2007, or 5.8%. For the week, Currency added $0.8bn, and Demand & Checkable Deposits increased $8.2bn. Savings Deposits fell $13.1bn, and Small Denominated Deposits dipped $0.3bn. Retail Money Fund assets rose $8.7bn...The downgrade of the $6bn Victoria SIV by Standard & Poor's takes its rating deep into 'junk' territory, to B minus. Just three months ago it was rated AAA. Analysts yesterday warned that Victoria's fate was being echoed across the SIV sector as this corner of finance suffers a barrage of downgrades. SIVs issue cheap, short-term debt to fund investments in longer-term and higher-yielding securities...An index of Junk bond spreads to Treasuries actually widened an additional 4 basis points today to 603 bps, this week above 600 for the first time since - not coincidently - the 2002 Debt Crisis...The world is a much different place today. The Mortgage Finance Bubble is a bust, Wall Street finance is imploding, and foreign financial institutions are keen to cut and run from the business of providing U.S. Credit. Countrywide's mortgage problems will be absorbed - along with so many other risks - by our domestic banking system. Worse yet, the economy is quickly succumbing to recessionary forces. With a high degree of confidence we can proclaim that the Mortgage Crisis has now evolved into a Corporate Debt Crisis - and this crisis will not be resolved anytime soon - by rates, by helicopters, or by bailouts. Unlike 2002, today's Credit crisis is systemic. Consumer and financial sector fragilities - the heart of our Credit system - are now impaired to the point of imperiling the capacity of the Credit system to finance business spending and intermediate corporate lending risk. To be sure, prospects for a faltering U.S. consumer sector, massive financial sector Credit losses, and an imminent economic downturn have quite negative ramifications for business lending and valuations. In particular, unfolding dislocation in the CDS and Credit "insurance" markets will severely restrict Credit Availability for small, medium and large firms - especially those less than top-tier borrowers. I'll go further and suggest that a severe tightening of Financial Conditions has abruptly made many business borrowing plans unviable; many a balance sheet and debt load untenable; and vast numbers of business strategies - crafted in altogether different financial and economic times - much less viable. Some companies will make the necessary adjustments and many will not. The unfolding backdrop definitely makes a lot of stock buyback plans imprudent and growth strategies highly risky. The aggressive risk-taking business manager - having previously capitalized on the protracted boom - will now be at a similar handicap to that which afflicted the zealous home buyer and lender banker."
Peter Schiff: "Given Ben Bernanke's promise yesterday to supply substantive interest rate reductions, despite his belief that the U.S. economy is not headed toward recession (a claim that even the Fed Chairman obviously does not believe), inflation has been given much more room to run. Of course, the Fed's free money fest will not be sidetracked by today's data that showed the November trade deficit surging to $63.1 Billion (some export boom), limit-up moves in commodity prices (beans in the teens!), and 2007 import prices rising by 10.9%, the largest calendar-year increase since 1987. Basically the Fed is sending the message that inflation is going to get a whole lot worse and that it couldn't care less. As the price of gold continues to climb as a result, look for more excuses to minimize the significance of the move."
Despite the growing threat from Islamic extremists, President Pervez Musharraf said U.S. troops are not welcome to join the fight against al-Qaida on Pakistani soil. Musharraf warned in an interview published Friday that Pakistan would resist any unilateral military action by the United States against militants sheltering in its lawless, tribal regions close to the Afghan border. "I challenge anybody coming into our mountains," he told Singapore's The Straits Times in the interview, notable for its unusually strident language. "They would regret that day."
Gary Ryan Blair: "Creative risk taking is essential to success in any goal where the stakes are high. Thoughtless risks are destructive, of course, but perhaps even more wasteful is thoughtless caution which prompts inaction and promotes failure to seize opportunity."
American Express was the worst Dow stock on Friday, falling 10% to $44 after warning late Thursday that it was seeing more delinquencies and less activity from consumers and was reserving $400 million to cover potential losses.
According to the FT, Citigroup is putting the final touches on its second major capital-raising effort in as many months, seeking up to $14bn from Chinese, Kuwaiti and public market investors, people familiar with the negotiations say.
UBS on Friday tried to rally support for its plans to raise SFr19bn ($17.2bn) in fresh capital following the US subprime crisis and warned that 2008 was “likely to be another generally difficult year. In a letter to shareholders, the Swiss group, one of the biggest casualties of the US subprime turmoil, sought to head off criticism of its handling of the crisis and its recourse to sovereign wealth funds for much of its new capital.
Young Broadcasting Inc. said Thursday that it is putting its San Francisco-based TV station, KRON, on the block. The company, which has retained financial advisers Moelis & Co., said that its goal is to conclude an agreement for the sale of KRON, a MyNetworkTV affiliate, before the end of the first quarter.
"Our decision to sell is based on the high level of interest in the property that we have received," Young Broadcasting chairman Vincent Young said. "It is purely a strategic economic decision, allowing us to benefit from the proceeds of the sale to further our future corporate initiatives."
Maya Lin: "To fly, we have to have resistance."
Even though equities have had a sharp decline over the past two weeks, the VIX is still only 23+.
Saturday, January 12, 2008
More Writedowns
1/12/08 More Writedowns
Countrywide shareholders would receive 0.1822 of a Bank of America share in exchange for each of their shares. The transaction values Countrywide at $7.16 per share, a 7.6 percent discount to the Thursday closing price of the company's stock.
They are looking at a closing in the third quarter of 2008.
Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost twice the company's original estimate, the New York Times reported on Friday. The losses were prompting the company to raise additional capital from an outside investor, the newspaper said in a report on its Web site.
American Express Co and Capital One Financial Corp , the largest independent U.S. credit card companies, projected profits below analyst forecasts on Thursday, citing mounting consumer loan losses as the U.S. economy slows.The forecasts show how the housing slump, tighter credit, high oil prices and rising unemployment have made it harder for many consumers to pay their bills. This has caused credit problems to widen beyond mortgages and affect other forms of debt, including credit cards and auto loans.
U.K. mortgage bank Northern Rock agreed to sell its portfolio of lifetime home equity release mortgages to J.P. Morgan. The portfolio has a balance sheet value of 2.2 billion pounds ($4.3 billion) and is being sold at a premium of 2.25%, the bank said. Northern Rock added the portfolio represents around 2% of its total assets as at June 30 and generated net interest income of 34 million pounds in the 12 months to the end of June. It will use the proceeds to reduce its borrowing from the Bank of England.
A tanker with a capacity of 65,000 barrels of oil struck a bridge on San Francisco Bay on Thursday evening, the San Francisco Chronicle reported. No oil was spilled, the ship's crew told the U.S. Coast Guard.
China's trade surplus climbed 48% to a record in 2007, according to reports. The nation's trade gap rose to $262.2 billion during the 12-month period, compared to $177.47 billion in 2006, newswires reported, citing figures released Friday by the General Administration of Customs. China's trade gap for December totaled $22.69 billion, compared to November's $26.28 billion and October's $27.05 billion. Chinese exports in December climbed 21.7% from the year-earlier period to $114.42 billion, while imports rose 25.7% on year to $91.73 billion.
Infosys Technologies reported a higher-than-expected 25.2% increase in third-quarter net profit on strong growth in revenue from outsourced contracts. Net profit during the October-December period rose to 12.31 billion rupees ($314 million), or 21.54 rupees a share, from a year-ago. Revenue increased 16.9% to 42.71 billion rupees, helped by the addition of 47 new clients. The company raised its full-year earnings forecast to 81.07 rupees, from at least 79.49 rupees previously and increased its revenue projection to a minimum of 166.27 billion rupees, from at least 165.88 billion rupees earlier.
Gold futures nudged the $900 per ounce level for the first time in electronic trading in Asia early Friday.
Japanese tax receipts on individuals are expected to climb 420 billion yen ($3.83 billion) once a repeal of tax cuts on stock dividends and real estate transactions come into effect during the next few years as part of a package of reforms, the Nikkei business daily reported Friday.
Ten weeks into the screenwriters' strike, Weinstein Co. has reached an interim agreement with the Writers Guild of America that will allow the independent studio to restart work on new films, according to Harvey Weinstein, co-chairman.
The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday. As I have noted in the last few years, a rating cut is warranted and long over due.
UBS wrote down the value of debt securities and leveraged loans by $14.7 billion last year, adding to more than $100 billion in markdowns and loan losses announced by the world's largest banks and securities firms. In my view, those write downs will mount higher in 2008.
India's industrial production grew in November at the slowest pace in 13 months, making it more likely the central bank may soon end more than three years of interest rate increases. Production at factories, utilities and mines rose 5.3 percent from a year earlier after gaining a revised 12 percent in October, the statistics office said By comparison, the U.S. is in reverse.
Richard Daughty: "The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year."
According to the NY Times, the new oil, along with refining projects under way by Petrobras, the national oil company, could eventually make Brazil a larger exporter of gasoline as well, adding to supplies in the United States and other countries where it is all but impossible to build new refineries. The subsalt basin that contains Tupi, the new deepwater field estimated to hold the equivalent of five billion to eight billion barrels of light crude oil, is creating a buzz among the world’s largest oil companies. They have struggled lately to find global-scale projects worth investing in, even with oil touching $100 a barrel. Tupi is the world’s biggest oil find since a 12-billion-barrel field discovered in 2000 in Kazakhstan.
Judith Warner on Hillary Clinton: "I don’t for a moment begrudge Hillary her victory on Tuesday. But if victory came for the reasons we’ve been led to believe – because women voters ultimately saw in her, exhausted and near defeat, a countenance that mirrored their own – then I hate what that victory says about the state of their lives and the nature of the emotions they carry forward into this race. I hate the thought that women feel beaten down, backed into a corner, overwhelmed and near to breaking point, as Hillary appeared to be in the debate Saturday night. And I hate even more that they’ve got to see a strong, smart and savvy woman cut down to size before they can embrace her as one of their own."
Zman: "You have to go all the way back to 2005 to find a surplus to the five year average this small. Again, while I think(natural) gas is due a pull back, this recent draw down towards more "average" levels should prevent gas from taking a drastic turn lower over the next couple of months…probably now lower than mid 7s barring a heat wave."
Between the Hedges: "The number of individual investors who are bearish on US equities exceeds those who are bullish by the most since November 1990, a signal to some investors that stocks may be poised to rebound. The percentage of AAII respondents who are bearish has exceeded those who are bullish by more than 33 percentage points only three other times since 1990 – in October 1992, February 2003 and July 2006. In the 12 months that followed those periods, the S&P 500 rose 14%, 35% and 24%, respectively. Assets in US money-market funds increased by $61.3 billion during the week ended Jan. 8, the sixth-largest increase on record, to an all-time high of $3.15 trillion, according to iMoneyNet."
Robert McHugh: "The VIX continues to follow the path annotated earlier this week, finishing a nasty multi-month Symmetrical Triangle pattern, with horrid prospects for the stock market over the next 4 to 6 months. The direction that an index traveled prior to this particular triangle pattern occurring is almost always the direction that the index will travel leaving the pattern. Because the pattern is large, we believe the VIX is headed much higher, perhaps into the 40's. It currently sits around 23.00. The VIX moves inversely to stocks. A sharply rising VIX means sharply diving stocks. Short-term, the VIX pattern needs to drop to about the 19.00 to 20.00 area, which should reporesent the end of the current rally. This could likely occur late next week, around our coming phi mate turn date. Two enjoyable rally days are over, and every second of the next week's move must be appreciated."
Deutsche Bank AG raised its forecast for crude oil prices this year because of global political tensions and a ``tight'' balance between demand and supply. West Texas Intermediate and Brent crude oil will average $85 a barrel this year, 6.3 percent more than a previous forecast of $80 a barrel, Deutsche Bank analysts including Pavel Kushnir wrote in a report today. Oil prices will average $80 a barrel in 2009 and $75 a barrel in 2010.
"We're facing the worst housing recession in U.S. history," according to Nouriel Roubini, an economics professor at New York University and co-founder of RGE Monitor, an economic research and analysis firm. He predicted peak-to-bottom national home price losses of 30 percent. Roubini joined a group of three other real estate experts at the Real Estate Connect NYC 2008 conference in New York Wednesday for a discussion titled, "The Housing Debate: Bull vs. Bear." "There will be 10 million houses with negative equity," he said, where the owners will owe more on their mortgages than the properties are worth, giving them less incentive to keep making payments. Many will walk away, he said, depressing markets further. The housing turndown, according to Roubini, was the initial trigger for a broad economic decline. "We're in an economy-wide recession already, one that will be much more severe than those of 1991 or 2001," he said. Although housing only accounts for 5 percent of the economy, he noted, the slump has already reduced consumption, which makes up two-thirds of it. Consumers are no longer tapping home equity, and they're cutting back on spending. And credit problems are no longer confined to subprime loans, according to Roubini. They've spread to near-prime mortgages, prime, auto loans and junk bonds, with losses that could reach trillions of dollars.
According to the RBC Cash Index, consumer confidence tumbled to a mark of 56.3 in early January. That compares with a reading of 65.9 in December — and a benchmark of 100 — and was the worst since the index began in 2002.
"People are anxious because everything sounds pretty awful these days," said Bill Cheney, chief economist at John Hancock Financial Services Group.
Matt Simmons: "My opinion is that it’s increasingly likely that we actually set an all-time record in May 2005 of 74,252,000 barrels per day. And for the first three months of 2007, we’re almost a million barrels per day behind that, and we’re dropping fast. If that record still holds a year from now, I’ll bet someone ten-to-one that we set peak oil in May 2005 and it’s now past tense."
Bill Bonner: " The feds can't stop a slump. All they can do is react to it. And their reactions are likely to lead to higher inflation levels."
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$8.427 billion in the week ended 1/9/08 with Domestic funds reporting net outflows of -$6.974 billion and Non-domestic funds reporting net outflows of -$1.453 billion; Excluding ETF activity, Equity funds report net cash inflows totaling $533 million with Domestic funds reporting net inflows of $264 million and Non-domestic funds reporting net inflows totaling $269 million.
The decline in leveraged buyouts is slashing fees for investment banks, including Deutsche Bank and JPMorgan Chase, by about 50 percent, Bloomberg News reported. Buyout firms paid $5.4 billion to securities firms in the U.S. and Europe in the second half of 2007, 38 percent less than the first six months, data compiled by New York-based research firm Freeman & Company and Thomson Financial show. The drop was steepest in Europe where fees fell 54 percent.
CNBC reported Friday morning that the bank was in preliminary talks with Washington Mutual. The talks are at a very early stage, people briefed on them told DealBook. These people suggested that J.P. Morgan has been holding early talks with several rivals, including SunTrust, and is weighing its options.
Record imports and surging oil prices helped widen the U.S. trade deficit much more than expected in November to $63.1 billion, despite a ninth consecutive month of record exports, a U.S. Commerce Department report on Friday showed. The trade gap jumped 9.3 percent to its highest level since September 2006 from a slightly revised estimate of $57.8 billion in October.
Ingersoll-Rand Co Ltd said on Friday it has taken a noncash pretax charge of $449 million for pending and estimated future asbestos claims through 2053. The charge, which will be $277 million after tax, results from a $538 million increase in recorded liability for asbestos claims to $755 million.
Tiffany lowers outlook, sees 'pullback' in U.S. spending.
CIT Group Inc. indicated it would post a fourth-quarter loss amid boosting loan-loss provisions by $300 million and writing off the remaining goodwill from getting into the student-loan business.
Up to 1,000 employees on the Warner Bros. lot in Burbank could be laid off anytime after Friday as a result of the Hollywood writers strike.
"Democratic Presidential candidate Dennis Kucinich, the most outspoken advocate in the Presidential field and in Congress for election integrity, paper-ballot elections, and campaign finance reform, has sent a letter to the New Hampshire Secretary of State asking for a recount of Tuesday’s election because of “unexplained disparities between hand-counted ballots and machine-counted ballots.”
AllianceBernstein Holding LP tumbled in Friday morning trading after the investment management firm said Thursday evening 2007 earnings per share would fall 30 cents short of previous estimates. The investment management company earnings estimates were revised lower because of worse-than-expected hedge performance fees and larger-than-expected loses on investment write downs.
From the BLS: "Due to budget constraints, beginning with the January 2008 release scheduled to be published on February 15, the price series for export postsecondary education services, export travel and tourism services, inbound ocean liner freight, and inbound tanker freight will no longer be published."
Citigroup Inc. is expected to get an investment from Saudi Prince Alwaleed bin Talal and other investors including China Development Bank, The Wall Street Journal reported on its Web site late Friday, citing people familiar with the matter.
The Dow Jones Industrial Average fell 246.8 points to close at 12,606.3. The S&P 500 shed 19.31 points to 1,401.02, while the Nasdaq Composite declined 48.58 points to 2,439.94.
Crude for February delivery closed down 81 cents, or 0.9%, at $92.90 a barrel on the New York Mercantile Exchange. Crude ended the week down $5.
Year to date, the U.S. is running a budget deficit of $105.5 billion.
Gold for February delivery ended up $4.1, or 0.5%, at $897.7 an ounce on the New York Mercantile Exchange.
MBIA Inc., the largest bond insurer, paid a yield of 14 percent on the sale of $1 billion of AA rated notes, a rate usually charged to the lowest-ranked borrowers. The yield is 3.125 percent higher than what Greenwood Village, Colorado-based First Data Corp. paid in October when it sold $2.2 billion of bonds to finance its leveraged buyout by Kohlberg, Kravis Roberts & Co., according to Merrill Lynch & Co. index data. ``It was expensive but they needed to get it done,'' said Kevin Murphy, who oversees investment-grade and emerging-market bonds at Boston-based Putnam Investments, which has $65 billion in fixed-income assets under management. ``It's good news for the company, good news for the bond insurance sector and good news for the credit markets.'' Since when is it good news to pay interest at a 14% rate?
Floyd Norris: "AMERICAN credit card debt is growing at the fastest rate in years, a fact that may signal coming trouble for the banks that issue them."
The terror card never sleeps under Bush. Attacks against U.S. troops in Iraq with bombs believed linked to Iran -- known as explosively formed penetrators (EFPs) -- have risen sharply in January after several months of decline, according to the top U.S. commander in Iraq.
Countrywide shareholders would receive 0.1822 of a Bank of America share in exchange for each of their shares. The transaction values Countrywide at $7.16 per share, a 7.6 percent discount to the Thursday closing price of the company's stock.
They are looking at a closing in the third quarter of 2008.
Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost twice the company's original estimate, the New York Times reported on Friday. The losses were prompting the company to raise additional capital from an outside investor, the newspaper said in a report on its Web site.
American Express Co and Capital One Financial Corp , the largest independent U.S. credit card companies, projected profits below analyst forecasts on Thursday, citing mounting consumer loan losses as the U.S. economy slows.The forecasts show how the housing slump, tighter credit, high oil prices and rising unemployment have made it harder for many consumers to pay their bills. This has caused credit problems to widen beyond mortgages and affect other forms of debt, including credit cards and auto loans.
U.K. mortgage bank Northern Rock agreed to sell its portfolio of lifetime home equity release mortgages to J.P. Morgan. The portfolio has a balance sheet value of 2.2 billion pounds ($4.3 billion) and is being sold at a premium of 2.25%, the bank said. Northern Rock added the portfolio represents around 2% of its total assets as at June 30 and generated net interest income of 34 million pounds in the 12 months to the end of June. It will use the proceeds to reduce its borrowing from the Bank of England.
A tanker with a capacity of 65,000 barrels of oil struck a bridge on San Francisco Bay on Thursday evening, the San Francisco Chronicle reported. No oil was spilled, the ship's crew told the U.S. Coast Guard.
China's trade surplus climbed 48% to a record in 2007, according to reports. The nation's trade gap rose to $262.2 billion during the 12-month period, compared to $177.47 billion in 2006, newswires reported, citing figures released Friday by the General Administration of Customs. China's trade gap for December totaled $22.69 billion, compared to November's $26.28 billion and October's $27.05 billion. Chinese exports in December climbed 21.7% from the year-earlier period to $114.42 billion, while imports rose 25.7% on year to $91.73 billion.
Infosys Technologies reported a higher-than-expected 25.2% increase in third-quarter net profit on strong growth in revenue from outsourced contracts. Net profit during the October-December period rose to 12.31 billion rupees ($314 million), or 21.54 rupees a share, from a year-ago. Revenue increased 16.9% to 42.71 billion rupees, helped by the addition of 47 new clients. The company raised its full-year earnings forecast to 81.07 rupees, from at least 79.49 rupees previously and increased its revenue projection to a minimum of 166.27 billion rupees, from at least 165.88 billion rupees earlier.
Gold futures nudged the $900 per ounce level for the first time in electronic trading in Asia early Friday.
Japanese tax receipts on individuals are expected to climb 420 billion yen ($3.83 billion) once a repeal of tax cuts on stock dividends and real estate transactions come into effect during the next few years as part of a package of reforms, the Nikkei business daily reported Friday.
Ten weeks into the screenwriters' strike, Weinstein Co. has reached an interim agreement with the Writers Guild of America that will allow the independent studio to restart work on new films, according to Harvey Weinstein, co-chairman.
The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday. As I have noted in the last few years, a rating cut is warranted and long over due.
UBS wrote down the value of debt securities and leveraged loans by $14.7 billion last year, adding to more than $100 billion in markdowns and loan losses announced by the world's largest banks and securities firms. In my view, those write downs will mount higher in 2008.
India's industrial production grew in November at the slowest pace in 13 months, making it more likely the central bank may soon end more than three years of interest rate increases. Production at factories, utilities and mines rose 5.3 percent from a year earlier after gaining a revised 12 percent in October, the statistics office said By comparison, the U.S. is in reverse.
Richard Daughty: "The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year."
According to the NY Times, the new oil, along with refining projects under way by Petrobras, the national oil company, could eventually make Brazil a larger exporter of gasoline as well, adding to supplies in the United States and other countries where it is all but impossible to build new refineries. The subsalt basin that contains Tupi, the new deepwater field estimated to hold the equivalent of five billion to eight billion barrels of light crude oil, is creating a buzz among the world’s largest oil companies. They have struggled lately to find global-scale projects worth investing in, even with oil touching $100 a barrel. Tupi is the world’s biggest oil find since a 12-billion-barrel field discovered in 2000 in Kazakhstan.
Judith Warner on Hillary Clinton: "I don’t for a moment begrudge Hillary her victory on Tuesday. But if victory came for the reasons we’ve been led to believe – because women voters ultimately saw in her, exhausted and near defeat, a countenance that mirrored their own – then I hate what that victory says about the state of their lives and the nature of the emotions they carry forward into this race. I hate the thought that women feel beaten down, backed into a corner, overwhelmed and near to breaking point, as Hillary appeared to be in the debate Saturday night. And I hate even more that they’ve got to see a strong, smart and savvy woman cut down to size before they can embrace her as one of their own."
Zman: "You have to go all the way back to 2005 to find a surplus to the five year average this small. Again, while I think(natural) gas is due a pull back, this recent draw down towards more "average" levels should prevent gas from taking a drastic turn lower over the next couple of months…probably now lower than mid 7s barring a heat wave."
Between the Hedges: "The number of individual investors who are bearish on US equities exceeds those who are bullish by the most since November 1990, a signal to some investors that stocks may be poised to rebound. The percentage of AAII respondents who are bearish has exceeded those who are bullish by more than 33 percentage points only three other times since 1990 – in October 1992, February 2003 and July 2006. In the 12 months that followed those periods, the S&P 500 rose 14%, 35% and 24%, respectively. Assets in US money-market funds increased by $61.3 billion during the week ended Jan. 8, the sixth-largest increase on record, to an all-time high of $3.15 trillion, according to iMoneyNet."
Robert McHugh: "The VIX continues to follow the path annotated earlier this week, finishing a nasty multi-month Symmetrical Triangle pattern, with horrid prospects for the stock market over the next 4 to 6 months. The direction that an index traveled prior to this particular triangle pattern occurring is almost always the direction that the index will travel leaving the pattern. Because the pattern is large, we believe the VIX is headed much higher, perhaps into the 40's. It currently sits around 23.00. The VIX moves inversely to stocks. A sharply rising VIX means sharply diving stocks. Short-term, the VIX pattern needs to drop to about the 19.00 to 20.00 area, which should reporesent the end of the current rally. This could likely occur late next week, around our coming phi mate turn date. Two enjoyable rally days are over, and every second of the next week's move must be appreciated."
Deutsche Bank AG raised its forecast for crude oil prices this year because of global political tensions and a ``tight'' balance between demand and supply. West Texas Intermediate and Brent crude oil will average $85 a barrel this year, 6.3 percent more than a previous forecast of $80 a barrel, Deutsche Bank analysts including Pavel Kushnir wrote in a report today. Oil prices will average $80 a barrel in 2009 and $75 a barrel in 2010.
"We're facing the worst housing recession in U.S. history," according to Nouriel Roubini, an economics professor at New York University and co-founder of RGE Monitor, an economic research and analysis firm. He predicted peak-to-bottom national home price losses of 30 percent. Roubini joined a group of three other real estate experts at the Real Estate Connect NYC 2008 conference in New York Wednesday for a discussion titled, "The Housing Debate: Bull vs. Bear." "There will be 10 million houses with negative equity," he said, where the owners will owe more on their mortgages than the properties are worth, giving them less incentive to keep making payments. Many will walk away, he said, depressing markets further. The housing turndown, according to Roubini, was the initial trigger for a broad economic decline. "We're in an economy-wide recession already, one that will be much more severe than those of 1991 or 2001," he said. Although housing only accounts for 5 percent of the economy, he noted, the slump has already reduced consumption, which makes up two-thirds of it. Consumers are no longer tapping home equity, and they're cutting back on spending. And credit problems are no longer confined to subprime loans, according to Roubini. They've spread to near-prime mortgages, prime, auto loans and junk bonds, with losses that could reach trillions of dollars.
According to the RBC Cash Index, consumer confidence tumbled to a mark of 56.3 in early January. That compares with a reading of 65.9 in December — and a benchmark of 100 — and was the worst since the index began in 2002.
"People are anxious because everything sounds pretty awful these days," said Bill Cheney, chief economist at John Hancock Financial Services Group.
Matt Simmons: "My opinion is that it’s increasingly likely that we actually set an all-time record in May 2005 of 74,252,000 barrels per day. And for the first three months of 2007, we’re almost a million barrels per day behind that, and we’re dropping fast. If that record still holds a year from now, I’ll bet someone ten-to-one that we set peak oil in May 2005 and it’s now past tense."
Bill Bonner: " The feds can't stop a slump. All they can do is react to it. And their reactions are likely to lead to higher inflation levels."
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$8.427 billion in the week ended 1/9/08 with Domestic funds reporting net outflows of -$6.974 billion and Non-domestic funds reporting net outflows of -$1.453 billion; Excluding ETF activity, Equity funds report net cash inflows totaling $533 million with Domestic funds reporting net inflows of $264 million and Non-domestic funds reporting net inflows totaling $269 million.
The decline in leveraged buyouts is slashing fees for investment banks, including Deutsche Bank and JPMorgan Chase, by about 50 percent, Bloomberg News reported. Buyout firms paid $5.4 billion to securities firms in the U.S. and Europe in the second half of 2007, 38 percent less than the first six months, data compiled by New York-based research firm Freeman & Company and Thomson Financial show. The drop was steepest in Europe where fees fell 54 percent.
CNBC reported Friday morning that the bank was in preliminary talks with Washington Mutual. The talks are at a very early stage, people briefed on them told DealBook. These people suggested that J.P. Morgan has been holding early talks with several rivals, including SunTrust, and is weighing its options.
Record imports and surging oil prices helped widen the U.S. trade deficit much more than expected in November to $63.1 billion, despite a ninth consecutive month of record exports, a U.S. Commerce Department report on Friday showed. The trade gap jumped 9.3 percent to its highest level since September 2006 from a slightly revised estimate of $57.8 billion in October.
Ingersoll-Rand Co Ltd said on Friday it has taken a noncash pretax charge of $449 million for pending and estimated future asbestos claims through 2053. The charge, which will be $277 million after tax, results from a $538 million increase in recorded liability for asbestos claims to $755 million.
Tiffany lowers outlook, sees 'pullback' in U.S. spending.
CIT Group Inc. indicated it would post a fourth-quarter loss amid boosting loan-loss provisions by $300 million and writing off the remaining goodwill from getting into the student-loan business.
Up to 1,000 employees on the Warner Bros. lot in Burbank could be laid off anytime after Friday as a result of the Hollywood writers strike.
"Democratic Presidential candidate Dennis Kucinich, the most outspoken advocate in the Presidential field and in Congress for election integrity, paper-ballot elections, and campaign finance reform, has sent a letter to the New Hampshire Secretary of State asking for a recount of Tuesday’s election because of “unexplained disparities between hand-counted ballots and machine-counted ballots.”
AllianceBernstein Holding LP tumbled in Friday morning trading after the investment management firm said Thursday evening 2007 earnings per share would fall 30 cents short of previous estimates. The investment management company earnings estimates were revised lower because of worse-than-expected hedge performance fees and larger-than-expected loses on investment write downs.
From the BLS: "Due to budget constraints, beginning with the January 2008 release scheduled to be published on February 15, the price series for export postsecondary education services, export travel and tourism services, inbound ocean liner freight, and inbound tanker freight will no longer be published."
Citigroup Inc. is expected to get an investment from Saudi Prince Alwaleed bin Talal and other investors including China Development Bank, The Wall Street Journal reported on its Web site late Friday, citing people familiar with the matter.
The Dow Jones Industrial Average fell 246.8 points to close at 12,606.3. The S&P 500 shed 19.31 points to 1,401.02, while the Nasdaq Composite declined 48.58 points to 2,439.94.
Crude for February delivery closed down 81 cents, or 0.9%, at $92.90 a barrel on the New York Mercantile Exchange. Crude ended the week down $5.
Year to date, the U.S. is running a budget deficit of $105.5 billion.
Gold for February delivery ended up $4.1, or 0.5%, at $897.7 an ounce on the New York Mercantile Exchange.
MBIA Inc., the largest bond insurer, paid a yield of 14 percent on the sale of $1 billion of AA rated notes, a rate usually charged to the lowest-ranked borrowers. The yield is 3.125 percent higher than what Greenwood Village, Colorado-based First Data Corp. paid in October when it sold $2.2 billion of bonds to finance its leveraged buyout by Kohlberg, Kravis Roberts & Co., according to Merrill Lynch & Co. index data. ``It was expensive but they needed to get it done,'' said Kevin Murphy, who oversees investment-grade and emerging-market bonds at Boston-based Putnam Investments, which has $65 billion in fixed-income assets under management. ``It's good news for the company, good news for the bond insurance sector and good news for the credit markets.'' Since when is it good news to pay interest at a 14% rate?
Floyd Norris: "AMERICAN credit card debt is growing at the fastest rate in years, a fact that may signal coming trouble for the banks that issue them."
The terror card never sleeps under Bush. Attacks against U.S. troops in Iraq with bombs believed linked to Iran -- known as explosively formed penetrators (EFPs) -- have risen sharply in January after several months of decline, according to the top U.S. commander in Iraq.
Thursday, January 10, 2008
Cross Currents
1/11/08 Cross Currents
Capital One Financial Corp. said early Thursday that its 2007 earnings will fall short of the company's previous expectations because of increased loan delinquencies and additional legal reserves in the fourth quarter.
The Bank of England held interest rates steady at 5.5 percent on Thursday, resisting calls for a cut amid mounting signs of a slowing domestic economy.
Blackstone Group said it's going to pay as much as $930 million to buy GSO Capital Partners, a fund manager specializing in leveraged finance, and said it would buy back up to $500 million in shares. Blackstone said the acquisition would be "non-dilutive."
Global prices for nickel, a key ingredient in stainless steel, have fallen to $29,100 per ton, about 43% below record highs in May.
Costco Wholesale Corp's December sales at stores open at least one year rose 7%.
Scottish & Newcastle rejected a new 7.6 billion pound ($15 billion), 780 pence a share takeover offer, suitors Carlsberg and Heineken said Thursday. The brewers said the offer is conditional on a recommendation from S&N's board, and added that the majority of the increase is being funded by Carlsberg, implying a very full price for BBH, the Russian brewer that Carlsberg and S&N currently jointly own.
Tata Motors unveiled its much-anticipated compact car model, Nano, with a price tag starting at 100,000 rupees ($2,550). The car, which will be available for sale in the second half of 2008, is a four-door vehicle that can seat five and sports a 624 cubic centimeter engine at the rear, according to reports.
Citigroup Inc.and Merrill Lynch are in talks to get further capital injections from investors including foreign governments, according to a report in the Wall Street Journal.
Limited Brands Inc said on Thursday sales at stores open at least a year fell 8 percent in December.
Ed McCarthy: "As I watch the daily unfolding of new ramifications of the Monstrous Greenspan Fed-created global credit bubble now stirred, similar to a witch’s brew, by the Bernanke acolyte and Hank Paulson from Guvmint Sach’s, I am moved to use my former colleagues outburst as the best available description. It has been my contention for quite some time (voiced not only to senior officials in banks and other financial institutions but also to senior regulatory officials) that, it was my opinion, financially engineered “structured finance” credit instruments were similar to the front end of a powerhouse 18 wheeler truck, missing any factual load in the rear compartment. The credit thus created was all acceleration and speed with no thought given to how to handle deceleration. Since tremendous amounts of this now dis-proven “safely diversified risk intermediation” is now in the type of trouble envisioned, I repeat my warning: There is no, repeat, no infrastructure in place to handle the ongoing train wreck that the alchemists have created!"
Steve Moyer on real estate: "Alas, my January, 2008 answer is this: Values have a long way to go (down), both in terms of price and timeframe, and the longer you keep your investment capital safe and secure, the more purchasing power that cash will have when the time is right. We're likely just 15 or 20% of the way there, so patience remains paramount. Just know that with each passing year, the buying power of your safe cash will surely grow."
Countrywide Financial Corp.'s future was called into question again Wednesday after it reported another rise in loan delinquencies and foreclosures, fueling fresh speculation that the company was headed toward bankruptcy.
The nation's biggest mortgage lender was "withering" and "might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," said Egan-Jones Ratings Co., an advisor to pension funds and other big investors. Weiss Research, which rates the condition of lenders, said the Calabasas company "is on a collision course with bankruptcy," adding that it "exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year."
Goldman Sachs Group cut its economic growth estimate for Japan and said there's a 50 percent chance of a recession in the world's second-largest economy. ``The probability of a recession in Japan has risen to the danger level,'' Tetsufumi Yamakawa, chief Japan economist at Goldman, said in a report to clients today. ``We project weaker- than-expected growth in Japan.''
The pace of Japan's economic growth is slowing due to a big drop in housing investment and the slowdown is likely to persist for some time, a senior central bank official said in a speech Thursday."The nation's economic cycle is weakening now but the cycle itself remains intact," said Toshiro Muto, one of the Bank of Japan's two deputy governors."However, looking ahead, the economy wi
According to the FT, Bear Stearns held preliminary talks with Fortress Investments, a listed alternative asset management firm, regarding a possible combination in the weeks before Jimmy Cayne stepped down as chief executive of the investment bank, people familiar with the matter said.
Escalating fears of a recession drove the cost of protecting corporate debt against default to a record high in the US on Wednesday.
Citing pressures from the "challenging and uncertain" economic environment as well a delays in certain scheduled restaurant openings, Morton's Restaurant Group, the steakhouse operator, said earnings for the final quarter will be in the range of 36 cents to 39 cents a share, well below the company's earlier 46- to-48 cent-a-share guidance. Analysts surveyed by Reuters Estimates had been anticipating per-share earnings of 44 cents, compared with the 33 cents Morton's reported in the last quarter of 2006. The stock sold down to a new low at $6+. The company went public in 2006 at $17.
The Internal Revenue Service should issue "apology payments" of up to $1,000 to taxpayers whose cases are mishandled, the National Taxpayer Advocate told Congress yesterday.Nina E. Olson, a federal official appointed by the Treasury secretary, said Congress should also enact a Taxpayer Bill of Rights.
How about reducing taxes, cutting government spending and government pork? How about eliminating dozens of unnecessary government agencies?
Brett Steenbarger: "Across every major index--S&P 500 large caps; S&P 400 mid caps; S&P 600 small caps--new 52-week lows have expanded relative to August. Until we see a pattern of price lows with fewer stocks making new lows, I'm not jumping into this market for the long haul."
Wal-Mart's same-store sales rose 2.4% for the five weeks ending on January 4.
Logitech International rose over 12% in Europe on rumors that Microsoft might buy the company, according to Reuters.
Morgan Stanley analyst Heidi Wood said the first Boeing Dreamliner still had no avionics or wiring in the cockpit in mid-December and that the speculation of further delay is "likely true." She wrote that the jet's first flight, supposed to happen in March, "might occur closer to late April/May."
U.K. natural gas for delivery this summer and the following winter climbed to records today as the price of spot gas rose. Gas for delivery in the six months through September 2008 climbed as much as 1.5 percent to 53 pence a therm at 8:02 a.m. local time, according to broker ICAP Plc. That's $10.37 a million British thermal units. A therm is 100,000 Btus.
The seasonally adjusted number of people filing for state unemployment benefits fell 15,000 to 322,000 last week, the Labor Department reported Thursday. It's the lowest figure since Nov. 3. The four-week average of new claims fell by 3,000 to 341,000, the lowest in a month. Meanwhile, the number of people receiving state benefits fell by 52,000 to 2.7 million. Despite the decline, the four-week average of continuing claims rose by 17,000 to 2.7 million, the most since November 2005. Compared with the same time last year, initial claims are up about 7%, while continuing claims are up about 10%.
Abercrombie & Fitch's December sales at stores open at least one year fell 2%.
JCPenney December same-department-store sales down 7.5%.
Kohl's December reported same-store sales down 11.4%.
T. ROWE PRICE ASSOCIATES, INC. filed a 13G report
with a 10% ownership of BJ Services.
Yahoo! Real Estate today launched its new online property listings
program, allowing franchisors and brokers nationwide to post their
complete set of home listings on the site for free on the Internet’s
#1 real estate website. Prudential Real Estate Affiliates and Realogy
Corporation, two of the industry’s largest franchisors, are among the first to participate in the service, enabling
their teams of real estate professionals to market their full catalog of
property listings on Yahoo! Real Estate. Realogy’s
franchise brand networks include CENTURY 21, Coldwell Banker, ERA and Sotheby’s International Realty.
European Central Bank President Jean-Claude Trichet said there are upside risks to price stability, and said it remains prepared to act pre-emptively. But he also noted downside risk to the economy from the "re-appraisal of risk in financial markets." The ECB earlier announced it was holding its key interest rate at 4%.
Shares of Yahoo rose 2.9% in pre-market trade, following a report in The New York Post that sources close to Microsoft say the company is still debating if it should make last year's informal offer to buy the search firm official by going public with its bid. The Post last year reported on Microsoft-Yahoo talks, though other outlets reported the discussions were more on a partnership and not a takeover.
According to Bloomberg, Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar. That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That's also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it's now or later this year.
Australia's trade deficit narrowed in November for the first time in four months as mining companies shipped more iron, copper, lead and uranium. The trade gap shrank to A$2.25 billion ($1.98 billion) from a revised A$2.86 billion in October, the Bureau of Statistics said in Sydney today.
U.S. natural gas inventories fell 171 billion cubic feet in the week ending Jan. 4, the Energy Information Administration reported on Thursday. After the data, natural gas futures for February delivery rose 3.1 cents, or 0.4%, to $8.14 per million British thermal units.
ABBAS: "The settlement for us is considered an obstacle for negotiations, and we have spoke more than once with Mr. Prime Minister Olmert, very frankly. And we also spoke in this meeting with President George Bush, and consequently, the President understood this issue."
According to MarcoNews, it appears that a mega deal to sell the luxury, Italian-inspired Tuscany Reserve community off Livingston Road near the Lee-Collier line is off. On Monday, a prospective buyer received an e-mail from a community sales agent saying the developer, Bonita Springs-based WCI Communities Inc., “is no longer looking to sell it” and that marketing is gearing up again. The sales agent gave two reasons why cash-strapped WCI has taken the community off the market: The tax advantage that it would have gotten in 2007 doesn’t exist anymore and the company had more closings than expected last month at several other projects, which has improved its cash flow. Jerry Starkey, WCI’s CEO, wouldn’t comment, saying the company doesn’t discuss transactions.
Ben Bernanke: "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."
After a clear signal from Fed Chairman Ben Bernanke on Thursday, traders are almost certain that the Federal Reserve will cut its key overnight lending rate by a half-point from 4.25% to 3.75% at the Jan. 30 meeting, according to prices in the Chicago Board of Trade's federal funds futures market. The odds of a half-point cut rose to 88% from 76% earlier.
The board of Delta Air Lines Inc. will be asked Friday to begin formal talks with Northwest Airlines Corp.and UAL Corp. with the aim of consummating a merger with one of the companies, The Wall Street Journal reported on its Web site Thursday, citing people familiar with the matter.
The yen strengthened considerably against the dollar and the U.S. dollar index again weakened to the 95.96 level.
Commissioners of the Federal Communications Commission have signed off on the $19.5 billion acquisition of Clear Channel Communications Inc. by Bain Capital and Thomas H. Lee Partners, indicating a possible formal agency approval within the next several weeks, The Wall Street Journal reported on its Web site Thursday, citing a person close to the issue.
Natural gas prices have risen 9 percent since Dec. 31 and are 21 percent higher than a year ago. Gas for February delivery rose 14.7 cents, or 1.8 percent, to $8.246 per million British thermal units at 1:26 p.m. on the New York Mercantile Exchange. A close at that price would be the highest since Nov. 2 when it settled at $8.418 per million Btu.
Chevron Corp. expects fourth-quarter net income to exceed third-quarter results, helped by higher prices for crude oil and natural gas that boosted its upstream segment. The San Ramon, Calif.-based energy company predicts its downstream segment will be lower than the previous quarter, as refined-product margins continued to be weak. Chevron earned $3.72 billion, or $1.75 a share, in the third quarter. For the fourth quarter, analysts polled by Thomson Financial, on average, are expecting earnings of $2.31 a share.
Crude for February delivery ended down $1.96, or 2.1%, at $93.71 a barrel on the New York Mercantile Exchange.
Bank of America Corp.is in advanced talks to buy Countrywide Financial Corp., The Wall Street Journal reported Thursday on its Web site, citing people familiar with the situation. The first time around the B of A bought $2 billion in preferred stock and saw Countrywide shares decline to $5. I guess B of A is a glutton for punishment. The Street was so excited that the Dow took off on a triple digit ride and the shorts hurried to cover.
African proverb: “Only a fool tests the depth of the water with both feet.”
February gold finished up $11.90 at $893.60 an ounce on Nymex.
Capital One Financial Corp. said early Thursday that its 2007 earnings will fall short of the company's previous expectations because of increased loan delinquencies and additional legal reserves in the fourth quarter.
The Bank of England held interest rates steady at 5.5 percent on Thursday, resisting calls for a cut amid mounting signs of a slowing domestic economy.
Blackstone Group said it's going to pay as much as $930 million to buy GSO Capital Partners, a fund manager specializing in leveraged finance, and said it would buy back up to $500 million in shares. Blackstone said the acquisition would be "non-dilutive."
Global prices for nickel, a key ingredient in stainless steel, have fallen to $29,100 per ton, about 43% below record highs in May.
Costco Wholesale Corp's December sales at stores open at least one year rose 7%.
Scottish & Newcastle rejected a new 7.6 billion pound ($15 billion), 780 pence a share takeover offer, suitors Carlsberg and Heineken said Thursday. The brewers said the offer is conditional on a recommendation from S&N's board, and added that the majority of the increase is being funded by Carlsberg, implying a very full price for BBH, the Russian brewer that Carlsberg and S&N currently jointly own.
Tata Motors unveiled its much-anticipated compact car model, Nano, with a price tag starting at 100,000 rupees ($2,550). The car, which will be available for sale in the second half of 2008, is a four-door vehicle that can seat five and sports a 624 cubic centimeter engine at the rear, according to reports.
Citigroup Inc.and Merrill Lynch are in talks to get further capital injections from investors including foreign governments, according to a report in the Wall Street Journal.
Limited Brands Inc said on Thursday sales at stores open at least a year fell 8 percent in December.
Ed McCarthy: "As I watch the daily unfolding of new ramifications of the Monstrous Greenspan Fed-created global credit bubble now stirred, similar to a witch’s brew, by the Bernanke acolyte and Hank Paulson from Guvmint Sach’s, I am moved to use my former colleagues outburst as the best available description. It has been my contention for quite some time (voiced not only to senior officials in banks and other financial institutions but also to senior regulatory officials) that, it was my opinion, financially engineered “structured finance” credit instruments were similar to the front end of a powerhouse 18 wheeler truck, missing any factual load in the rear compartment. The credit thus created was all acceleration and speed with no thought given to how to handle deceleration. Since tremendous amounts of this now dis-proven “safely diversified risk intermediation” is now in the type of trouble envisioned, I repeat my warning: There is no, repeat, no infrastructure in place to handle the ongoing train wreck that the alchemists have created!"
Steve Moyer on real estate: "Alas, my January, 2008 answer is this: Values have a long way to go (down), both in terms of price and timeframe, and the longer you keep your investment capital safe and secure, the more purchasing power that cash will have when the time is right. We're likely just 15 or 20% of the way there, so patience remains paramount. Just know that with each passing year, the buying power of your safe cash will surely grow."
Countrywide Financial Corp.'s future was called into question again Wednesday after it reported another rise in loan delinquencies and foreclosures, fueling fresh speculation that the company was headed toward bankruptcy.
The nation's biggest mortgage lender was "withering" and "might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," said Egan-Jones Ratings Co., an advisor to pension funds and other big investors. Weiss Research, which rates the condition of lenders, said the Calabasas company "is on a collision course with bankruptcy," adding that it "exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year."
Goldman Sachs Group cut its economic growth estimate for Japan and said there's a 50 percent chance of a recession in the world's second-largest economy. ``The probability of a recession in Japan has risen to the danger level,'' Tetsufumi Yamakawa, chief Japan economist at Goldman, said in a report to clients today. ``We project weaker- than-expected growth in Japan.''
The pace of Japan's economic growth is slowing due to a big drop in housing investment and the slowdown is likely to persist for some time, a senior central bank official said in a speech Thursday."The nation's economic cycle is weakening now but the cycle itself remains intact," said Toshiro Muto, one of the Bank of Japan's two deputy governors."However, looking ahead, the economy wi
According to the FT, Bear Stearns held preliminary talks with Fortress Investments, a listed alternative asset management firm, regarding a possible combination in the weeks before Jimmy Cayne stepped down as chief executive of the investment bank, people familiar with the matter said.
Escalating fears of a recession drove the cost of protecting corporate debt against default to a record high in the US on Wednesday.
Citing pressures from the "challenging and uncertain" economic environment as well a delays in certain scheduled restaurant openings, Morton's Restaurant Group, the steakhouse operator, said earnings for the final quarter will be in the range of 36 cents to 39 cents a share, well below the company's earlier 46- to-48 cent-a-share guidance. Analysts surveyed by Reuters Estimates had been anticipating per-share earnings of 44 cents, compared with the 33 cents Morton's reported in the last quarter of 2006. The stock sold down to a new low at $6+. The company went public in 2006 at $17.
The Internal Revenue Service should issue "apology payments" of up to $1,000 to taxpayers whose cases are mishandled, the National Taxpayer Advocate told Congress yesterday.Nina E. Olson, a federal official appointed by the Treasury secretary, said Congress should also enact a Taxpayer Bill of Rights.
How about reducing taxes, cutting government spending and government pork? How about eliminating dozens of unnecessary government agencies?
Brett Steenbarger: "Across every major index--S&P 500 large caps; S&P 400 mid caps; S&P 600 small caps--new 52-week lows have expanded relative to August. Until we see a pattern of price lows with fewer stocks making new lows, I'm not jumping into this market for the long haul."
Wal-Mart's same-store sales rose 2.4% for the five weeks ending on January 4.
Logitech International rose over 12% in Europe on rumors that Microsoft might buy the company, according to Reuters.
Morgan Stanley analyst Heidi Wood said the first Boeing Dreamliner still had no avionics or wiring in the cockpit in mid-December and that the speculation of further delay is "likely true." She wrote that the jet's first flight, supposed to happen in March, "might occur closer to late April/May."
U.K. natural gas for delivery this summer and the following winter climbed to records today as the price of spot gas rose. Gas for delivery in the six months through September 2008 climbed as much as 1.5 percent to 53 pence a therm at 8:02 a.m. local time, according to broker ICAP Plc. That's $10.37 a million British thermal units. A therm is 100,000 Btus.
The seasonally adjusted number of people filing for state unemployment benefits fell 15,000 to 322,000 last week, the Labor Department reported Thursday. It's the lowest figure since Nov. 3. The four-week average of new claims fell by 3,000 to 341,000, the lowest in a month. Meanwhile, the number of people receiving state benefits fell by 52,000 to 2.7 million. Despite the decline, the four-week average of continuing claims rose by 17,000 to 2.7 million, the most since November 2005. Compared with the same time last year, initial claims are up about 7%, while continuing claims are up about 10%.
Abercrombie & Fitch's December sales at stores open at least one year fell 2%.
JCPenney December same-department-store sales down 7.5%.
Kohl's December reported same-store sales down 11.4%.
T. ROWE PRICE ASSOCIATES, INC. filed a 13G report
with a 10% ownership of BJ Services.
Yahoo! Real Estate today launched its new online property listings
program, allowing franchisors and brokers nationwide to post their
complete set of home listings on the site for free on the Internet’s
#1 real estate website. Prudential Real Estate Affiliates and Realogy
Corporation, two of the industry’s largest franchisors, are among the first to participate in the service, enabling
their teams of real estate professionals to market their full catalog of
property listings on Yahoo! Real Estate. Realogy’s
franchise brand networks include CENTURY 21, Coldwell Banker, ERA and Sotheby’s International Realty.
European Central Bank President Jean-Claude Trichet said there are upside risks to price stability, and said it remains prepared to act pre-emptively. But he also noted downside risk to the economy from the "re-appraisal of risk in financial markets." The ECB earlier announced it was holding its key interest rate at 4%.
Shares of Yahoo rose 2.9% in pre-market trade, following a report in The New York Post that sources close to Microsoft say the company is still debating if it should make last year's informal offer to buy the search firm official by going public with its bid. The Post last year reported on Microsoft-Yahoo talks, though other outlets reported the discussions were more on a partnership and not a takeover.
According to Bloomberg, Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar. That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That's also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it's now or later this year.
Australia's trade deficit narrowed in November for the first time in four months as mining companies shipped more iron, copper, lead and uranium. The trade gap shrank to A$2.25 billion ($1.98 billion) from a revised A$2.86 billion in October, the Bureau of Statistics said in Sydney today.
U.S. natural gas inventories fell 171 billion cubic feet in the week ending Jan. 4, the Energy Information Administration reported on Thursday. After the data, natural gas futures for February delivery rose 3.1 cents, or 0.4%, to $8.14 per million British thermal units.
ABBAS: "The settlement for us is considered an obstacle for negotiations, and we have spoke more than once with Mr. Prime Minister Olmert, very frankly. And we also spoke in this meeting with President George Bush, and consequently, the President understood this issue."
According to MarcoNews, it appears that a mega deal to sell the luxury, Italian-inspired Tuscany Reserve community off Livingston Road near the Lee-Collier line is off. On Monday, a prospective buyer received an e-mail from a community sales agent saying the developer, Bonita Springs-based WCI Communities Inc., “is no longer looking to sell it” and that marketing is gearing up again. The sales agent gave two reasons why cash-strapped WCI has taken the community off the market: The tax advantage that it would have gotten in 2007 doesn’t exist anymore and the company had more closings than expected last month at several other projects, which has improved its cash flow. Jerry Starkey, WCI’s CEO, wouldn’t comment, saying the company doesn’t discuss transactions.
Ben Bernanke: "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."
After a clear signal from Fed Chairman Ben Bernanke on Thursday, traders are almost certain that the Federal Reserve will cut its key overnight lending rate by a half-point from 4.25% to 3.75% at the Jan. 30 meeting, according to prices in the Chicago Board of Trade's federal funds futures market. The odds of a half-point cut rose to 88% from 76% earlier.
The board of Delta Air Lines Inc. will be asked Friday to begin formal talks with Northwest Airlines Corp.and UAL Corp. with the aim of consummating a merger with one of the companies, The Wall Street Journal reported on its Web site Thursday, citing people familiar with the matter.
The yen strengthened considerably against the dollar and the U.S. dollar index again weakened to the 95.96 level.
Commissioners of the Federal Communications Commission have signed off on the $19.5 billion acquisition of Clear Channel Communications Inc. by Bain Capital and Thomas H. Lee Partners, indicating a possible formal agency approval within the next several weeks, The Wall Street Journal reported on its Web site Thursday, citing a person close to the issue.
Natural gas prices have risen 9 percent since Dec. 31 and are 21 percent higher than a year ago. Gas for February delivery rose 14.7 cents, or 1.8 percent, to $8.246 per million British thermal units at 1:26 p.m. on the New York Mercantile Exchange. A close at that price would be the highest since Nov. 2 when it settled at $8.418 per million Btu.
Chevron Corp. expects fourth-quarter net income to exceed third-quarter results, helped by higher prices for crude oil and natural gas that boosted its upstream segment. The San Ramon, Calif.-based energy company predicts its downstream segment will be lower than the previous quarter, as refined-product margins continued to be weak. Chevron earned $3.72 billion, or $1.75 a share, in the third quarter. For the fourth quarter, analysts polled by Thomson Financial, on average, are expecting earnings of $2.31 a share.
Crude for February delivery ended down $1.96, or 2.1%, at $93.71 a barrel on the New York Mercantile Exchange.
Bank of America Corp.is in advanced talks to buy Countrywide Financial Corp., The Wall Street Journal reported Thursday on its Web site, citing people familiar with the situation. The first time around the B of A bought $2 billion in preferred stock and saw Countrywide shares decline to $5. I guess B of A is a glutton for punishment. The Street was so excited that the Dow took off on a triple digit ride and the shorts hurried to cover.
African proverb: “Only a fool tests the depth of the water with both feet.”
February gold finished up $11.90 at $893.60 an ounce on Nymex.
Wednesday, January 09, 2008
Forecasts
1/10/08 Forecasts
Robert McHugh:"We are in the midst of a stock market crash that started at 14,200 in October 2007, and is likely to continue to at least 11,500 the first half of 2008."
Stock Traders Almanac: " When the Dow closes below its December closing low in the first quarter, it is frequently an excellent warning sign. The December Low Indicator was originated by Lucien Hooper, a Forbes columnist and Wall Street analyst back in the 1970s. Hooper dismissed the importance of January and January's first week as reliable indicators. He noted that the trend could be random or even manipulated during a holiday-shortened week. Instead, said Hooper, “Pay much more attention to the December low. If that low is violated during the first quarter of the New Year, watch out! 13 of the 27 occurrences were followed by gains for the rest of the year – and full year gains – after the low for the year was reached. Hooper’s “Watch Out†warning was absolutely correct. All but one of the instances since 1952 experienced further declines, as the Dow fell an additional 10.1% on average when December's low was breached in Q1. Only three significant drops occurred when December’s low was not breached in Q1 (1974, 1981, and 1987)."
Mike Shedlock: "The interest expense for December alone was a whopping $106 billion. Using a three month average, Federal expenses just on interest is $615 billion."
The California Public Employees Retirement System said Wednesday it has taken a 9.9% stake in U.S. private-equity house Silver Lake Partners. Calpers has also agreed to make further commitments to Silver Lake funds, whose investments are focused on the technology industry.
At 7 a.m. Eastern, February gold futures rose $8 to $888.30 an ounce. February gold finished up $1.40 at $881.70 an ounce.
Countrywide's fourth-quarter fundings were $69 billion, exceeding forecasts. "Prepayment speeds continued to decline throughout the quarter, which has enhanced the economic value of our mortgage servicing rights asset," the lender said. Average daily mortgage loan application activity for December was $1.5 billion, down from $1.9 billion in November.
E*Trade Financial Corp. said that it has made significant progress toward executing its turnaround plan in recent weeks. The company has sold around $3 billion of additional available-for-sale securities. Also, its home equity loan portfolio continued to run off as anticipated, ending the year with under $12 billion in balances. The firm has also reduced bank wholesale borrowing levels by eliminating around $3.5 billion in Federal Home Loan Bank advances and repurchase agreements quarter over quarter. E*Trade said that it expects 2007 year-end tier I and risk-based bank capital to be equal to or better than 5.9% and 11.1%. It will also fully exit its institutional trading business by closing its remaining trading desk and has formed a special committee to aggressively reduce real estate portfolio risk.
DuPont lifted its outlook for 2008 earnings to a range of $3.35 to $3.55 a share compared to an earlier forecast of $3.31 to $3.52 a share, saying it expects growth in its agriculture and nutrition business segment and in its emerging market operations to more than compensate for a slower U.S. economy.
In the U.K., Marks & Spencer reported a 2.2% same-store sales decline and the stock dropped 14%.
Shares of Chinese personal computer maker Lenovo Group tumbled 10.7% with heavy volumes in Hong Kong Wednesday on a brokerage downgrade and reports its chairman has cautioned the Chinese economy has become highly dependent on the U.S. market.
Mortgage application volume skyrocketed 32.2 percent during the holiday shortened week ending Jan. 4, ending three consecutive weeks of sharp declines, according to the Mortgage Bankers Association's weekly application survey.
Richard Daughty: "Instead of the town saying, 'Oh, my God! What kind of ravenous vampires have we become?' and lowering their...damned taxes, 'The town is pushing a program that would let seniors work part-time...to help pay off some of their property taxes.'" From AP, we can't believe our eyes when we read, "Plan Would Let Seniors Work to Pay Taxes". It seems that in Greenburgh, N.Y., the damned local government is eating the financial guts out of its citizens. For example, a 76-year old woman named Audrey Davison lives alone, gets a $620 Social Security check per month ($7,440 a year), and has to pay $12,000 a year in property taxes on the house that she has lived in for 43 years! Instead of the town saying, "Oh, my God! What kind of ravenous vampires have we become?" and lowering their damned spending and the damned taxes, "The town is pushing a program that would let seniors work part-time, for $7 an hour, to help pay off some of their property taxes."
The New York Times reports that McGraw-Hill will cut 3% of its staff.
According to a Bloomberg story, the U.S. will skirt recession as consumer spending slows without collapsing, a survey of economists showed. Economic growth will average 1.5 percent in the first six months of 2008, matching the fourth quarter's pace, according to the median estimate of 62 economists surveyed by Bloomberg News from Jan. 3 to Jan. 8. The rate of expansion would be the weakest since the last nine months of 2001.
Goldman Sachs Group Inc. said the U.S. economy is probably slipping into recession and expects the Federal Reserve to respond by slashing interest rates. Goldman expects the Fed to cut its benchmark rate to 2.5 percent by the third quarter, according to an e-mailed strategy note. Goldman said in November the Fed would reduce its key rate, currently at 4.25 percent, to 3 percent by the middle of 2008.
Steel Partners, a New York investment firm that owns 9.1 percent of Rowan's stock, said it will nominate three candidates to Rowan's board of directors in an effort to unlock more value from the company. "Because Rowan owns and operates both a contract-drilling-service business and a significant manufacturing company, we believe the market continues to mistakenly apply a conglomerate discount to its stock," Warren Lichtenstein, managing member of Steel Partners, said in a statement. "If elected, our nominees would work with the board and management of Rowan to implement a strategy to unlock that intrinsic value of the company." But Rowan Chairman and CEO Daniel McNease made clear that Steel Partners' move to assert greater influence on Rowan's board was unwelcome and would not go unchallenged.
MBIA, the world's largest bond insurer, on Wednesday slashed its common stock dividend 62 percent as part of a plan to strengthen capital and preserve the ``triple-A'' credit ratings it depends on to operate normally. The company reduced its quarterly dividend to 13 cents per share from 34 cents, in a bid to save $80 million a year. It also said its main insurance unit plans to sell $1 billion of debt maturing in 2033. Last month, MBIA said Warburg Pincus agreed to invest $500 million in common stock, and receive warrants to buy additional shares.
Bill Bonner: "A barrel of oil is worth about 1/8 of an ounce of gold. That's about what it was worth in 2001…and it's about what it is worth now. And wheat…and soybeans…and farmland…they're all correctly priced too. At least in terms of each other. But many people are getting the wrong signals. They're mistaking inflation gains for real gains…and they're making errors. That's what happened to the homebuilders, who thought that higher nominal prices meant that there was more real demand. Finally, they realized that the higher prices were largely an illusion. In the first place, they represented no real increase in demand…and in the second place; nominal prices went so high that people couldn't afford to pay them. Result: falling sales. And now we see farmers planting more soybeans as if they were houses. Argentina is covered with soybeans. And America is covered with corn and houses. House prices have already started to go down. It won't be long before farm prices collapse too. All mistakes are corrected."
Mosaic Co.'s fiscal second-quarter net income rose sharply to $394 million, or 89 cents a share, from $65.9 million, or 15 cents a share, a year earlier. Results for the latest quarter included a foreign currency transaction loss of 9 cents a share and a tax benefit of 8 cents a share. Sales at the the Plymouth, Minn., fertilizer company grew 44% to $2.2 billion in the period ended Nov. 30. Analysts polled by Thomson Financial expected earnings of 73 cents a share and revenue of $2.17 billion.
Marathon Oil Corp. anticipates fourth-quarter oil costs in the range of $190 million to $210 million, higher than its prior guidance of $110 million to $150 million. The Houston-based company cited the expensing of non-commercial Flathead wells in the Gulf of Mexico for the increase. Additionally Marathon said its liquid hydrocarbon and natural gas production available for sale during the fourth quarter is expected to be about 350,000 barrels of oil equivalent per day, or boepd, compared to its guidance of 330,000 to 355,000 boepd.
Over the past 2 months, Cisco has dropped from $34 to $25+. For long term investors, this appears to possess a favorable risk/reward scenario. The last time we suggested Cisco was in the Spring of 2003 at the $15.50 level. Patience was rewarded.
St. Louis Federal Reserve President William Poole: "The fundamentals of our economy remain strong ... and 2008 looks to be a year of rising growth."
U.S. crude inventories dropped by 6.8 million barrels in the latest week, much more than expected by analysts, U.S. Energy Information Administration reported on Wednesday. U.S. crude inventories dropped to 282.8 million barrels in the week ending Jan. 4, EIA reported. Gasoline supplies rose by 5.3 million barrels in the latest week, and distillate stocks grew by 1.5 million barrels, EIA reported.
The Dow Jones U.S. Home Construction Index was down about 4% in afternoon trading.
Countrywide Financial Corp , the largest U.S. mortgage lender, said on Wednesday that foreclosures and late payments rose in December to the highest on record, though it made more loans than expected in the fourth quarter.
George Ure on the NH primary: "Curiously, lots of comment on the 'net this morning about how "Ain't it curious that Obama won where the ballots were hand counted?".
There's a good backgrounder at the www.blackboxvoting.org site worth a read.. Article here.
Just for good measure, there's the matter of Obama and Ron Paul poll workers kicked out of some precincts. "
According to Bloomberg, the Nigerian militant group known as the Movement for the Emancipation of the Niger Delta, or MEND, said it's planning a major attack against the oil industry. ``An attack is imminent that will rock the foundation of the international oil market,'' MEND spokesman Jomo Gbomo said in an e-mail to Bloomberg. A ``smoke screen'' is being devised to divert attention away from the actual target, he said. Gbomo said the strike would be a reprisal for a government attack last month on a warlord's camp. Nigeria is Africa's biggest oil producer.
Excluding a favorable restructuring adjustment and a tax benefit stemming from the sale of Alcoa's packaging and consumer businesses, earnings would have come in at 36 cents a share. Analysts polled by Thomson Financial had expected a profit of 33 cents a share on sales of $6.92 billion. Earnings growth was held back by higher freight and energy costs.
The Dow industrials gained 146.2 points to end at 12,735.3. The S&P 500 climbed 18.92 points to close at 1,409.11, while the Nasdaq Composite snapped an eight-day losing streak, rising 34.04 points to finish at 2,474.55.
Robert McHugh:"We are in the midst of a stock market crash that started at 14,200 in October 2007, and is likely to continue to at least 11,500 the first half of 2008."
Stock Traders Almanac: " When the Dow closes below its December closing low in the first quarter, it is frequently an excellent warning sign. The December Low Indicator was originated by Lucien Hooper, a Forbes columnist and Wall Street analyst back in the 1970s. Hooper dismissed the importance of January and January's first week as reliable indicators. He noted that the trend could be random or even manipulated during a holiday-shortened week. Instead, said Hooper, “Pay much more attention to the December low. If that low is violated during the first quarter of the New Year, watch out! 13 of the 27 occurrences were followed by gains for the rest of the year – and full year gains – after the low for the year was reached. Hooper’s “Watch Out†warning was absolutely correct. All but one of the instances since 1952 experienced further declines, as the Dow fell an additional 10.1% on average when December's low was breached in Q1. Only three significant drops occurred when December’s low was not breached in Q1 (1974, 1981, and 1987)."
Mike Shedlock: "The interest expense for December alone was a whopping $106 billion. Using a three month average, Federal expenses just on interest is $615 billion."
The California Public Employees Retirement System said Wednesday it has taken a 9.9% stake in U.S. private-equity house Silver Lake Partners. Calpers has also agreed to make further commitments to Silver Lake funds, whose investments are focused on the technology industry.
At 7 a.m. Eastern, February gold futures rose $8 to $888.30 an ounce. February gold finished up $1.40 at $881.70 an ounce.
Countrywide's fourth-quarter fundings were $69 billion, exceeding forecasts. "Prepayment speeds continued to decline throughout the quarter, which has enhanced the economic value of our mortgage servicing rights asset," the lender said. Average daily mortgage loan application activity for December was $1.5 billion, down from $1.9 billion in November.
E*Trade Financial Corp. said that it has made significant progress toward executing its turnaround plan in recent weeks. The company has sold around $3 billion of additional available-for-sale securities. Also, its home equity loan portfolio continued to run off as anticipated, ending the year with under $12 billion in balances. The firm has also reduced bank wholesale borrowing levels by eliminating around $3.5 billion in Federal Home Loan Bank advances and repurchase agreements quarter over quarter. E*Trade said that it expects 2007 year-end tier I and risk-based bank capital to be equal to or better than 5.9% and 11.1%. It will also fully exit its institutional trading business by closing its remaining trading desk and has formed a special committee to aggressively reduce real estate portfolio risk.
DuPont lifted its outlook for 2008 earnings to a range of $3.35 to $3.55 a share compared to an earlier forecast of $3.31 to $3.52 a share, saying it expects growth in its agriculture and nutrition business segment and in its emerging market operations to more than compensate for a slower U.S. economy.
In the U.K., Marks & Spencer reported a 2.2% same-store sales decline and the stock dropped 14%.
Shares of Chinese personal computer maker Lenovo Group tumbled 10.7% with heavy volumes in Hong Kong Wednesday on a brokerage downgrade and reports its chairman has cautioned the Chinese economy has become highly dependent on the U.S. market.
Mortgage application volume skyrocketed 32.2 percent during the holiday shortened week ending Jan. 4, ending three consecutive weeks of sharp declines, according to the Mortgage Bankers Association's weekly application survey.
Richard Daughty: "Instead of the town saying, 'Oh, my God! What kind of ravenous vampires have we become?' and lowering their...damned taxes, 'The town is pushing a program that would let seniors work part-time...to help pay off some of their property taxes.'" From AP, we can't believe our eyes when we read, "Plan Would Let Seniors Work to Pay Taxes". It seems that in Greenburgh, N.Y., the damned local government is eating the financial guts out of its citizens. For example, a 76-year old woman named Audrey Davison lives alone, gets a $620 Social Security check per month ($7,440 a year), and has to pay $12,000 a year in property taxes on the house that she has lived in for 43 years! Instead of the town saying, "Oh, my God! What kind of ravenous vampires have we become?" and lowering their damned spending and the damned taxes, "The town is pushing a program that would let seniors work part-time, for $7 an hour, to help pay off some of their property taxes."
The New York Times reports that McGraw-Hill will cut 3% of its staff.
According to a Bloomberg story, the U.S. will skirt recession as consumer spending slows without collapsing, a survey of economists showed. Economic growth will average 1.5 percent in the first six months of 2008, matching the fourth quarter's pace, according to the median estimate of 62 economists surveyed by Bloomberg News from Jan. 3 to Jan. 8. The rate of expansion would be the weakest since the last nine months of 2001.
Goldman Sachs Group Inc. said the U.S. economy is probably slipping into recession and expects the Federal Reserve to respond by slashing interest rates. Goldman expects the Fed to cut its benchmark rate to 2.5 percent by the third quarter, according to an e-mailed strategy note. Goldman said in November the Fed would reduce its key rate, currently at 4.25 percent, to 3 percent by the middle of 2008.
Steel Partners, a New York investment firm that owns 9.1 percent of Rowan's stock, said it will nominate three candidates to Rowan's board of directors in an effort to unlock more value from the company. "Because Rowan owns and operates both a contract-drilling-service business and a significant manufacturing company, we believe the market continues to mistakenly apply a conglomerate discount to its stock," Warren Lichtenstein, managing member of Steel Partners, said in a statement. "If elected, our nominees would work with the board and management of Rowan to implement a strategy to unlock that intrinsic value of the company." But Rowan Chairman and CEO Daniel McNease made clear that Steel Partners' move to assert greater influence on Rowan's board was unwelcome and would not go unchallenged.
MBIA, the world's largest bond insurer, on Wednesday slashed its common stock dividend 62 percent as part of a plan to strengthen capital and preserve the ``triple-A'' credit ratings it depends on to operate normally. The company reduced its quarterly dividend to 13 cents per share from 34 cents, in a bid to save $80 million a year. It also said its main insurance unit plans to sell $1 billion of debt maturing in 2033. Last month, MBIA said Warburg Pincus agreed to invest $500 million in common stock, and receive warrants to buy additional shares.
Bill Bonner: "A barrel of oil is worth about 1/8 of an ounce of gold. That's about what it was worth in 2001…and it's about what it is worth now. And wheat…and soybeans…and farmland…they're all correctly priced too. At least in terms of each other. But many people are getting the wrong signals. They're mistaking inflation gains for real gains…and they're making errors. That's what happened to the homebuilders, who thought that higher nominal prices meant that there was more real demand. Finally, they realized that the higher prices were largely an illusion. In the first place, they represented no real increase in demand…and in the second place; nominal prices went so high that people couldn't afford to pay them. Result: falling sales. And now we see farmers planting more soybeans as if they were houses. Argentina is covered with soybeans. And America is covered with corn and houses. House prices have already started to go down. It won't be long before farm prices collapse too. All mistakes are corrected."
Mosaic Co.'s fiscal second-quarter net income rose sharply to $394 million, or 89 cents a share, from $65.9 million, or 15 cents a share, a year earlier. Results for the latest quarter included a foreign currency transaction loss of 9 cents a share and a tax benefit of 8 cents a share. Sales at the the Plymouth, Minn., fertilizer company grew 44% to $2.2 billion in the period ended Nov. 30. Analysts polled by Thomson Financial expected earnings of 73 cents a share and revenue of $2.17 billion.
Marathon Oil Corp. anticipates fourth-quarter oil costs in the range of $190 million to $210 million, higher than its prior guidance of $110 million to $150 million. The Houston-based company cited the expensing of non-commercial Flathead wells in the Gulf of Mexico for the increase. Additionally Marathon said its liquid hydrocarbon and natural gas production available for sale during the fourth quarter is expected to be about 350,000 barrels of oil equivalent per day, or boepd, compared to its guidance of 330,000 to 355,000 boepd.
Over the past 2 months, Cisco has dropped from $34 to $25+. For long term investors, this appears to possess a favorable risk/reward scenario. The last time we suggested Cisco was in the Spring of 2003 at the $15.50 level. Patience was rewarded.
St. Louis Federal Reserve President William Poole: "The fundamentals of our economy remain strong ... and 2008 looks to be a year of rising growth."
U.S. crude inventories dropped by 6.8 million barrels in the latest week, much more than expected by analysts, U.S. Energy Information Administration reported on Wednesday. U.S. crude inventories dropped to 282.8 million barrels in the week ending Jan. 4, EIA reported. Gasoline supplies rose by 5.3 million barrels in the latest week, and distillate stocks grew by 1.5 million barrels, EIA reported.
The Dow Jones U.S. Home Construction Index was down about 4% in afternoon trading.
Countrywide Financial Corp , the largest U.S. mortgage lender, said on Wednesday that foreclosures and late payments rose in December to the highest on record, though it made more loans than expected in the fourth quarter.
George Ure on the NH primary: "Curiously, lots of comment on the 'net this morning about how "Ain't it curious that Obama won where the ballots were hand counted?".
There's a good backgrounder at the www.blackboxvoting.org site worth a read.. Article here.
Just for good measure, there's the matter of Obama and Ron Paul poll workers kicked out of some precincts. "
According to Bloomberg, the Nigerian militant group known as the Movement for the Emancipation of the Niger Delta, or MEND, said it's planning a major attack against the oil industry. ``An attack is imminent that will rock the foundation of the international oil market,'' MEND spokesman Jomo Gbomo said in an e-mail to Bloomberg. A ``smoke screen'' is being devised to divert attention away from the actual target, he said. Gbomo said the strike would be a reprisal for a government attack last month on a warlord's camp. Nigeria is Africa's biggest oil producer.
Excluding a favorable restructuring adjustment and a tax benefit stemming from the sale of Alcoa's packaging and consumer businesses, earnings would have come in at 36 cents a share. Analysts polled by Thomson Financial had expected a profit of 33 cents a share on sales of $6.92 billion. Earnings growth was held back by higher freight and energy costs.
The Dow industrials gained 146.2 points to end at 12,735.3. The S&P 500 climbed 18.92 points to close at 1,409.11, while the Nasdaq Composite snapped an eight-day losing streak, rising 34.04 points to finish at 2,474.55.
Tuesday, January 08, 2008
Replacements
1/9/08 Replacements
Starbucks Corp. Chairman Howard Schultz is reclaiming the chief executive's chair as part of a major restructuring initiative to slow the company's U.S. growth and improve offerings for its customers. The ouster of CEO Jim Donald, coupled with plans to close some U.S. stores and slow down opening new ones, comes as the world's largest chain of coffee houses has seen its stock plummet 50 percent over the last year amid declining traffic in its domestic stores. Starbucks wouldn't say how many stores would close and declined to detail its revised growth plans until it reports fiscal first-quarter earnings on Jan. 30.
Bear Stearns Chief Executive James Cayne is resigning under pressure from shareholders upset over the firm's losses amid a slew of problems sparked by the collapse of mortgage markets, The Wall Street Journal reported Monday. Cayne was expected to be replaced by Bear Stearns President Alan Schwartz, a 57-year-old investment banker.
Microsoft Corp. bid $1.2 billion for the Norwegian search engine company Fast Search & Transfer ASA on Tuesday as it seeks to help companies trawl for information on the Internet. The offer of $2.97 per share was 42 percent premium to the Norwegian company's recent average share price, and caused the stock to soar by nearly the same amount in early trading on the Oslo stock exchange. Fast's board unanimously recommended that shareholders accept the offer, a news release said. Fast, founded in 1997, employs about 500 people, and specializes in high-end Internet search and business intelligence systems now used by many major companies worldwide.
Joy Global said it's buying Continental Global, a maker of conveyor systems for use in mining and other industrial applications, from NES Group Inc. for $270 million. Continental's 2007 sales of conveyor equipment are expected to be approximately $340 million.
Gold for February delivery hit $883.80 an ounce on the New York Mercantile Exchange, surpassing the previous record of $875 set on Jan. 21, 1980. The contract surged $18.30 to end at $880.30 an ounce, a new all-time closing high.
Japanese automotive sales fell last year to their lowest level in 35 years, as a declining population and shifting cultural values among younger consumers weighed on vehicle demand, according to reports Tuesday. Vehicle sales fell 7.6% to 3.434 million units, its fourth consecutive annual decline and the lowest level since 1972 when 3.406 million vehicles were sold, according to wire reports which cited data released by the Japan Automobile Dealers Association.
Retail sales fell by 0.5% month-on-month in the euro area in November, according to data released Tuesday by the Eurostat statistics agency.
British house prices increased by 1.3% in December following three successive monthly falls, the lender Halifax reported Tuesday.
Family Dollar Stores Inc said on Tuesday quarterly profit fell as sales at older stores declined and customers cut their discretionary spending. The discount retailer said profit was $51.9 million, or 37 cents per share, for its fiscal first quarter ended December 1, compared with $54.1 million, or 36 cents per share, in the comparable quarter a year earlier. Profit rose on a per-share basis as the company had fewer shares outstanding in the period.
The housing market in King County (eastside of Seattle) ended 2007 on a sour note as the median single-family house price last month fell 1.1 percent from December 2006. It was the first time in recent history that prices declined year-over-year. And the number of homes for sale rose 61 percent in King County, continuing a trend that started in April, the Northwest Multiple Listing Service reported Monday. The MLS is an association of Realtors that compiles home-sales statistics for King, Snohomish, Pierce, Kitsap and 15 other counties. In King County — which had nearly 11,000 houses and condos for sale in December, by far the most in the four-county region — it would have taken seven months to sell off that inventory at last month's sales rate.
Stephen Roach:"The US has been the main culprit behind the destabilising global imbalances of recent years. America's massive current account deficit absorbs about 75 per cent of the world's surplus saving. Most believe that a weaker US dollar is the best cure for these imbalances. Yet a broad measure of the US dollar has dropped 23 per cent since February 2002 in real terms, with only minimal impact on America's gaping external imbalance. Dollar bears argue that more currency depreciation is needed. Protectionists insist that China - which has the largest bilateral trade imbalance with the US - should bear a disproportionate share of the next down leg in the US dollar. There is good reason to doubt this view. America's current account deficit is due more to bubbles in asset prices than to a misaligned dollar. A resolution will require more of a correction in asset prices than a further depreciation of the dollar. At the core of the problem is one of the most insidious characteristics of an asset-dependent economy - a chronic shortfall in domestic saving. With America's net national saving averaging a mere 1.4 per cent of national income over the past five years, the US has had to import surplus saving from abroad to keep growing. That means it must run massive current account and trade deficits to attract the foreign capital...A sharp decline in asset prices is necessary to rebalance the US economy. It is the only realistic hope to shift the mix of saving away from asset appreciation back to that supported by income generation. That could entail as much as a 20-30 per cent decline in overall US housing prices and a related deflating of the bubble of cheap and easy credit. Those trends now appear to be under way."
Harrah's receives 98%+ of the consents required in its tender offer for its senior notes.
Supervalu said it now expects to earn $2.71 to $2.77 per share. That's down from $2.73 to $2.83 it previously forecast. Analysts were expecting $2.77. ''We are pleased with our overall results, despite some headwind from softer than expected retail sales in the quarter,'' Chairman and Chief Executive Jeff Noddle said in a statement.
247WallSt: "t is not official, but the odds that the buyers of Clear Channel (CCU) will walk on the deal are probably north of 99%. The total value of the buy-out is $19.5 billion. According to the FT "scepticism that Thomas H. Lee and Bain Capital will go through with their purchase on the original terms has been fed by the falling share prices of comparable companies." The break-up fee for the deal is $500 million."
Cisco's John Chambers: "We think 12 to 17 percent growth is very doable if our vision, our differentiation strategy and execution is right. That's pretty strong for a company that's $40 billion in sales."
Venezuelan Energy Minister Rafael Ramirez says that there is no need for OPEC to raise its production, warning "the time of cheap oil is over."
Citigroup Inc., the biggest U.S. bank, may be forced to write down $16 billion in the fourth quarter and post a larger loss than previously estimated, Merrill Lynch & Co. analyst Guy Moszkowski said.
Chain-store sales for the week ended Jan. 5 rose 1.9% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales increased 0.4%. "Gift-card redemptions and post-Christmas bargain hunting seemed to drive consumer demand over the last week," said Michael Niemira, ICSC chief economist. Niemira lowered his December sales forecast to a gain of 1% from a previous estimate of 1.5%. "It was a moderate November-December holiday sales performance, but clearly softer than in recent years," he added.
Avon Products Inc. expects to cut a net of about 2400 jobs as part of a restructuring program begun in 2005. The reductions would come from restructuring some international direct selling operations, most significantly in Germany; realigning supply chain operations in Western Europe and Latin America; and outsourcing call centers and transaction processing functions.
Philadelphia Fed President Charles Plosser said he believes the weak U.S. economy will "improve appreciably" by the second half of the year, before the effect of any additional rate cuts would be felt. At the same time, Plosser said he saw "worrisome signs of underlying price pressures."
KB Home reported financial results for its fourth quarter and fiscal year ended November 30, 2007. Results include:
* Revenues totaled $2.07 billion for the quarter ended November 30, 2007, down from $3.01 billion in the corresponding quarter of 2006, primarily reflecting lower housing revenues. Fourth quarter 2007 housing revenues of $2.02 billion were 31% lower than in the year-earlier period. This decline reflected a 22% year-over-year decrease in new home deliveries to 8,132 in the fourth quarter of 2007 from 10,386 in the 2006 fourth quarter, and a 12% year-over-year decrease in the average selling price to $247,800 in 2007 from $280,000 in 2006.
* The Company reported a loss from continuing operations before income taxes of $399.0 million for the quarter ended November 30, 2007 due to pretax, non-cash charges of $403.4 million associated with inventory and joint venture impairments and the abandonment of certain land option contracts. In the year-earlier quarter, the Company posted a loss from continuing operations before income taxes of $171.1 million due to $343.3 million of pretax, non-cash impairment and abandonment charges.
* During the fourth quarter of 2007, the Company recorded an after-tax, non-cash charge of $514.2 million to establish a valuation allowance related to its deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The valuation allowance is reflected as a charge to fourth quarter income tax expense and a reduction of the Company’s deferred tax assets as of November 30, 2007. Including the valuation allowance, the Company recorded a net loss of $772.7 million or $9.99 per diluted share in the fourth quarter of 2007. In the fourth quarter of 2006, the Company’s net loss totaled $49.6 million or $.64 per diluted share.
* The Company delivered 23,743 new homes in fiscal year 2007, down 26% from the 32,124 new homes it delivered in fiscal year 2006. Revenues totaled $6.42 billion in fiscal year 2007, decreasing 32% from $9.38 billion in fiscal year 2006, reflecting fewer new home deliveries and a 9% year-over-year decline in the average selling price to $261,600 from $287,700. The Company posted a loss from continuing operations of $1.41 billion in fiscal year 2007 due to non-cash charges associated with inventory and joint venture impairments and land option contract abandonments; goodwill impairment; and the deferred tax assets valuation allowance. In fiscal year 2006, the Company generated income from continuing operations of $392.9 million. Including the results of its French discontinued operations, the Company posted a net loss of $929.4 million or $12.04 per diluted share in fiscal year 2007 and net income of $482.4 million or $5.82 per diluted share in fiscal year 2006.
* The Company continued to generate positive cash flows in the 2007 fourth quarter, ending the year with a cash balance of $1.33 billion at November 30, 2007. The Company increased its cash balance by $625.2 million from November 30, 2006 in addition to reducing debt by $758.5 million. Furthermore, the Company had no borrowings outstanding under its $1.5 billion revolving credit facility as of November 30, 2007. The Company’s ratio of debt to total capital was 53.9% at November 30, 2007 compared to 50.0% at November 30, 2006. Net of cash, the ratio of debt to total capital improved 12.1 percentage points to 31.1% at November 30, 2007 from 43.2% at November 30, 2006.
Barack Obama expanded his lead over Hillary Clinton in New Hampshire to 13 points as voting began in the state's critical presidential primary, according to a Reuters/C-SPAN/Zogby poll released on Tuesday.
The Washington Times reports that the Secret Service has in recent days ramped up the security it provides for Democratic presidential candidate Barack Obama. "The Illinois senator's security now rivals that of President Bush, with a dozen Secret Service agents wearing dark suits and earpieces leading bomb-sniffing dogs through event venues, sweeping all equipment brought by journalists and flanking the candidate as he plunges into crowds of supporters," the paper says.
The pending home sales index, based on contracts signed but not closed in November, fell 2.6% in November and was down 19.2% in the past year, the National Association of Realtors reported Tuesday.
Eli Lilly and Company said Tuesday that the U.S. Food and Drug Administration has approved its flagship erectile dysfunction drug Cialis for daily use.
Scientists in China have identified about 400 genes that appear to make some people more easily addicted to drugs, opening the way for more effective therapies and addiction control. Experts believe genetic factors account for up to 60 percent of a person's vulnerability to drug addiction, with environmental factors accounting for the remainder.
Credit-default swaps, used to help protect against the risk a company won't pay its debt, may cause losses of $250 billion this year as corporate defaults rise, Pacific Investment Management Co.'s Bill Gross said. ``Credit-default swaps are perhaps the most egregious offenders'' in today's banking system, Gross wrote on the company's Web site today. The federal funds rate, the Fed's key policy tool, will likely be cut to 3 percent by mid-year, said Gross, chief investment officer of Pacific Investment Management Company, in Newport Beach, California.
Sprint Nextel Corp.'s soft launch of its Xohm mobile Internet service is underway in Chicago, Baltimore and Washington, D.C, the telecommunications company said Tuesday. Sprint is launching the high-speed service with employees as it prepares for a commercial introduction later this year. The company is building a nationwide mobile broadband network using WiMax technology, which is seen as a cost-effective alternative to cellular broadband.
Amgen Inc.sees a 2007 adjusted profit near the low end of a $4.30 to $4.50 a share range, up from a previous range of $4.13 to $4.23 a share.
The chief executive of AT&T said the U.S. economic slowdown was hurting the company's consumer business, sending shares of the largest U.S. phone company down 4.8 percent.
The Dow Jones Industrial Average fell 238.4 points to 12,589.1. The S&P 500 shed 26 points to end at 1,390.18, while the Nasdaq Composite declined 58.95 points to 2,440.51.
U.S. consumers took on more debt in November, increasing their credit-card balances at the fourth fastest pace during the six-year expansion, the Federal Reserve reported Tuesday. Total seasonally adjusted consumer debt increased by $15.5 billion, or a 7.5% annual rate, in November to $2.51 trillion after a revised 1% rise in October, the Fed reported. It was the biggest gain in outstanding debt since August.
Crude oil for February delivery closed up $1.24, or 1.3%, at $96.33 a barrel on the New York Mercantile Exchange.
Countrywide shares dropped 27.4 percent in its steepest decline since the stock market crash of 1987. The plunge came amid speculation the company may file for bankruptcy as it struggles to emerge from the mortgage and credit market crisis in one piece. The company denied the speculation.
Starbucks Corp. Chairman Howard Schultz is reclaiming the chief executive's chair as part of a major restructuring initiative to slow the company's U.S. growth and improve offerings for its customers. The ouster of CEO Jim Donald, coupled with plans to close some U.S. stores and slow down opening new ones, comes as the world's largest chain of coffee houses has seen its stock plummet 50 percent over the last year amid declining traffic in its domestic stores. Starbucks wouldn't say how many stores would close and declined to detail its revised growth plans until it reports fiscal first-quarter earnings on Jan. 30.
Bear Stearns Chief Executive James Cayne is resigning under pressure from shareholders upset over the firm's losses amid a slew of problems sparked by the collapse of mortgage markets, The Wall Street Journal reported Monday. Cayne was expected to be replaced by Bear Stearns President Alan Schwartz, a 57-year-old investment banker.
Microsoft Corp. bid $1.2 billion for the Norwegian search engine company Fast Search & Transfer ASA on Tuesday as it seeks to help companies trawl for information on the Internet. The offer of $2.97 per share was 42 percent premium to the Norwegian company's recent average share price, and caused the stock to soar by nearly the same amount in early trading on the Oslo stock exchange. Fast's board unanimously recommended that shareholders accept the offer, a news release said. Fast, founded in 1997, employs about 500 people, and specializes in high-end Internet search and business intelligence systems now used by many major companies worldwide.
Joy Global said it's buying Continental Global, a maker of conveyor systems for use in mining and other industrial applications, from NES Group Inc. for $270 million. Continental's 2007 sales of conveyor equipment are expected to be approximately $340 million.
Gold for February delivery hit $883.80 an ounce on the New York Mercantile Exchange, surpassing the previous record of $875 set on Jan. 21, 1980. The contract surged $18.30 to end at $880.30 an ounce, a new all-time closing high.
Japanese automotive sales fell last year to their lowest level in 35 years, as a declining population and shifting cultural values among younger consumers weighed on vehicle demand, according to reports Tuesday. Vehicle sales fell 7.6% to 3.434 million units, its fourth consecutive annual decline and the lowest level since 1972 when 3.406 million vehicles were sold, according to wire reports which cited data released by the Japan Automobile Dealers Association.
Retail sales fell by 0.5% month-on-month in the euro area in November, according to data released Tuesday by the Eurostat statistics agency.
British house prices increased by 1.3% in December following three successive monthly falls, the lender Halifax reported Tuesday.
Family Dollar Stores Inc said on Tuesday quarterly profit fell as sales at older stores declined and customers cut their discretionary spending. The discount retailer said profit was $51.9 million, or 37 cents per share, for its fiscal first quarter ended December 1, compared with $54.1 million, or 36 cents per share, in the comparable quarter a year earlier. Profit rose on a per-share basis as the company had fewer shares outstanding in the period.
The housing market in King County (eastside of Seattle) ended 2007 on a sour note as the median single-family house price last month fell 1.1 percent from December 2006. It was the first time in recent history that prices declined year-over-year. And the number of homes for sale rose 61 percent in King County, continuing a trend that started in April, the Northwest Multiple Listing Service reported Monday. The MLS is an association of Realtors that compiles home-sales statistics for King, Snohomish, Pierce, Kitsap and 15 other counties. In King County — which had nearly 11,000 houses and condos for sale in December, by far the most in the four-county region — it would have taken seven months to sell off that inventory at last month's sales rate.
Stephen Roach:"The US has been the main culprit behind the destabilising global imbalances of recent years. America's massive current account deficit absorbs about 75 per cent of the world's surplus saving. Most believe that a weaker US dollar is the best cure for these imbalances. Yet a broad measure of the US dollar has dropped 23 per cent since February 2002 in real terms, with only minimal impact on America's gaping external imbalance. Dollar bears argue that more currency depreciation is needed. Protectionists insist that China - which has the largest bilateral trade imbalance with the US - should bear a disproportionate share of the next down leg in the US dollar. There is good reason to doubt this view. America's current account deficit is due more to bubbles in asset prices than to a misaligned dollar. A resolution will require more of a correction in asset prices than a further depreciation of the dollar. At the core of the problem is one of the most insidious characteristics of an asset-dependent economy - a chronic shortfall in domestic saving. With America's net national saving averaging a mere 1.4 per cent of national income over the past five years, the US has had to import surplus saving from abroad to keep growing. That means it must run massive current account and trade deficits to attract the foreign capital...A sharp decline in asset prices is necessary to rebalance the US economy. It is the only realistic hope to shift the mix of saving away from asset appreciation back to that supported by income generation. That could entail as much as a 20-30 per cent decline in overall US housing prices and a related deflating of the bubble of cheap and easy credit. Those trends now appear to be under way."
Harrah's receives 98%+ of the consents required in its tender offer for its senior notes.
Supervalu said it now expects to earn $2.71 to $2.77 per share. That's down from $2.73 to $2.83 it previously forecast. Analysts were expecting $2.77. ''We are pleased with our overall results, despite some headwind from softer than expected retail sales in the quarter,'' Chairman and Chief Executive Jeff Noddle said in a statement.
247WallSt: "t is not official, but the odds that the buyers of Clear Channel (CCU) will walk on the deal are probably north of 99%. The total value of the buy-out is $19.5 billion. According to the FT "scepticism that Thomas H. Lee and Bain Capital will go through with their purchase on the original terms has been fed by the falling share prices of comparable companies." The break-up fee for the deal is $500 million."
Cisco's John Chambers: "We think 12 to 17 percent growth is very doable if our vision, our differentiation strategy and execution is right. That's pretty strong for a company that's $40 billion in sales."
Venezuelan Energy Minister Rafael Ramirez says that there is no need for OPEC to raise its production, warning "the time of cheap oil is over."
Citigroup Inc., the biggest U.S. bank, may be forced to write down $16 billion in the fourth quarter and post a larger loss than previously estimated, Merrill Lynch & Co. analyst Guy Moszkowski said.
Chain-store sales for the week ended Jan. 5 rose 1.9% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales increased 0.4%. "Gift-card redemptions and post-Christmas bargain hunting seemed to drive consumer demand over the last week," said Michael Niemira, ICSC chief economist. Niemira lowered his December sales forecast to a gain of 1% from a previous estimate of 1.5%. "It was a moderate November-December holiday sales performance, but clearly softer than in recent years," he added.
Avon Products Inc. expects to cut a net of about 2400 jobs as part of a restructuring program begun in 2005. The reductions would come from restructuring some international direct selling operations, most significantly in Germany; realigning supply chain operations in Western Europe and Latin America; and outsourcing call centers and transaction processing functions.
Philadelphia Fed President Charles Plosser said he believes the weak U.S. economy will "improve appreciably" by the second half of the year, before the effect of any additional rate cuts would be felt. At the same time, Plosser said he saw "worrisome signs of underlying price pressures."
KB Home reported financial results for its fourth quarter and fiscal year ended November 30, 2007. Results include:
* Revenues totaled $2.07 billion for the quarter ended November 30, 2007, down from $3.01 billion in the corresponding quarter of 2006, primarily reflecting lower housing revenues. Fourth quarter 2007 housing revenues of $2.02 billion were 31% lower than in the year-earlier period. This decline reflected a 22% year-over-year decrease in new home deliveries to 8,132 in the fourth quarter of 2007 from 10,386 in the 2006 fourth quarter, and a 12% year-over-year decrease in the average selling price to $247,800 in 2007 from $280,000 in 2006.
* The Company reported a loss from continuing operations before income taxes of $399.0 million for the quarter ended November 30, 2007 due to pretax, non-cash charges of $403.4 million associated with inventory and joint venture impairments and the abandonment of certain land option contracts. In the year-earlier quarter, the Company posted a loss from continuing operations before income taxes of $171.1 million due to $343.3 million of pretax, non-cash impairment and abandonment charges.
* During the fourth quarter of 2007, the Company recorded an after-tax, non-cash charge of $514.2 million to establish a valuation allowance related to its deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The valuation allowance is reflected as a charge to fourth quarter income tax expense and a reduction of the Company’s deferred tax assets as of November 30, 2007. Including the valuation allowance, the Company recorded a net loss of $772.7 million or $9.99 per diluted share in the fourth quarter of 2007. In the fourth quarter of 2006, the Company’s net loss totaled $49.6 million or $.64 per diluted share.
* The Company delivered 23,743 new homes in fiscal year 2007, down 26% from the 32,124 new homes it delivered in fiscal year 2006. Revenues totaled $6.42 billion in fiscal year 2007, decreasing 32% from $9.38 billion in fiscal year 2006, reflecting fewer new home deliveries and a 9% year-over-year decline in the average selling price to $261,600 from $287,700. The Company posted a loss from continuing operations of $1.41 billion in fiscal year 2007 due to non-cash charges associated with inventory and joint venture impairments and land option contract abandonments; goodwill impairment; and the deferred tax assets valuation allowance. In fiscal year 2006, the Company generated income from continuing operations of $392.9 million. Including the results of its French discontinued operations, the Company posted a net loss of $929.4 million or $12.04 per diluted share in fiscal year 2007 and net income of $482.4 million or $5.82 per diluted share in fiscal year 2006.
* The Company continued to generate positive cash flows in the 2007 fourth quarter, ending the year with a cash balance of $1.33 billion at November 30, 2007. The Company increased its cash balance by $625.2 million from November 30, 2006 in addition to reducing debt by $758.5 million. Furthermore, the Company had no borrowings outstanding under its $1.5 billion revolving credit facility as of November 30, 2007. The Company’s ratio of debt to total capital was 53.9% at November 30, 2007 compared to 50.0% at November 30, 2006. Net of cash, the ratio of debt to total capital improved 12.1 percentage points to 31.1% at November 30, 2007 from 43.2% at November 30, 2006.
Barack Obama expanded his lead over Hillary Clinton in New Hampshire to 13 points as voting began in the state's critical presidential primary, according to a Reuters/C-SPAN/Zogby poll released on Tuesday.
The Washington Times reports that the Secret Service has in recent days ramped up the security it provides for Democratic presidential candidate Barack Obama. "The Illinois senator's security now rivals that of President Bush, with a dozen Secret Service agents wearing dark suits and earpieces leading bomb-sniffing dogs through event venues, sweeping all equipment brought by journalists and flanking the candidate as he plunges into crowds of supporters," the paper says.
The pending home sales index, based on contracts signed but not closed in November, fell 2.6% in November and was down 19.2% in the past year, the National Association of Realtors reported Tuesday.
Eli Lilly and Company said Tuesday that the U.S. Food and Drug Administration has approved its flagship erectile dysfunction drug Cialis for daily use.
Scientists in China have identified about 400 genes that appear to make some people more easily addicted to drugs, opening the way for more effective therapies and addiction control. Experts believe genetic factors account for up to 60 percent of a person's vulnerability to drug addiction, with environmental factors accounting for the remainder.
Credit-default swaps, used to help protect against the risk a company won't pay its debt, may cause losses of $250 billion this year as corporate defaults rise, Pacific Investment Management Co.'s Bill Gross said. ``Credit-default swaps are perhaps the most egregious offenders'' in today's banking system, Gross wrote on the company's Web site today. The federal funds rate, the Fed's key policy tool, will likely be cut to 3 percent by mid-year, said Gross, chief investment officer of Pacific Investment Management Company, in Newport Beach, California.
Sprint Nextel Corp.'s soft launch of its Xohm mobile Internet service is underway in Chicago, Baltimore and Washington, D.C, the telecommunications company said Tuesday. Sprint is launching the high-speed service with employees as it prepares for a commercial introduction later this year. The company is building a nationwide mobile broadband network using WiMax technology, which is seen as a cost-effective alternative to cellular broadband.
Amgen Inc.sees a 2007 adjusted profit near the low end of a $4.30 to $4.50 a share range, up from a previous range of $4.13 to $4.23 a share.
The chief executive of AT&T said the U.S. economic slowdown was hurting the company's consumer business, sending shares of the largest U.S. phone company down 4.8 percent.
The Dow Jones Industrial Average fell 238.4 points to 12,589.1. The S&P 500 shed 26 points to end at 1,390.18, while the Nasdaq Composite declined 58.95 points to 2,440.51.
U.S. consumers took on more debt in November, increasing their credit-card balances at the fourth fastest pace during the six-year expansion, the Federal Reserve reported Tuesday. Total seasonally adjusted consumer debt increased by $15.5 billion, or a 7.5% annual rate, in November to $2.51 trillion after a revised 1% rise in October, the Fed reported. It was the biggest gain in outstanding debt since August.
Crude oil for February delivery closed up $1.24, or 1.3%, at $96.33 a barrel on the New York Mercantile Exchange.
Countrywide shares dropped 27.4 percent in its steepest decline since the stock market crash of 1987. The plunge came amid speculation the company may file for bankruptcy as it struggles to emerge from the mortgage and credit market crisis in one piece. The company denied the speculation.
Monday, January 07, 2008
The Terror Card
1/8/08 The Terror Card
John Hussman: " Market conditions presently feature a Pandora's Box of rich valuations, vulnerable profit margins, rising default risk, rapidly deteriorating market internals, failing support levels, and accumulating evidence of oncoming recession."
According to the WSJ, McDonald's plans to install coffee bars at its nearly 14,000 U.S. locations starting this year, its biggest menu addition in three decades. The effort to poach Starbucks customers aims to add $1 billion to the fast-food chain's annual sales.
The price of 100 dollars for a barrel of crude oil is "not necessarily very high" given the high demand of oil and higher production costs, the president of OPEC said Sunday.
According to the WSJ, for the first time in four years, the national vacancy rate for office buildings rose in the fourth quarter, as an unusually large amount of new space came on the market and tenants shied way from signing new leases. Demand for commercial buildings has begun to slow and vacancy rates to climb in several markets, such as Orange County, Calif., and Las Vegas, that have been particularly hard hit by the nation's housing slump and turmoil in the residential mortgage market.
Robert McHugh: "Given the worsening housing and credit market situation, look for the Fed to print and pump M-3 at this economy as if every dollar was worth a thousand votes. The world economy will be cheering this effort, because if they cannot export their goods to a dollar-rich U.S. consumer, their economies will tank. Period. World Central Banks should fully support the Fed's printing presses. And they have, failing to cut their rates, and participating in the recent liquidity flood. Kiss the dollar goodbye. It is being sacrificed."
San Antonio-based Valero, which began gasoline operations in California in 2000, now owns two of the state's 14 fuel-making refineries and displays its brand on 921 service stations out of a statewide total of around 9,400. In the last three years, the company has added nearly 300 Valero locations to its California roster.
Hong Kong shares fell sharply Monday morning as new economic data out of the U.S. added to fears of a recession. The blue-chip Hang Seng Index was down 708.55 points, or 2.57 percent, at 26,811.14 points by midmorning, having dipped by nearly 3 percent early in the day.All 43 blue chips were down, tracking Friday's declines on Wall Street
Citigroup is considering cutting 5 percent to 10 percent of its work force, which totals 327,000, CNBC television reported on Monday, without citing sources.
Steven Deitz: “A people who's primary aims are driving, shopping, and television are subject to terrorism at any time.”
The U.S. military said that Iranian Revolutionary Guard gunboats harassed three U.S. warships on Sunday in the Strait of Hormuz, according to news reports Monday. NBC news quoted U.S. military officials as saying the event was a "significant provocative act." The network said on its MSNBC.com Web site that no shots were fired but that the Iranian ships threatened to "blow up" the U.S. vessels. The encounter lasted between 15 and 25 minutes. Iran's Foreign Ministry said Monday that a confrontation between Iranian boats and U.S. Navy ships in the Persian Gulf over the weekend was "something normal" and was resolved. It suggested the Iranian boats had not recognized the U.S. vessels.
Nothing like playing the terror card during the primaries. As for Bill Clinton, he's no Putin.
Loesje: “Is it the extremist, or the media, that blow things up?"
Today, the Space and Science Research Center, (SSRC) in Orlando, Florida announces that it has confirmed the recent web announcement of NASA solar physicists that there are substantial changes occurring in the sun’s surface. The SSRC has further researched these changes and has concluded they will bring about the next climate change to one of a long lasting cold era.
Today, Director of the SSRC, John Casey has reaffirmed earlier research he led that independently discovered the sun’s changes are the result of a family of cycles that bring about climate shifts from cold climate to warm and back again.
“We today confirm the recent announcement by NASA that there are historic and important changes taking place on the sun’s surface. This will have only one outcome - a new climate change is coming that will bring an extended period of deep cold to the planet. This is not however a unique event for the planet although it is critically important news to this and the next generations. It is but the normal sequence of alternating climate changes that has been going on for thousands of years. Further according to our research, this series of solar cycles are so predictable that they can be used to roughly forecast the next series of climate changes many decades in advance. I have verified the accuracy of these cycles’ behavior over the last 1,100 years relative to temperatures on Earth, to well over 90%.”
As to what these changes are Casey says, “The sun’s surface flows have slowed dramatically as NASA has indicated. This process of surface movement, what NASA calls the “conveyor belt” essentially sweeps up old sunspots and deposits new ones. NASA’s studies have found that when the surface movement slows down, sunspot counts drop significantly. All records of sunspot counts and other proxies of solar activity going back 6,000 years clearly validates our own findings that when we have sunspot counts lower then 50 it means only one thing - an intense cold climate, globally. NASA says the solar cycle 25, the one after the next that starts this spring will be at 50 or lower. The general opinion of the SSRC scientists is that it could begin even sooner within 3 years with the next solar cycle 24. What we are saying today is that my own research and that of the other scientists at the SSRC verifies that NASA is right about one thing – a solar cycle of 50 or lower is headed our way. With this next solar minimum predicted by NASA, what I call a “solar hibernation,” the SSRC forecasts a much colder Earth just as it has transpired before for thousands of years. If NASA is the more accurate on the schedule, then we may see even warmer temperatures before the bottom falls out. If the SSRC and other scientists around the world are correct then we have only a few years to prepare before 20-30 years of lasting and possibly dangerous cold arrive.”
``The only lesson the U.S. has learned from Japan is how to clean up the post-bubble mess,'' says Roach, now chairman of Morgan Stanley in Asia. ``America has failed to learn the much more important lesson -- how to avoid dangerously destabilizing bubbles in the first place. The Greenspan/Bernanke ideology still places disproportionate emphasis on the former while ignoring the latter at great peril.''
"Let me be clear that no single policy or action will undo the excesses of the last few years," Paulson said...Treasury Secretary Henry Paulson said investors remain wary of U.S. markets and that further signs of ``slower growth'' will emerge before the economy shakes off the effects of the housing crisis. ``It will take additional time for markets to regain confidence,'' Paulson said in a speech to the New York Society of Security Analysts today in New York. ``We will likely have further indications of slower growth in the weeks and months ahead.''
Gold for February delivery fell $3.70 to end at $862 an ounce on the New York Mercantile Exchange. Crude oil for February delivery dropped $2.82, or nearly 3%, to finish at $95.09 a barrel on the New York Mercantile Exchange.
The U.S. economy is in a recession, David Rosenberg, chief North American economist for Merrill Lynch, wrote Monday. "Friday's employment report strongly suggests that an official recession has arrived," Rosenberg said in a note to clients.
Claudius Claudianus: "He who strikes terror in others is himself continually in fear."
John Hussman: " Market conditions presently feature a Pandora's Box of rich valuations, vulnerable profit margins, rising default risk, rapidly deteriorating market internals, failing support levels, and accumulating evidence of oncoming recession."
According to the WSJ, McDonald's plans to install coffee bars at its nearly 14,000 U.S. locations starting this year, its biggest menu addition in three decades. The effort to poach Starbucks customers aims to add $1 billion to the fast-food chain's annual sales.
The price of 100 dollars for a barrel of crude oil is "not necessarily very high" given the high demand of oil and higher production costs, the president of OPEC said Sunday.
According to the WSJ, for the first time in four years, the national vacancy rate for office buildings rose in the fourth quarter, as an unusually large amount of new space came on the market and tenants shied way from signing new leases. Demand for commercial buildings has begun to slow and vacancy rates to climb in several markets, such as Orange County, Calif., and Las Vegas, that have been particularly hard hit by the nation's housing slump and turmoil in the residential mortgage market.
Robert McHugh: "Given the worsening housing and credit market situation, look for the Fed to print and pump M-3 at this economy as if every dollar was worth a thousand votes. The world economy will be cheering this effort, because if they cannot export their goods to a dollar-rich U.S. consumer, their economies will tank. Period. World Central Banks should fully support the Fed's printing presses. And they have, failing to cut their rates, and participating in the recent liquidity flood. Kiss the dollar goodbye. It is being sacrificed."
San Antonio-based Valero, which began gasoline operations in California in 2000, now owns two of the state's 14 fuel-making refineries and displays its brand on 921 service stations out of a statewide total of around 9,400. In the last three years, the company has added nearly 300 Valero locations to its California roster.
Hong Kong shares fell sharply Monday morning as new economic data out of the U.S. added to fears of a recession. The blue-chip Hang Seng Index was down 708.55 points, or 2.57 percent, at 26,811.14 points by midmorning, having dipped by nearly 3 percent early in the day.All 43 blue chips were down, tracking Friday's declines on Wall Street
Citigroup is considering cutting 5 percent to 10 percent of its work force, which totals 327,000, CNBC television reported on Monday, without citing sources.
Steven Deitz: “A people who's primary aims are driving, shopping, and television are subject to terrorism at any time.”
The U.S. military said that Iranian Revolutionary Guard gunboats harassed three U.S. warships on Sunday in the Strait of Hormuz, according to news reports Monday. NBC news quoted U.S. military officials as saying the event was a "significant provocative act." The network said on its MSNBC.com Web site that no shots were fired but that the Iranian ships threatened to "blow up" the U.S. vessels. The encounter lasted between 15 and 25 minutes. Iran's Foreign Ministry said Monday that a confrontation between Iranian boats and U.S. Navy ships in the Persian Gulf over the weekend was "something normal" and was resolved. It suggested the Iranian boats had not recognized the U.S. vessels.
Nothing like playing the terror card during the primaries. As for Bill Clinton, he's no Putin.
Loesje: “Is it the extremist, or the media, that blow things up?"
Today, the Space and Science Research Center, (SSRC) in Orlando, Florida announces that it has confirmed the recent web announcement of NASA solar physicists that there are substantial changes occurring in the sun’s surface. The SSRC has further researched these changes and has concluded they will bring about the next climate change to one of a long lasting cold era.
Today, Director of the SSRC, John Casey has reaffirmed earlier research he led that independently discovered the sun’s changes are the result of a family of cycles that bring about climate shifts from cold climate to warm and back again.
“We today confirm the recent announcement by NASA that there are historic and important changes taking place on the sun’s surface. This will have only one outcome - a new climate change is coming that will bring an extended period of deep cold to the planet. This is not however a unique event for the planet although it is critically important news to this and the next generations. It is but the normal sequence of alternating climate changes that has been going on for thousands of years. Further according to our research, this series of solar cycles are so predictable that they can be used to roughly forecast the next series of climate changes many decades in advance. I have verified the accuracy of these cycles’ behavior over the last 1,100 years relative to temperatures on Earth, to well over 90%.”
As to what these changes are Casey says, “The sun’s surface flows have slowed dramatically as NASA has indicated. This process of surface movement, what NASA calls the “conveyor belt” essentially sweeps up old sunspots and deposits new ones. NASA’s studies have found that when the surface movement slows down, sunspot counts drop significantly. All records of sunspot counts and other proxies of solar activity going back 6,000 years clearly validates our own findings that when we have sunspot counts lower then 50 it means only one thing - an intense cold climate, globally. NASA says the solar cycle 25, the one after the next that starts this spring will be at 50 or lower. The general opinion of the SSRC scientists is that it could begin even sooner within 3 years with the next solar cycle 24. What we are saying today is that my own research and that of the other scientists at the SSRC verifies that NASA is right about one thing – a solar cycle of 50 or lower is headed our way. With this next solar minimum predicted by NASA, what I call a “solar hibernation,” the SSRC forecasts a much colder Earth just as it has transpired before for thousands of years. If NASA is the more accurate on the schedule, then we may see even warmer temperatures before the bottom falls out. If the SSRC and other scientists around the world are correct then we have only a few years to prepare before 20-30 years of lasting and possibly dangerous cold arrive.”
``The only lesson the U.S. has learned from Japan is how to clean up the post-bubble mess,'' says Roach, now chairman of Morgan Stanley in Asia. ``America has failed to learn the much more important lesson -- how to avoid dangerously destabilizing bubbles in the first place. The Greenspan/Bernanke ideology still places disproportionate emphasis on the former while ignoring the latter at great peril.''
"Let me be clear that no single policy or action will undo the excesses of the last few years," Paulson said...Treasury Secretary Henry Paulson said investors remain wary of U.S. markets and that further signs of ``slower growth'' will emerge before the economy shakes off the effects of the housing crisis. ``It will take additional time for markets to regain confidence,'' Paulson said in a speech to the New York Society of Security Analysts today in New York. ``We will likely have further indications of slower growth in the weeks and months ahead.''
Gold for February delivery fell $3.70 to end at $862 an ounce on the New York Mercantile Exchange. Crude oil for February delivery dropped $2.82, or nearly 3%, to finish at $95.09 a barrel on the New York Mercantile Exchange.
The U.S. economy is in a recession, David Rosenberg, chief North American economist for Merrill Lynch, wrote Monday. "Friday's employment report strongly suggests that an official recession has arrived," Rosenberg said in a note to clients.
Claudius Claudianus: "He who strikes terror in others is himself continually in fear."
Sunday, January 06, 2008
Storms Brewing?
1/7/08 Storms Brewing?
BHP Billiton's CEO Kloppers talking about the proposal to buy Rio: "It is about unlocking material value that would otherwise be lost," he said.
Goldman Sachs is close to completing a 15 billion pound ($29.5 billion) financing package to be used by suitors for UK lender Northern Rock , the Sunday Times reported, adding details may be unveiled this week.
Fed Vice Chairman Donald Kohn: "When, as now, the FOMC believes that uncertainty is high, it may need to give greater weight to new information and be readier to revise its forecasts. "Policy decisions may also take into account the substantial risk that the economy will turn out differently than the most likely forecast, especially when that alternative is seen as having unusually large costs," he said.
Chinese toy exports up 20% in year to October. Chinese toy exports to U.S. up 13% in year to October.
According to the WSJ, Russia's Gazprom OAO is in discussions with the Nigerian government about signing an energy deal that would see the giant state-run natural gas company help explore and develop the West African nation's giant gas resources, a senior Nigerian oil official and Gazprom officials said.
Mike Burk: "The Russell 2000 (R2K) rose for 6 consecutive days through December 26 then fell for 6 consecutive days as of last Friday. This is pretty unusual, having occurred only 6 other times since 1979...the high number of new lows on Friday (539 on the NYSE and 429 on the NASDAQ) suggest another retest of the lows is likely...Next week is the week prior to the 2nd Friday in January during the 4th year of the Presidential Cycle...Historically the SPX has been up about half of the time with modest gains. The OTC however, has been quite strong, up 82% of the time during the 4th year of the Presidential Cycle with an average again over 2%...The market is very oversold and likely to rally. I expect the major indices to be higher on Friday January 11 than they were on Friday January 4."
European Central Bank President Jean- Claude Trichet said financial-market tensions are receding and the bank remains committed to fighting inflation.``Tensions have receded while remaining significant,'' Trichet said today in a speech at a convention of Germany's Christian Democratic Union party in Wiesbaden, near Frankfurt. ``The ECB's Governing Council stands ready to counter upside risks to price stability, in line with its mandate.''
AAA reported Friday that the average price for a gallon of regular gasoline nationwide was $3.07, up from $2.32 a year ago.
If oil prices stay up, Americans also may see higher prices for a host of other petroleum-derived products, from light bulbs and paint to golf balls and deodorant."There's oil in everything around us," said Edward Morse, chief energy economist at Lehman Bros. in New York. So it's impossible not to be touched by $100 oil. "Whether it's the direct impact of heating oil or diesel or gasoline, the indirect impact is sort of ubiquitous in the world we live in," he said. "And it affects everyone's pocketbook because it affects the amount we can spend on the things we need and want."
Ford sees the EcoBoost four-cylinder and six-cylinder engines — which will be unveiled at this month's North American International Auto Show in Detroit — as a key part of its strategy to improve fuel economy in the near term, along with improved aerodynamics and lighter materials. The 2009 Lincoln MKS sedan, out later this year, will be the first Ford vehicle with EcoBoost as an option. Ford said EcoBoost will give the MKS's 3.5-liter, twin-turbocharged V6 the power and torque of a V8.Ford says EcoBoost can deliver up to 20 percent better fuel economy and a 15 percent improvement in emissions without compromising driving performance.
"The big drain on the economy for the past year and a half has been housing ... eventually that is going to bottom out and when that bottom outs, even if it doesn't expand, it will
remove that negative drag on the economy," White House Council Of Economic Advisers Chairman Edward Lazear said a live interview. "Housing has been unfortunately a negative and that should stop probably in the next six months," he said. If you buy what Lazear is saying, then the housing stocks as a group should soon bottom out. I don't buy his prediction.
The U.S. trade deficit probably widened in November as Americans spent a record amount on imported oil, economists said a report this week may show. The gap between imports and exports expanded to $59.5 billion, a five-month high, according to the median estimate of economists surveyed by Bloomberg News ahead of the Commerce Department's Jan. 11 report.
As global credit markets tighten, the ANZ is expected to lift rates on some fixed loans by 0.25 percentage points to around 8.54 per cent. The National Australia Bank has indicated it will raise its rate by 0.12 percentage points.
Iran said on Sunday that U.S. President George W. Bush's planned trip to the Middle East was aimed at interfering in relations among regional states. "We consider such a trip as interference in the relations of the countries in the region and propaganda," Iranian Foreign Ministry spokesman Mohammad-Ali Hosseini told reporters during his weekly briefing.
BHP Billiton's CEO Kloppers talking about the proposal to buy Rio: "It is about unlocking material value that would otherwise be lost," he said.
Goldman Sachs is close to completing a 15 billion pound ($29.5 billion) financing package to be used by suitors for UK lender Northern Rock , the Sunday Times reported, adding details may be unveiled this week.
Fed Vice Chairman Donald Kohn: "When, as now, the FOMC believes that uncertainty is high, it may need to give greater weight to new information and be readier to revise its forecasts. "Policy decisions may also take into account the substantial risk that the economy will turn out differently than the most likely forecast, especially when that alternative is seen as having unusually large costs," he said.
Chinese toy exports up 20% in year to October. Chinese toy exports to U.S. up 13% in year to October.
According to the WSJ, Russia's Gazprom OAO is in discussions with the Nigerian government about signing an energy deal that would see the giant state-run natural gas company help explore and develop the West African nation's giant gas resources, a senior Nigerian oil official and Gazprom officials said.
Mike Burk: "The Russell 2000 (R2K) rose for 6 consecutive days through December 26 then fell for 6 consecutive days as of last Friday. This is pretty unusual, having occurred only 6 other times since 1979...the high number of new lows on Friday (539 on the NYSE and 429 on the NASDAQ) suggest another retest of the lows is likely...Next week is the week prior to the 2nd Friday in January during the 4th year of the Presidential Cycle...Historically the SPX has been up about half of the time with modest gains. The OTC however, has been quite strong, up 82% of the time during the 4th year of the Presidential Cycle with an average again over 2%...The market is very oversold and likely to rally. I expect the major indices to be higher on Friday January 11 than they were on Friday January 4."
European Central Bank President Jean- Claude Trichet said financial-market tensions are receding and the bank remains committed to fighting inflation.``Tensions have receded while remaining significant,'' Trichet said today in a speech at a convention of Germany's Christian Democratic Union party in Wiesbaden, near Frankfurt. ``The ECB's Governing Council stands ready to counter upside risks to price stability, in line with its mandate.''
AAA reported Friday that the average price for a gallon of regular gasoline nationwide was $3.07, up from $2.32 a year ago.
If oil prices stay up, Americans also may see higher prices for a host of other petroleum-derived products, from light bulbs and paint to golf balls and deodorant."There's oil in everything around us," said Edward Morse, chief energy economist at Lehman Bros. in New York. So it's impossible not to be touched by $100 oil. "Whether it's the direct impact of heating oil or diesel or gasoline, the indirect impact is sort of ubiquitous in the world we live in," he said. "And it affects everyone's pocketbook because it affects the amount we can spend on the things we need and want."
Ford sees the EcoBoost four-cylinder and six-cylinder engines — which will be unveiled at this month's North American International Auto Show in Detroit — as a key part of its strategy to improve fuel economy in the near term, along with improved aerodynamics and lighter materials. The 2009 Lincoln MKS sedan, out later this year, will be the first Ford vehicle with EcoBoost as an option. Ford said EcoBoost will give the MKS's 3.5-liter, twin-turbocharged V6 the power and torque of a V8.Ford says EcoBoost can deliver up to 20 percent better fuel economy and a 15 percent improvement in emissions without compromising driving performance.
"The big drain on the economy for the past year and a half has been housing ... eventually that is going to bottom out and when that bottom outs, even if it doesn't expand, it will
remove that negative drag on the economy," White House Council Of Economic Advisers Chairman Edward Lazear said a live interview. "Housing has been unfortunately a negative and that should stop probably in the next six months," he said. If you buy what Lazear is saying, then the housing stocks as a group should soon bottom out. I don't buy his prediction.
The U.S. trade deficit probably widened in November as Americans spent a record amount on imported oil, economists said a report this week may show. The gap between imports and exports expanded to $59.5 billion, a five-month high, according to the median estimate of economists surveyed by Bloomberg News ahead of the Commerce Department's Jan. 11 report.
As global credit markets tighten, the ANZ is expected to lift rates on some fixed loans by 0.25 percentage points to around 8.54 per cent. The National Australia Bank has indicated it will raise its rate by 0.12 percentage points.
Iran said on Sunday that U.S. President George W. Bush's planned trip to the Middle East was aimed at interfering in relations among regional states. "We consider such a trip as interference in the relations of the countries in the region and propaganda," Iranian Foreign Ministry spokesman Mohammad-Ali Hosseini told reporters during his weekly briefing.
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