2/23/08 The Thursday Night Debate
Hillary Clinton: "Whatever happens, we're going to be fine. You know, we have strong support from our families and our friends," she said, looking at Obama sitting next to her. "I just hope that we'll be able to say the same thing about the American people, and that's what this election should be about." Sound familiar?
It should.
John Edwards: "All of us are going to be just fine no matter what happens in this election. But what's at stake is whether America is going to be fine."
Xerox that, Hillary!
More than 20,000 U.S. citizens living abroad voted in the primary, which ran from Feb. 5 to Feb. 12. Obama won about 65 percent of the vote, according to the results released yesterday. Voters living in 164 countries cast votes online, while expatriates voted in person in more than 30 countries, at hotels in Australia and Costa Rica, at a pub in Ireland and at a Starbucks in Thailand. The results took about a week to tabulate as committees around the globe gathered ballots.
According to the NY Times, "Senator Hillary Rodham Clinton’s latest campaign finance report, published Wednesday night, appeared even to her most stalwart supporters and donors to be a road map of her political and management failings. Several of them, echoing political analysts, expressed concerns that Mrs. Clinton’s spending priorities amounted to costly errors in judgment that have hamstrung her competitiveness against Senator Barack Obama of Illinois.“We didn’t raise all of this money to keep paying consultants who have pursued basically the wrong strategy for a year now,” said a prominent New York donor. “So much about her campaign needs to change — but it may be too late.”
According to the Washington Post, the nation's top federal election official told Sen. John McCain yesterday that he cannot immediately withdraw from the presidential public financing system as he had requested, a decision that threatens to dramatically restrict his spending until the general election campaign begins in the fall.
Nouriel Roubini: "Needless to say the latest macro news (the Philly Fed report) and financial news (increase in corporate bankruptcies and LBOs going belly up, monoline deeper mess, trouble in the muni bonds markets, credit spreads widening, etc.) confirm my analysis that the risk of a systemic financial crisis is rising."
Brad Setser: "Some key findings of the latest Pew Survey: Fully 58% of the public says that their incomes are falling behind the rising cost of living. Overall, 24% cite concerns over prices -- with the cost of energy and healthcare mentioned most frequently -- as the most important problem facing the country. Substantial numbers of people with very low annual incomes -- less than $20,000 a year -- say they have difficulty affording basic necessities. Nearly three-quarters (74%) say they have difficulty affording gasoline, 65% report problems affording heat and electricity, and half have trouble affording food. The recent rise in the percentage of Americans who say that their incomes are falling behind the cost of living has come largely among middle-income and poor people. Roughly seven-in-ten (71%) of those with household incomes of less than $50,000 a year say their incomes are falling behind the cost of living, up 16 points since last September. By contrast, only a third (33%) of those with household incomes of $100,000 a year or more say their incomes are not keeping pace with the cost of living, up modestly since September (four points)."
California's nonpartisan fiscal watchdog on Wednesday said the state's budget shortfall has grown to $16 billion and offered an unprecedented and competing plan to close the gap by imposing both spending cuts and tax increases.
According to the NY Times, with the collapse of the housing boom, the government is considering proposals to rescue the nearly 8.8 million homeowners, or 10.3 percent of the total, who are underwater.
As of last Friday, natural gas in storage had fallen for a second consecutive week vs year ago levels. This past week there was a draw down of 172 billion cubic feet. As of last Tuesday there was a record short position in NYMEX natural gas futures and options. By comparison, let's consider that Turkey is paying record prices for individual or spot liquefied natural gas cargoes after Iran slashed exports through a natural gas pipeline, according to energy consultant FACTS Inc. The country is paying between $17 and $18 per million British thermal units for LNG, natural gas chilled for transport by tankers, for immediate delivery this month, Siamak Adibi, a FACTS analyst, said in a report dated February, without elaborating. The price is more than double the U.S. benchmark at Henry Hub, Louisiana. Iran halted gas exports to Turkey after record low temperatures boosted domestic demand, Facts said.
The premium of ICE gas oil futures to Brent crude, known in the industry as cracks, rose as high as $19.890 a barrel, the strongest level since mid-October 2005, a sign that supply of the product is tight at a time of intensifying cold weather.
Brett Steenbarger: "Interestingly, although we saw weakness in Thursday's trade, we had more stocks register new 20-day highs (848) and fewer register new lows (736) than the day prior."
Winter storms in the U.S. Northeast are causing airline delays and cancellations Friday morning.
In 2007, the median age for a car moved up to 7.1 years. People are keeping their cars longer.
The head of Nissan Motor Co. said even if the United States is not in recession, its auto industry is.
According to Bloomberg, Chinese steelmakers, the largest buyers of iron ore, will reject Rio Tinto Group's demand for a minimum 71 percent price increase in the raw material, two people familiar with the negotiations said. The mills will only accept a 65 percent price gain for ore from London-based Rio's mines in Australia, said the people, who declined to be identified because the talks are confidential.
Asian aframax rates rose for an eighth day, bolstered by increasing cargoes for March delivery and expectations by owners that demand for bigger tankers will spill over to smaller vessels.
Merrill Lynch & Co. advised clients to sell shares of Fannie Mae and Freddie Mac because the worst housing market in a quarter century will stifle earnings through 2011.
Investors should buy Malaysia's ringgit against the dollar as Malaysia's economy is likely to be less affected than other Asian nations by a U.S. economic slowdown, according to Morgan Stanley.
According to Reuters, EMC Corp, the world's biggest maker of corporate storage computing gear, said on Thursday it was hiring former Microsoft Corp executive Paul Maritz to run a division to develop services delivered over the Web. EMC also said it will buy Pi Corp, a privately held start-up founded by Maritz. It did not disclose the purchase price. Pi Corp. is based in Seattle and is privately owned. The software development company employs about 100 engineers in the U.S., Montreal and Bangalore, India. Maritz will be president and general manager of EMC's new Cloud Infrastructure and Services Division. The unit will focus on "cloud computing," a term that describes services accessed over the Web that seem to exist in a cloud of the Internet.
Cleveland-Cliffs Inc. said Thursday its fourth-quarter earnings rose 35 percent, led by domestic iron ore sales and revenue from recently acquired coal mines. The company earned $92.7 million, or $1.77 per share, compared with $68.6 million, or $1.33 per share, in the year-ago quarter. Revenue surged 43 percent to $782.5 million, from $549 million in the prior-year period.
The Turkish military says it has launched a land offensive across the border into northern Iraq to attack suspected Kurdish rebels.
Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Bear Stearns Cos. may earn 40 percent less profit than estimated in the first quarter because of lower investment banking revenue, said Sanford C. Bernstein & Co. Morgan Stanley may report 12 percent less profit, according to New-York based analyst Brad Hintz, who also cited ``challenging'' fixed income markets for reduced earnings.
S&P cut GMAC three notches to B+ and Residential Capital four notches to B, the ratings agency said in a statement. It said the ratings outlook for both companies was negative, suggesting further downward pressure.
The big Nasdaq stocks were under particular selling pressure in the early going on Friday. Google, Apple, RIMM, Microsoft, Oracle, Intel, Cisco, EMC and others. After tax-prep software company Intuit Inc. reported weak fiscal second-quarter revenue and cut its full-year forecast, the stock took the largest midday fall Friday on the Nasdaq 100 index. The weakness in this sector may prove an attractive entry point and/or a spot to add within this air pocket.
Starbucks cuts 600 positions.
Soybeans for May delivery jumped 9.25 cents to fetch $14.34 a bushel on the Chicago Board of Trade, after earlier rising to an all-time high of $14.375 a bushel.
Crude for April delivery rose 58 cents, or 0.6%, to close at $98.81 a barrel on the New York Mercantile Exchange. Natural gas jumped to $9.19. Gold for April delivery dropped $1.40 to end at $947.80 an ounce on Nymex. Gold, however, gained $41.70 this week from last Friday's closing level of $906.10.
Thirty-three percent of homeowners reported that their home had lost value in February, compared with 16 percent in February 2007 and well above the 24 percent peak recorded in 1992.
Genentech Inc. said late Friday that the U.S. Food and Drug Administration granted an accelerated approval for Avastin, in combination with paclitaxel chemotherapy, for the treatment of patients who have not received chemotherapy for their metastatic breast cancer.
Ambac Financial shares jumped more than 18% in afternoon trading on Friday after CNBC reported that a plan by several big banks to bailout the struggling bond insurer could be unveiled on Monday or Tuesday.
Saturday, February 23, 2008
Friday, February 22, 2008
Inflation
2/22/08 Inflation
David Fry: " Inflation is officially at 4%, but pre-Clinton era methodology shows the real number closer to 8%."
Robert McHugh: "Stocks are very close to a sharp breakout from their recent Symmetrical Triangle sideways moves. The breakout should be at least a 4 to 5 percent move, lasting several weeks."
China's gold demand rose 26% in 2007 from a year earlier, according to a wire report citing figures from the World Gold Council and the Shanghai Gold Exchange Thursday.
Taiwan has frozen exports of some steel products used in construction amid growing concerns about rising prices for the alloy, according to Dow Jones Newswires, which cited a statement by the Ministry of Economic Affairs. The export ban will affect steel billets and steel bars and will go into effect in about two weeks.
U.K. publishing group Reed Elsevier agreed to buy ChoicePoint Inc for a total cost of $4.1 billion, including the assumption of $600 million of debt. Reed said it will pay $50 a share for ChoicePoint, which provides data and analytics to the insurance industry. The deal has been recommended by the ChoicePoint board and represents a 49% premium to the closing price of $33.66 a share on Wednesday.
The value of Japanese exports surged 7.7% in January as rising shipments to Europe, Asia and commodity-rich countries offset slowing orders from the U.S.
Allianz's net profit dropped by more than half in the fourth quarter, as strength in its main property-casualty insurance business could not offset the damage from subprime write-downs at its banking arm. Its Dresdner Bank unit announced on Thursday it was cutting back on its activity in structured investment vehicles (SIV) and other structured products, at the root of the crisis, and cutting 450 jobs, though most of these have already been carried out. Dresdner Bank AG, Germany's third- largest bank, agreed to rescue its $18.8 billion K2 structured investment vehicle.
Pharmaceutical companies increased wholesale prices for the 50 top-selling branded drugs by an average of 7.82% in 2007, after increases of 6.73% and 6.22% in the previous two years, according to Delta Marketing Dynamics Inc., a health-care marketing research company. The most recent increase is almost double the overall U.S. economy's 4.1% annual inflation rate last year.
Silver gained to 27-year high.
The cost of protecting the debt of US and European companies against default surged to all-time highs.
McCormick & Company bought Canada’s largest honey company for $75 million in cash, about two times Billy Bee Honey Products’s annual sales of $37 million.
BNP Paribas , one of the largest banks in France, reported a 42 percent decline in fourth-quarter profit after writing down the value of securities hurt by worsening credit markets. Alliance & Leicester of Britain warned that a big rise in financing costs would derail 2008 profit after a write-down on risky assets hit 2007 results.
Bruce Everiss: Microsoft said that in the future XNA will be available for Zune. So now we know that Zune will evolve into a mobile gaming platform.
Research in Motion raised its subscriber forecasts this morning, and now expects its net subscriber additions for its fourth quarter to be approximately 15% to 20% higher than the 1.82 million net subscriber account additions forecast on December 20, 2007.
Crude oil prices of $100 may look ``cheap'' within five years if OPEC production fails to keep pace with global demand growth, according to Alfa Bank.
Search market share: Google 58.5%, Yahoo 22.2%, and Microsoft 9.8%.
J.C. Penney says its fourth-quarter profit fell 10 percent due to a shorter quarter. It also predicts 2008 earnings below Wall Street expectations, amid a weak consumer spending environment.
Microsoft announced a new initiative Wednesday to allow amateur developers to build games for Xbox Live, an online network with more than 10 million subscribers. The development tools for these games also allow them to be run on a PC and, eventually, Microsoft's portable digital media player, Zune. With the addition of these "community-created games," Microsoft expects to have more than 1,000 titles available for the Xbox 360 by the end of the year, said John Schappert, a Microsoft corporate vice president leading the effort.
KLA-Tencor Corp. said Thursday it intends to buy Belgian chip packaging testing company ICOS Vision Systems Corp. NV, for around $465.8 million.
For 2008, Williams Companies raised its profit guidance to $1.60 to $2 a share from $1.50 to $1.90 a share. For 2009, the company forecast profit in the range of $1.70 to $2.20 a share. At year-end 2007, it had replaced 232% of its production for the year.
In early Thursday trading, April gold is up $11.60 at $949.40 an ounce on the Nymex. April platinum futures also hit a record high of $2,194.80 an ounce and were last trading up $26.30 at $2,165.10 an ounce.
Barrick also entered into an agreement with Kennecott Explorations Ltd., a Rio Tinto plc subsidiary, to purchase a 40% stake in the Cortez Joint Venture for $1.7 billion.
The number of initial claims in the week ending Feb. 16 fell 9,000 to 349,000. It's the lowest level since the week ended Jan. 19. Claims in the previous week were revised to an increase of 1,000 to 358,000 compared with the initial estimate of a fall of 9,000 to 348,000. The four-week average of initial claims rose 10,750 to 360,500. A Labor Department official said that a state holiday in California may have reduced claims in the latest week. Meanwhile, the number of Americans receiving state jobless benefits rose 48,000 to 2.78 million in the week ending Feb. 9. The four-week moving average of continuing claims rose 28,750 to 2.75 million.
Microsoft Corp expects its sales to Taiwan's contract manufacturers of PCs, including Quanta and Asustek , to rise more than 10 percent in 2008, the head of its Taiwan unit said on Thursday.
The index of leading U.S. economic indicators dropped by 0.1% in January, the Conference Board reported Thursday, as weaker stock prices and housing data drove the index's fourth consecutive decline.
The Philly Fed diffusion index fell to -24 in February. The index had plunged to -20.9 in January from -1.6 in December. Readings below zero indicate contraction. The decline was unexpected. The new orders index rose to -10.9 from -15.2, while the shipments index fell to -12.2 from -2.3. Inflationary pressures eased a bit. The prices paid index dropped to 46.6 from 49.8.
The Eurekahedge Hedge Fund Index, which tracks the performance of 2,467 funds that invest globally, dropped 3.3 percent, based on preliminary figures, according to the Singapore-based hedge-fund research and publishing company. The drop is the worst since January 2000, when Eurekahedge began compiling the data. The index rose 0.7 percent in December.
The U.S. dollar index was at 75.940, down from 76.143 late Wednesday.
U.S. crude inventories rose more than expected, up 4.2 million barrels to 305.3 million barrels in the week ending Feb. 15, U.S. Energy Information Administration reported on Thursday. Analysts surveyed by Platts expected a rise of 3.2 million barrels. After the data, crude-oil futures for April delivery fell 90 cents, or 0.9%, to $98.80 a barrel on the New York Mercantile Exchange. Gasoline supplies rose by 1.1 million barrels in the latest week, while distillate stocks fell by 4.5 million barrels, EIA reported.
At the end of 2007, Marathon said it had net proved liquid hydrocarbon and natural gas reserves equal to 1.23 billion barrels of oil. About 53 percent was liquid and the rest gas, the company said.
A tight market for polysilicon has limited the solar-power industry's ability to produce more.
Goldman Sachs is likely to cut 1,500 employees, Lehman another 200, and Merrill an amount yet to be disclosed.
Crude for April delivery, the new front-month contract, declined $1.47 to settle at $98.23 a barrel on the New York Mercantile Exchange. Gold for April delivery rose $11.40 to end at $949.20 an ounce on the New York Mercantile Exchange. April platinum futures also hit a record Thursday, climbing as high as $2,194.80 an ounce. Platinum finished up $49.40 at $2,188.20 an ounce.
Fitch Ratings said it sees about $7 billion to $8 billion in losses in the U.S. life insurance industry because of exposure to subprime and Alt-A residential mortgages.
Microsoft announced it will be publishing technical information about its products to ensure interoperability with rivals' offerings. It won't make software developers obtain a license or pay royalties or other fees.
Beijing has given the green light for domestic banks to invest client funds in the Japanese stock market, according to a Dow Jones Newswire report Friday, citing a statement by the China Banking Regulatory Commission.
The People's Bank of China said Friday it expects growth in consumer prices to remain elevated in the first half, and warned inflationary pressures could keep on an upward trajectory for an extended period. The central bank also said the rate of growth in the economy was likely to slow this year. The PBOC said it would use interest rates to cool demand growth and quell inflation while bank reserve ratios could be increased to help manage liquidity.
Japan lowered its assessment of the economy for the first time in 15 months in its February report, noting a host of indicators were pointing to weaker economic growth.
In 2008, Express Scripts expects earnings from continuing operations in a range of $2.92 to $3 a share.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$4.197 billion in the week ended 2/20/08 with Domestic funds reporting net outflows of -$5.853 billion and Non-domestic funds reporting net inflows of $1.656 billion; Excluding ETF activity, Equity funds report net cash inflows totaling $167 million with Domestic funds reporting net inflows of $141 million and Non-domestic funds reporting net inflows totaling $25 million.
David Fry: " Inflation is officially at 4%, but pre-Clinton era methodology shows the real number closer to 8%."
Robert McHugh: "Stocks are very close to a sharp breakout from their recent Symmetrical Triangle sideways moves. The breakout should be at least a 4 to 5 percent move, lasting several weeks."
China's gold demand rose 26% in 2007 from a year earlier, according to a wire report citing figures from the World Gold Council and the Shanghai Gold Exchange Thursday.
Taiwan has frozen exports of some steel products used in construction amid growing concerns about rising prices for the alloy, according to Dow Jones Newswires, which cited a statement by the Ministry of Economic Affairs. The export ban will affect steel billets and steel bars and will go into effect in about two weeks.
U.K. publishing group Reed Elsevier agreed to buy ChoicePoint Inc for a total cost of $4.1 billion, including the assumption of $600 million of debt. Reed said it will pay $50 a share for ChoicePoint, which provides data and analytics to the insurance industry. The deal has been recommended by the ChoicePoint board and represents a 49% premium to the closing price of $33.66 a share on Wednesday.
The value of Japanese exports surged 7.7% in January as rising shipments to Europe, Asia and commodity-rich countries offset slowing orders from the U.S.
Allianz's net profit dropped by more than half in the fourth quarter, as strength in its main property-casualty insurance business could not offset the damage from subprime write-downs at its banking arm. Its Dresdner Bank unit announced on Thursday it was cutting back on its activity in structured investment vehicles (SIV) and other structured products, at the root of the crisis, and cutting 450 jobs, though most of these have already been carried out. Dresdner Bank AG, Germany's third- largest bank, agreed to rescue its $18.8 billion K2 structured investment vehicle.
Pharmaceutical companies increased wholesale prices for the 50 top-selling branded drugs by an average of 7.82% in 2007, after increases of 6.73% and 6.22% in the previous two years, according to Delta Marketing Dynamics Inc., a health-care marketing research company. The most recent increase is almost double the overall U.S. economy's 4.1% annual inflation rate last year.
Silver gained to 27-year high.
The cost of protecting the debt of US and European companies against default surged to all-time highs.
McCormick & Company bought Canada’s largest honey company for $75 million in cash, about two times Billy Bee Honey Products’s annual sales of $37 million.
BNP Paribas , one of the largest banks in France, reported a 42 percent decline in fourth-quarter profit after writing down the value of securities hurt by worsening credit markets. Alliance & Leicester of Britain warned that a big rise in financing costs would derail 2008 profit after a write-down on risky assets hit 2007 results.
Bruce Everiss: Microsoft said that in the future XNA will be available for Zune. So now we know that Zune will evolve into a mobile gaming platform.
Research in Motion raised its subscriber forecasts this morning, and now expects its net subscriber additions for its fourth quarter to be approximately 15% to 20% higher than the 1.82 million net subscriber account additions forecast on December 20, 2007.
Crude oil prices of $100 may look ``cheap'' within five years if OPEC production fails to keep pace with global demand growth, according to Alfa Bank.
Search market share: Google 58.5%, Yahoo 22.2%, and Microsoft 9.8%.
J.C. Penney says its fourth-quarter profit fell 10 percent due to a shorter quarter. It also predicts 2008 earnings below Wall Street expectations, amid a weak consumer spending environment.
Microsoft announced a new initiative Wednesday to allow amateur developers to build games for Xbox Live, an online network with more than 10 million subscribers. The development tools for these games also allow them to be run on a PC and, eventually, Microsoft's portable digital media player, Zune. With the addition of these "community-created games," Microsoft expects to have more than 1,000 titles available for the Xbox 360 by the end of the year, said John Schappert, a Microsoft corporate vice president leading the effort.
KLA-Tencor Corp. said Thursday it intends to buy Belgian chip packaging testing company ICOS Vision Systems Corp. NV, for around $465.8 million.
For 2008, Williams Companies raised its profit guidance to $1.60 to $2 a share from $1.50 to $1.90 a share. For 2009, the company forecast profit in the range of $1.70 to $2.20 a share. At year-end 2007, it had replaced 232% of its production for the year.
In early Thursday trading, April gold is up $11.60 at $949.40 an ounce on the Nymex. April platinum futures also hit a record high of $2,194.80 an ounce and were last trading up $26.30 at $2,165.10 an ounce.
Barrick also entered into an agreement with Kennecott Explorations Ltd., a Rio Tinto plc subsidiary, to purchase a 40% stake in the Cortez Joint Venture for $1.7 billion.
The number of initial claims in the week ending Feb. 16 fell 9,000 to 349,000. It's the lowest level since the week ended Jan. 19. Claims in the previous week were revised to an increase of 1,000 to 358,000 compared with the initial estimate of a fall of 9,000 to 348,000. The four-week average of initial claims rose 10,750 to 360,500. A Labor Department official said that a state holiday in California may have reduced claims in the latest week. Meanwhile, the number of Americans receiving state jobless benefits rose 48,000 to 2.78 million in the week ending Feb. 9. The four-week moving average of continuing claims rose 28,750 to 2.75 million.
Microsoft Corp expects its sales to Taiwan's contract manufacturers of PCs, including Quanta and Asustek , to rise more than 10 percent in 2008, the head of its Taiwan unit said on Thursday.
The index of leading U.S. economic indicators dropped by 0.1% in January, the Conference Board reported Thursday, as weaker stock prices and housing data drove the index's fourth consecutive decline.
The Philly Fed diffusion index fell to -24 in February. The index had plunged to -20.9 in January from -1.6 in December. Readings below zero indicate contraction. The decline was unexpected. The new orders index rose to -10.9 from -15.2, while the shipments index fell to -12.2 from -2.3. Inflationary pressures eased a bit. The prices paid index dropped to 46.6 from 49.8.
The Eurekahedge Hedge Fund Index, which tracks the performance of 2,467 funds that invest globally, dropped 3.3 percent, based on preliminary figures, according to the Singapore-based hedge-fund research and publishing company. The drop is the worst since January 2000, when Eurekahedge began compiling the data. The index rose 0.7 percent in December.
The U.S. dollar index was at 75.940, down from 76.143 late Wednesday.
U.S. crude inventories rose more than expected, up 4.2 million barrels to 305.3 million barrels in the week ending Feb. 15, U.S. Energy Information Administration reported on Thursday. Analysts surveyed by Platts expected a rise of 3.2 million barrels. After the data, crude-oil futures for April delivery fell 90 cents, or 0.9%, to $98.80 a barrel on the New York Mercantile Exchange. Gasoline supplies rose by 1.1 million barrels in the latest week, while distillate stocks fell by 4.5 million barrels, EIA reported.
At the end of 2007, Marathon said it had net proved liquid hydrocarbon and natural gas reserves equal to 1.23 billion barrels of oil. About 53 percent was liquid and the rest gas, the company said.
A tight market for polysilicon has limited the solar-power industry's ability to produce more.
Goldman Sachs is likely to cut 1,500 employees, Lehman another 200, and Merrill an amount yet to be disclosed.
Crude for April delivery, the new front-month contract, declined $1.47 to settle at $98.23 a barrel on the New York Mercantile Exchange. Gold for April delivery rose $11.40 to end at $949.20 an ounce on the New York Mercantile Exchange. April platinum futures also hit a record Thursday, climbing as high as $2,194.80 an ounce. Platinum finished up $49.40 at $2,188.20 an ounce.
Fitch Ratings said it sees about $7 billion to $8 billion in losses in the U.S. life insurance industry because of exposure to subprime and Alt-A residential mortgages.
Microsoft announced it will be publishing technical information about its products to ensure interoperability with rivals' offerings. It won't make software developers obtain a license or pay royalties or other fees.
Beijing has given the green light for domestic banks to invest client funds in the Japanese stock market, according to a Dow Jones Newswire report Friday, citing a statement by the China Banking Regulatory Commission.
The People's Bank of China said Friday it expects growth in consumer prices to remain elevated in the first half, and warned inflationary pressures could keep on an upward trajectory for an extended period. The central bank also said the rate of growth in the economy was likely to slow this year. The PBOC said it would use interest rates to cool demand growth and quell inflation while bank reserve ratios could be increased to help manage liquidity.
Japan lowered its assessment of the economy for the first time in 15 months in its February report, noting a host of indicators were pointing to weaker economic growth.
In 2008, Express Scripts expects earnings from continuing operations in a range of $2.92 to $3 a share.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$4.197 billion in the week ended 2/20/08 with Domestic funds reporting net outflows of -$5.853 billion and Non-domestic funds reporting net inflows of $1.656 billion; Excluding ETF activity, Equity funds report net cash inflows totaling $167 million with Domestic funds reporting net inflows of $141 million and Non-domestic funds reporting net inflows totaling $25 million.
Wednesday, February 20, 2008
Forbearance
2/21/08 Forbearance
The consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices. But other prices were also higher. The core CPI, which excludes food and energy costs, was up 0.3% in January, the largest gain since June 2006.
George Ure: "The 3-month annualized CPI is now running 6.8!"
Construction on new U.S. homes posted a small gain in January, even as building permits continued a downward slide, the Commerce Department reported Wednesday. Housing starts rose 0.8% to a seasonally adjusted annual rate of 1.01 million, the most since November. In December, starts fell by a revised 14.8% to an annual rate of 1.00 million. Economists were expecting national housing starts to rise to a pace of 1.01 million. Building permits dropped by 3.0%, to a seasonally adjusted annual rate of 1.08 million, the lowest since November 1991.
Sharper Image Corp., the San Francisco retailer, said in a statement Wednesday that it had filed under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware. In addition, Lillian Vernon Corp. filed for bankruptcy,
KKR Financial Holdings has postponed repayment of billions of commercial paper and is holding talks with creditors, according to a published report in the Financial Times Wednesday.
ACA Capital Holdings Inc. entered into a third forbearance agreement with its structured credit and other similarly situated counterparties, the company said late Tuesday. The agreement will remain effective until April 23. Under the agreement, the counterparties will continue to waive all collateral posting requirements, termination rights and policy claims relating to the rating of ACA Financial Guaranty Corporation, ACA Capital's financial guaranty insurance subsidiary, under their respective transaction documents including any credit support annexes and similar agreements.
China's consumer prices in January surged 7.1% from a year earlier.
Microsoft has hired proxy-solicitation group Innisfree M&A to help oust Yahoo's 10-member board, all of whom are up for re-election this year.
It has until March 14 to nominate a slate of directors for Yahoo.
``There are those who would say that you have to be wary about inspiration because you might be disappointed,'' Obama said. ``They say Obama might make a good speech, but what is really going to make a difference is how you work our government. But I have to say that it is my central premise that the only way we will bring about real change in America is if we bring new people into the process.''
In early Wednesday trading natural gas traded at $9.10. Yesterday, two hedge funds folded. Shorting natural gas caused their demise. There will be others to follow.
Rob Hanna: "The market gapped up big today but couldn’t hold on to those gains as the S&P 500, Dow 30, and Nasdaq all finished in the red. Reading financial columns tonight you’ll be told that the inability of the market to hold on to its gains was a bad thing. The large black candlesticks are ugly. Market participants are selling into strength. All of which means there is likely more downside to come. But is any of it true?
I ran a study on the Nasdaq 100 tonight to find instances where the index gapped higher by 1% or more and then closed lower on the day. I wanted to see whether the negativity tended to carry through to the next day or next several days. Here’s what I found.
Going back to 1986, the NDX has had 52 occurrences where the market gapped up over 1% and then finished negative on the day. It closed higher the next day 54% of the time. The chance of the NDX being up on any day over the period was also 54%. Over the next 3 and 5 days the chances of the market being higher were 62% and 65% after a large failed gap up. The NDX has closed higher between 55.5% and 56.5% of the time over all 3 and 5 days periods since 1986. So looking out over three and five days the supposedly negative reversal actually seems to be a positive for the market."
Bain Capital Partners said Wednesday it withdrew its application for U.S. national security approval for its planned $2.2 billion acquisition of network-equipment maker 3Com. The parties remain committed to continuing discussions, it said. 3Com Corp. said it couldn't reach an agreement with a federal oversight panel on national security issues surrounding its proposed $2.2 billion buyout by a private-equity firm and Chinese telecommunications company.
Pfizer to acquire Encysive Pharma for $2.35 a share.
The dollar index was at 76.244, up from 76.043 late Tuesday.
Airbus said Wednesday it expects half as many orders for new planes in 2008 as it got last year after receiving record orders in recent years and amid slower global growth.
GMAC to lay off 930 employees.
The Federal Reserve said on Wednesday it had lowered its growth forecast for 2008 to between 1.3 percent and 2 percent due to the deepening housing contraction and tight credit, and said risks of further setbacks are troubling."The possibility that house prices could decline more steeply than anticipated, further reducing households' wealth and access to credit, was perceived as a significant risk to the central outlook for economic growth and employment," the Fed said in its Summary of Economic Projections. "Several participants noted that the risks of a downturn in the economy were significant,'' according to minutes of the Fed's Jan. 9 and 21 conference calls and Jan. 29-30 meeting. ``Many participants were concerned that the drop in equity prices, coupled with the ongoing decline in house prices, implied reductions in household wealth that would likely damp consumer spending.''
Crude oil for March delivery rose 73 cents to finish at a new record closing high of $100.74 a barrel on the New York Mercantile Exchange. Gold for April delivery rose $8 to end at $937.80 an ounce on the New York Mercantile Exchange.
Rick Klein and Sarah Amos: "Texas has a one-of-a-kind primary/caucus system, where two-thirds of the state's delegates will be awarded in the March 4 primary, while the remaining third will depend on the results of caucuses later that evening. Voters are permitted — and, in fact, are encouraged by campaigns — to attend both events. But Obama has demonstrated organizational strength in other caucus states, leaving him favored to emerge with the larger share of the 67 delegates at stake in the caucuses, regardless of what happens in the primary earlier in the day." Overall, Texas allocates 193 delegates.
Teddy Roosevelt: “The things that will destroy America are prosperity at any price, peace at any price, safety first instead of duty first and love of soft living and the get-rich-quick theory of life.”
The consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices. But other prices were also higher. The core CPI, which excludes food and energy costs, was up 0.3% in January, the largest gain since June 2006.
George Ure: "The 3-month annualized CPI is now running 6.8!"
Construction on new U.S. homes posted a small gain in January, even as building permits continued a downward slide, the Commerce Department reported Wednesday. Housing starts rose 0.8% to a seasonally adjusted annual rate of 1.01 million, the most since November. In December, starts fell by a revised 14.8% to an annual rate of 1.00 million. Economists were expecting national housing starts to rise to a pace of 1.01 million. Building permits dropped by 3.0%, to a seasonally adjusted annual rate of 1.08 million, the lowest since November 1991.
Sharper Image Corp., the San Francisco retailer, said in a statement Wednesday that it had filed under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware. In addition, Lillian Vernon Corp. filed for bankruptcy,
KKR Financial Holdings has postponed repayment of billions of commercial paper and is holding talks with creditors, according to a published report in the Financial Times Wednesday.
ACA Capital Holdings Inc. entered into a third forbearance agreement with its structured credit and other similarly situated counterparties, the company said late Tuesday. The agreement will remain effective until April 23. Under the agreement, the counterparties will continue to waive all collateral posting requirements, termination rights and policy claims relating to the rating of ACA Financial Guaranty Corporation, ACA Capital's financial guaranty insurance subsidiary, under their respective transaction documents including any credit support annexes and similar agreements.
China's consumer prices in January surged 7.1% from a year earlier.
Microsoft has hired proxy-solicitation group Innisfree M&A to help oust Yahoo's 10-member board, all of whom are up for re-election this year.
It has until March 14 to nominate a slate of directors for Yahoo.
``There are those who would say that you have to be wary about inspiration because you might be disappointed,'' Obama said. ``They say Obama might make a good speech, but what is really going to make a difference is how you work our government. But I have to say that it is my central premise that the only way we will bring about real change in America is if we bring new people into the process.''
In early Wednesday trading natural gas traded at $9.10. Yesterday, two hedge funds folded. Shorting natural gas caused their demise. There will be others to follow.
Rob Hanna: "The market gapped up big today but couldn’t hold on to those gains as the S&P 500, Dow 30, and Nasdaq all finished in the red. Reading financial columns tonight you’ll be told that the inability of the market to hold on to its gains was a bad thing. The large black candlesticks are ugly. Market participants are selling into strength. All of which means there is likely more downside to come. But is any of it true?
I ran a study on the Nasdaq 100 tonight to find instances where the index gapped higher by 1% or more and then closed lower on the day. I wanted to see whether the negativity tended to carry through to the next day or next several days. Here’s what I found.
Going back to 1986, the NDX has had 52 occurrences where the market gapped up over 1% and then finished negative on the day. It closed higher the next day 54% of the time. The chance of the NDX being up on any day over the period was also 54%. Over the next 3 and 5 days the chances of the market being higher were 62% and 65% after a large failed gap up. The NDX has closed higher between 55.5% and 56.5% of the time over all 3 and 5 days periods since 1986. So looking out over three and five days the supposedly negative reversal actually seems to be a positive for the market."
Bain Capital Partners said Wednesday it withdrew its application for U.S. national security approval for its planned $2.2 billion acquisition of network-equipment maker 3Com. The parties remain committed to continuing discussions, it said. 3Com Corp. said it couldn't reach an agreement with a federal oversight panel on national security issues surrounding its proposed $2.2 billion buyout by a private-equity firm and Chinese telecommunications company.
Pfizer to acquire Encysive Pharma for $2.35 a share.
The dollar index was at 76.244, up from 76.043 late Tuesday.
Airbus said Wednesday it expects half as many orders for new planes in 2008 as it got last year after receiving record orders in recent years and amid slower global growth.
GMAC to lay off 930 employees.
The Federal Reserve said on Wednesday it had lowered its growth forecast for 2008 to between 1.3 percent and 2 percent due to the deepening housing contraction and tight credit, and said risks of further setbacks are troubling."The possibility that house prices could decline more steeply than anticipated, further reducing households' wealth and access to credit, was perceived as a significant risk to the central outlook for economic growth and employment," the Fed said in its Summary of Economic Projections. "Several participants noted that the risks of a downturn in the economy were significant,'' according to minutes of the Fed's Jan. 9 and 21 conference calls and Jan. 29-30 meeting. ``Many participants were concerned that the drop in equity prices, coupled with the ongoing decline in house prices, implied reductions in household wealth that would likely damp consumer spending.''
Crude oil for March delivery rose 73 cents to finish at a new record closing high of $100.74 a barrel on the New York Mercantile Exchange. Gold for April delivery rose $8 to end at $937.80 an ounce on the New York Mercantile Exchange.
Rick Klein and Sarah Amos: "Texas has a one-of-a-kind primary/caucus system, where two-thirds of the state's delegates will be awarded in the March 4 primary, while the remaining third will depend on the results of caucuses later that evening. Voters are permitted — and, in fact, are encouraged by campaigns — to attend both events. But Obama has demonstrated organizational strength in other caucus states, leaving him favored to emerge with the larger share of the 67 delegates at stake in the caucuses, regardless of what happens in the primary earlier in the day." Overall, Texas allocates 193 delegates.
Teddy Roosevelt: “The things that will destroy America are prosperity at any price, peace at any price, safety first instead of duty first and love of soft living and the get-rich-quick theory of life.”
Tuesday, February 19, 2008
Crude Prices
2/20/08 Crude Prices
Credit Suisse suspended a number of traders in connection with a $2.85 billion over valuation of assets.
Oil, heating oil and gasoline prices spiked Tuesday as investors eyed the possibility that OPEC may cut production just ahead of the second quarter, when gasoline demand in the Northern Hemisphere usually becomes the central focus of the market. An explosion at a 70,000-barrel-a-day refinery in Texas may have also boosted prices. Crude oil for March delivery rose $2.75 at $98.25 a barrel on the New York Mercantile Exchange. March reformulated gasoline soared 10.52 cents, or over 4%, at $2.5990 a gallon. March heating oil surged 8.81 cents, or over 3%, at $2.7350 a gallon and March natural gas rallied 24 cents at $8.90 per million British thermal units.
Wal-Mart said net income in the quarter ended Jan. 31 rose to $4.096 billion, or $1.02 per share, compared to $3.94 billion, or 95 cents a share, a year earlier.
Microsoft is not privately haggling with Yahoo over the software maker's rejected $31-per-share buyout offer for the slumping Internet pioneer, Bill Gates said in an interview. "We sent them a letter and said we think that's a fair offer. There's nothing that's gone on other than us stating that we think it's a fair offer," the Microsoft chairman said Monday. "They should take a hard look at it."
In an escalation of its fight for Yahoo, Microsoft will authorize a proxy fight at the Internet company this week, people briefed on the matter told DealBook.
Dubai International Capital LLC plans to increase its holdings in China, India and Japan to more than $5 billion during the next three to five years while expanding funds under management to between $25 billion to $30 billion from $13 billion currently, Kyodo reported Tuesday, citing comments by Anand Krishnan, chief operating officer of the fund.
China's consumer price index climbed 7.1% in January, accelerating from a 6.5% rise in December, data released by the National Bureau of Statistics showed Tuesday.
John Hussman: "As we enter 2008, the excessive creation of risky debt is beginning – and I should emphasize only beginning – to produce writedowns and losses...Having observed the inflation pressures I had anticipated over the near term, we are now starting to observe the credit problems I had anticipated over the longer term. Probably the only “bright side” is that increasing credit difficulties can be expected to put downward pressure on inflation later this year. Periods of heightened credit concerns tend to increase the demand for government liabilities (e.g. currency and Treasury securities), which tends to lower monetary “velocity” enough to drive down the rate of inflation...
I continue to believe that there is substantial risk of audit delays and “qualified” opinions in the upcoming reports of financial companies. It is difficult to see how analysts and some financial news anchors can seriously be looking for the market to have “discounted the bad news” when companies are still at a loss to quantify their news at all. It is equally difficult to see how financials can “come clean” with their losses when those losses generally have not yet occurred because the major wave of mortgage resets that started in October probably only now beginning to produce delinquencies. It's impossible to know yet which mortgages and how much will end up in foreclosure.
Most likely, there is more turbulence to come."
Banks in the United States have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times. The newspaper said the use of the Fed's Term Auction Facility (TAF), which allows banks to borrow at relatively attractive rates against a wide range of their assets, saw borrowing of nearly $50 billion of one-month funds from the Fed by mid-February.
Barclays Plc , Britain's third-biggest bank, raised its 2007 writedown on the value of risky assets to 1.6 billion pounds ($3.1 billion) but reported profits broadly in line with analysts' expectations.
According to the WSJ, Lehman Bros.is sitting on a big pile of commercial real-estate loans, and that market is deteriorating, potentially causing bigger-than-expected write-downs. In recent weeks, credit markets have worsened, and Lehman believes it is now facing a write-down in the $1.3 billion range.
The dollar remained under pressure in European trading Tuesday, dogged by worries about the path of the ongoing credit crisis and ideas China's central bank might soon raise interest rates to battle surging inflation. The U.S. dollar index fell to the 75.95 area.
According to the FT, Barack Obama on Monday made an aggressive pitch at Ohio’s blue-collar workers by proposing a “Patriot Employers” plan that would lower corporate taxes for companies that did not ship jobs overseas.The proposal, which came two weeks before the critical Ohio primary and just before on Tuesday’s nominating contest in Wisconsin, is the most radical any presidential candidate has put forward so far to mitigate the perceived effects of globalization on US manufacturing.
According to the NY Times, the 2008 Index of Silicon Valley — which this year was sponsored by Joint Venture: Silicon Valley Network, a public-private partnership, and the Silicon Valley Community Foundation, a nonprofit — found that from 2002 to 2006, middle-wage jobs fell to 46 percent of the work force, from 52 percent.
According to Bloomberg, Dubai Mercantile Exchange, a venture between the Dubai government, the Oman Investment Fund and Nymex Holdings Inc., plans to offer financially settled contracts for Brent and Oman crude oil. The new contracts enable investors to trade the difference between high and lower sulfur benchmark oil grades without taking physical delivery. Dubai Mercantile will end its Brent- Oman Financial Spread Contract and WTI-Oman Financial Spread Contract when trading in the new contracts start, the exchange said in an e-mailed statement today.
In early Tuesday trading, gold futures soared over 2% in a broad commodities rally Tuesday, as platinum surged 4% after hitting another record high of $2,174.0 an ounce in electronic trading. Gold for April delivery rose $20.20 at $926.30 an ounce on the New York Mercantile Exchange. April platinum rallied $76.30 at $2,140 an ounce on Nymex after hitting a new record high earlier in the session. March palladium rallied $36.30, or 6%, at $488 an ounce, March copper rose 13.20 cents, or 4%, at $3.6550 a pound, and March silver gained 31.20 cents, or 2%, at $17.430 an ounce.
Staples Inc. announced Tuesday a 2.5 billion euro ($3.7 billion) hostile offer for European office-supplies chain Corporate Express, asserting the Dutch company should accept its acquisition bid rather than wait for its own restructuring plan to go ahead.
Mike Shedlock: "What ails the economy is cash strapped consumers who have recklessly spent over the years, businesses that have over expanded, and government that keeps spending more money every year than it collects. And if ever there was a worse time to start a business than now, you would be hard pressed to find it."
Whole Foods Market Inc's first-quarter profit fell to $39.1 million, or 28 cents a share, from $53.8 million, or 38 cents a share, a year ago. Results for the latest quarter were 36 cents a share excluding the impact from the company's acquisition of Wild Oats.
Yahoo Inc. plans to offer all of its employees "enhanced severance benefits" if they are laid off following a sale of the company, according to a report Tuesday in the online edition of The Wall Street Journal.
For the first quarter, excluding charges and one-time items, H-P would have earned $2.3 billion, or 86 cents a share, to beat the estimates of analysts surveyed by Thomson Financial, who forecast the company to earn 81 cents a share on $27.6 billion in sales.
Crude-oil futures surged nearly 5% Tuesday to close above $100 a barrel for the first time ever.
April gold soared $23.70, or nearly 3%, at $929.80 an ounce on the New York Mercantile Exchange. April platinum rallied $89.40, or over 4%, at $2,153.10 an ounce. March palladium rallied $47.60, or over 10%, to finish at $499.30 an ounce.
The home builders' housing market index rose to 20 in February from 19 in January, the National Association of Home Builders reported Tuesday.
Credit Suisse suspended a number of traders in connection with a $2.85 billion over valuation of assets.
Oil, heating oil and gasoline prices spiked Tuesday as investors eyed the possibility that OPEC may cut production just ahead of the second quarter, when gasoline demand in the Northern Hemisphere usually becomes the central focus of the market. An explosion at a 70,000-barrel-a-day refinery in Texas may have also boosted prices. Crude oil for March delivery rose $2.75 at $98.25 a barrel on the New York Mercantile Exchange. March reformulated gasoline soared 10.52 cents, or over 4%, at $2.5990 a gallon. March heating oil surged 8.81 cents, or over 3%, at $2.7350 a gallon and March natural gas rallied 24 cents at $8.90 per million British thermal units.
Wal-Mart said net income in the quarter ended Jan. 31 rose to $4.096 billion, or $1.02 per share, compared to $3.94 billion, or 95 cents a share, a year earlier.
Microsoft is not privately haggling with Yahoo over the software maker's rejected $31-per-share buyout offer for the slumping Internet pioneer, Bill Gates said in an interview. "We sent them a letter and said we think that's a fair offer. There's nothing that's gone on other than us stating that we think it's a fair offer," the Microsoft chairman said Monday. "They should take a hard look at it."
In an escalation of its fight for Yahoo, Microsoft will authorize a proxy fight at the Internet company this week, people briefed on the matter told DealBook.
Dubai International Capital LLC plans to increase its holdings in China, India and Japan to more than $5 billion during the next three to five years while expanding funds under management to between $25 billion to $30 billion from $13 billion currently, Kyodo reported Tuesday, citing comments by Anand Krishnan, chief operating officer of the fund.
China's consumer price index climbed 7.1% in January, accelerating from a 6.5% rise in December, data released by the National Bureau of Statistics showed Tuesday.
John Hussman: "As we enter 2008, the excessive creation of risky debt is beginning – and I should emphasize only beginning – to produce writedowns and losses...Having observed the inflation pressures I had anticipated over the near term, we are now starting to observe the credit problems I had anticipated over the longer term. Probably the only “bright side” is that increasing credit difficulties can be expected to put downward pressure on inflation later this year. Periods of heightened credit concerns tend to increase the demand for government liabilities (e.g. currency and Treasury securities), which tends to lower monetary “velocity” enough to drive down the rate of inflation...
I continue to believe that there is substantial risk of audit delays and “qualified” opinions in the upcoming reports of financial companies. It is difficult to see how analysts and some financial news anchors can seriously be looking for the market to have “discounted the bad news” when companies are still at a loss to quantify their news at all. It is equally difficult to see how financials can “come clean” with their losses when those losses generally have not yet occurred because the major wave of mortgage resets that started in October probably only now beginning to produce delinquencies. It's impossible to know yet which mortgages and how much will end up in foreclosure.
Most likely, there is more turbulence to come."
Banks in the United States have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times. The newspaper said the use of the Fed's Term Auction Facility (TAF), which allows banks to borrow at relatively attractive rates against a wide range of their assets, saw borrowing of nearly $50 billion of one-month funds from the Fed by mid-February.
Barclays Plc , Britain's third-biggest bank, raised its 2007 writedown on the value of risky assets to 1.6 billion pounds ($3.1 billion) but reported profits broadly in line with analysts' expectations.
According to the WSJ, Lehman Bros.is sitting on a big pile of commercial real-estate loans, and that market is deteriorating, potentially causing bigger-than-expected write-downs. In recent weeks, credit markets have worsened, and Lehman believes it is now facing a write-down in the $1.3 billion range.
The dollar remained under pressure in European trading Tuesday, dogged by worries about the path of the ongoing credit crisis and ideas China's central bank might soon raise interest rates to battle surging inflation. The U.S. dollar index fell to the 75.95 area.
According to the FT, Barack Obama on Monday made an aggressive pitch at Ohio’s blue-collar workers by proposing a “Patriot Employers” plan that would lower corporate taxes for companies that did not ship jobs overseas.The proposal, which came two weeks before the critical Ohio primary and just before on Tuesday’s nominating contest in Wisconsin, is the most radical any presidential candidate has put forward so far to mitigate the perceived effects of globalization on US manufacturing.
According to the NY Times, the 2008 Index of Silicon Valley — which this year was sponsored by Joint Venture: Silicon Valley Network, a public-private partnership, and the Silicon Valley Community Foundation, a nonprofit — found that from 2002 to 2006, middle-wage jobs fell to 46 percent of the work force, from 52 percent.
According to Bloomberg, Dubai Mercantile Exchange, a venture between the Dubai government, the Oman Investment Fund and Nymex Holdings Inc., plans to offer financially settled contracts for Brent and Oman crude oil. The new contracts enable investors to trade the difference between high and lower sulfur benchmark oil grades without taking physical delivery. Dubai Mercantile will end its Brent- Oman Financial Spread Contract and WTI-Oman Financial Spread Contract when trading in the new contracts start, the exchange said in an e-mailed statement today.
In early Tuesday trading, gold futures soared over 2% in a broad commodities rally Tuesday, as platinum surged 4% after hitting another record high of $2,174.0 an ounce in electronic trading. Gold for April delivery rose $20.20 at $926.30 an ounce on the New York Mercantile Exchange. April platinum rallied $76.30 at $2,140 an ounce on Nymex after hitting a new record high earlier in the session. March palladium rallied $36.30, or 6%, at $488 an ounce, March copper rose 13.20 cents, or 4%, at $3.6550 a pound, and March silver gained 31.20 cents, or 2%, at $17.430 an ounce.
Staples Inc. announced Tuesday a 2.5 billion euro ($3.7 billion) hostile offer for European office-supplies chain Corporate Express, asserting the Dutch company should accept its acquisition bid rather than wait for its own restructuring plan to go ahead.
Mike Shedlock: "What ails the economy is cash strapped consumers who have recklessly spent over the years, businesses that have over expanded, and government that keeps spending more money every year than it collects. And if ever there was a worse time to start a business than now, you would be hard pressed to find it."
Whole Foods Market Inc's first-quarter profit fell to $39.1 million, or 28 cents a share, from $53.8 million, or 38 cents a share, a year ago. Results for the latest quarter were 36 cents a share excluding the impact from the company's acquisition of Wild Oats.
Yahoo Inc. plans to offer all of its employees "enhanced severance benefits" if they are laid off following a sale of the company, according to a report Tuesday in the online edition of The Wall Street Journal.
For the first quarter, excluding charges and one-time items, H-P would have earned $2.3 billion, or 86 cents a share, to beat the estimates of analysts surveyed by Thomson Financial, who forecast the company to earn 81 cents a share on $27.6 billion in sales.
Crude-oil futures surged nearly 5% Tuesday to close above $100 a barrel for the first time ever.
April gold soared $23.70, or nearly 3%, at $929.80 an ounce on the New York Mercantile Exchange. April platinum rallied $89.40, or over 4%, at $2,153.10 an ounce. March palladium rallied $47.60, or over 10%, to finish at $499.30 an ounce.
The home builders' housing market index rose to 20 in February from 19 in January, the National Association of Home Builders reported Tuesday.
Monday, February 18, 2008
Nationalize
2/19/08 Nationalize
Over the weekend, Nippon Steel and Posco agreed to pay 65% more for iron ore supplied by Companhia Vale do Rio Doce in 2008, Dow Jones Newswires reported. Japan's four largest steelmakers have agreed to a 65% increase in iron ore prices from Brazilian mining company Vale do Rio Doce, setting a new global benchmark. The new contract price, marking the sixth straight yearly increase, will apply to the fiscal year beginning April 1.
Societe Generale, the French bank which has been hurt by a $7.1 billion loss from unauthorized trading, had its credit rating reduced to AA- from AA by Standard & Poor's.
Societe Generale has held preliminary discussion about a possible merger with La Banque Postale, according to a report in Les Echos newspaper Monday.
Northern Rock shares were suspended after the U.K. government said on Sunday that it intends to nationalize the embattled lender.
China's producer price index climbed 6.1% in January from a year earlier, the National Bureau of Statistics said Monday. The increase follows a 5.4% rise in December, and marks the sixth straight month the growth rate in the PPI index has increased.
Australia and New Zealand Banking Group Ltd. Monday warned of higher provisions for the current financial year, including a $200 million write-down on a derivative position related to an U.S. monoline insurer. The company said in a statement a "substantial portion" of the provision could be written back in future periods. The bank said the write-down is related to derivative positions it took between 2005 and February 2007, and follows the credit downgrade of a U.S. monocline insurer to "CCC". ANZ did not identify the monoline insurer.
The U.S. Department of Agriculture on Sunday ordered the recall of 143 million pounds of beef from a Southern California slaughterhouse that is the subject of an animal-abuse investigation.
China attracted $11.2 billion in foreign investment in January, up 109.8 percent from the same month last year, the government said Monday.
Satyajit Das: "2007 may come to associated with the start of the "big" credit crunch. 2008 has begun with a number of "unresolved" items. Hope of an early resolution seems to be fading. In the words of Lily Tomlin, the American comedian: "Things are going to get a lot worse before they are going to get worse."
Floyd Norris: "Overall, Americans are spending about 13 percent more on food and energy now than a year ago."
DataQuick Information Systems released figures showing that the median price of a new home in Orange County fell 6.2 percent in January from the year before – and 26 percent from December. New home sales last month fell 62.8 percent. The same is happening elsewhere in the region. Prices of new homes sold in Southern California fell 7.8 percent last month from the year before and 51 percent from December, while sales dropped nearly 47 percent, DataQuick reported.
Brett Steenbarger: "After a strong snap-back rally from the January lows, we're now seeing deterioration in the indicators. I will need to see improvements in the readings before taking the long side for anything other than a short-term trade."
According to the FT, prices for top-quality spring wheat have jumped by 90 per cent in the past month and a half, boosted by a scramble by corporate consumers to secure scarce grain and speculative buying by investors. A surge on Friday in prices for wheat used in bread to an all-time high of $19.88 a bushel – the highest yet paid for any wheat contract and a three-fold increase from a year ago – prompted the US baking industry to call for wheat exports to be curtailed.
According to Reuters, the government of Qatar has begun investing in Credit Suisse (CS) and the company's prime minister says that Middle East country is prepared to put up to $15 billion into US and European banks.
Year-to-date, the S&P500 is down 8.1%, and off 7.3% over the past 52 weeks.
"Senator Obama visited this morning with John and Elizabeth Edwards at their home in Chapel Hill to discuss the state of the campaign and the pressing issues facing American families," said Obama spokesman Bill Burton. He would not comment on the possibility of an endorsement.
Over the weekend, Nippon Steel and Posco agreed to pay 65% more for iron ore supplied by Companhia Vale do Rio Doce in 2008, Dow Jones Newswires reported. Japan's four largest steelmakers have agreed to a 65% increase in iron ore prices from Brazilian mining company Vale do Rio Doce, setting a new global benchmark. The new contract price, marking the sixth straight yearly increase, will apply to the fiscal year beginning April 1.
Societe Generale, the French bank which has been hurt by a $7.1 billion loss from unauthorized trading, had its credit rating reduced to AA- from AA by Standard & Poor's.
Societe Generale has held preliminary discussion about a possible merger with La Banque Postale, according to a report in Les Echos newspaper Monday.
Northern Rock shares were suspended after the U.K. government said on Sunday that it intends to nationalize the embattled lender.
China's producer price index climbed 6.1% in January from a year earlier, the National Bureau of Statistics said Monday. The increase follows a 5.4% rise in December, and marks the sixth straight month the growth rate in the PPI index has increased.
Australia and New Zealand Banking Group Ltd. Monday warned of higher provisions for the current financial year, including a $200 million write-down on a derivative position related to an U.S. monoline insurer. The company said in a statement a "substantial portion" of the provision could be written back in future periods. The bank said the write-down is related to derivative positions it took between 2005 and February 2007, and follows the credit downgrade of a U.S. monocline insurer to "CCC". ANZ did not identify the monoline insurer.
The U.S. Department of Agriculture on Sunday ordered the recall of 143 million pounds of beef from a Southern California slaughterhouse that is the subject of an animal-abuse investigation.
China attracted $11.2 billion in foreign investment in January, up 109.8 percent from the same month last year, the government said Monday.
Satyajit Das: "2007 may come to associated with the start of the "big" credit crunch. 2008 has begun with a number of "unresolved" items. Hope of an early resolution seems to be fading. In the words of Lily Tomlin, the American comedian: "Things are going to get a lot worse before they are going to get worse."
Floyd Norris: "Overall, Americans are spending about 13 percent more on food and energy now than a year ago."
DataQuick Information Systems released figures showing that the median price of a new home in Orange County fell 6.2 percent in January from the year before – and 26 percent from December. New home sales last month fell 62.8 percent. The same is happening elsewhere in the region. Prices of new homes sold in Southern California fell 7.8 percent last month from the year before and 51 percent from December, while sales dropped nearly 47 percent, DataQuick reported.
Brett Steenbarger: "After a strong snap-back rally from the January lows, we're now seeing deterioration in the indicators. I will need to see improvements in the readings before taking the long side for anything other than a short-term trade."
According to the FT, prices for top-quality spring wheat have jumped by 90 per cent in the past month and a half, boosted by a scramble by corporate consumers to secure scarce grain and speculative buying by investors. A surge on Friday in prices for wheat used in bread to an all-time high of $19.88 a bushel – the highest yet paid for any wheat contract and a three-fold increase from a year ago – prompted the US baking industry to call for wheat exports to be curtailed.
According to Reuters, the government of Qatar has begun investing in Credit Suisse (CS) and the company's prime minister says that Middle East country is prepared to put up to $15 billion into US and European banks.
Year-to-date, the S&P500 is down 8.1%, and off 7.3% over the past 52 weeks.
"Senator Obama visited this morning with John and Elizabeth Edwards at their home in Chapel Hill to discuss the state of the campaign and the pressing issues facing American families," said Obama spokesman Bill Burton. He would not comment on the possibility of an endorsement.
Sunday, February 17, 2008
Dislocations
2/17/08 Dislocations
According to the WSJ, Alibaba hired advisers to help it negotiate for expanded management independence in the event its U.S. partner, Yahoo, is acquired by Microsoft. The company is concerned about how China would view the merger.
Opposition to Nafta helped Obama win the backing of the SEIU, the politically powerful service-employees' union.
According to the FT, Delta Air Lines’ board plans to meet on Wednesday to approve the US carrier’s merger with rival Northwest Airlines, people close to the matter said on Friday.
"The auction-rate securities market is unwinding and most of the market will enter a failed state," said Alex Roever, fixed-income strategist at JPMorgan.
Doug Noland: "I definitely feel the economic ramifications of the unfolding Credit Crisis are receiving short shrift in the media. This week saw parts of the municipal debt market grind to a virtual halt and the corporate debt market take another significant blow. Investment grade debt issuance has now slowed markedly after beginning the year at near record pace. At this point, the junk, CDO, ABS, “private-label” MBS, muni, and even investment grade debt markets are all somewhere between impaired, dislocated and completely dysfunctional...Today, with bursting bubbles in corporate and municipal finance joining the mortgage bust, the U.S. Bubble economy has quickly fallen desperately short of sufficient Credit and liquidity. And the greater the Credit market dislocation and broad-based tightness of Credit, the bleaker become economic prospects and the more intense the Revulsion to Wall Street’s Credit instruments. The days of free-flowing cheap finance for home buyers, state and local governments, LBO firms, commercial real estate speculators, college students, risky auto buyers, and high-risk Credit card holders are over - and they will not be returning for some time to come. ..In a disconcerting development, recent market developments seem to confirm that the leveraged speculating community and the GSEs are poised as the next shoes to drop – the next Dominoes in an Escalating Contagion. Along with the “monolines” and mortgage insurers, the “Credit default swap market” and GSE mortgage Risk Intermediation were at the epicenter of the most egregious Systemic Risk Distortions and Accumulations. They are now quickly moving to the forefront of Current Acute Fragilities. Simplifying highly complex circumstances, the various risk models that empowered the greatest leveraging of risk in the history of finance no longer function as expected - or as required to maintain highly leveraged exposures to a multitude of escalating risks. And it was all just only a matter of time. The overriding flaw was to ignore that a runaway Bubble in market-based finance ensured that various market and Credit risks all coalesced into One Massive, Unmanageable, Highly Correlated, Unhedgable, Undiversifiable Association of Interrelated Systemic Risks. "
The yield on an index of 100 junk bonds tracked by KDP Investment Advisors hit a five-year high of 9.63% on Friday, up from 9.03% two weeks ago.
Borse Dubai said on Sunday it would consider selling a stake in the London Stock Exchange Group to Qatar, but had not received any approaches and was unlikely to sell any stake in the short term. Borse Dubai and the Nasdaq Stock Market should close a deal this month to buy Nordic and Baltic stock exchange OMX . Under the tie-up, Borse Dubai gets Nasdaq's stake in the London Stock Exchange (LSE).
Mike Burk: "The bottom indicators are suggesting there is little risk in the market. After a bottom has been made downside volume (DV) dries up pretty quickly. That has not happened yet, but it is encouraging to see DV falling off faster in the small cap indices than the large cap indices...The bad news is the extreme number of new lows in mid January implies another retest of the recent lows in the next few months...The rally off the lows of January (early February for the OTC) has been less robust than I would like to see, but new lows suggest an intermediate term bottom is in place. I expect the major indices to be higher on Friday February 22 than they were on Friday February 15."
Robert McHugh: "This week, on Thursday, February 14th, Bernanke spoke, markets fell. Confidence in the Fed Chairman wanes. From a fundamental perspective, until something is done to bail out the credit insurers, so they maintain their AAA rating from Moodys and S&P, market rallies will be corrective. This is an economic nuclear bomb at 32,000 feet This is about bank solvency, bank risk-based capital, the bank credit function, not about the insurers themselves. Should a downgrade come to the insurers, billions of municipal bonds will effectively become illiquid, joining the trillion of CDOs (mostly subprime loan securities) that have already become illiquid. Without a bailout here, we are headed for a depression. "
New York’s regulator will hold talks this weekend with sovereign wealth funds, Warren Buffett and other investors in an effort to stabilise ratings on $220bn of municipal bonds guaranteed by FGIC .
According to the WSJ, Alibaba hired advisers to help it negotiate for expanded management independence in the event its U.S. partner, Yahoo, is acquired by Microsoft. The company is concerned about how China would view the merger.
Opposition to Nafta helped Obama win the backing of the SEIU, the politically powerful service-employees' union.
According to the FT, Delta Air Lines’ board plans to meet on Wednesday to approve the US carrier’s merger with rival Northwest Airlines, people close to the matter said on Friday.
"The auction-rate securities market is unwinding and most of the market will enter a failed state," said Alex Roever, fixed-income strategist at JPMorgan.
Doug Noland: "I definitely feel the economic ramifications of the unfolding Credit Crisis are receiving short shrift in the media. This week saw parts of the municipal debt market grind to a virtual halt and the corporate debt market take another significant blow. Investment grade debt issuance has now slowed markedly after beginning the year at near record pace. At this point, the junk, CDO, ABS, “private-label” MBS, muni, and even investment grade debt markets are all somewhere between impaired, dislocated and completely dysfunctional...Today, with bursting bubbles in corporate and municipal finance joining the mortgage bust, the U.S. Bubble economy has quickly fallen desperately short of sufficient Credit and liquidity. And the greater the Credit market dislocation and broad-based tightness of Credit, the bleaker become economic prospects and the more intense the Revulsion to Wall Street’s Credit instruments. The days of free-flowing cheap finance for home buyers, state and local governments, LBO firms, commercial real estate speculators, college students, risky auto buyers, and high-risk Credit card holders are over - and they will not be returning for some time to come. ..In a disconcerting development, recent market developments seem to confirm that the leveraged speculating community and the GSEs are poised as the next shoes to drop – the next Dominoes in an Escalating Contagion. Along with the “monolines” and mortgage insurers, the “Credit default swap market” and GSE mortgage Risk Intermediation were at the epicenter of the most egregious Systemic Risk Distortions and Accumulations. They are now quickly moving to the forefront of Current Acute Fragilities. Simplifying highly complex circumstances, the various risk models that empowered the greatest leveraging of risk in the history of finance no longer function as expected - or as required to maintain highly leveraged exposures to a multitude of escalating risks. And it was all just only a matter of time. The overriding flaw was to ignore that a runaway Bubble in market-based finance ensured that various market and Credit risks all coalesced into One Massive, Unmanageable, Highly Correlated, Unhedgable, Undiversifiable Association of Interrelated Systemic Risks. "
The yield on an index of 100 junk bonds tracked by KDP Investment Advisors hit a five-year high of 9.63% on Friday, up from 9.03% two weeks ago.
Borse Dubai said on Sunday it would consider selling a stake in the London Stock Exchange Group to Qatar, but had not received any approaches and was unlikely to sell any stake in the short term. Borse Dubai and the Nasdaq Stock Market should close a deal this month to buy Nordic and Baltic stock exchange OMX . Under the tie-up, Borse Dubai gets Nasdaq's stake in the London Stock Exchange (LSE).
Mike Burk: "The bottom indicators are suggesting there is little risk in the market. After a bottom has been made downside volume (DV) dries up pretty quickly. That has not happened yet, but it is encouraging to see DV falling off faster in the small cap indices than the large cap indices...The bad news is the extreme number of new lows in mid January implies another retest of the recent lows in the next few months...The rally off the lows of January (early February for the OTC) has been less robust than I would like to see, but new lows suggest an intermediate term bottom is in place. I expect the major indices to be higher on Friday February 22 than they were on Friday February 15."
Robert McHugh: "This week, on Thursday, February 14th, Bernanke spoke, markets fell. Confidence in the Fed Chairman wanes. From a fundamental perspective, until something is done to bail out the credit insurers, so they maintain their AAA rating from Moodys and S&P, market rallies will be corrective. This is an economic nuclear bomb at 32,000 feet This is about bank solvency, bank risk-based capital, the bank credit function, not about the insurers themselves. Should a downgrade come to the insurers, billions of municipal bonds will effectively become illiquid, joining the trillion of CDOs (mostly subprime loan securities) that have already become illiquid. Without a bailout here, we are headed for a depression. "
New York’s regulator will hold talks this weekend with sovereign wealth funds, Warren Buffett and other investors in an effort to stabilise ratings on $220bn of municipal bonds guaranteed by FGIC .
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