2/28/09 Buffett's Worst Year
"To the Shareholders of Berkshire Hathaway Inc.:
Our decrease in net worth during 2008 was $11.5 billion, which reduced the per-share book value of both our Class A and Class B stock by 9.6%. Over the last 44 years (that is, since present management took over) book value has grown from $19 to $70,530, a rate of 20.3% compounded annually.* The table on the preceding page, recording both the 44-year performance of Berkshire’s book value and the S&P 500 index, shows that 2008 was the worst year for each. The period was devastating as well for corporate and municipal bonds, real estate and commodities. By yearend, investors of all stripes were bloodied
and confused, much as if they were small birds that had strayed into a badminton game....
Take a look again at the 44-year table on page 2. In 75% of those years, the S&P stocks recorded a gain. I would guess that a roughly similar percentage of years will be positive in the next 44. But neither Charlie Munger, my partner in running Berkshire, nor I can predict the winning and losing years in advance. (In our usual opinionated view, we don’t think anyone else can either.) We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall.....Most of the Berkshire businesses whose results are significantly affected by the economy earned below their potential last year, and that will be true in 2009 as well....The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today’s could have been obtained on good-grade municipal or corporate bonds even while risk-free
governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms. When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary."
Warren Buffett’s Berkshire Hathaway Inc. posted a fifth-straight profit drop, the longest streak of quarterly declines in at least 17 years, on losses from derivative bets tied to stock markets. Fourth-quarter net income fell 96 percent to $117 million, or $76 a share, from $2.95 billion, or $1,904 a share, in the same period a year earlier, the Omaha, Nebraska-based firm said in its annual report.
Banks in Nevada and Illinois were seized by regulators, bringing this year’s tally to 16. Security Savings Bank of Henderson, Nevada, and Heritage Community Bank of Glenwood, Illinois, with combined assets of $471.2 million, were shut by state regulators and the Federal Deposit Insurance Corp. was named receiver, the FDIC said yesterday.
Doug Noland: "Over the past decade, the “optimists” often cited the federal government’s positive fiscal position as evidence of the health of the overall economy and soundness of our prosperity. It should be clear these days that the protracted boom's massive inflation of private-sector Credit had grossly inflated government receipts (among other things). Indeed, over the 12-year period Federal Receipts inflated 88% (to $2.651 TN) and State & Local receipts increased 92% (to $1.903bn). This crucial facet of the inflationary boom spurred federal and state & local spending growth of 80% and 93%, respectively.
State & Local governments will now attempt to maintain these inflated levels of expenditures, while the federal government will move aggressively to grossly inflate already inflated spending. The budget now calls for federal expenditures this year to approach $4.0 TN. This compares to spending of about $1.6 TN back in 1995. The federal deficit is projected to expand by a combined $3.0 TN during fiscal years ’09 and ’10. This would amount to a 60% increase in federal debt in only two years.
Today’s unparalleled expansion of federal debt and obligations is being dressed up as textbook “Keynesian.” It’s rather obvious that we are in dire need of some new books, curriculum and economic doctrine. But from a political perspective, the title is appropriate enough. From an analytical framework perspective such policymaking is more accurately labeled “inflationism” – a desperate attempt to prop inflated asset prices, incomes, business revenues, government receipts, and economic “output”. There have been many comparable sordid episodes throughout history, and I am not aware of any positive outcomes....Today, the deeply impaired financial sector is incapable of assuaging the system's bloated Credit needs.... In the final analysis, the bust has left multi-Trillion dollar holes in various sector balance sheets. Moreover, Patterns of Spending throughout the economy have been forever altered. Year-after-year of reckless lending has quickly come home to roost in a Big way.
Our federal government has commenced the process of attempting to fill holes through the massive inflation of government Credit and obligations (by the Trillions). Depending on the reader’s perspective, I risk appearing either the master of the obvious or a rabid sensationalist. Yet the stakes associated with the current course of fiscal and monetary policy are absolutely momentous. And I am compelled to write that “if you’re not confused you don’t understand the nature of the problem.”...But I do fear that we now face Trillion dollar deficits as far as the eye can see. I don’t expect “Keynesian” policies to have much success in reinvigorating busted asset markets. I’ll be surprised if private-sector Credit creation bounces back anytime soon. I fear policymaking will do more harm than good when it comes to needed economic restructuring. And my worst fears of policymaking (fiscal and monetary, democrat and republican, national and local) bankrupting the country are being anything but allayed. Similar to my belief that mortgage Credit growth should have been limited to, say, no more than 4 or 5% annually during the boom, there is today a very serious need to incorporate some reasonable limits on the expansion of federal debt and obligations. "
John Ing: "The root of the current crisis lies in excessive debt, cheap money and the monetary excess that led to a boom and the inevitable bust. Following the Second World War, public debt stood at 100 percent of GDP to finance the rebuilding of America. America's public debt to GDP ratio could approach 60 percent next year up from 38 percent today. However, including housing-related private debt, the ratio of private and public debt to gross domestic product was a whopping 358 percent in the third quarter, surpassing the peak in 1933. To finance this growing deficit the US Treasury must issue record debt. Already yields on 10 year Treasuries rose to almost 3 percent up from just over 2 percent at yearend. The rise in yields has pushed 30 year mortgages up, causing the Fed to consider capping rates by purchasing debt as they did in the Great Depression....We suggest the creation of a new asset-backed security, but this time backed by a real asset, gold. Good money will always drive out bad money. The United States is the world's largest holder of gold at 261 million ounces or 8,133 tonnes representing 77.2 percent of their reserves. The Fed could issue gold backed debentures, using its holdings as backing which would both create needed liquidity and trust in its already weakened financial system. Alternatively we could modify and expand the usage of SDRs. The bottom line in that gold will become the new currency."
Daniel Aaronson and Lee Markowitz: "When the rest of the world gets fewer dollars from a shrinking trade deficit, the value of the Dollar strengthens. The US now is embarking on a path to an astronomically high budget deficit that will have the complete opposite effect. Instead of foreigners being flush with Dollars to re-invest in the United States, they are lacking Dollars at the very time that we need their Dollars the most - to fund the US government's deficit. This can only have one effect on the Dollar - that is for it to FALL."
China’s consumer spending jumped by 18 percent in January, bank loans surged and power output and consumption regained growth since the middle of this month, Wen said today.
Still, Wen cautioned that the positive data may be temporary or distorted by seasonal factors.
“We must understand that the crisis will be prolonged and arduous,” Wen said, “We must be ready to take more forceful measures at any time to alleviate damage the crisis may do.”
"The government has already taken over the financial system," Nouriel Roubini says, noting U.S. policymakers have committed $9 trillion to rescue the financial system and already spent $2 trillion. "So let's stop the delusion about 'no nationalization.'"
Roubini, who has publicly advocated for temporary nationalization of insolvent banks, says fully nationalizing Citigroup and/or Bank of America would have a minimal effect on the Dow, which is a price-weighted average. More importantly, he believes full nationalizations (vs. the current partial, piecemeal effort) would be better for the market and the economy because it's the first step in the process of cleaning up "bad" banks so they can later be sold back to private investors, i.e. "re-privatized", as was the case last year with IndyMac.
The Obama administration Thursday proposed raising at least $31.5 billion over 10 years from oil and gas companies, reflecting a repeal of tax breaks for domestic production and new charges on oil and gas production in the Gulf of Mexico.
Felix Salmon: "A majority of Americans, 55 percent, say they are just making ends meet, with more than 6 in 10 concerned that someone in their household might lose his job in the next year.And it comes out, a few days later, like this: Over six in ten Americans think that someone in their household will lose their job in the next year. That means six in ten people won't buy anything other than basics. The economy comes to a full halt even worse than now....There are lots of reasons why people are cutting back spending right now, and fear of unemployment is only one of them -- and not even the most important one. The fact that many people don't have any more access to credit is surely a much bigger factor, and consumer-price deflation plays a very important role as well."
On Friday March 6 the BLS reports the February unemployment numbers. Let's say the number is 724,000 and the unemployment number jumps to 8%. How do you think the equity market will respond?
Even though the S&P is at 12-year lows, the VIX remains range bound at the 46 level.
Despite hurricanes Dolly, Gustav and Ike soaking Texas in 2008, almost every part of the state — nearly 97 percent — is experiencing some drought, according to the most recent U.S. Drought Monitor map, released Feb. 26.
Parts of Central Texas and the Hill Country — more that 8 percent of the state — are not only in exceptional drought — the most severe stage of dryness — but they are now the driest region in the country and the driest they have been since 1918. It is the only place in the U.S. experiencing exceptional drought.
San Antonio, two counties east of Shudde's ranch, has gotten only 16.67 inches of rain since September 2007, its driest 17 months ever and about 28 inches below normal.
Univision Communications Inc., the nation's top Hispanic broadcaster, on Friday laid off 300 people, or 6 percent of the work force, a spokeswoman confirmed.
The company blamed the recession and the "downward pressure this has caused on advertising-related businesses" for the layoffs.
Southeast Asian nations signed a free trade pact with Australia and New Zealand, boosting the regional bloc’s efforts to increase commerce amid the global economic recession.
The 10-member Association of Southeast Asian Nations and the three non-member nations will eliminate or lower tariffs on products such as coffee, dairy, minerals, cars and vegetables in the next 12 years. The pact, estimated to boost trade by $12 billion, was signed in Cha-am, Thailand today. Asean’s trade with Australia and New Zealand was about $50 billion last year, and foreign direct investment by the two countries into the regional bloc totaled more than $1 billion, according to Singapore’s trade ministry. Asean includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. It was formed in 1967.
Saturday, February 28, 2009
The Worst Ever February
2/27/08 The Worst Ever February
Last November, the intraday low for the S&P was 741. This number was broken on the downside in early Friday trading. Today the S&P closed at its lowest level since Dec. 1996.
Equity indices had the worst February on record. The Dow Jones Industrial Average fell 119.15 points, or 1.7%, to 7,062.93. The blue-chip index declined 4.1% for the week and 11.7% for the month. The S&P 500 shed 17.74 points, or 2.4%, to 735.09, leaving it with a weekly loss of 4.5% and a monthly hit of 11%. The Nasdaq Composite fell 13.63 points, or 1%, to finish at 1,377.84, down 4.4% for the week and 6.7% for February.
Groucho Marx:" I'm not crazy about reality, but it's still the only place to get a decent meal."
GE cut the quarterly dividend to 10 cents from 31 cents.It is the first cut since 1938.The shares made a new 52-week low. Boeing and Simon Property also made new 52-week lows.
GDP in the U.S. fell at a 6.2% seasonally adjusted annualized pace in the final three months of 2008, revised from the initial estimate of a 3.8% drop, the Commerce Department reported. It was the worst decline in GDP since a 6.4% decrease in the first quarter of 1982. Economists surveyed by MarketWatch had expected a revision to a 5.5% decline. The revision showed inventory investment and exports were "substantially weaker" than first reported, the government said. Consumer spending? Down the worst since 1980. Business investment? Down the worst since 1975. Exports? Down the worst since 1971. Government spending? Up slightly.
Abraham Lincoln: "How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn't make it a leg. "
The Rocky Mountain News, Colorado's oldest newspaper and a Denver fixture since 1859, will publish its last edition Friday.
Owner E.W. Scripps Co. said Thursday the newspaper lost $16 million last year and the company was unable to find a buyer.
Daniel Henninger: " It's becoming clear that the private sector is going to be demoted into a secondary role in the U.S. system. This isn't socialism, but it is not the system we've had since the early 1980s. It would be a reordered economic system, its direction chosen and guided by Mr. Obama and his inner circle.
Gov. Bobby Jindal's postspeech reply did not come close to recognizing the gauntlet Mr. Obama has thrown down to the opposition. Unless the GOP can discover a radical message of its own to distinguish it from the president's, it should prepare to live under Mr. Obama's radicalism for at least a generation."
Shares of Citigroup fell more than 20% Friday morning in pre-open trade after the U.S. said it will convert more that $25 billion of its Citi preferred shares into common stock. Citi also said that it recorded a pre-tax impairment charge of $9.6 billion in the fourth quarter because of deterioration in the financial markets, further widening its 2008 loss. Citi shares fell 23%, to $1.90 in pre-open trading. Separately, Citi said it'll suspend dividends on its preferred shares and its common stock. The company will continue to pay the distribution on its Trust Preferred Securities and Enhanced Trust Preferred Securities at the current rates.
Dell’s earnings dropped 48% last quarter.
The third-party staffing agencies that provide temporary workers to Microsoft have agreed to a 10 percent reduction in the rate they charge the software giant, and many are passing a similar cut onto their employees.
It's the latest cost-saving move Microsoft has made to adjust to a recession that is clipping both consumer and business spending.
Fannie Mae, the mortgage-finance company seized by regulators in September, asked the U.S. Treasury for $15.2 billion in capital and raised the possibility of requesting more aid after a sixth consecutive quarterly loss drove its net worth below zero.
Japan’s manufacturers cut production by a record 10 percent in January and household spending plunged, adding to evidence that the economy in its worst recession in 60 years
According to AMG Data Services, for the week ended Feb. 25, Equity Fund Outflows -$6.6 Bil; Taxable Bond Fund Outflows -$388 Mil
xETFs - Equity Fund Outflows -$6.4 Bil; Taxable Bond Fund Outflows -$735 Mil.
The $3.55 trillion budget proposal for 2010 the president unveiled yesterday projects 3.2 percent economic growth next year, thanks to a $787 billion fiscal-stimulus measure he signed into law earlier this month that is aimed at creating jobs and consumer demand.
That is twice the 1.5 percent growth projected by the Congressional Budget Office before the stimulus bill was enacted and higher than the 2.1 percent consensus growth estimate by analysts in the Blue Chip Economic Indicators survey.
The nation's banks lost $26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.
The Federal Deposit Insurance Corp. said Thursday that U.S. banks and thrifts also more than doubled the amount they set aside to cover potential loan losses, to $69.3 billion in the fourth quarter from $32.1 billion a year earlier. Regulators said there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter.
Pharmaceutical stocks fell after Eli Lilly & Co. and AstraZeneca Plc said they would lose “several hundred million” dollars each in drug sales if a health-care plan proposed by President Barack Obama is approved.
Obama’s budget proposal would raise rebates that drugmakers must provide for patients on Medicaid, the nation’s health plan for the poor, to 22 percent of the manufacturer’s price, from 15 percent.
The federal insurance fund that protects most bank deposits is being drained by a sharp rise in bank failures and has dwindled to its lowest level since 1993, the Federal Deposit Insurance Corp. reported yesterday.
The fund held $52.4 billion at the beginning of 2008. One year and 25 bank failures later, the fund held $18.9 billion.
So far this year, 14 banks have failed, draining another $1.7 billion from the insurance fund.
than oil supplies running out, according to a major new report from the
Ceres group of sustainable investors which urges firms and investors to undertake water risk assessments as a matter of urgency.
The report,
Water Scarcity & Climate Change: Growing Risks for Businesses and Investors, notes that water shortages are already causing disruption to large numbers of businesses and warns that the situation will worsen as the combination of population growth and climate change places further pressure on water supplies.
Mindy S Lubber, president of Ceres, which represents investors with an estimated $7tr (£5tr) of assets under management, said the
business community " needs to wake up to the reality that water is becoming scarcer and will likely become even more so in many parts of the world due to climate change".
She added that it was "critical" that both businesses and investors assess their exposure to water-related risks and begin to integrate water issues into their long-term strategies.
The research assessed a number of industries at risk of disruption from water shortages, including sectors already under pressure from water scarcity such as agriculture, tourism and the beverage industry, as well as fields such as IT and energy that are less commonly associated with high levels of water use but are now facing severe drought-related risks.
" I believe that banking institutions are more dangerous to our liberties than standing armies. If
the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
Thomas Jefferson 1802
Pilgrim's Pride Corp. will idle three of its 32 U.S. chicken-processing plants by mid-May to help cut costs in light of oversupply and weak demand. The affected plants, which are in Douglas, Ga., El Dorado, Ark., and Farmerville, La., employ about 3,000 people, or about 7% of the company's U.S. workforce. About 430 independent contract growers will also be affected.
Russia’s economy contracted at an annual rate of 8.8 per cent in January, according to the latest statement by the Russian economy minister.
In early trading on Friday, new 52-week lows made by Burlington Northern, Microsoft, Union Pacific, CSX, Norfolk Southern, Caterpillar, Vornado Reality and Citigroup. The continued weakness in the transports bodes poorly for equities as a group.
Losses in Berkshire’s stock portfolio and writedowns on derivative bets tied to equity markets may have caused book value per share, a measure of assets minus liabilities, to fall by 8.5 percent, according to Gary Ransom, an analyst with Fox- Pitt Kelton Cochran Caronia Waller. That ratio declined only once before on Buffett’s watch, falling 6.2 percent in 2001.
The dollar approaches a three-year high against a basket of rival U.S. trading partners' currencies. I guess investors truly adhere to "In God We Trust".
Eric Savitz: "RBC Capital’s Mark Sue this morning cut his Q1 forecast for global handset unit demand to 230 million, from 248 million, which would mean a sequential drop of 25%. For the full year, Sue now expects handset units to drop 18%. “Despite some inventory clearing at carriers and distributors, magnified deterioration in developed markets and sharp declines in emerging markets means global handsets may contract more than dire predictions,” he writes in a research note."
Amid persistent economic turmoil, a consumer sentiment index fell in late February to 56.3 from 61.2 in January, according to a media report of a survey released Friday by the University of Michigan and Reuters.
Ryanair Holdings PLC Chief Executive Michael O'Leary said the carrier is looking at "putting a coin slot on the toilet door so that people might have to actually spend a pound or spend a penny in the future. How customer friendly can one get?
Beijing has refused to consider caps on its greenhouse gas output, noting that the nation's average per-capita emissions are much lower than the West's.
James Galbraith: “Guaranteeing bad assets will not stabilize the price of housing. It will not stabilize incomes and profit opportunities in the economy. Therefore it will not solve the credit problem. “Meanwhile the guarantees will support incumbent management and shareholders. They will add vast sums to the public debt - directly or contingently - making achievement of the president’s other priorities more difficult. And they will distort the distribution of wealth, by guaranteeing the financial position of an elite group while that of so many others is collapsing.“Keeping the existing management in place means that we will not arrive at clean and trustworthy audits of the banks. Therefore no one will know to what degree they actually are, or actually are not insolvent. No one will know just how bad the bad assets are, and most will (prudently) suspect the worst. This collapse of trust means that lending to the banks, including by other banks, will continue to be impaired."
Crude for April delivery dropped 46 cents, or 1%, to end at $44.76 a barrel on the New York Mercantile Exchange.
California's unemployment rate climbed to 10.1% in January, the highest since 1983, as employers in the nation's most-populous state cut 79,000 jobs in the month.
The rate, released Friday by the state's Employment Development Department, is up from a revised figure of 8.7% for December 2008. The national jobless rate for January was 7.6%.
There were 3.3% fewer jobs in January 2009 compared to January 2008. The report said there were 1,863,000 unemployed Californians in January, up by 754,000 a year earlier.
The first half of 2009 will continue "to be pretty ugly," said Howard Roth, the chief economist for the state's finance department. "Hopefully, the second half of the year will be better and maybe we get some moderate [job] growth in 2010."
The state is threatening to pass the 11% jobless rate of late 1982, the highest since the Great Depression. "All we need is another month like this," Mr. Roth said.
The WSJ Opinion Journal: "The reality is that the only way to pay for Mr. Obama's ambitions is to reach ever deeper into the pockets of the American middle class."
The number of drilling rigs operating in the United States has dropped by close to 40% from peak levels in 2008.
Demosthenes: "There are all kinds of devices invented for the protection and preservation of countries: defensive barriers, forts, trenches, and the like... But prudent minds have as a natural gift one safeguard which is the common possession of all, and this applies especially to the dealings of democracies. What is this safeguard? Skepticism. This you must preserve. This you must retain. If you can keep this, you need fear no harm."
Henderson, Nev.-based Security Savings Bank was closed by regulators Friday, marking the 16th bank failure of 2009.
California Gov. Arnold Schwarzenegger said late Friday the state could lose up to $3 billion in 2009 because of an ongoing three-year drought. Schwarzenegger declared a state of emergency because of the state's water shortage. Under the declaration, the governor directed state agencies to implement a water reduction plan and conservation actions and urged California residents to reduce their water use by 20%.
Last November, the intraday low for the S&P was 741. This number was broken on the downside in early Friday trading. Today the S&P closed at its lowest level since Dec. 1996.
Equity indices had the worst February on record. The Dow Jones Industrial Average fell 119.15 points, or 1.7%, to 7,062.93. The blue-chip index declined 4.1% for the week and 11.7% for the month. The S&P 500 shed 17.74 points, or 2.4%, to 735.09, leaving it with a weekly loss of 4.5% and a monthly hit of 11%. The Nasdaq Composite fell 13.63 points, or 1%, to finish at 1,377.84, down 4.4% for the week and 6.7% for February.
Groucho Marx:" I'm not crazy about reality, but it's still the only place to get a decent meal."
GE cut the quarterly dividend to 10 cents from 31 cents.It is the first cut since 1938.The shares made a new 52-week low. Boeing and Simon Property also made new 52-week lows.
GDP in the U.S. fell at a 6.2% seasonally adjusted annualized pace in the final three months of 2008, revised from the initial estimate of a 3.8% drop, the Commerce Department reported. It was the worst decline in GDP since a 6.4% decrease in the first quarter of 1982. Economists surveyed by MarketWatch had expected a revision to a 5.5% decline. The revision showed inventory investment and exports were "substantially weaker" than first reported, the government said. Consumer spending? Down the worst since 1980. Business investment? Down the worst since 1975. Exports? Down the worst since 1971. Government spending? Up slightly.
Abraham Lincoln: "How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn't make it a leg. "
The Rocky Mountain News, Colorado's oldest newspaper and a Denver fixture since 1859, will publish its last edition Friday.
Owner E.W. Scripps Co. said Thursday the newspaper lost $16 million last year and the company was unable to find a buyer.
Daniel Henninger: " It's becoming clear that the private sector is going to be demoted into a secondary role in the U.S. system. This isn't socialism, but it is not the system we've had since the early 1980s. It would be a reordered economic system, its direction chosen and guided by Mr. Obama and his inner circle.
Gov. Bobby Jindal's postspeech reply did not come close to recognizing the gauntlet Mr. Obama has thrown down to the opposition. Unless the GOP can discover a radical message of its own to distinguish it from the president's, it should prepare to live under Mr. Obama's radicalism for at least a generation."
Shares of Citigroup fell more than 20% Friday morning in pre-open trade after the U.S. said it will convert more that $25 billion of its Citi preferred shares into common stock. Citi also said that it recorded a pre-tax impairment charge of $9.6 billion in the fourth quarter because of deterioration in the financial markets, further widening its 2008 loss. Citi shares fell 23%, to $1.90 in pre-open trading. Separately, Citi said it'll suspend dividends on its preferred shares and its common stock. The company will continue to pay the distribution on its Trust Preferred Securities and Enhanced Trust Preferred Securities at the current rates.
Dell’s earnings dropped 48% last quarter.
The third-party staffing agencies that provide temporary workers to Microsoft have agreed to a 10 percent reduction in the rate they charge the software giant, and many are passing a similar cut onto their employees.
It's the latest cost-saving move Microsoft has made to adjust to a recession that is clipping both consumer and business spending.
Fannie Mae, the mortgage-finance company seized by regulators in September, asked the U.S. Treasury for $15.2 billion in capital and raised the possibility of requesting more aid after a sixth consecutive quarterly loss drove its net worth below zero.
Japan’s manufacturers cut production by a record 10 percent in January and household spending plunged, adding to evidence that the economy in its worst recession in 60 years
According to AMG Data Services, for the week ended Feb. 25, Equity Fund Outflows -$6.6 Bil; Taxable Bond Fund Outflows -$388 Mil
xETFs - Equity Fund Outflows -$6.4 Bil; Taxable Bond Fund Outflows -$735 Mil.
The $3.55 trillion budget proposal for 2010 the president unveiled yesterday projects 3.2 percent economic growth next year, thanks to a $787 billion fiscal-stimulus measure he signed into law earlier this month that is aimed at creating jobs and consumer demand.
That is twice the 1.5 percent growth projected by the Congressional Budget Office before the stimulus bill was enacted and higher than the 2.1 percent consensus growth estimate by analysts in the Blue Chip Economic Indicators survey.
The nation's banks lost $26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.
The Federal Deposit Insurance Corp. said Thursday that U.S. banks and thrifts also more than doubled the amount they set aside to cover potential loan losses, to $69.3 billion in the fourth quarter from $32.1 billion a year earlier. Regulators said there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter.
Pharmaceutical stocks fell after Eli Lilly & Co. and AstraZeneca Plc said they would lose “several hundred million” dollars each in drug sales if a health-care plan proposed by President Barack Obama is approved.
Obama’s budget proposal would raise rebates that drugmakers must provide for patients on Medicaid, the nation’s health plan for the poor, to 22 percent of the manufacturer’s price, from 15 percent.
The federal insurance fund that protects most bank deposits is being drained by a sharp rise in bank failures and has dwindled to its lowest level since 1993, the Federal Deposit Insurance Corp. reported yesterday.
The fund held $52.4 billion at the beginning of 2008. One year and 25 bank failures later, the fund held $18.9 billion.
So far this year, 14 banks have failed, draining another $1.7 billion from the insurance fund.
than oil supplies running out, according to a major new report from the
Ceres group of sustainable investors which urges firms and investors to undertake water risk assessments as a matter of urgency.
The report,
Water Scarcity & Climate Change: Growing Risks for Businesses and Investors, notes that water shortages are already causing disruption to large numbers of businesses and warns that the situation will worsen as the combination of population growth and climate change places further pressure on water supplies.
Mindy S Lubber, president of Ceres, which represents investors with an estimated $7tr (£5tr) of assets under management, said the
business community " needs to wake up to the reality that water is becoming scarcer and will likely become even more so in many parts of the world due to climate change".
She added that it was "critical" that both businesses and investors assess their exposure to water-related risks and begin to integrate water issues into their long-term strategies.
The research assessed a number of industries at risk of disruption from water shortages, including sectors already under pressure from water scarcity such as agriculture, tourism and the beverage industry, as well as fields such as IT and energy that are less commonly associated with high levels of water use but are now facing severe drought-related risks.
" I believe that banking institutions are more dangerous to our liberties than standing armies. If
the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
Thomas Jefferson 1802
Pilgrim's Pride Corp. will idle three of its 32 U.S. chicken-processing plants by mid-May to help cut costs in light of oversupply and weak demand. The affected plants, which are in Douglas, Ga., El Dorado, Ark., and Farmerville, La., employ about 3,000 people, or about 7% of the company's U.S. workforce. About 430 independent contract growers will also be affected.
Russia’s economy contracted at an annual rate of 8.8 per cent in January, according to the latest statement by the Russian economy minister.
In early trading on Friday, new 52-week lows made by Burlington Northern, Microsoft, Union Pacific, CSX, Norfolk Southern, Caterpillar, Vornado Reality and Citigroup. The continued weakness in the transports bodes poorly for equities as a group.
Losses in Berkshire’s stock portfolio and writedowns on derivative bets tied to equity markets may have caused book value per share, a measure of assets minus liabilities, to fall by 8.5 percent, according to Gary Ransom, an analyst with Fox- Pitt Kelton Cochran Caronia Waller. That ratio declined only once before on Buffett’s watch, falling 6.2 percent in 2001.
The dollar approaches a three-year high against a basket of rival U.S. trading partners' currencies. I guess investors truly adhere to "In God We Trust".
Eric Savitz: "RBC Capital’s Mark Sue this morning cut his Q1 forecast for global handset unit demand to 230 million, from 248 million, which would mean a sequential drop of 25%. For the full year, Sue now expects handset units to drop 18%. “Despite some inventory clearing at carriers and distributors, magnified deterioration in developed markets and sharp declines in emerging markets means global handsets may contract more than dire predictions,” he writes in a research note."
Amid persistent economic turmoil, a consumer sentiment index fell in late February to 56.3 from 61.2 in January, according to a media report of a survey released Friday by the University of Michigan and Reuters.
Ryanair Holdings PLC Chief Executive Michael O'Leary said the carrier is looking at "putting a coin slot on the toilet door so that people might have to actually spend a pound or spend a penny in the future. How customer friendly can one get?
Beijing has refused to consider caps on its greenhouse gas output, noting that the nation's average per-capita emissions are much lower than the West's.
James Galbraith: “Guaranteeing bad assets will not stabilize the price of housing. It will not stabilize incomes and profit opportunities in the economy. Therefore it will not solve the credit problem. “Meanwhile the guarantees will support incumbent management and shareholders. They will add vast sums to the public debt - directly or contingently - making achievement of the president’s other priorities more difficult. And they will distort the distribution of wealth, by guaranteeing the financial position of an elite group while that of so many others is collapsing.“Keeping the existing management in place means that we will not arrive at clean and trustworthy audits of the banks. Therefore no one will know to what degree they actually are, or actually are not insolvent. No one will know just how bad the bad assets are, and most will (prudently) suspect the worst. This collapse of trust means that lending to the banks, including by other banks, will continue to be impaired."
Crude for April delivery dropped 46 cents, or 1%, to end at $44.76 a barrel on the New York Mercantile Exchange.
California's unemployment rate climbed to 10.1% in January, the highest since 1983, as employers in the nation's most-populous state cut 79,000 jobs in the month.
The rate, released Friday by the state's Employment Development Department, is up from a revised figure of 8.7% for December 2008. The national jobless rate for January was 7.6%.
There were 3.3% fewer jobs in January 2009 compared to January 2008. The report said there were 1,863,000 unemployed Californians in January, up by 754,000 a year earlier.
The first half of 2009 will continue "to be pretty ugly," said Howard Roth, the chief economist for the state's finance department. "Hopefully, the second half of the year will be better and maybe we get some moderate [job] growth in 2010."
The state is threatening to pass the 11% jobless rate of late 1982, the highest since the Great Depression. "All we need is another month like this," Mr. Roth said.
The WSJ Opinion Journal: "The reality is that the only way to pay for Mr. Obama's ambitions is to reach ever deeper into the pockets of the American middle class."
The number of drilling rigs operating in the United States has dropped by close to 40% from peak levels in 2008.
Demosthenes: "There are all kinds of devices invented for the protection and preservation of countries: defensive barriers, forts, trenches, and the like... But prudent minds have as a natural gift one safeguard which is the common possession of all, and this applies especially to the dealings of democracies. What is this safeguard? Skepticism. This you must preserve. This you must retain. If you can keep this, you need fear no harm."
Henderson, Nev.-based Security Savings Bank was closed by regulators Friday, marking the 16th bank failure of 2009.
California Gov. Arnold Schwarzenegger said late Friday the state could lose up to $3 billion in 2009 because of an ongoing three-year drought. Schwarzenegger declared a state of emergency because of the state's water shortage. Under the declaration, the governor directed state agencies to implement a water reduction plan and conservation actions and urged California residents to reduce their water use by 20%.
Thursday, February 26, 2009
The Budget
2/26/09 The Budget
George Ure: " The latest Labor Department Employment Situation Report shows that in January there are only 20, 245,000 worker in the workforce of 153,716,000 workers. The rest? Services, farmers, and government. We have 20,245,000 people who actually make things and the whole country is fed by the 19,135,000 people who are in farming & farm-related employment. That adds up to 39,380,000 people left who actually make things... We've got an additional $1.75 trillion budget deficit divided by 39,380,00 real primary-goods and farm producers. If you're a primary producer you're gong to get to fund an additional $45,595 worth of deficits this year and that's on top of the financial train wreck left over by the republicorps/Bushiecrats....
There's about $10.843 trillion of public debt already...and if we add the additional $1.75 trillion it means by year's end we ought to be in hock $12.593 trillion which dived by the 39.380 primary jobs producers (you'll love this) means the real workers will be responsible for $319,781 of debt. Hell, let's just divide it by the people with jobs as of January: 142,099,000 workers and it still pencils out at $88,621 per worker.
And that's all before the unemployment rate goes up - as I expect we'll see on March 6 when the new unemployment numbers come out. And we just know they're accurate."
Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.
Purchases dropped 10 percent to an annual pace of 309,000, the lowest level since data began in 1963, the Commerce Department said today in Washington. The median price decreased 13.5 percent, the most in almost four decades.
The number of new homes for sale at the end of the month fell 3.1 percent to 342,000. The supply of homes at the current sales rate surged to a record 13.3 months' worth.
The National Association of Realtors has said five-to-six months' supply is consistent with a stable market.
Foreclosures in the U.S. rose 17.8 percent in January from a year earlier, according to a report from RealtyTrac Inc. issued last week. A total of 274,399 properties got a default or auction notice or were seized by banks, the 10th straight month that foreclosures topped 250,000.
JPMorgan Chase said it expects losses of $1 billion to $1.4 billion in each quarter of 2009 tied to its "non-credit-impaired" home equity loan portfolio.
The second-largest U.S. bank also said on Thursday that falling home prices may result in more borrowers with home equity loans owing more than their residences are worth.
It said this could affect 35 percent to 39 percent of home equity borrowers at the end of 2009 and 36 percent to 41 percent at the end of 2010, up from 27 percent at the end of 2008.
General Motors Corp said on Thursday it expects auditors to cast doubt on the automaker's ability to remain viable as it endures the worst market in decades.
General Motors Corp. says it lost $9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of cash.
The nation's biggest domestic automaker lost $30.9 billion for all of 2008 as it struggled against a U.S. sales slump and a global recession.
GM has received $13.4 billion in federal loans and its executives are in Washington, D.C., Thursday to talk to the Obama administration about the company's request for up to $30 billion.
For the fourth quarter, GM says it lost $15.71 per share, compared with a loss of $722 million, or $1.28 per share, in the year-ago period.
Excluding special items, The Detroit company's loss was $9.65 per share. On that basis, analysts surveyed by Thomson Reuters predicted a loss of $7.40 per share.
General Motors Corp. says it lost $9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of cash.
The nation's biggest domestic automaker lost $30.9 billion for all of 2008 as it struggled against a U.S. sales slump and a global recession.
GM has received $13.4 billion in federal loans and its executives are in Washington, D.C., Thursday to talk to the Obama administration about the company's request for up to $30 billion.
For the fourth quarter, GM says it lost $15.71 per share, compared with a loss of $722 million, or $1.28 per share, in the year-ago period.
Excluding special items, The Detroit company's loss was $9.65 per share. On that basis, analysts surveyed by Thomson Reuters predicted a loss of $7.40 per share. GM has lost more than $70 billion since 2005, and therefore is a prime candidate for a further government bailout, and mirrors the opportunity in AIG. Do you think Obama, Geithner, and Bernanke would put their own money in GM, AIG, or Citigroup?
U.S. Government budget deficit is estimated to be $1.75 billion. What are the chances this forecast is very low? They assume 10-year Treasury bonds to yield and now they are at 2.98%.
The budget proposal would increase the top income tax rate from 35% to 39.6% for couples with incomes above $250,000 a year. As part of the stimulus package, incomes taxes were cut by up to $800 a year for most American families.
The $634 billion Obama wants to set aside for healthcare would be almost evenly divided between spending reductions and tax increases.
Obama's plan would trim $316 billion over 10 years from Medicare by decreasing some payments to private insurance plans that focus on the elderly. Other proposals include charging upper-income beneficiaries a higher premium for Medicare's prescription drug coverage, added during the Bush administration
The healthcare proposal would also limit tax deductions for upper-income individuals and families, raising about $318 billion over 10 years.
Obama proposes $3.6 trillion budget for fiscal 2010. It assumes GDP growth of 3% in 2010. That's funny.
A gauge of economic sentiment across the euro zone fell to a new record low in February, the European Commission reported Thursday. The economic sentiment indicator for the single-currency region declined from 67.2 in January to 65.4 this month, the lowest reading since the indicator was launched in January 1985. The drop reflects a fall in most of the indicator's component indexes, with the exception of a slight rise in the retail trade index, which rose 1 point to -19. The euro-zone consumer confidence indicator fell to -33 from -31 in January, while the industrial sentiment indicator fell to -36 from -33 in January, and the services index dropped one point to -23. The construction index fell two points to -32.
Sears announced the closure of 28 stores during 2008 and on Thursday said it had decided to close 24 additional stores in January. The company had cash of $1.3 billion as of January 31, compared with $1.6 billion a year earlier. It said it reduced short-term borrowings on its $4 billion revolving credit line to $435 million as of January 31 from $1.9 billion at November 1, 2008.
Rob Hanna: "A positive intermediate-term sign Wednesday was the fact that the Semiconductor Index (SOX) rose even as the S&P and Nasdaq suffered 1% declines....
Over the next week the S&P has posted a close higher than the trigger day close 89% of the time. If you look out 12 days there has been at least 1 close higher than the trigger day in 42 of 43 instances (98%). The only loser came after the 7/21/98 signal. This has been a solidly bullish intermediate-term signal."
Cisco laid off 250 employees, joining other tech giants who have cut staff. The layoffs are the first wave of a planned cut of up to 2,000 employees.
The National Association of Realtors said Wednesday that sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million in December. It was the weakest showing since July 1997, and some analysts don't see sales bottoming out until later this year as prices continue to sink. Sales had been expected to rise to an annual pace of 4.79 million homes, according to Thomson Reuters.
"If Americans are worried they won't have a job next month, next quarter, or next year, you've got a real problem," Mike Larson, a real estate analyst with Weiss Research, wrote in a research note.
Without adjusting for seasonal factors, sales nationwide fell 7.6 percent from a year earlier. The West was the only part of the country to show increased sales.
Washington ranked second among the states, behind New Jersey, in the rate of growth in bankruptcy filings from December to January, according to AACER, an Oklahoma City-based bankruptcy data and management firm.
More than 1,900 households and businesses declared bankruptcy across the state last month, court statistics show.
Home sales in the Western United States surged in January as first-time homebuyers, real-estate investors and others seized on bargain-priced foreclosed homes in California, Nevada and Arizona, according to two reports released Wednesday.
A total of 74,000 existing homes and condos were sold in January in the 13-state region. Sales were up 32.1 percent from the same month in 2008, without adjusting for seasonal factors, according to the National Association of Realtors.
As has been the trend since last summer, distressed sales continued to fuel sales in the West, and that helped drag down median home prices in the region by almost 26 percent from the year before, to $220,000, the association said.
Those Western cities ranked among the top 10 U.S. metros to post the sharpest median-price declines last month, with San Francisco and Phoenix behind only Detroit.
Elsewhere in the West, sales declined in Seattle; Portland; Honolulu; Billings, Mont.; Boise; Albuquerque; Denver; and Anchorage, according to the AP-Re/Max report.
Oil climbed close to $45 a barrel on Thursday after the United Arab Emirates announced deeper cuts in crude supply to Asia for April in a possible signal that OPEC will cut output further at its next meeting in March.
Abu Dhabi National Oil Co (ADNOC), the main oil supplier in the UAE, said it will sell customers less of its flagship Murban crude oil and three other main grades in April than in March. Since September the cartel has decided to lower supply by a total of 4.2 million bpd, about 5 percent of daily world demand, and several OPEC members have signaled that the group may reduce production further when it meets again next month to decide oil output policy.
Gold futures fell Thursday for a fourth straight session to near $940 an ounce as rising crude prices and stock markets reduced safe-haven buying. Gold for April delivery dropped $24.80, or 2.6%, to $941.40 an ounce in early North American electronic trading.
Demand for U.S.-made durable goods fell for the sixth straight month in January amid widespread weakness from both domestic and foreign buyers. Orders for durable goods -- such as airplanes, computers and washing machines --fell 5.2% in January, the Commerce Department reported Thursday. Orders fell in every major sector. The report was much weaker than the 3% drop expected by economists surveyed by MarketWatch. Excluding the 13.5% drop in transportation orders, orders fell 2.5%. Orders for core capital equipment goods - the kind of things companies use to expand or upgrade their productive capacity - fell 5.4% in January after falling 5.8% in December.
First-time applications for state unemployment benefits for the week ending Feb. 21 rose 36,000 to a seasonally adjusted 667,000. The level of initial claims is the highest since October 1982 and up 86% from the same period in the prior year. The four-week average of new claims, which measures the underlying trend, rose 19,000 to 639,000 - also the highest level since October 1982, and up 84% from the prior year. For the week ending Feb. 14, the number of people collecting benefits reached a record high, rising 114,000 to 5.11 million - a level that is 86% higher than in the prior year. The four-week average of continuing claims was also a record, gaining 89,250 to 4.93 million - a level that is 80% higher than in the prior year. The insured unemployment rate reached the highest level since July 1983, rising to 3.8% from 3.7%. The data go back to 1967.
Japan's economy is sinking into its worst recession since World War II, international credit rating firm Standard & Poor's said Thursday.
The Japanese economy is expected to shrink 4 percent in 2009, which would be worse than the 2 percent contraction in 1998, when Japan went through its own financial crisis after the "bubble" economy burst, S&P said.
Richard Daughty: "Total Fed Credit, otherwise known as Federal Reserve Credit, ballooned by a huge $76.9 billion last week, taking the Fed’s total “help” to the scumbag banks to a nice, cool $1.9 trillion, of which a whopping $56 billion gob of the money created last week by the Fed was used by the Fed itself to buy Treasury securities for itself! Hahaha! What a scam!"
President Barack Obama will seek $75.5 billion more for combat operations in Iraq and Afghanistan through the end of this fiscal year, according to three people familiar with the request.
It will be submitted along with the fiscal 2010 budget Obama sends to Congress tomorrow. That proposal will request $130 billion for the wars in fiscal 2010 in addition to a total Defense Department budget of about $534 billion, the people said.
JPMorgan Chase & Co. said Thursday it will eliminate about 12,000 jobs as it folds in the operations of Washington Mutual Inc.
Publicly traded shares of Pimco's Corporate Opportunity Fund and High Income Fund are under pressure after Pimco said late yesterday it may be forced to postpone dividends as "continued severe market disruptions" have caused heavy declines, denting asset coverage ratios.
Federal Reserve officials don't see labor markets improving until 2011, after economic growth gains traction.
U.S. natural gas inventories fell by 101 billion cubic feet in the week ended Feb. 20, the Energy Information Administration reported Thursday. Analysts at IHS Global Insight had expected a withdrawal of 145 billion cubic feet. At 1,895 billion cubic feet, stocks were 233 billion cubic feet higher than last year at this time and 199 billion cubic feet above the five-year average. On the New York Mercantile Exchange, natural gas for April delivery added 1.1% to $4.073 per million British thermal units.
IBM Chief Financial Officer Mark Loughridge said IBM expects to earn at least $9.20, which the company previously forecast in its 2008 fourth-quarter report in January.
I have written this many weeks ago. I find it interesting that Wal-Mart and Costco have trouble holding a rally. Microsoft, Caterpillar, and Deere keep getting recommended as values and yet trade near a 52-week low.
Ford said it now expects total U.S. car and truck sales to fall as low as 10.5 million this year, a reduction of 1 million vehicles from a forecast the company issued in January. Expecting auto sales will rise in the second half, the Dearborn, Michigan- based automaker continued to project a high-end estimate of 12.5 million vehicle sales in the U.S. this year, it said in its filing.
“There is a risk, however, that industry sales volume may not stabilize as early in 2009, or begin to improve as soon thereafter, as we forecast,” the company said in its filing. Ford reiterated its expectation that it will be able to avoid taking federal aid.
U.S. gasoline consumption averaged 9 million barrels a day over the past four weeks, up 1.7 percent from a year earlier, yesterday’s report showed.
The premium of Brent crude oil to WTI crude has dropped to $1.30 per barrel. That hedge was certainly painless and the risk turned out to be nil.
Kohl's CEO Kevin Mansell said in the earnings report that he expects "2009 to be just as challenging from a macroeconomic perspective" and is "planning conservatively in our sales expectations, inventory levels and expenses."
The Dow Jones Industrial Average fell 88.81 points, or 1.2%, to 7,182.08. The S&P 500 declined 12.08 points, or 1.6%, to 752.82, and the Nasdaq Composite shed 33.96 points, or 2.4%, to 1,391.47.
Dell Inc. reported a fiscal fourth-quarter profit of $351 million, or 18 cents a share, on revenue of $13.4 billion. During the same period a year ago, Dell earned $679 million, or 31 cents a share on almost $16 billion in revenue.
The FDIC has said that as of the end of Q4 that there were some 252 problem banks, the largest since 1993. There were 171 at the end of the third quarter.
Fannie Mae reported a fourth-quarter net loss of $25.23 billion, or $4.47 a share, and revenue of $5.64 billion. The mortgage-finance giant, which has been placed in conservatorship by the government, blamed the weak results on $12.3 billion in net fair value losses and credit-related expenses of $12 billion amid a deterioration in mortgage performance and home prices. "We expect the market conditions that contributed to our net loss for each quarter of 2008 to continue and possibly worsen in 2009, which is likely to cause further reductions in our net worth," said Fannie Mae in a statement.
.
George Ure: " The latest Labor Department Employment Situation Report shows that in January there are only 20, 245,000 worker in the workforce of 153,716,000 workers. The rest? Services, farmers, and government. We have 20,245,000 people who actually make things and the whole country is fed by the 19,135,000 people who are in farming & farm-related employment. That adds up to 39,380,000 people left who actually make things... We've got an additional $1.75 trillion budget deficit divided by 39,380,00 real primary-goods and farm producers. If you're a primary producer you're gong to get to fund an additional $45,595 worth of deficits this year and that's on top of the financial train wreck left over by the republicorps/Bushiecrats....
There's about $10.843 trillion of public debt already...and if we add the additional $1.75 trillion it means by year's end we ought to be in hock $12.593 trillion which dived by the 39.380 primary jobs producers (you'll love this) means the real workers will be responsible for $319,781 of debt. Hell, let's just divide it by the people with jobs as of January: 142,099,000 workers and it still pencils out at $88,621 per worker.
And that's all before the unemployment rate goes up - as I expect we'll see on March 6 when the new unemployment numbers come out. And we just know they're accurate."
Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.
Purchases dropped 10 percent to an annual pace of 309,000, the lowest level since data began in 1963, the Commerce Department said today in Washington. The median price decreased 13.5 percent, the most in almost four decades.
The number of new homes for sale at the end of the month fell 3.1 percent to 342,000. The supply of homes at the current sales rate surged to a record 13.3 months' worth.
The National Association of Realtors has said five-to-six months' supply is consistent with a stable market.
Foreclosures in the U.S. rose 17.8 percent in January from a year earlier, according to a report from RealtyTrac Inc. issued last week. A total of 274,399 properties got a default or auction notice or were seized by banks, the 10th straight month that foreclosures topped 250,000.
JPMorgan Chase said it expects losses of $1 billion to $1.4 billion in each quarter of 2009 tied to its "non-credit-impaired" home equity loan portfolio.
The second-largest U.S. bank also said on Thursday that falling home prices may result in more borrowers with home equity loans owing more than their residences are worth.
It said this could affect 35 percent to 39 percent of home equity borrowers at the end of 2009 and 36 percent to 41 percent at the end of 2010, up from 27 percent at the end of 2008.
General Motors Corp said on Thursday it expects auditors to cast doubt on the automaker's ability to remain viable as it endures the worst market in decades.
General Motors Corp. says it lost $9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of cash.
The nation's biggest domestic automaker lost $30.9 billion for all of 2008 as it struggled against a U.S. sales slump and a global recession.
GM has received $13.4 billion in federal loans and its executives are in Washington, D.C., Thursday to talk to the Obama administration about the company's request for up to $30 billion.
For the fourth quarter, GM says it lost $15.71 per share, compared with a loss of $722 million, or $1.28 per share, in the year-ago period.
Excluding special items, The Detroit company's loss was $9.65 per share. On that basis, analysts surveyed by Thomson Reuters predicted a loss of $7.40 per share.
General Motors Corp. says it lost $9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of cash.
The nation's biggest domestic automaker lost $30.9 billion for all of 2008 as it struggled against a U.S. sales slump and a global recession.
GM has received $13.4 billion in federal loans and its executives are in Washington, D.C., Thursday to talk to the Obama administration about the company's request for up to $30 billion.
For the fourth quarter, GM says it lost $15.71 per share, compared with a loss of $722 million, or $1.28 per share, in the year-ago period.
Excluding special items, The Detroit company's loss was $9.65 per share. On that basis, analysts surveyed by Thomson Reuters predicted a loss of $7.40 per share. GM has lost more than $70 billion since 2005, and therefore is a prime candidate for a further government bailout, and mirrors the opportunity in AIG. Do you think Obama, Geithner, and Bernanke would put their own money in GM, AIG, or Citigroup?
U.S. Government budget deficit is estimated to be $1.75 billion. What are the chances this forecast is very low? They assume 10-year Treasury bonds to yield and now they are at 2.98%.
The budget proposal would increase the top income tax rate from 35% to 39.6% for couples with incomes above $250,000 a year. As part of the stimulus package, incomes taxes were cut by up to $800 a year for most American families.
The $634 billion Obama wants to set aside for healthcare would be almost evenly divided between spending reductions and tax increases.
Obama's plan would trim $316 billion over 10 years from Medicare by decreasing some payments to private insurance plans that focus on the elderly. Other proposals include charging upper-income beneficiaries a higher premium for Medicare's prescription drug coverage, added during the Bush administration
The healthcare proposal would also limit tax deductions for upper-income individuals and families, raising about $318 billion over 10 years.
Obama proposes $3.6 trillion budget for fiscal 2010. It assumes GDP growth of 3% in 2010. That's funny.
A gauge of economic sentiment across the euro zone fell to a new record low in February, the European Commission reported Thursday. The economic sentiment indicator for the single-currency region declined from 67.2 in January to 65.4 this month, the lowest reading since the indicator was launched in January 1985. The drop reflects a fall in most of the indicator's component indexes, with the exception of a slight rise in the retail trade index, which rose 1 point to -19. The euro-zone consumer confidence indicator fell to -33 from -31 in January, while the industrial sentiment indicator fell to -36 from -33 in January, and the services index dropped one point to -23. The construction index fell two points to -32.
Sears announced the closure of 28 stores during 2008 and on Thursday said it had decided to close 24 additional stores in January. The company had cash of $1.3 billion as of January 31, compared with $1.6 billion a year earlier. It said it reduced short-term borrowings on its $4 billion revolving credit line to $435 million as of January 31 from $1.9 billion at November 1, 2008.
Rob Hanna: "A positive intermediate-term sign Wednesday was the fact that the Semiconductor Index (SOX) rose even as the S&P and Nasdaq suffered 1% declines....
Over the next week the S&P has posted a close higher than the trigger day close 89% of the time. If you look out 12 days there has been at least 1 close higher than the trigger day in 42 of 43 instances (98%). The only loser came after the 7/21/98 signal. This has been a solidly bullish intermediate-term signal."
Cisco laid off 250 employees, joining other tech giants who have cut staff. The layoffs are the first wave of a planned cut of up to 2,000 employees.
The National Association of Realtors said Wednesday that sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million in December. It was the weakest showing since July 1997, and some analysts don't see sales bottoming out until later this year as prices continue to sink. Sales had been expected to rise to an annual pace of 4.79 million homes, according to Thomson Reuters.
"If Americans are worried they won't have a job next month, next quarter, or next year, you've got a real problem," Mike Larson, a real estate analyst with Weiss Research, wrote in a research note.
Without adjusting for seasonal factors, sales nationwide fell 7.6 percent from a year earlier. The West was the only part of the country to show increased sales.
Washington ranked second among the states, behind New Jersey, in the rate of growth in bankruptcy filings from December to January, according to AACER, an Oklahoma City-based bankruptcy data and management firm.
More than 1,900 households and businesses declared bankruptcy across the state last month, court statistics show.
Home sales in the Western United States surged in January as first-time homebuyers, real-estate investors and others seized on bargain-priced foreclosed homes in California, Nevada and Arizona, according to two reports released Wednesday.
A total of 74,000 existing homes and condos were sold in January in the 13-state region. Sales were up 32.1 percent from the same month in 2008, without adjusting for seasonal factors, according to the National Association of Realtors.
As has been the trend since last summer, distressed sales continued to fuel sales in the West, and that helped drag down median home prices in the region by almost 26 percent from the year before, to $220,000, the association said.
Those Western cities ranked among the top 10 U.S. metros to post the sharpest median-price declines last month, with San Francisco and Phoenix behind only Detroit.
Elsewhere in the West, sales declined in Seattle; Portland; Honolulu; Billings, Mont.; Boise; Albuquerque; Denver; and Anchorage, according to the AP-Re/Max report.
Oil climbed close to $45 a barrel on Thursday after the United Arab Emirates announced deeper cuts in crude supply to Asia for April in a possible signal that OPEC will cut output further at its next meeting in March.
Abu Dhabi National Oil Co (ADNOC), the main oil supplier in the UAE, said it will sell customers less of its flagship Murban crude oil and three other main grades in April than in March. Since September the cartel has decided to lower supply by a total of 4.2 million bpd, about 5 percent of daily world demand, and several OPEC members have signaled that the group may reduce production further when it meets again next month to decide oil output policy.
Gold futures fell Thursday for a fourth straight session to near $940 an ounce as rising crude prices and stock markets reduced safe-haven buying. Gold for April delivery dropped $24.80, or 2.6%, to $941.40 an ounce in early North American electronic trading.
Demand for U.S.-made durable goods fell for the sixth straight month in January amid widespread weakness from both domestic and foreign buyers. Orders for durable goods -- such as airplanes, computers and washing machines --fell 5.2% in January, the Commerce Department reported Thursday. Orders fell in every major sector. The report was much weaker than the 3% drop expected by economists surveyed by MarketWatch. Excluding the 13.5% drop in transportation orders, orders fell 2.5%. Orders for core capital equipment goods - the kind of things companies use to expand or upgrade their productive capacity - fell 5.4% in January after falling 5.8% in December.
First-time applications for state unemployment benefits for the week ending Feb. 21 rose 36,000 to a seasonally adjusted 667,000. The level of initial claims is the highest since October 1982 and up 86% from the same period in the prior year. The four-week average of new claims, which measures the underlying trend, rose 19,000 to 639,000 - also the highest level since October 1982, and up 84% from the prior year. For the week ending Feb. 14, the number of people collecting benefits reached a record high, rising 114,000 to 5.11 million - a level that is 86% higher than in the prior year. The four-week average of continuing claims was also a record, gaining 89,250 to 4.93 million - a level that is 80% higher than in the prior year. The insured unemployment rate reached the highest level since July 1983, rising to 3.8% from 3.7%. The data go back to 1967.
Japan's economy is sinking into its worst recession since World War II, international credit rating firm Standard & Poor's said Thursday.
The Japanese economy is expected to shrink 4 percent in 2009, which would be worse than the 2 percent contraction in 1998, when Japan went through its own financial crisis after the "bubble" economy burst, S&P said.
Richard Daughty: "Total Fed Credit, otherwise known as Federal Reserve Credit, ballooned by a huge $76.9 billion last week, taking the Fed’s total “help” to the scumbag banks to a nice, cool $1.9 trillion, of which a whopping $56 billion gob of the money created last week by the Fed was used by the Fed itself to buy Treasury securities for itself! Hahaha! What a scam!"
President Barack Obama will seek $75.5 billion more for combat operations in Iraq and Afghanistan through the end of this fiscal year, according to three people familiar with the request.
It will be submitted along with the fiscal 2010 budget Obama sends to Congress tomorrow. That proposal will request $130 billion for the wars in fiscal 2010 in addition to a total Defense Department budget of about $534 billion, the people said.
JPMorgan Chase & Co. said Thursday it will eliminate about 12,000 jobs as it folds in the operations of Washington Mutual Inc.
Publicly traded shares of Pimco's Corporate Opportunity Fund and High Income Fund are under pressure after Pimco said late yesterday it may be forced to postpone dividends as "continued severe market disruptions" have caused heavy declines, denting asset coverage ratios.
Federal Reserve officials don't see labor markets improving until 2011, after economic growth gains traction.
U.S. natural gas inventories fell by 101 billion cubic feet in the week ended Feb. 20, the Energy Information Administration reported Thursday. Analysts at IHS Global Insight had expected a withdrawal of 145 billion cubic feet. At 1,895 billion cubic feet, stocks were 233 billion cubic feet higher than last year at this time and 199 billion cubic feet above the five-year average. On the New York Mercantile Exchange, natural gas for April delivery added 1.1% to $4.073 per million British thermal units.
IBM Chief Financial Officer Mark Loughridge said IBM expects to earn at least $9.20, which the company previously forecast in its 2008 fourth-quarter report in January.
I have written this many weeks ago. I find it interesting that Wal-Mart and Costco have trouble holding a rally. Microsoft, Caterpillar, and Deere keep getting recommended as values and yet trade near a 52-week low.
Ford said it now expects total U.S. car and truck sales to fall as low as 10.5 million this year, a reduction of 1 million vehicles from a forecast the company issued in January. Expecting auto sales will rise in the second half, the Dearborn, Michigan- based automaker continued to project a high-end estimate of 12.5 million vehicle sales in the U.S. this year, it said in its filing.
“There is a risk, however, that industry sales volume may not stabilize as early in 2009, or begin to improve as soon thereafter, as we forecast,” the company said in its filing. Ford reiterated its expectation that it will be able to avoid taking federal aid.
U.S. gasoline consumption averaged 9 million barrels a day over the past four weeks, up 1.7 percent from a year earlier, yesterday’s report showed.
The premium of Brent crude oil to WTI crude has dropped to $1.30 per barrel. That hedge was certainly painless and the risk turned out to be nil.
Kohl's CEO Kevin Mansell said in the earnings report that he expects "2009 to be just as challenging from a macroeconomic perspective" and is "planning conservatively in our sales expectations, inventory levels and expenses."
The Dow Jones Industrial Average fell 88.81 points, or 1.2%, to 7,182.08. The S&P 500 declined 12.08 points, or 1.6%, to 752.82, and the Nasdaq Composite shed 33.96 points, or 2.4%, to 1,391.47.
Dell Inc. reported a fiscal fourth-quarter profit of $351 million, or 18 cents a share, on revenue of $13.4 billion. During the same period a year ago, Dell earned $679 million, or 31 cents a share on almost $16 billion in revenue.
The FDIC has said that as of the end of Q4 that there were some 252 problem banks, the largest since 1993. There were 171 at the end of the third quarter.
Fannie Mae reported a fourth-quarter net loss of $25.23 billion, or $4.47 a share, and revenue of $5.64 billion. The mortgage-finance giant, which has been placed in conservatorship by the government, blamed the weak results on $12.3 billion in net fair value losses and credit-related expenses of $12 billion amid a deterioration in mortgage performance and home prices. "We expect the market conditions that contributed to our net loss for each quarter of 2008 to continue and possibly worsen in 2009, which is likely to cause further reductions in our net worth," said Fannie Mae in a statement.
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Wednesday, February 25, 2009
Dividend Cuts
2/25/09 Dividend Cuts
Sales of pre-owned homes dropped 5.3% to a seasonally adjusted annual rate of 4.49 million in January, the lowest sales pace in 12 years, the National Association of Realtors reported Wednesday. Sales are down 8.6% in the past year, the industry trade group reported. The median sales price fell to $170,300, the lowest in nearly six years and down 14.8% compared with a year ago. The inventory of unsold homes fell 2.7% in January to 3.6 million, representing a 9.6-month supply at the January sales pace. About 45% of all home sales now involve distressed property transactions, including foreclosures.
The fastest reduction in U.S. dividends since 1955 is depriving investors of the only thing that gave stocks an advantage over government bonds in the last century.
U.S. equities returned 6 percent a year on average since 1900, inflation-adjusted data compiled by the London Business School and Credit Suisse Group AG show. Take away dividends and the annual gain drops to 1.7 percent. That return hardly warrants the risk in investing in equities as a group.
"A colony or satellite is a people who lose control of their resources to a foreign power," according to Gordon Laxer, political economist and director of the University of Alberta's Parkland Institute. "Canada is prohibited from using its oil to supply half its citizens during international shortages. No other country is forbidden from using domestic resources to provide for its own citizens." Canada has no Strategic Petroleum Reserve (SPR). It exports 65 per cent of its oil and 59 per cent of its natural gas to the U.S. In 2007, it imported 50 per cent of its oil refinery needs, including a small amount of refined oil, from the U.S. Most of those imports come from unstable Organization of Petroleum Exporting Countries (OPEC) nations such as Iraq and Algeria.
Agrium Inc. has proposed to buy fertilizer-maker CF Industries for about $3.6 billion, or $72 a share, the Canadian agricultural supplier said Wednesday. The offer price represents a near 30% premium to CF's closing price in prior-day trading, but is conditioned on the company ending its bid for Terra Industries. Deerfield, Ill., based CF has not won support among Terra shareholders to swap 0.4235 CF Industries shares for each Terra share.
Many elderly Americans once planned to sell their homes to finance their retirement care. But with both home values and investment portfolios shrinking, they are now struggling to cope.
Gartner: Worldwide semiconductor rev to fall 24% in 2009.
Frank Barbera: "Speaking of the financial markets, the message emanating loud and clear from most corners of the world is that of two words, “downside continuation.” That’s right, rather than a warm and cozy dose of ‘chicken soup for the soul,’ the downside confirmation coming from both US and Foreign Stock Indices is more akin to the markets choking on a ‘chicken bone in the throat.”
According to the FT, cash-strapped investors have put more than $540m (€420m) of private equity and hedge fund stakes up for sale on a new platform launched Tuesday, aiming to draw out possible buyers for the otherwise illiquid holdings.
The platform introduced by newcomers SecondMarket is a bold move to break the log-jam in markets for second-hand private equity and hedge fund stakes, where prices have plunged to record lows as sellers have far outweighed buyers.
Ambac Financial Group Inc reported a fourth-quarter loss of more than $2 billion on Wednesday as the bond insurer set aside nearly $1 billion more for losses tied to residential mortgage debt.
EXCO plans to cut capital spending from $989 million in 2008 to $582 million in 2009.This prudent action reflects low natural gas prices.
API released the following:
Crude: up 341,000 barrels Gasoline: down 898,000 barrels Distillate: down 1.8 mm barrels.
U.S. crude inventories rose 700,000 barrels in the week ended Feb. 20, the Energy Information Administration reported Wednesday. Analysts surveyed by Platts had expected a gain of more than 2 million barrels. Meanwhile, gasoline inventories fell by 3.4 million barrels, more than analysts expected.The EIA also reported that distillate stockpiles, which include diesel and heating oil, rose by 800,000 barrels.
The federal government may acquire large minority positions in the nation's largest banks but has no plans to run the institutions and zero out shareholders, Federal Reserve Board Chairman Ben Bernanke said Wednesday.
Nortel Networks Corp., which filed for bankruptcy protection last month, said Wednesday it will eliminate 3,200 jobs, the latest in a series of job cuts undertaken by the struggling Canadian maker of telecommunications equipment.
Roche Holdings sold 11.157 billion euros ($14.305 billion) of corporate debt on Thursday, the largest euro-denominated sale on record, according to Dealogic. The funds will add to U.S. debt the Swiss drug maker sold earlier this week, originally intended to help fund its purchase of Genentech, an offer that company recommended rejecting. It's also the third largest corporate bond deal on record for any currency, adding to what is shaping up to be the most active month for corporate debt sales, Dealogic said.
Crude for April delivery ended up $2.54, or 6.4%, at $42.50 a barrel on the New York Mercantile Exchange.
The Dow closed down 80 points, the Nasdaq down 16 points, and the S&P down 8
points. Boeing, Caterpillar, and United Technologies all traded at new 52-week lows.
Lincoln National lost $1.83 to $11.21. The Philadelphia- based insurance company cut its quarterly dividend to 1 cent a share from 21 cents. Textron Inc. also cut its dividend, sending shares of the Cessna aircraft maker down 3.9 percent to $5.90. The company decreased its payout by 91 percent to 2 cents a share as it conserves cash amid a slowdown in demand. Gannett Co.said late Wednesday its board cut the quarterly dividend to 4 cents from 40 cents because of the recession and stale credit markets.
“It’s back to the same old concern,” said John Carey, who oversees $10 billion at Boston-based Pioneer Investment Management. “The jury is still out on whether there’s going to be any equity value in these financial companies.”
Singapore's economy contracted at an annualized 16.4% in the October-to-December quarter, its sharpest pace of contraction in 33 years, according to revised figures released Thursday by the Ministry of Trade and Industry.
U.S. digital camera sales declined even more sharply than expected in the fourth-quarter holiday season, falling 12% to 15 million units.
Internet advertising could fall by 5% in the first quarter of 2009, the first contraction in online ad spending since the dot-com bubble burst in 2001, market research group IDC said Wednesday.
IDC analyst Karsten Weide also said the U.S. Internet ad market could get worse in the second quarter before the situation improves.
Sales of pre-owned homes dropped 5.3% to a seasonally adjusted annual rate of 4.49 million in January, the lowest sales pace in 12 years, the National Association of Realtors reported Wednesday. Sales are down 8.6% in the past year, the industry trade group reported. The median sales price fell to $170,300, the lowest in nearly six years and down 14.8% compared with a year ago. The inventory of unsold homes fell 2.7% in January to 3.6 million, representing a 9.6-month supply at the January sales pace. About 45% of all home sales now involve distressed property transactions, including foreclosures.
The fastest reduction in U.S. dividends since 1955 is depriving investors of the only thing that gave stocks an advantage over government bonds in the last century.
U.S. equities returned 6 percent a year on average since 1900, inflation-adjusted data compiled by the London Business School and Credit Suisse Group AG show. Take away dividends and the annual gain drops to 1.7 percent. That return hardly warrants the risk in investing in equities as a group.
"A colony or satellite is a people who lose control of their resources to a foreign power," according to Gordon Laxer, political economist and director of the University of Alberta's Parkland Institute. "Canada is prohibited from using its oil to supply half its citizens during international shortages. No other country is forbidden from using domestic resources to provide for its own citizens." Canada has no Strategic Petroleum Reserve (SPR). It exports 65 per cent of its oil and 59 per cent of its natural gas to the U.S. In 2007, it imported 50 per cent of its oil refinery needs, including a small amount of refined oil, from the U.S. Most of those imports come from unstable Organization of Petroleum Exporting Countries (OPEC) nations such as Iraq and Algeria.
Agrium Inc. has proposed to buy fertilizer-maker CF Industries for about $3.6 billion, or $72 a share, the Canadian agricultural supplier said Wednesday. The offer price represents a near 30% premium to CF's closing price in prior-day trading, but is conditioned on the company ending its bid for Terra Industries. Deerfield, Ill., based CF has not won support among Terra shareholders to swap 0.4235 CF Industries shares for each Terra share.
Many elderly Americans once planned to sell their homes to finance their retirement care. But with both home values and investment portfolios shrinking, they are now struggling to cope.
Gartner: Worldwide semiconductor rev to fall 24% in 2009.
Frank Barbera: "Speaking of the financial markets, the message emanating loud and clear from most corners of the world is that of two words, “downside continuation.” That’s right, rather than a warm and cozy dose of ‘chicken soup for the soul,’ the downside confirmation coming from both US and Foreign Stock Indices is more akin to the markets choking on a ‘chicken bone in the throat.”
According to the FT, cash-strapped investors have put more than $540m (€420m) of private equity and hedge fund stakes up for sale on a new platform launched Tuesday, aiming to draw out possible buyers for the otherwise illiquid holdings.
The platform introduced by newcomers SecondMarket is a bold move to break the log-jam in markets for second-hand private equity and hedge fund stakes, where prices have plunged to record lows as sellers have far outweighed buyers.
Ambac Financial Group Inc reported a fourth-quarter loss of more than $2 billion on Wednesday as the bond insurer set aside nearly $1 billion more for losses tied to residential mortgage debt.
EXCO plans to cut capital spending from $989 million in 2008 to $582 million in 2009.This prudent action reflects low natural gas prices.
API released the following:
Crude: up 341,000 barrels Gasoline: down 898,000 barrels Distillate: down 1.8 mm barrels.
U.S. crude inventories rose 700,000 barrels in the week ended Feb. 20, the Energy Information Administration reported Wednesday. Analysts surveyed by Platts had expected a gain of more than 2 million barrels. Meanwhile, gasoline inventories fell by 3.4 million barrels, more than analysts expected.The EIA also reported that distillate stockpiles, which include diesel and heating oil, rose by 800,000 barrels.
The federal government may acquire large minority positions in the nation's largest banks but has no plans to run the institutions and zero out shareholders, Federal Reserve Board Chairman Ben Bernanke said Wednesday.
Nortel Networks Corp., which filed for bankruptcy protection last month, said Wednesday it will eliminate 3,200 jobs, the latest in a series of job cuts undertaken by the struggling Canadian maker of telecommunications equipment.
Roche Holdings sold 11.157 billion euros ($14.305 billion) of corporate debt on Thursday, the largest euro-denominated sale on record, according to Dealogic. The funds will add to U.S. debt the Swiss drug maker sold earlier this week, originally intended to help fund its purchase of Genentech, an offer that company recommended rejecting. It's also the third largest corporate bond deal on record for any currency, adding to what is shaping up to be the most active month for corporate debt sales, Dealogic said.
Crude for April delivery ended up $2.54, or 6.4%, at $42.50 a barrel on the New York Mercantile Exchange.
The Dow closed down 80 points, the Nasdaq down 16 points, and the S&P down 8
points. Boeing, Caterpillar, and United Technologies all traded at new 52-week lows.
Lincoln National lost $1.83 to $11.21. The Philadelphia- based insurance company cut its quarterly dividend to 1 cent a share from 21 cents. Textron Inc. also cut its dividend, sending shares of the Cessna aircraft maker down 3.9 percent to $5.90. The company decreased its payout by 91 percent to 2 cents a share as it conserves cash amid a slowdown in demand. Gannett Co.said late Wednesday its board cut the quarterly dividend to 4 cents from 40 cents because of the recession and stale credit markets.
“It’s back to the same old concern,” said John Carey, who oversees $10 billion at Boston-based Pioneer Investment Management. “The jury is still out on whether there’s going to be any equity value in these financial companies.”
Singapore's economy contracted at an annualized 16.4% in the October-to-December quarter, its sharpest pace of contraction in 33 years, according to revised figures released Thursday by the Ministry of Trade and Industry.
U.S. digital camera sales declined even more sharply than expected in the fourth-quarter holiday season, falling 12% to 15 million units.
Internet advertising could fall by 5% in the first quarter of 2009, the first contraction in online ad spending since the dot-com bubble burst in 2001, market research group IDC said Wednesday.
IDC analyst Karsten Weide also said the U.S. Internet ad market could get worse in the second quarter before the situation improves.
Home Prices And Consumer Confidence
2/24/09 Home Prices And Consumer Confidence
Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December. Since home prices peaked in Q2 2006, they have dropped 26%.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy considerably worsened, according to the monthly Conference Board index reported Tuesday. The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months." The present situation index fell tp a reading of 21.2 and the expectations index fell to 27.5. The January readings for these were 29.7 and 42.5.
The Oil Drum: "Non OPEC-12 oil production peaked in 2004 at 46.8 million barrels/day (mbd). This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2004 but decreases to 42.1 mbd.
The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining non OPEC-12 oil production to renew the focus on oil conservation and alternative energy sources."
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That's three years sooner than previously forecast.
At the same time, the government's already large share of the nation's health care bill will keep growing.
Michael Pento: "The only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy. All sectors of the economy become overleveraged and the need to reduce debt becomes paramount. The economy then experiences a severe contraction in GDP. In a depression, the pull back in borrowing is not caused by interest rate increases from the Fed but an inability of the economy to take on further debt. A depression can last for many years as consumers, banks and the government goes through the painfully long and arduous process of deleveraging."
Rep. Ron Paul: "The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money. If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy's lifeblood, the currency, back where it Constitutionally belongs. If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate. If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization."
Target Corp.said fourth-quarter net income fell 41% to $609 million, or 81 cents a share, from $1.03 billion, or $1.23 a share in the year-ago period. Revenue edged down to $19 billion from $19.3 billion. Analysts expected earnings of 84 cents a share on revenue of $19.6 billion, according to a survey of analysts by FactSet.
Gold for February delivery was last down $6.20, or 0.6%, at $988.40 an ounce in North American electronic trading. Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
Commercial property prices fell almost 15% in 2008 amid the credit storm, according to the Moody's/REAL National All Property Type Aggregate Index.
Macy's sees same-store sales in 2009 to be down between 6% and 8%. Per-share profit is forecast to be 40 cents to 55 cents a share, excluding restructuring costs, Macy's said.
Excluding the charges and write-offs, Home Depot would have earned 19 cents a share, down 52.5% from the prior year. Sales fell 17% to $14.6 billion, for a 13% comparable sales fall. Analysts polled by FactSet were looking for a profit of 16 cents a share. For 2009, Home Depot sees earnings from continuing operations per share falling 7%, sales dropping 9%, and "high single digit negative" comparable-store sales.
Hans Goetti, Chief Investment Officer of LGT Bank in Liechtenstein, is saying that there could be a move to $3,000.00 per ounce of gold.
Rob Hanna: "Monday marked the 5th day in a row that the S&P 500 closed below its lower Bollinger Band (20 period, 2 std dev). Looking back to 1960 I found only 23 other occurrences. Of those, 22 managed to close higher than the trigger-day close at some point in the next 3 days. Unfortunately, the edge has been very short-term."
Feeling the pinch from sliding sales
Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy court in Wilmington, Del. Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states.
Jonah Goldberg: "Recall that during the primaries, Obama was probably second only to Dennis Kucinich as an anti-Iraq war and anti-Bush candidate. But he has kept President Bush's Defense secretary and appointed a secretary of State, Hillary Rodham Clinton, who voted for the war. His vice president, Joe Biden, also voted for the war. Obama himself seems to be in less of a hurry to leave Iraq than we might have expected from listening to him over the last couple of years.
The new president has ordered that his predecessor's rendition policies remain largely intact, even to the point of using the "state secrets" privilege to block a rendition lawsuit. Obama may have stated categorically that America "will not torture," but outsourcing it is still OK.
The White House also defends the Bush policy of imprisoning, without trial, enemy combatants captured abroad. Obama's lawyers argued in a court case brought by Afghan prisoners at the U.S. Air Force base at Bagram, Afghanistan, that the "government adheres to its previously articulated position" -- the one articulated by those evil Bush lawyers.
Meanwhile, a new Pentagon study commissioned by Obama has found that the prison at Guantanamo Bay meets the standards of the Geneva Convention. One can only guess how the White House will make use of that finding. At the least, it should provide cover while the administration looks for alternatives to Gitmo that might not be all that alternative.
On the domestic front, Education Secretary Arne Duncan has decided that Bush's signature No Child Left Behind Act should be retained and moderately reformed. His boldest suggestion so far? "Let's rebrand it. Give it a new name." Now that's change even cynics can believe in. "
In a rare instance of consistency between his campaign and his presidency, Obama is keeping Bush's Office of Faith-Based Initiatives, though he's renamed that one."
The Online Journal headed "
Obama's DOJ quietly sought dismissal of missing White House emails lawsuit."
Nassim Taleb Says U.S. Banking System Is `Designed to Blow Up'
The difference between three-month dollar Libor and the Fed’s target rate for overnight loans reached a record 3.32 percentage points on Oct. 10, before narrowing to 1 percentage point today. It averaged 0.16 percentage point in the seven years to August 2007. Three-month Libor was unchanged at 1.25 percent today.
“We are nowhere near the levels that you’d want to see to indicate a well functioning banking system,” said
Jeffrey Caughron, associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “People still don’t get it in terms of how bad things are in the domestic and global economies.”
Microsoft Corp.on Tuesday reiterated its forecast for the second half of fiscal 2009, saying a "difficult" economy will continue. The stock traded at an 11-year low.
Mexican state oil monopoly Pemex produced an average of 2.68 million barrels of crude oil per day in January, down 9.2% from the same month last year. How much longer will Mexico be able to export oil to the U.S.? Maybe another 12 months at best. Do you believe gas lines are a thing of the past? Not to worry. We have a BUY AMERICA initiative.
Robert McHugh: "Credit has dried up, credit card companies cutting back lines, real estate sales frozen, bids lacking in financial markets, jobs being cut, salary and bonuses for those working being scaled back. Tax rebates are negligible, it will take years before the infrastructure spending in the stimulus plan creates jobs. Confidence that anyone is in charge who knows what will get us out of this mess, is lacking. Too many fraud, and bankruptcy, and bailout surprises day by day."
Vornado Realty Trust on Tuesday said funds from operations in the fourth quarter was negative $78 million, or 50 cents a share share, compared with a positive $193.4 million, or $1.18 a share, in the year-ago quarter. This is an indication of the current condition of commercial real estate.
South Africa's economy contracted for the first time in a decade in the fourth quarter of 2008, official data showed Tuesday. Gross domestic product fell by 1.8% at a seasonally adjusted annualized rate in the fourth quarter of 2008, down from growth of just 0.2% in the third quarter.
In July 2007, Bob Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”
Adjusted for charges, Office Depot said it lost $199 million, or 73 cents per share, in the latest quarter. Boca Raton, Fla.-based Office Depot said sales fell 15 percent to $3.27 billion from $3.87 billion a year ago. Sales in the company's North American retail division declined 17 percent, and revenue slipped 15 percent internationally.
Same-store sales, or sales at stores open for more than a year, dropped 18 percent at locations in the U.S. and Canada. Sales were sluggish in California and Florida, Office Depot said.
U.S. policy makers should focus on stimulating lending and preventing foreclosures rather than nationalizing banks, according to
Bill Gross, co-chief investment officer of Pacific Investment Management Co., the operator of the world’s biggest bond fund.
“The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization,” Gross wrote in his March
investment outlook posted today on the Newport Beach, California-based firm’s Web site. “Trillions will be required in the U.S. alone.”
Dubai property values are predicted to dive as much as 60 percent in 2009.
On Tuesday, Caterpillar and GE both traded at a new 52-week lows.
Gold for February delivery closed at $969.10 an ounce, down $25.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. Crude for April delivery ended up $1.52, or 4%, at $39.96 a barrel on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke warned on Tuesday the "severe" U.S. recession may drag into 2010 unless the government succeeds in stabilizing the banking system and financial markets with strong action. Yet, he also stated that the recession might end this year, and that regulators aren't planning to nationalize banks.
Lonmin Plc, the world's third largest primary platinum producer, said Tuesday that it expects to lay off as many as 5,500 full-time workers at its Marikana and Limpopo operations, citing "challenging economic conditions." Lonmin, whose operations are all based in South Africa, said it has reached agreements with the recognized union regarding the layoffs.
The Pentagon’s weapons tester says he doesn’t have “high confidence” that the Boeing Co.-managed U.S. missile defense would be effective against even a rudimentary North Korean missile.
The United States plans to withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama's inauguration, according to administration officials.
Allstate cuts its dividend by more than half, to $0.20 from $0.41
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
Republican Gov. Bobby Jindal of Louisiana: Says the way to lead is not to raise taxes, which he says puts more power in hands of Washington politicians.
He says the recently enacted stimulus bill will "grow the government, increase our taxes down the line, and saddle future generations with debt...Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs or build a prosperous future for our children."
Barry Ritholtz: "Here is something to mull over: Technically, 7,470 in the DJIA is the 50% retracement of the entire bull market that began in August 1982.
At 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.That is astounding."
The Hearst Corp. said Tuesday that unless the San Francisco Chronicle can undertake "critical" cost cutting measures including job cuts within weeks, the company will be forced to sell or close the newspaper. Hearst said the Chronicle lost more than $50 million last year and added that, "this year's losses to date are worse." The Chronicle has had major losses each year since 2001, Hearst said.
The Dow Jones Industrial Average closed up 236 points, or 3.3%, to 7,351 after dropping 251 points on Monday. The Nasdaq Composite Index was up 54 points, or 3.9%, to 1,442, and the Standard & Poor's 500 Index had added 30 points, 4%, to 773.
The gains were the biggest for the major indexes since Jan. 21, and the Nasdaq and S&P 500 made back all of their losses suffered on Monday. Today's was only the third Dow gain in 11 sessions and the first gains for the S&P 500 and the Nasdaq after six straight losses.
The union representing engineers at the Boeing Co.'s military aircraft plant here has recommended that its members reject the company's contract offer and authorize a strike.
Negotiations broke down Tuesday between Chicago-based Boeing and the Society of Professional Engineering Employees in Aerospace, which represents 700 engineers at Boeing's Integrated Defense Systems plant.
Saks said it's aggressively managing cash flow and said it expects to be free-cash-flow positive for 2009 and have ample capacity under its revolving line throughout the year. For the year, Saks forecast same-store sales to decline in the low double digits, including a 20% drop in the first half of the year.
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2/24/09 Home Prices And Consumer Confidence
Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December. Since home prices peaked in Q2 2006, they have dropped 26%.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy considerably worsened, according to the monthly Conference Board index reported Tuesday. The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months." The present situation index fell tp a reading of 21.2 and the expectations index fell to 27.5. The January readings for these were 29.7 and 42.5.
The Oil Drum: "Non OPEC-12 oil production peaked in 2004 at 46.8 million barrels/day (mbd). This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2004 but decreases to 42.1 mbd.
The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining non OPEC-12 oil production to renew the focus on oil conservation and alternative energy sources."
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That's three years sooner than previously forecast.
At the same time, the government's already large share of the nation's health care bill will keep growing.
Michael Pento: "The only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy. All sectors of the economy become overleveraged and the need to reduce debt becomes paramount. The economy then experiences a severe contraction in GDP. In a depression, the pull back in borrowing is not caused by interest rate increases from the Fed but an inability of the economy to take on further debt. A depression can last for many years as consumers, banks and the government goes through the painfully long and arduous process of deleveraging."
Rep. Ron Paul: "The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money. If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy's lifeblood, the currency, back where it Constitutionally belongs. If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate. If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization."
Target Corp.said fourth-quarter net income fell 41% to $609 million, or 81 cents a share, from $1.03 billion, or $1.23 a share in the year-ago period. Revenue edged down to $19 billion from $19.3 billion. Analysts expected earnings of 84 cents a share on revenue of $19.6 billion, according to a survey of analysts by FactSet.
Gold for February delivery was last down $6.20, or 0.6%, at $988.40 an ounce in North American electronic trading. Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
Commercial property prices fell almost 15% in 2008 amid the credit storm, according to the Moody's/REAL National All Property Type Aggregate Index.
Macy's sees same-store sales in 2009 to be down between 6% and 8%. Per-share profit is forecast to be 40 cents to 55 cents a share, excluding restructuring costs, Macy's said.
Excluding the charges and write-offs, Home Depot would have earned 19 cents a share, down 52.5% from the prior year. Sales fell 17% to $14.6 billion, for a 13% comparable sales fall. Analysts polled by FactSet were looking for a profit of 16 cents a share. For 2009, Home Depot sees earnings from continuing operations per share falling 7%, sales dropping 9%, and "high single digit negative" comparable-store sales.
Hans Goetti, Chief Investment Officer of LGT Bank in Liechtenstein, is saying that there could be a move to $3,000.00 per ounce of gold.
Rob Hanna: "Monday marked the 5th day in a row that the S&P 500 closed below its lower Bollinger Band (20 period, 2 std dev). Looking back to 1960 I found only 23 other occurrences. Of those, 22 managed to close higher than the trigger-day close at some point in the next 3 days. Unfortunately, the edge has been very short-term."
Feeling the pinch from sliding sales
Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy court in Wilmington, Del. Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states.
Jonah Goldberg: "Recall that during the primaries, Obama was probably second only to Dennis Kucinich as an anti-Iraq war and anti-Bush candidate. But he has kept President Bush's Defense secretary and appointed a secretary of State, Hillary Rodham Clinton, who voted for the war. His vice president, Joe Biden, also voted for the war. Obama himself seems to be in less of a hurry to leave Iraq than we might have expected from listening to him over the last couple of years.
The new president has ordered that his predecessor's rendition policies remain largely intact, even to the point of using the "state secrets" privilege to block a rendition lawsuit. Obama may have stated categorically that America "will not torture," but outsourcing it is still OK.
The White House also defends the Bush policy of imprisoning, without trial, enemy combatants captured abroad. Obama's lawyers argued in a court case brought by Afghan prisoners at the U.S. Air Force base at Bagram, Afghanistan, that the "government adheres to its previously articulated position" -- the one articulated by those evil Bush lawyers.
Meanwhile, a new Pentagon study commissioned by Obama has found that the prison at Guantanamo Bay meets the standards of the Geneva Convention. One can only guess how the White House will make use of that finding. At the least, it should provide cover while the administration looks for alternatives to Gitmo that might not be all that alternative.
On the domestic front, Education Secretary Arne Duncan has decided that Bush's signature No Child Left Behind Act should be retained and moderately reformed. His boldest suggestion so far? "Let's rebrand it. Give it a new name." Now that's change even cynics can believe in. "
In a rare instance of consistency between his campaign and his presidency, Obama is keeping Bush's Office of Faith-Based Initiatives, though he's renamed that one."
The Online Journal headed "
Obama's DOJ quietly sought dismissal of missing White House emails lawsuit."
Nassim Taleb Says U.S. Banking System Is `Designed to Blow Up'
The difference between three-month dollar Libor and the Fed’s target rate for overnight loans reached a record 3.32 percentage points on Oct. 10, before narrowing to 1 percentage point today. It averaged 0.16 percentage point in the seven years to August 2007. Three-month Libor was unchanged at 1.25 percent today.
“We are nowhere near the levels that you’d want to see to indicate a well functioning banking system,” said
Jeffrey Caughron, associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “People still don’t get it in terms of how bad things are in the domestic and global economies.”
Microsoft Corp.on Tuesday reiterated its forecast for the second half of fiscal 2009, saying a "difficult" economy will continue. The stock traded at an 11-year low.
Mexican state oil monopoly Pemex produced an average of 2.68 million barrels of crude oil per day in January, down 9.2% from the same month last year. How much longer will Mexico be able to export oil to the U.S.? Maybe another 12 months at best. Do you believe gas lines are a thing of the past? Not to worry. We have a BUY AMERICA initiative.
Robert McHugh: "Credit has dried up, credit card companies cutting back lines, real estate sales frozen, bids lacking in financial markets, jobs being cut, salary and bonuses for those working being scaled back. Tax rebates are negligible, it will take years before the infrastructure spending in the stimulus plan creates jobs. Confidence that anyone is in charge who knows what will get us out of this mess, is lacking. Too many fraud, and bankruptcy, and bailout surprises day by day."
Vornado Realty Trust on Tuesday said funds from operations in the fourth quarter was negative $78 million, or 50 cents a share share, compared with a positive $193.4 million, or $1.18 a share, in the year-ago quarter. This is an indication of the current condition of commercial real estate.
South Africa's economy contracted for the first time in a decade in the fourth quarter of 2008, official data showed Tuesday. Gross domestic product fell by 1.8% at a seasonally adjusted annualized rate in the fourth quarter of 2008, down from growth of just 0.2% in the third quarter.
In July 2007, Bob Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”
Adjusted for charges, Office Depot said it lost $199 million, or 73 cents per share, in the latest quarter. Boca Raton, Fla.-based Office Depot said sales fell 15 percent to $3.27 billion from $3.87 billion a year ago. Sales in the company's North American retail division declined 17 percent, and revenue slipped 15 percent internationally.
Same-store sales, or sales at stores open for more than a year, dropped 18 percent at locations in the U.S. and Canada. Sales were sluggish in California and Florida, Office Depot said.
U.S. policy makers should focus on stimulating lending and preventing foreclosures rather than nationalizing banks, according to
Bill Gross, co-chief investment officer of Pacific Investment Management Co., the operator of the world’s biggest bond fund.
“The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization,” Gross wrote in his March
investment outlook posted today on the Newport Beach, California-based firm’s Web site. “Trillions will be required in the U.S. alone.”
Dubai property values are predicted to dive as much as 60 percent in 2009.
On Tuesday, Caterpillar and GE both traded at a new 52-week lows.
Gold for February delivery closed at $969.10 an ounce, down $25.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. Crude for April delivery ended up $1.52, or 4%, at $39.96 a barrel on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke warned on Tuesday the "severe" U.S. recession may drag into 2010 unless the government succeeds in stabilizing the banking system and financial markets with strong action. Yet, he also stated that the recession might end this year, and that regulators aren't planning to nationalize banks.
Lonmin Plc, the world's third largest primary platinum producer, said Tuesday that it expects to lay off as many as 5,500 full-time workers at its Marikana and Limpopo operations, citing "challenging economic conditions." Lonmin, whose operations are all based in South Africa, said it has reached agreements with the recognized union regarding the layoffs.
The Pentagon’s weapons tester says he doesn’t have “high confidence” that the Boeing Co.-managed U.S. missile defense would be effective against even a rudimentary North Korean missile.
The United States plans to withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama's inauguration, according to administration officials.
Allstate cuts its dividend by more than half, to $0.20 from $0.41
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
Republican Gov. Bobby Jindal of Louisiana: Says the way to lead is not to raise taxes, which he says puts more power in hands of Washington politicians.
He says the recently enacted stimulus bill will "grow the government, increase our taxes down the line, and saddle future generations with debt...Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs or build a prosperous future for our children."
Barry Ritholtz: "Here is something to mull over: Technically, 7,470 in the DJIA is the 50% retracement of the entire bull market that began in August 1982.
At 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.That is astounding."
The Hearst Corp. said Tuesday that unless the San Francisco Chronicle can undertake "critical" cost cutting measures including job cuts within weeks, the company will be forced to sell or close the newspaper. Hearst said the Chronicle lost more than $50 million last year and added that, "this year's losses to date are worse." The Chronicle has had major losses each year since 2001, Hearst said.
The Dow Jones Industrial Average closed up 236 points, or 3.3%, to 7,351 after dropping 251 points on Monday. The Nasdaq Composite Index was up 54 points, or 3.9%, to 1,442, and the Standard & Poor's 500 Index had added 30 points, 4%, to 773.
The gains were the biggest for the major indexes since Jan. 21, and the Nasdaq and S&P 500 made back all of their losses suffered on Monday. Today's was only the third Dow gain in 11 sessions and the first gains for the S&P 500 and the Nasdaq after six straight losses.
The union representing engineers at the Boeing Co.'s military aircraft plant here has recommended that its members reject the company's contract offer and authorize a strike.
Negotiations broke down Tuesday between Chicago-based Boeing and the Society of Professional Engineering Employees in Aerospace, which represents 700 engineers at Boeing's Integrated Defense Systems plant.
Saks said it's aggressively managing cash flow and said it expects to be free-cash-flow positive for 2009 and have ample capacity under its revolving line throughout the year. For the year, Saks forecast same-store sales to decline in the low double digits, including a 20% drop in the first half of the year.
.
2/24/09 Home Prices And Consumer Confidence
Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December. Since home prices peaked in Q2 2006, they have dropped 26%.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy considerably worsened, according to the monthly Conference Board index reported Tuesday. The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months." The present situation index fell tp a reading of 21.2 and the expectations index fell to 27.5. The January readings for these were 29.7 and 42.5.
The Oil Drum: "Non OPEC-12 oil production peaked in 2004 at 46.8 million barrels/day (mbd). This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2004 but decreases to 42.1 mbd.
The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining non OPEC-12 oil production to renew the focus on oil conservation and alternative energy sources."
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That's three years sooner than previously forecast.
At the same time, the government's already large share of the nation's health care bill will keep growing.
Michael Pento: "The only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy. All sectors of the economy become overleveraged and the need to reduce debt becomes paramount. The economy then experiences a severe contraction in GDP. In a depression, the pull back in borrowing is not caused by interest rate increases from the Fed but an inability of the economy to take on further debt. A depression can last for many years as consumers, banks and the government goes through the painfully long and arduous process of deleveraging."
Rep. Ron Paul: "The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money. If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy's lifeblood, the currency, back where it Constitutionally belongs. If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate. If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization."
Target Corp.said fourth-quarter net income fell 41% to $609 million, or 81 cents a share, from $1.03 billion, or $1.23 a share in the year-ago period. Revenue edged down to $19 billion from $19.3 billion. Analysts expected earnings of 84 cents a share on revenue of $19.6 billion, according to a survey of analysts by FactSet.
Gold for February delivery was last down $6.20, or 0.6%, at $988.40 an ounce in North American electronic trading. Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
Commercial property prices fell almost 15% in 2008 amid the credit storm, according to the Moody's/REAL National All Property Type Aggregate Index.
Macy's sees same-store sales in 2009 to be down between 6% and 8%. Per-share profit is forecast to be 40 cents to 55 cents a share, excluding restructuring costs, Macy's said.
Excluding the charges and write-offs, Home Depot would have earned 19 cents a share, down 52.5% from the prior year. Sales fell 17% to $14.6 billion, for a 13% comparable sales fall. Analysts polled by FactSet were looking for a profit of 16 cents a share. For 2009, Home Depot sees earnings from continuing operations per share falling 7%, sales dropping 9%, and "high single digit negative" comparable-store sales.
Hans Goetti, Chief Investment Officer of LGT Bank in Liechtenstein, is saying that there could be a move to $3,000.00 per ounce of gold.
Rob Hanna: "Monday marked the 5th day in a row that the S&P 500 closed below its lower Bollinger Band (20 period, 2 std dev). Looking back to 1960 I found only 23 other occurrences. Of those, 22 managed to close higher than the trigger-day close at some point in the next 3 days. Unfortunately, the edge has been very short-term."
Feeling the pinch from sliding sales
Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy court in Wilmington, Del. Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states.
Jonah Goldberg: "Recall that during the primaries, Obama was probably second only to Dennis Kucinich as an anti-Iraq war and anti-Bush candidate. But he has kept President Bush's Defense secretary and appointed a secretary of State, Hillary Rodham Clinton, who voted for the war. His vice president, Joe Biden, also voted for the war. Obama himself seems to be in less of a hurry to leave Iraq than we might have expected from listening to him over the last couple of years.
The new president has ordered that his predecessor's rendition policies remain largely intact, even to the point of using the "state secrets" privilege to block a rendition lawsuit. Obama may have stated categorically that America "will not torture," but outsourcing it is still OK.
The White House also defends the Bush policy of imprisoning, without trial, enemy combatants captured abroad. Obama's lawyers argued in a court case brought by Afghan prisoners at the U.S. Air Force base at Bagram, Afghanistan, that the "government adheres to its previously articulated position" -- the one articulated by those evil Bush lawyers.
Meanwhile, a new Pentagon study commissioned by Obama has found that the prison at Guantanamo Bay meets the standards of the Geneva Convention. One can only guess how the White House will make use of that finding. At the least, it should provide cover while the administration looks for alternatives to Gitmo that might not be all that alternative.
On the domestic front, Education Secretary Arne Duncan has decided that Bush's signature No Child Left Behind Act should be retained and moderately reformed. His boldest suggestion so far? "Let's rebrand it. Give it a new name." Now that's change even cynics can believe in. "
In a rare instance of consistency between his campaign and his presidency, Obama is keeping Bush's Office of Faith-Based Initiatives, though he's renamed that one."
The Online Journal headed "
Obama's DOJ quietly sought dismissal of missing White House emails lawsuit."
Nassim Taleb Says U.S. Banking System Is `Designed to Blow Up'
The
difference between three-month dollar Libor and the Fed’s target rate for overnight loans reached a record 3.32 percentage points on Oct. 10, before narrowing to 1 percentage point today. It averaged 0.16 percentage point in the seven years to August 2007. Three-month Libor was unchanged at 1.25 percent today.
“We are nowhere near the levels that you’d want to see to indicate a well functioning banking system,” said
Jeffrey Caughron, associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “People still don’t get it in terms of how bad things are in the domestic and global economies.”
Microsoft Corp.on Tuesday reiterated its forecast for the second half of fiscal 2009, saying a "difficult" economy will continue. The stock traded at an 11-year low.
Mexican state oil monopoly Pemex produced an average of 2.68 million barrels of crude oil per day in January, down 9.2% from the same month last year. How much longer will Mexico be able to export oil to the U.S.? Maybe another 12 months at best. Do you believe gas lines are a thing of the past? Not to worry. We have a BUY AMERICA initiative.
Robert McHugh: "Credit has dried up, credit card companies cutting back lines, real estate sales frozen, bids lacking in financial markets, jobs being cut, salary and bonuses for those working being scaled back. Tax rebates are negligible, it will take years before the infrastructure spending in the stimulus plan creates jobs. Confidence that anyone is in charge who knows what will get us out of this mess, is lacking. Too many fraud, and bankruptcy, and bailout surprises day by day."
Vornado Realty Trust on Tuesday said funds from operations in the fourth quarter was negative $78 million, or 50 cents a share share, compared with a positive $193.4 million, or $1.18 a share, in the year-ago quarter. This is an indication of the current condition of commercial real estate.
South Africa's economy contracted for the first time in a decade in the fourth quarter of 2008, official data showed Tuesday. Gross domestic product fell by 1.8% at a seasonally adjusted annualized rate in the fourth quarter of 2008, down from growth of just 0.2% in the third quarter.
In July 2007, Bob Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”
Adjusted for charges, Office Depot said it lost $199 million, or 73 cents per share, in the latest quarter. Boca Raton, Fla.-based Office Depot said sales fell 15 percent to $3.27 billion from $3.87 billion a year ago. Sales in the company's North American retail division declined 17 percent, and revenue slipped 15 percent internationally.
Same-store sales, or sales at stores open for more than a year, dropped 18 percent at locations in the U.S. and Canada. Sales were sluggish in California and Florida, Office Depot said.
U.S. policy makers should focus on stimulating lending and preventing foreclosures rather than nationalizing banks, according to
Bill Gross, co-chief investment officer of Pacific Investment Management Co., the operator of the world’s biggest bond fund.
“The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization,” Gross wrote in his March
investment outlook posted today on the Newport Beach, California-based firm’s Web site. “Trillions will be required in the U.S. alone.”
Dubai property values are predicted to dive as much as 60 percent in 2009.
On Tuesday, Caterpillar and GE both traded at a new 52-week lows.
Gold for February delivery closed at $969.10 an ounce, down $25.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. Crude for April delivery ended up $1.52, or 4%, at $39.96 a barrel on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke warned on Tuesday the "severe" U.S. recession may drag into 2010 unless the government succeeds in stabilizing the banking system and financial markets with strong action. Yet, he also stated that the recession might end this year, and that regulators aren't planning to nationalize banks.
Lonmin Plc, the world's third largest primary platinum producer, said Tuesday that it expects to lay off as many as 5,500 full-time workers at its Marikana and Limpopo operations, citing "challenging economic conditions." Lonmin, whose operations are all based in South Africa, said it has reached agreements with the recognized union regarding the layoffs.
The Pentagon’s weapons tester says he doesn’t have “high confidence” that the Boeing Co.-managed U.S. missile defense would be effective against even a rudimentary North Korean missile.
The United States plans to withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama's inauguration, according to administration officials.
Allstate cuts its dividend by more than half, to $0.20 from $0.41
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
Republican Gov. Bobby Jindal of Louisiana: Says the way to lead is not to raise taxes, which he says puts more power in hands of Washington politicians.
He says the recently enacted stimulus bill will "grow the government, increase our taxes down the line, and saddle future generations with debt...Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs or build a prosperous future for our children."
Barry Ritholtz: "Here is something to mull over: Technically, 7,470 in the DJIA is the 50% retracement of the entire bull market that began in August 1982.
At 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.That is astounding."
The Hearst Corp. said Tuesday that unless the San Francisco Chronicle can undertake "critical" cost cutting measures including job cuts within weeks, the company will be forced to sell or close the newspaper. Hearst said the Chronicle lost more than $50 million last year and added that, "this year's losses to date are worse." The Chronicle has had major losses each year since 2001, Hearst said.
The Dow Jones Industrial Average closed up 236 points, or 3.3%, to 7,351 after dropping 251 points on Monday. The Nasdaq Composite Index was up 54 points, or 3.9%, to 1,442, and the Standard & Poor's 500 Index had added 30 points, 4%, to 773.
The gains were the biggest for the major indexes since Jan. 21, and the Nasdaq and S&P 500 made back all of their losses suffered on Monday. Today's was only the third Dow gain in 11 sessions and the first gains for the S&P 500 and the Nasdaq after six straight losses.
The union representing engineers at the Boeing Co.'s military aircraft plant here has recommended that its members reject the company's contract offer and authorize a strike.
Negotiations broke down Tuesday between Chicago-based Boeing and the Society of Professional Engineering Employees in Aerospace, which represents 700 engineers at Boeing's Integrated Defense Systems plant.
Saks said it's aggressively managing cash flow and said it expects to be free-cash-flow positive for 2009 and have ample capacity under its revolving line throughout the year. For the year, Saks forecast same-store sales to decline in the low double digits, including a 20% drop in the first half of the year.
Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December. Since home prices peaked in Q2 2006, they have dropped 26%.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy considerably worsened, according to the monthly Conference Board index reported Tuesday. The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months." The present situation index fell tp a reading of 21.2 and the expectations index fell to 27.5. The January readings for these were 29.7 and 42.5.
The Oil Drum: "Non OPEC-12 oil production peaked in 2004 at 46.8 million barrels/day (mbd). This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2004 but decreases to 42.1 mbd.
The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining non OPEC-12 oil production to renew the focus on oil conservation and alternative energy sources."
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That's three years sooner than previously forecast.
At the same time, the government's already large share of the nation's health care bill will keep growing.
Michael Pento: "The only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy. All sectors of the economy become overleveraged and the need to reduce debt becomes paramount. The economy then experiences a severe contraction in GDP. In a depression, the pull back in borrowing is not caused by interest rate increases from the Fed but an inability of the economy to take on further debt. A depression can last for many years as consumers, banks and the government goes through the painfully long and arduous process of deleveraging."
Rep. Ron Paul: "The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money. If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy's lifeblood, the currency, back where it Constitutionally belongs. If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate. If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization."
Target Corp.said fourth-quarter net income fell 41% to $609 million, or 81 cents a share, from $1.03 billion, or $1.23 a share in the year-ago period. Revenue edged down to $19 billion from $19.3 billion. Analysts expected earnings of 84 cents a share on revenue of $19.6 billion, according to a survey of analysts by FactSet.
Gold for February delivery was last down $6.20, or 0.6%, at $988.40 an ounce in North American electronic trading. Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
Commercial property prices fell almost 15% in 2008 amid the credit storm, according to the Moody's/REAL National All Property Type Aggregate Index.
Macy's sees same-store sales in 2009 to be down between 6% and 8%. Per-share profit is forecast to be 40 cents to 55 cents a share, excluding restructuring costs, Macy's said.
Excluding the charges and write-offs, Home Depot would have earned 19 cents a share, down 52.5% from the prior year. Sales fell 17% to $14.6 billion, for a 13% comparable sales fall. Analysts polled by FactSet were looking for a profit of 16 cents a share. For 2009, Home Depot sees earnings from continuing operations per share falling 7%, sales dropping 9%, and "high single digit negative" comparable-store sales.
Hans Goetti, Chief Investment Officer of LGT Bank in Liechtenstein, is saying that there could be a move to $3,000.00 per ounce of gold.
Rob Hanna: "Monday marked the 5th day in a row that the S&P 500 closed below its lower Bollinger Band (20 period, 2 std dev). Looking back to 1960 I found only 23 other occurrences. Of those, 22 managed to close higher than the trigger-day close at some point in the next 3 days. Unfortunately, the edge has been very short-term."
Feeling the pinch from sliding sales
Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy court in Wilmington, Del. Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states.
Jonah Goldberg: "Recall that during the primaries, Obama was probably second only to Dennis Kucinich as an anti-Iraq war and anti-Bush candidate. But he has kept President Bush's Defense secretary and appointed a secretary of State, Hillary Rodham Clinton, who voted for the war. His vice president, Joe Biden, also voted for the war. Obama himself seems to be in less of a hurry to leave Iraq than we might have expected from listening to him over the last couple of years.
The new president has ordered that his predecessor's rendition policies remain largely intact, even to the point of using the "state secrets" privilege to block a rendition lawsuit. Obama may have stated categorically that America "will not torture," but outsourcing it is still OK.
The White House also defends the Bush policy of imprisoning, without trial, enemy combatants captured abroad. Obama's lawyers argued in a court case brought by Afghan prisoners at the U.S. Air Force base at Bagram, Afghanistan, that the "government adheres to its previously articulated position" -- the one articulated by those evil Bush lawyers.
Meanwhile, a new Pentagon study commissioned by Obama has found that the prison at Guantanamo Bay meets the standards of the Geneva Convention. One can only guess how the White House will make use of that finding. At the least, it should provide cover while the administration looks for alternatives to Gitmo that might not be all that alternative.
On the domestic front, Education Secretary Arne Duncan has decided that Bush's signature No Child Left Behind Act should be retained and moderately reformed. His boldest suggestion so far? "Let's rebrand it. Give it a new name." Now that's change even cynics can believe in. "
In a rare instance of consistency between his campaign and his presidency, Obama is keeping Bush's Office of Faith-Based Initiatives, though he's renamed that one."
The Online Journal headed "
Obama's DOJ quietly sought dismissal of missing White House emails lawsuit."
Nassim Taleb Says U.S. Banking System Is `Designed to Blow Up'
The difference between three-month dollar Libor and the Fed’s target rate for overnight loans reached a record 3.32 percentage points on Oct. 10, before narrowing to 1 percentage point today. It averaged 0.16 percentage point in the seven years to August 2007. Three-month Libor was unchanged at 1.25 percent today.
“We are nowhere near the levels that you’d want to see to indicate a well functioning banking system,” said
Jeffrey Caughron, associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “People still don’t get it in terms of how bad things are in the domestic and global economies.”
Microsoft Corp.on Tuesday reiterated its forecast for the second half of fiscal 2009, saying a "difficult" economy will continue. The stock traded at an 11-year low.
Mexican state oil monopoly Pemex produced an average of 2.68 million barrels of crude oil per day in January, down 9.2% from the same month last year. How much longer will Mexico be able to export oil to the U.S.? Maybe another 12 months at best. Do you believe gas lines are a thing of the past? Not to worry. We have a BUY AMERICA initiative.
Robert McHugh: "Credit has dried up, credit card companies cutting back lines, real estate sales frozen, bids lacking in financial markets, jobs being cut, salary and bonuses for those working being scaled back. Tax rebates are negligible, it will take years before the infrastructure spending in the stimulus plan creates jobs. Confidence that anyone is in charge who knows what will get us out of this mess, is lacking. Too many fraud, and bankruptcy, and bailout surprises day by day."
Vornado Realty Trust on Tuesday said funds from operations in the fourth quarter was negative $78 million, or 50 cents a share share, compared with a positive $193.4 million, or $1.18 a share, in the year-ago quarter. This is an indication of the current condition of commercial real estate.
South Africa's economy contracted for the first time in a decade in the fourth quarter of 2008, official data showed Tuesday. Gross domestic product fell by 1.8% at a seasonally adjusted annualized rate in the fourth quarter of 2008, down from growth of just 0.2% in the third quarter.
In July 2007, Bob Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”
Adjusted for charges, Office Depot said it lost $199 million, or 73 cents per share, in the latest quarter. Boca Raton, Fla.-based Office Depot said sales fell 15 percent to $3.27 billion from $3.87 billion a year ago. Sales in the company's North American retail division declined 17 percent, and revenue slipped 15 percent internationally.
Same-store sales, or sales at stores open for more than a year, dropped 18 percent at locations in the U.S. and Canada. Sales were sluggish in California and Florida, Office Depot said.
U.S. policy makers should focus on stimulating lending and preventing foreclosures rather than nationalizing banks, according to
Bill Gross, co-chief investment officer of Pacific Investment Management Co., the operator of the world’s biggest bond fund.
“The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization,” Gross wrote in his March
investment outlook posted today on the Newport Beach, California-based firm’s Web site. “Trillions will be required in the U.S. alone.”
Dubai property values are predicted to dive as much as 60 percent in 2009.
On Tuesday, Caterpillar and GE both traded at a new 52-week lows.
Gold for February delivery closed at $969.10 an ounce, down $25.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. Crude for April delivery ended up $1.52, or 4%, at $39.96 a barrel on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke warned on Tuesday the "severe" U.S. recession may drag into 2010 unless the government succeeds in stabilizing the banking system and financial markets with strong action. Yet, he also stated that the recession might end this year, and that regulators aren't planning to nationalize banks.
Lonmin Plc, the world's third largest primary platinum producer, said Tuesday that it expects to lay off as many as 5,500 full-time workers at its Marikana and Limpopo operations, citing "challenging economic conditions." Lonmin, whose operations are all based in South Africa, said it has reached agreements with the recognized union regarding the layoffs.
The Pentagon’s weapons tester says he doesn’t have “high confidence” that the Boeing Co.-managed U.S. missile defense would be effective against even a rudimentary North Korean missile.
The United States plans to withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama's inauguration, according to administration officials.
Allstate cuts its dividend by more than half, to $0.20 from $0.41
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
Republican Gov. Bobby Jindal of Louisiana: Says the way to lead is not to raise taxes, which he says puts more power in hands of Washington politicians.
He says the recently enacted stimulus bill will "grow the government, increase our taxes down the line, and saddle future generations with debt...Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs or build a prosperous future for our children."
Barry Ritholtz: "Here is something to mull over: Technically, 7,470 in the DJIA is the 50% retracement of the entire bull market that began in August 1982.
At 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.That is astounding."
The Hearst Corp. said Tuesday that unless the San Francisco Chronicle can undertake "critical" cost cutting measures including job cuts within weeks, the company will be forced to sell or close the newspaper. Hearst said the Chronicle lost more than $50 million last year and added that, "this year's losses to date are worse." The Chronicle has had major losses each year since 2001, Hearst said.
The Dow Jones Industrial Average closed up 236 points, or 3.3%, to 7,351 after dropping 251 points on Monday. The Nasdaq Composite Index was up 54 points, or 3.9%, to 1,442, and the Standard & Poor's 500 Index had added 30 points, 4%, to 773.
The gains were the biggest for the major indexes since Jan. 21, and the Nasdaq and S&P 500 made back all of their losses suffered on Monday. Today's was only the third Dow gain in 11 sessions and the first gains for the S&P 500 and the Nasdaq after six straight losses.
The union representing engineers at the Boeing Co.'s military aircraft plant here has recommended that its members reject the company's contract offer and authorize a strike.
Negotiations broke down Tuesday between Chicago-based Boeing and the Society of Professional Engineering Employees in Aerospace, which represents 700 engineers at Boeing's Integrated Defense Systems plant.
Saks said it's aggressively managing cash flow and said it expects to be free-cash-flow positive for 2009 and have ample capacity under its revolving line throughout the year. For the year, Saks forecast same-store sales to decline in the low double digits, including a 20% drop in the first half of the year.
.
2/24/09 Home Prices And Consumer Confidence
Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December. Since home prices peaked in Q2 2006, they have dropped 26%.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy considerably worsened, according to the monthly Conference Board index reported Tuesday. The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months." The present situation index fell tp a reading of 21.2 and the expectations index fell to 27.5. The January readings for these were 29.7 and 42.5.
The Oil Drum: "Non OPEC-12 oil production peaked in 2004 at 46.8 million barrels/day (mbd). This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2004 but decreases to 42.1 mbd.
The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining non OPEC-12 oil production to renew the focus on oil conservation and alternative energy sources."
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That's three years sooner than previously forecast.
At the same time, the government's already large share of the nation's health care bill will keep growing.
Michael Pento: "The only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy. All sectors of the economy become overleveraged and the need to reduce debt becomes paramount. The economy then experiences a severe contraction in GDP. In a depression, the pull back in borrowing is not caused by interest rate increases from the Fed but an inability of the economy to take on further debt. A depression can last for many years as consumers, banks and the government goes through the painfully long and arduous process of deleveraging."
Rep. Ron Paul: "The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money. If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy's lifeblood, the currency, back where it Constitutionally belongs. If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate. If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization."
Target Corp.said fourth-quarter net income fell 41% to $609 million, or 81 cents a share, from $1.03 billion, or $1.23 a share in the year-ago period. Revenue edged down to $19 billion from $19.3 billion. Analysts expected earnings of 84 cents a share on revenue of $19.6 billion, according to a survey of analysts by FactSet.
Gold for February delivery was last down $6.20, or 0.6%, at $988.40 an ounce in North American electronic trading. Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
Commercial property prices fell almost 15% in 2008 amid the credit storm, according to the Moody's/REAL National All Property Type Aggregate Index.
Macy's sees same-store sales in 2009 to be down between 6% and 8%. Per-share profit is forecast to be 40 cents to 55 cents a share, excluding restructuring costs, Macy's said.
Excluding the charges and write-offs, Home Depot would have earned 19 cents a share, down 52.5% from the prior year. Sales fell 17% to $14.6 billion, for a 13% comparable sales fall. Analysts polled by FactSet were looking for a profit of 16 cents a share. For 2009, Home Depot sees earnings from continuing operations per share falling 7%, sales dropping 9%, and "high single digit negative" comparable-store sales.
Hans Goetti, Chief Investment Officer of LGT Bank in Liechtenstein, is saying that there could be a move to $3,000.00 per ounce of gold.
Rob Hanna: "Monday marked the 5th day in a row that the S&P 500 closed below its lower Bollinger Band (20 period, 2 std dev). Looking back to 1960 I found only 23 other occurrences. Of those, 22 managed to close higher than the trigger-day close at some point in the next 3 days. Unfortunately, the edge has been very short-term."
Feeling the pinch from sliding sales
Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy court in Wilmington, Del. Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states.
Jonah Goldberg: "Recall that during the primaries, Obama was probably second only to Dennis Kucinich as an anti-Iraq war and anti-Bush candidate. But he has kept President Bush's Defense secretary and appointed a secretary of State, Hillary Rodham Clinton, who voted for the war. His vice president, Joe Biden, also voted for the war. Obama himself seems to be in less of a hurry to leave Iraq than we might have expected from listening to him over the last couple of years.
The new president has ordered that his predecessor's rendition policies remain largely intact, even to the point of using the "state secrets" privilege to block a rendition lawsuit. Obama may have stated categorically that America "will not torture," but outsourcing it is still OK.
The White House also defends the Bush policy of imprisoning, without trial, enemy combatants captured abroad. Obama's lawyers argued in a court case brought by Afghan prisoners at the U.S. Air Force base at Bagram, Afghanistan, that the "government adheres to its previously articulated position" -- the one articulated by those evil Bush lawyers.
Meanwhile, a new Pentagon study commissioned by Obama has found that the prison at Guantanamo Bay meets the standards of the Geneva Convention. One can only guess how the White House will make use of that finding. At the least, it should provide cover while the administration looks for alternatives to Gitmo that might not be all that alternative.
On the domestic front, Education Secretary Arne Duncan has decided that Bush's signature No Child Left Behind Act should be retained and moderately reformed. His boldest suggestion so far? "Let's rebrand it. Give it a new name." Now that's change even cynics can believe in. "
In a rare instance of consistency between his campaign and his presidency, Obama is keeping Bush's Office of Faith-Based Initiatives, though he's renamed that one."
The Online Journal headed "
Obama's DOJ quietly sought dismissal of missing White House emails lawsuit."
Nassim Taleb Says U.S. Banking System Is `Designed to Blow Up'
The difference between three-month dollar Libor and the Fed’s target rate for overnight loans reached a record 3.32 percentage points on Oct. 10, before narrowing to 1 percentage point today. It averaged 0.16 percentage point in the seven years to August 2007. Three-month Libor was unchanged at 1.25 percent today.
“We are nowhere near the levels that you’d want to see to indicate a well functioning banking system,” said
Jeffrey Caughron, associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “People still don’t get it in terms of how bad things are in the domestic and global economies.”
Microsoft Corp.on Tuesday reiterated its forecast for the second half of fiscal 2009, saying a "difficult" economy will continue. The stock traded at an 11-year low.
Mexican state oil monopoly Pemex produced an average of 2.68 million barrels of crude oil per day in January, down 9.2% from the same month last year. How much longer will Mexico be able to export oil to the U.S.? Maybe another 12 months at best. Do you believe gas lines are a thing of the past? Not to worry. We have a BUY AMERICA initiative.
Robert McHugh: "Credit has dried up, credit card companies cutting back lines, real estate sales frozen, bids lacking in financial markets, jobs being cut, salary and bonuses for those working being scaled back. Tax rebates are negligible, it will take years before the infrastructure spending in the stimulus plan creates jobs. Confidence that anyone is in charge who knows what will get us out of this mess, is lacking. Too many fraud, and bankruptcy, and bailout surprises day by day."
Vornado Realty Trust on Tuesday said funds from operations in the fourth quarter was negative $78 million, or 50 cents a share share, compared with a positive $193.4 million, or $1.18 a share, in the year-ago quarter. This is an indication of the current condition of commercial real estate.
South Africa's economy contracted for the first time in a decade in the fourth quarter of 2008, official data showed Tuesday. Gross domestic product fell by 1.8% at a seasonally adjusted annualized rate in the fourth quarter of 2008, down from growth of just 0.2% in the third quarter.
In July 2007, Bob Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”
Adjusted for charges, Office Depot said it lost $199 million, or 73 cents per share, in the latest quarter. Boca Raton, Fla.-based Office Depot said sales fell 15 percent to $3.27 billion from $3.87 billion a year ago. Sales in the company's North American retail division declined 17 percent, and revenue slipped 15 percent internationally.
Same-store sales, or sales at stores open for more than a year, dropped 18 percent at locations in the U.S. and Canada. Sales were sluggish in California and Florida, Office Depot said.
U.S. policy makers should focus on stimulating lending and preventing foreclosures rather than nationalizing banks, according to
Bill Gross, co-chief investment officer of Pacific Investment Management Co., the operator of the world’s biggest bond fund.
“The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization,” Gross wrote in his March
investment outlook posted today on the Newport Beach, California-based firm’s Web site. “Trillions will be required in the U.S. alone.”
Dubai property values are predicted to dive as much as 60 percent in 2009.
On Tuesday, Caterpillar and GE both traded at a new 52-week lows.
Gold for February delivery closed at $969.10 an ounce, down $25.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. Crude for April delivery ended up $1.52, or 4%, at $39.96 a barrel on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke warned on Tuesday the "severe" U.S. recession may drag into 2010 unless the government succeeds in stabilizing the banking system and financial markets with strong action. Yet, he also stated that the recession might end this year, and that regulators aren't planning to nationalize banks.
Lonmin Plc, the world's third largest primary platinum producer, said Tuesday that it expects to lay off as many as 5,500 full-time workers at its Marikana and Limpopo operations, citing "challenging economic conditions." Lonmin, whose operations are all based in South Africa, said it has reached agreements with the recognized union regarding the layoffs.
The Pentagon’s weapons tester says he doesn’t have “high confidence” that the Boeing Co.-managed U.S. missile defense would be effective against even a rudimentary North Korean missile.
The United States plans to withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama's inauguration, according to administration officials.
Allstate cuts its dividend by more than half, to $0.20 from $0.41
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
Republican Gov. Bobby Jindal of Louisiana: Says the way to lead is not to raise taxes, which he says puts more power in hands of Washington politicians.
He says the recently enacted stimulus bill will "grow the government, increase our taxes down the line, and saddle future generations with debt...Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs or build a prosperous future for our children."
Barry Ritholtz: "Here is something to mull over: Technically, 7,470 in the DJIA is the 50% retracement of the entire bull market that began in August 1982.
At 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.That is astounding."
The Hearst Corp. said Tuesday that unless the San Francisco Chronicle can undertake "critical" cost cutting measures including job cuts within weeks, the company will be forced to sell or close the newspaper. Hearst said the Chronicle lost more than $50 million last year and added that, "this year's losses to date are worse." The Chronicle has had major losses each year since 2001, Hearst said.
The Dow Jones Industrial Average closed up 236 points, or 3.3%, to 7,351 after dropping 251 points on Monday. The Nasdaq Composite Index was up 54 points, or 3.9%, to 1,442, and the Standard & Poor's 500 Index had added 30 points, 4%, to 773.
The gains were the biggest for the major indexes since Jan. 21, and the Nasdaq and S&P 500 made back all of their losses suffered on Monday. Today's was only the third Dow gain in 11 sessions and the first gains for the S&P 500 and the Nasdaq after six straight losses.
The union representing engineers at the Boeing Co.'s military aircraft plant here has recommended that its members reject the company's contract offer and authorize a strike.
Negotiations broke down Tuesday between Chicago-based Boeing and the Society of Professional Engineering Employees in Aerospace, which represents 700 engineers at Boeing's Integrated Defense Systems plant.
Saks said it's aggressively managing cash flow and said it expects to be free-cash-flow positive for 2009 and have ample capacity under its revolving line throughout the year. For the year, Saks forecast same-store sales to decline in the low double digits, including a 20% drop in the first half of the year.
.
2/24/09 Home Prices And Consumer Confidence
Home prices in 20 major U.S. cities dropped 2.5% in December from the prior month, and were down a record 18.5% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest declines in December and for year were in Phoenix, with price drops of 5.1% and 34%, respectively. For the original 10-city index, prices fell a record 19.2% for the year, and 2.3% in December. Since home prices peaked in Q2 2006, they have dropped 26%.
Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy considerably worsened, according to the monthly Conference Board index reported Tuesday. The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months." The present situation index fell tp a reading of 21.2 and the expectations index fell to 27.5. The January readings for these were 29.7 and 42.5.
The Oil Drum: "Non OPEC-12 oil production peaked in 2004 at 46.8 million barrels/day (mbd). This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2004 but decreases to 42.1 mbd.
The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining non OPEC-12 oil production to renew the focus on oil conservation and alternative energy sources."
Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.
As the recession cuts into tax receipts, Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That's three years sooner than previously forecast.
At the same time, the government's already large share of the nation's health care bill will keep growing.
Michael Pento: "The only cure for a depression is time. Not the abrogation of the free market. The seeds of a depression are sown when an extreme over supply of money and credit is allowed to continue for a protracted period of time. When this phenomenon occurs, it produces a pernicious level of debt to pervade throughout the economy. All sectors of the economy become overleveraged and the need to reduce debt becomes paramount. The economy then experiences a severe contraction in GDP. In a depression, the pull back in borrowing is not caused by interest rate increases from the Fed but an inability of the economy to take on further debt. A depression can last for many years as consumers, banks and the government goes through the painfully long and arduous process of deleveraging."
Rep. Ron Paul: "The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money. If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy's lifeblood, the currency, back where it Constitutionally belongs. If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate. If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization."
Target Corp.said fourth-quarter net income fell 41% to $609 million, or 81 cents a share, from $1.03 billion, or $1.23 a share in the year-ago period. Revenue edged down to $19 billion from $19.3 billion. Analysts expected earnings of 84 cents a share on revenue of $19.6 billion, according to a survey of analysts by FactSet.
Gold for February delivery was last down $6.20, or 0.6%, at $988.40 an ounce in North American electronic trading. Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
Commercial property prices fell almost 15% in 2008 amid the credit storm, according to the Moody's/REAL National All Property Type Aggregate Index.
Macy's sees same-store sales in 2009 to be down between 6% and 8%. Per-share profit is forecast to be 40 cents to 55 cents a share, excluding restructuring costs, Macy's said.
Excluding the charges and write-offs, Home Depot would have earned 19 cents a share, down 52.5% from the prior year. Sales fell 17% to $14.6 billion, for a 13% comparable sales fall. Analysts polled by FactSet were looking for a profit of 16 cents a share. For 2009, Home Depot sees earnings from continuing operations per share falling 7%, sales dropping 9%, and "high single digit negative" comparable-store sales.
Hans Goetti, Chief Investment Officer of LGT Bank in Liechtenstein, is saying that there could be a move to $3,000.00 per ounce of gold.
Rob Hanna: "Monday marked the 5th day in a row that the S&P 500 closed below its lower Bollinger Band (20 period, 2 std dev). Looking back to 1960 I found only 23 other occurrences. Of those, 22 managed to close higher than the trigger-day close at some point in the next 3 days. Unfortunately, the edge has been very short-term."
Feeling the pinch from sliding sales
Ritz Camera Centers Inc. has filed for Chapter 11 protection in U.S. Bankruptcy court in Wilmington, Del. Ritz is the nation's largest camera store chain with more than 1,000 locations in 45 states.
Jonah Goldberg: "Recall that during the primaries, Obama was probably second only to Dennis Kucinich as an anti-Iraq war and anti-Bush candidate. But he has kept President Bush's Defense secretary and appointed a secretary of State, Hillary Rodham Clinton, who voted for the war. His vice president, Joe Biden, also voted for the war. Obama himself seems to be in less of a hurry to leave Iraq than we might have expected from listening to him over the last couple of years.
The new president has ordered that his predecessor's rendition policies remain largely intact, even to the point of using the "state secrets" privilege to block a rendition lawsuit. Obama may have stated categorically that America "will not torture," but outsourcing it is still OK.
The White House also defends the Bush policy of imprisoning, without trial, enemy combatants captured abroad. Obama's lawyers argued in a court case brought by Afghan prisoners at the U.S. Air Force base at Bagram, Afghanistan, that the "government adheres to its previously articulated position" -- the one articulated by those evil Bush lawyers.
Meanwhile, a new Pentagon study commissioned by Obama has found that the prison at Guantanamo Bay meets the standards of the Geneva Convention. One can only guess how the White House will make use of that finding. At the least, it should provide cover while the administration looks for alternatives to Gitmo that might not be all that alternative.
On the domestic front, Education Secretary Arne Duncan has decided that Bush's signature No Child Left Behind Act should be retained and moderately reformed. His boldest suggestion so far? "Let's rebrand it. Give it a new name." Now that's change even cynics can believe in. "
In a rare instance of consistency between his campaign and his presidency, Obama is keeping Bush's Office of Faith-Based Initiatives, though he's renamed that one."
The Online Journal headed "
Obama's DOJ quietly sought dismissal of missing White House emails lawsuit."
Nassim Taleb Says U.S. Banking System Is `Designed to Blow Up'
The
difference between three-month dollar Libor and the Fed’s target rate for overnight loans reached a record 3.32 percentage points on Oct. 10, before narrowing to 1 percentage point today. It averaged 0.16 percentage point in the seven years to August 2007. Three-month Libor was unchanged at 1.25 percent today.
“We are nowhere near the levels that you’d want to see to indicate a well functioning banking system,” said
Jeffrey Caughron, associate partner in Oklahoma City at The Baker Group Ltd., which advises community banks investing $20 billion of assets. “People still don’t get it in terms of how bad things are in the domestic and global economies.”
Microsoft Corp.on Tuesday reiterated its forecast for the second half of fiscal 2009, saying a "difficult" economy will continue. The stock traded at an 11-year low.
Mexican state oil monopoly Pemex produced an average of 2.68 million barrels of crude oil per day in January, down 9.2% from the same month last year. How much longer will Mexico be able to export oil to the U.S.? Maybe another 12 months at best. Do you believe gas lines are a thing of the past? Not to worry. We have a BUY AMERICA initiative.
Robert McHugh: "Credit has dried up, credit card companies cutting back lines, real estate sales frozen, bids lacking in financial markets, jobs being cut, salary and bonuses for those working being scaled back. Tax rebates are negligible, it will take years before the infrastructure spending in the stimulus plan creates jobs. Confidence that anyone is in charge who knows what will get us out of this mess, is lacking. Too many fraud, and bankruptcy, and bailout surprises day by day."
Vornado Realty Trust on Tuesday said funds from operations in the fourth quarter was negative $78 million, or 50 cents a share share, compared with a positive $193.4 million, or $1.18 a share, in the year-ago quarter. This is an indication of the current condition of commercial real estate.
South Africa's economy contracted for the first time in a decade in the fourth quarter of 2008, official data showed Tuesday. Gross domestic product fell by 1.8% at a seasonally adjusted annualized rate in the fourth quarter of 2008, down from growth of just 0.2% in the third quarter.
In July 2007, Bob Prechter advised shorting U.S. stocks saying “aggressive speculators should return to a fully leveraged short position.” He yesterday recommended investors cover that position.
“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”
Adjusted for charges, Office Depot said it lost $199 million, or 73 cents per share, in the latest quarter. Boca Raton, Fla.-based Office Depot said sales fell 15 percent to $3.27 billion from $3.87 billion a year ago. Sales in the company's North American retail division declined 17 percent, and revenue slipped 15 percent internationally.
Same-store sales, or sales at stores open for more than a year, dropped 18 percent at locations in the U.S. and Canada. Sales were sluggish in California and Florida, Office Depot said.
U.S. policy makers should focus on stimulating lending and preventing foreclosures rather than nationalizing banks, according to
Bill Gross, co-chief investment officer of Pacific Investment Management Co., the operator of the world’s biggest bond fund.
“The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization,” Gross wrote in his March
investment outlook posted today on the Newport Beach, California-based firm’s Web site. “Trillions will be required in the U.S. alone.”
Dubai property values are predicted to dive as much as 60 percent in 2009.
On Tuesday, Caterpillar and GE both traded at a new 52-week lows.
Gold for February delivery closed at $969.10 an ounce, down $25.50, or 2.6%, on the Comex division of the New York Mercantile Exchange. Crude for April delivery ended up $1.52, or 4%, at $39.96 a barrel on the New York Mercantile Exchange.
Federal Reserve Chairman Ben Bernanke warned on Tuesday the "severe" U.S. recession may drag into 2010 unless the government succeeds in stabilizing the banking system and financial markets with strong action. Yet, he also stated that the recession might end this year, and that regulators aren't planning to nationalize banks.
Lonmin Plc, the world's third largest primary platinum producer, said Tuesday that it expects to lay off as many as 5,500 full-time workers at its Marikana and Limpopo operations, citing "challenging economic conditions." Lonmin, whose operations are all based in South Africa, said it has reached agreements with the recognized union regarding the layoffs.
The Pentagon’s weapons tester says he doesn’t have “high confidence” that the Boeing Co.-managed U.S. missile defense would be effective against even a rudimentary North Korean missile.
The United States plans to withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama's inauguration, according to administration officials.
Allstate cuts its dividend by more than half, to $0.20 from $0.41
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
Republican Gov. Bobby Jindal of Louisiana: Says the way to lead is not to raise taxes, which he says puts more power in hands of Washington politicians.
He says the recently enacted stimulus bill will "grow the government, increase our taxes down the line, and saddle future generations with debt...Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs or build a prosperous future for our children."
Barry Ritholtz: "Here is something to mull over: Technically, 7,470 in the DJIA is the 50% retracement of the entire bull market that began in August 1982.
At 7,100, we not only cut in half the October 2007 highs of 14,198.50, but we have given back 50% of the 27 year move from the start of the big bull market of the 1980s to yesterday.That is astounding."
The Hearst Corp. said Tuesday that unless the San Francisco Chronicle can undertake "critical" cost cutting measures including job cuts within weeks, the company will be forced to sell or close the newspaper. Hearst said the Chronicle lost more than $50 million last year and added that, "this year's losses to date are worse." The Chronicle has had major losses each year since 2001, Hearst said.
The Dow Jones Industrial Average closed up 236 points, or 3.3%, to 7,351 after dropping 251 points on Monday. The Nasdaq Composite Index was up 54 points, or 3.9%, to 1,442, and the Standard & Poor's 500 Index had added 30 points, 4%, to 773.
The gains were the biggest for the major indexes since Jan. 21, and the Nasdaq and S&P 500 made back all of their losses suffered on Monday. Today's was only the third Dow gain in 11 sessions and the first gains for the S&P 500 and the Nasdaq after six straight losses.
The union representing engineers at the Boeing Co.'s military aircraft plant here has recommended that its members reject the company's contract offer and authorize a strike.
Negotiations broke down Tuesday between Chicago-based Boeing and the Society of Professional Engineering Employees in Aerospace, which represents 700 engineers at Boeing's Integrated Defense Systems plant.
Saks said it's aggressively managing cash flow and said it expects to be free-cash-flow positive for 2009 and have ample capacity under its revolving line throughout the year. For the year, Saks forecast same-store sales to decline in the low double digits, including a 20% drop in the first half of the year.
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