4/24/09 America's Soul
Employers took 2,933 mass layoff actions in March that resulted inthe separation of 299,388 workers, seasonally adjusted, as measured bynew filings for unemployment insurance benefits during the month, theBureau of Labor Statistics of the U.S. Department of Labor reported to-day. Each action involved at least 50 persons from a single employer. The number of mass layoff events in March increased by 164 from the prior month, while the number of associated initial claims increased by 3,911. Over the year, the number of mass layoff events increased by 1,348, and the number of associated initial claims increased by 137,891. In March, the manufacturing sector experienced 1,259 mass layoff events, seasonally adjusted, resulting in 155,909 initial claims. Over the month, mass layoff events in manufacturing increased by 24, and initial claims
increased by 3,291. Layoff events and
initial claims rose to their highest levels on record, with data available back to 1995; events in the manufacturing sector also reached its highest level.
A South Florida county that rode high through the housing boomearlier this decade, then crashed hard when the foreclosure crisisstruck, declared a state of economic emergency on Tuesday.
St. Lucie County's action authorizes $25 million to $30 million for a slate of new construction projects — with the condition they use largely local labor and supplies — in hopes of jump-starting a sorely distressed local economy.
However, the county commission toed a careful line, insisting the government itself was financially healthy while expressing dire need.
"The whole country is in an economic crisis," Commissioner Doug Coward said. "Clearly a declaration of local economic emergency sends a message of distress, but in my opinion, we need to balance that with the optimism that I think we in the board have."
Officials are trying to throw a lifeline to the 25 percent to 40 percent of unemployed workers in sectors of the formerly lucrative construction industry. Winning contractors must use at least 75 percent of labor, supplies and materials from local sources.
The National Association of Counties had said it knew of no other U.S. county that was contemplating such a move as St. Lucie.
Mark Knoller: "On Earth Day President Obama could have saved at least 9,116 gallons of fuel by giving his speech at the White House – but no wind turbines are manufactured here."
China has boosted its gold reserves to 1,054 metric tons, according to a Friday report by Xinhua News Agency, which cited Hu Xiaolian, head of the State Administration of Foreign Exchange.
The increase makes China the world's fifth-largest holder of gold, just ahead of Switzerland, and among the six nations plus the International Monetary Fund that have reserves of more than 1,000 metric tons.
Amazon's results reported late Thursday indicated that despite the recession, consumers are still buying plenty of products like books, DVDs and electronics through the Seattle-based company's Web site.
Amazon shares rose $1.99, or 2.5 percent, to $82.60 in premarket activity.
American Express reported a 56% drop in quarterly net income as the credit card giant set aside more money to cover loan losses. But, net income attributable to common shareholders was 31 cents a share, well ahead of a 12 cents a share estimate in a Thomson Reuters survey.
For the full year, Honeywell lowered its earnings outlook to the range of $2.85 to $3.20 a share, from a prior range of $3.20 to $3.55 a share.
Ford Motor Credit lost $13 million in the first quarter, compared to net income of $24 million a year earlier. On a pre-tax basis, Ford Motor Credit reported a loss of $36 million in the first quarter, compared with earnings of $32 million in the previous year.
Schlumberger said that its first-quarter net income fell to $938.5 million, or 78 cents a share, from 1.3 billion, or $1.09 a share, a year ago. Analysts had been expecting earnings of 75 cents a share, according to data compiled by FactSet. Revenue at the oil services firm declined to $6.0 billion, from $6.29 billion a year ago. The firm said that the rate of decline in revenue at its oilfield services division accelerated considerably compared to the fourth quarter, largely due to a sharp in North American natural gas rig count. "Our visibility on 2009 has not materially changed from the end of the fourth quarter," it said. Schlumberger said it's wrapping up a round of 5,000 layoffs and reiterated plans to cut another 5,000 jobs by the end of the year.
China's foreign exchange reserves stood at $1.946 trillion at the end of 2008, up $417.8 billion from the year before, the state-run Xinhua news agency reported Friday, citing China's State Administration of Foreign Exchange.
According to the WSJ, Chrysler is preparing to file for Chapter 11 protection as soon as next week, whether or not it reaches a deal with lenders or forges an alliance with Italy's Fiat. Meanwhile, Fiat is talking to GM about Europe and Latin America.
Microsoft Corp. posted a 32% drop in profit and the first decline in quarterly revenue in its 23-year history as a public company, as the global recession took a toll on nearly every segment of the software company's business. The company pointed to a significant decline in display-advertising rates, even as page views and search queries went up. It plans to launch a new version of search in the next few months and has also been reported to be in talks with Yahoo on a search partnership.
The UK economy contracted much more sharply in the first quarter of this year than economists expected, casting doubt on the chancellor’s economic forecasts made in this week’s Budget.
GDP in the first three months of 2009 contracted by 1.9 per cent from the level seen in the fourth quarter of 2008, according to the Office for National Statistics. Economists polled by Reuters had expected an average decline of 1.5 per cent.
According to AMG Data Services, for the week ended April 22, Equity Fund Inflows $13 Mil; Taxable Bond Fund Inflows $4 Bil
xETFs - Equity Fund Inflows $1.3 Bil; Taxable Bond Fund Inflows $2.2 Bil
Rob Hanna: "One of the most notable aspects of Thursday’s trading was the poor breadth in the Nasdaq, as only about 38% of issues closed higher."
Sales of new homes were nearly unchanged in March, the Commerce Department reported Friday, adding that sales in the first two months of the year were stronger than initially reported. Sales fell 0.6% in March to a seasonally adjusted annual rate of 356,000 from 358,000 in February. February's sales pace was revised higher from 337,000 reported a month ago. January's sales pace was revised from 322,000 to 331,000, the low for the cycle. Builders continued to cut prices in March, and have reduced their inventories of unsold homes by a record amount in the past year. But the time it takes to sell a home rose to record high of 10.2 months, the government said.
"We are no doubt in difficult times. More difficult than I foresaw four months ago," said Dave Cote, chief executive of Honeywell, on a conference call with analysts. "We don't know exactly how long these challenging economic times will continue."
3M, which makes products ranging from Scotch tape to optical films for liquid crystal displays, cut its 2009 per-share profit forecast by about 9 percent at its midpoint, and Honeywell cut its view by 10 percent.
"I do not expect to see much in the way of end market improvements until at least the third quarter, or possibly even the fourth quarter," said George Buckley, 3M's CEO. "The year will turn out to be somewhat more challenging than we had originally expected."
GM gets $2 bln in working capital from Treasury.
Moody's Investors Service downgraded the long-term and short-term ratings of American Express Co. because of weaker revenue trends. Moody's cut its long-term debt rating to A3 from A2, and the short-term rating to Prime-2 from Prime-1. The outlook is negative.
Paul Krugman: "For the fact is that officials in the Bush administration instituted torture as a policy, misled the nation into a war they wanted to fight and, probably, tortured people in the attempt to extract “confessions” that would justify that war. And during the march to war, most of the political and media establishment looked the other way.
It’s hard, then, not to be cynical when some of the people who should have spoken out against what was happening, but didn’t, now declare that we should forget the whole era — for the sake of the country, of course.
Sorry, but what we really should do for the sake of the country is have investigations both of torture and of the march to war. These investigations should, where appropriate, be followed by prosecutions — not out of vindictiveness, but because this is a nation of laws.
We need to do this for the sake of our future. For this isn’t about looking backward, it’s about looking forward — because it’s about reclaiming America’s soul."
A small, single-engine plane strayed into restricted air space near the U.S. Capitol on Friday, forcing anxious officials to place the White House in temporary lockdown and take steps to evacuate the U.S. Capitol.
The episode was over within minutes as two F-16 fighter jets and two Coast Guard helicopters were dispatched to intercept the plane and escort it to an airport in Maryland, according to the Federal Aviation Administration. U.S. Northern Command spokesman Michael Kucharek said the two helicopters established communications with the pilot.
The plane landed at Indian Head Airport in Charles County, Md., where airport owner Gil Bauserman said the aircraft had been flying from Maine to North Carolina. Bauserman said the military notified the airport that the plane, which he identified as a Cessna 180, would be making an unscheduled landing at 12:45 p.m. EDT. The plane landed 15 minutes later, escorted by the F-16s and the helicopters.
"It was just a navigation mistake, the GPS went and the pilot got confused," Bauserman said in an interview with The Associated Press.
Where were the F-16's during 9/11? I guess they only intercept single-engine planes!
Finance ministers from the world's top industrial and developing nations were gathering Friday for three days of discussions on ways to revive the ailing global economy, including the vital task of getting the world's banks to lend more freely again.
The ministers, gathered in Washington for meetings of the Group of Seven major industrialized nations and the Group of 20 rich and developing nations, are urging Treasury Secretary Timothy Geithner to move quickly to remove distressed assets from U.S. banks' books.
"We need to kickstart credit," British finance minister Alistair Darling told reporters on Friday. "We need to get credit flowing again, and that means you've got to sort out these toxic assets. So I hope America, the United States can make progress as fast as it possibly can. That's one of the things that will be discussed at this afternoon's meetings of the G-7 and G-20. It is absolute imperative: If you can't fix the banking system, you won't fix the wider economy."
The Federal Reserve is using a new pessimistic forecast about whether each bank has sufficient capital reserves to survive over the next two years, according to the release. The closest thing Geithner knows about a stress test is the daily use of Charmin.
GM will drop its 83-year- old Pontiac brand as part of a government-led recalibration of its business plan, people familiar with the decision said.
Natural gas fell to the lowest price in more than six years in New York on concern supplies of the heating and industrial fuel will overwhelm demand this year.
Gas futures have plunged 41 percent since the end of December as orders for goods at U.S. factories decline, prompting companies including General Motors Corp. to shut down production. Industrial and power plant gas consumption each account for 29 percent of U.S. demand.
“Until demand picks up and domestic gas production starts to come down more rapidly we’re going to be in this situation,” said Scott Hanold, an analyst at RBC Capital Markets in Minneapolis. “We’re going to have above-average storage levels for the rest of the year.”
Natural gas for May delivery fell 11.2 cents, or 3.3 percent, to settle at $3.297 per million British thermal units at 3:03 p.m. on the New York Mercantile Exchange, the lowest closing price since Sept. 11, 2002.
Prices dropped 12 percent this week, the biggest decline since the week ended March 27.
Ketchum, Idaho-based First Bank of Idaho became the fourth bank closed by regulators Friday, as the credit crisis continued claiming victims. The Federal Deposit Insurance Corp. said Minneapolis-based U.S. Bank has assumed the failed bank's deposits. First Bank of Idaho had $374 million in deposits as of Dec. 31, the FDIC said. The bank's closure follows that of other banks in Georgia, Michigan and California on Friday.
The Dow Jones Industrial Average climbed 119.23 points, or 1.5%, to 8,076.29, leaving it down 0.7% from a week ago. The S&P 500 Index rose 14.29 points, or 1.7%, to 866.22, a weekly slip of 0.4%. The Nasdaq Composite added 42.08 points, or 2.6%, to end at 1,694.29, up 1.3% for the week.
Crude oil for June delivery rose $1.69, or 3.5%, to $51.33 a barrel on Globex.
Saturday, April 25, 2009
Friday, April 24, 2009
Global Economy
4/23/09 Global Economy
The IMF said that world output would contract by 1.3 per cent this year and grow by just 1.9 per cent the year after in what it described as a “substantial downward revision” of its January forecasts, when it said that the global economy would grow by 0.5 per cent this year and spring back to 3 per cent growth in 2010.
Net income dropped to $840 million, or 56 cents a share, from $4.14 billion, or $2.62, a year earlier, Houston-based ConocoPhillips said.
Occidental Petroleum Corp., the biggest oil producer in Texas, said first-quarter profit declined as shrinking demand for fuel to run trucks, trains and automobiles battered petroleum prices.
Net income dropped to $368 million, or 45 cents a share, from $1.85 billion, or $2.22, a year earlier, the Los Angeles- based company said today in a statement. Excluding one-time losses and gains, Occidental was expected to earn 40 cents a share, based on the average of 18 analyst estimates compiled by Bloomberg.
Resales of existing homes and condos fell 3% in March to a seasonally adjusted annual rate of 4.57 million, with distressed sales now accounting for half of all sales, a trade group reported Thursday. Sales are down 7.1% in the past year, the National Association of Realtors said .First-time buyers accounted for 53% of buyers in March, the group said. First-time buyers can get thousands in subsidies from the federal and state governments. Sales were weaker than the 4.63 million pace expected by economists surveyed by MarketWatch. Median sales prices have fallen 12.4% in the past year, the group said.
U.S. natural gas inventories rose 46 billion cubic feet last week, the Energy Inormation Administration reported Thursday, in line with analysts' expectations. At 1,741 billion cubic feet, stocks were 459 billion cubic feet higher than last year at this time and 322 billion cubic feet above the five-year average. On the New York Mercantile Exchange, natural gas for May delivery lost 9.2 cents, or 2.6%, to $3.44 per million British thermal units.
Microsoft Corp's quarterly profit fell 32 percent, but its shares rose as investors welcomed continuing efforts to cut costs and news that the release of its Windows 7 oprating system is on track.
The world's top software maker offered no profit forecast on Thursday, after withdrawing its outlook in January, but did say it expected the personal computer, server and hardware markets to remain weak for at least another quarter.
"While we would all like to think that our recovery will be soon and painless, we unfortunately believe that it will be slow and gradual," Chief Financial Officer Chris Liddell said on a conference call.
The Dow Industrials rose 70.49 points Thursday, closing at 7,957.06.
The NASDAQ 100 rose 8.69 points Thursday, closing at 1,344.41. The Russell 2000 fell 4.09 points Thursday, closing at 466.62. The HUI Amex Gold Bugs Index rose 10.69 points Thursday, closing at 290.64. June Gold rose to 905.6. Silver rose to 12.80, while June Oil rose to 49.76. The Dollar fell 0.85 to 85.45. Bonds rose half a point to 125^07. The VIX fell 0.95 to 37.15.
The Treasury Department has reached an agreement in principle with the autoworkers union in the event that Chrysler, which is negotiating with Fiat, files for bankruptcy.
The Ford Motor Company said on Friday that it lost $1.4 billion in the first quarter and that it did not plan to seek federal aid even as its two domestic rivals faced the possibility of bankruptcy.
Ford, the only Detroit automaker not being kept afloat by the government, said it had $21.3 billion in cash as of March 31, after going through $3.7 billion of its automotive cash reserves in the quarter. That is better than the $7.2 billion it used in the fourth quarter, even though sales were lower from January to March.
The dollar index, a measure of the U.S. unit against a trade-weighted basket of currencies, traded at 84.996, down from 85.353 in North American trade late Thursday. The euro traded at $1.3217 versus the dollar, up from $1.3145 late Thursday. The U.S. dollar dropped versus the Japanese currency to trade at 97.08 yen, down from 98.05 yen.
The deep recession in manufacturing worsened in March, as demand for U.S.-made durable goods fell 0.8%, the seventh decline in the past eight months, the Commerce Department estimated Friday. New orders declined in almost every industrial sector, although a key gauge of capital spending by businesses rose 1.5%, the second straight increase following a severe decline in January. Shipments of durable goods fell 1.7% in March. Inventories fell 1.1%, an encouraging sign that manufacturers are getting their supplies of unsold goods more in line with demand.
3M Co. said its first-quarter profit fell to $518 million, or 74 cents a share, from $1 billion, or $1.38 a share, in the year-ago period. Excluding one-time items, the St. Paul maker of consumer- and office-related products said it would have earned 81 cents a share. Analysts polled by FactSet Research were looking for earnings of 85 cents a share, on average. Analyst estimates typically exclude one-time items. Sales for the quarter plunged 21.3% to $5.1 billion from $6.5 billion. For the full year, 3M lowered its earnings outlook to $3.90 to $4.30 a share, compared to its prior guidance of $4.30 to $4.70 a share.
The IMF said that world output would contract by 1.3 per cent this year and grow by just 1.9 per cent the year after in what it described as a “substantial downward revision” of its January forecasts, when it said that the global economy would grow by 0.5 per cent this year and spring back to 3 per cent growth in 2010.
Net income dropped to $840 million, or 56 cents a share, from $4.14 billion, or $2.62, a year earlier, Houston-based ConocoPhillips said.
Occidental Petroleum Corp., the biggest oil producer in Texas, said first-quarter profit declined as shrinking demand for fuel to run trucks, trains and automobiles battered petroleum prices.
Net income dropped to $368 million, or 45 cents a share, from $1.85 billion, or $2.22, a year earlier, the Los Angeles- based company said today in a statement. Excluding one-time losses and gains, Occidental was expected to earn 40 cents a share, based on the average of 18 analyst estimates compiled by Bloomberg.
Resales of existing homes and condos fell 3% in March to a seasonally adjusted annual rate of 4.57 million, with distressed sales now accounting for half of all sales, a trade group reported Thursday. Sales are down 7.1% in the past year, the National Association of Realtors said .First-time buyers accounted for 53% of buyers in March, the group said. First-time buyers can get thousands in subsidies from the federal and state governments. Sales were weaker than the 4.63 million pace expected by economists surveyed by MarketWatch. Median sales prices have fallen 12.4% in the past year, the group said.
U.S. natural gas inventories rose 46 billion cubic feet last week, the Energy Inormation Administration reported Thursday, in line with analysts' expectations. At 1,741 billion cubic feet, stocks were 459 billion cubic feet higher than last year at this time and 322 billion cubic feet above the five-year average. On the New York Mercantile Exchange, natural gas for May delivery lost 9.2 cents, or 2.6%, to $3.44 per million British thermal units.
Microsoft Corp's quarterly profit fell 32 percent, but its shares rose as investors welcomed continuing efforts to cut costs and news that the release of its Windows 7 oprating system is on track.
The world's top software maker offered no profit forecast on Thursday, after withdrawing its outlook in January, but did say it expected the personal computer, server and hardware markets to remain weak for at least another quarter.
"While we would all like to think that our recovery will be soon and painless, we unfortunately believe that it will be slow and gradual," Chief Financial Officer Chris Liddell said on a conference call.
The Dow Industrials rose 70.49 points Thursday, closing at 7,957.06.
The NASDAQ 100 rose 8.69 points Thursday, closing at 1,344.41. The Russell 2000 fell 4.09 points Thursday, closing at 466.62. The HUI Amex Gold Bugs Index rose 10.69 points Thursday, closing at 290.64. June Gold rose to 905.6. Silver rose to 12.80, while June Oil rose to 49.76. The Dollar fell 0.85 to 85.45. Bonds rose half a point to 125^07. The VIX fell 0.95 to 37.15.
The Treasury Department has reached an agreement in principle with the autoworkers union in the event that Chrysler, which is negotiating with Fiat, files for bankruptcy.
The Ford Motor Company said on Friday that it lost $1.4 billion in the first quarter and that it did not plan to seek federal aid even as its two domestic rivals faced the possibility of bankruptcy.
Ford, the only Detroit automaker not being kept afloat by the government, said it had $21.3 billion in cash as of March 31, after going through $3.7 billion of its automotive cash reserves in the quarter. That is better than the $7.2 billion it used in the fourth quarter, even though sales were lower from January to March.
The dollar index, a measure of the U.S. unit against a trade-weighted basket of currencies, traded at 84.996, down from 85.353 in North American trade late Thursday. The euro traded at $1.3217 versus the dollar, up from $1.3145 late Thursday. The U.S. dollar dropped versus the Japanese currency to trade at 97.08 yen, down from 98.05 yen.
The deep recession in manufacturing worsened in March, as demand for U.S.-made durable goods fell 0.8%, the seventh decline in the past eight months, the Commerce Department estimated Friday. New orders declined in almost every industrial sector, although a key gauge of capital spending by businesses rose 1.5%, the second straight increase following a severe decline in January. Shipments of durable goods fell 1.7% in March. Inventories fell 1.1%, an encouraging sign that manufacturers are getting their supplies of unsold goods more in line with demand.
3M Co. said its first-quarter profit fell to $518 million, or 74 cents a share, from $1 billion, or $1.38 a share, in the year-ago period. Excluding one-time items, the St. Paul maker of consumer- and office-related products said it would have earned 81 cents a share. Analysts polled by FactSet Research were looking for earnings of 85 cents a share, on average. Analyst estimates typically exclude one-time items. Sales for the quarter plunged 21.3% to $5.1 billion from $6.5 billion. For the full year, 3M lowered its earnings outlook to $3.90 to $4.30 a share, compared to its prior guidance of $4.30 to $4.70 a share.
Thursday, April 23, 2009
Earnings
4/22/09 Earnings
Walter Shorenstein: "Many wealthy people have learned that you don't have to be super smart to succeed, because there are always dumber people out there."
Japan's trade surplus shriveled by 99% in March from the year-earlier month as exports tumbled even more rapidly than the sharp decline in imports, official data showed Wednesday. The trade surplus for the month was 10.96 billion yen ($109.6 million), compared with 1.1 trillion yen in March 2008, according to provisional figures. Despite the small surplus in March, Japan's trade balance for the year ended March 31 showed a deficit of 725.3 billion yen, the country's first trade deficit in 28 years, according to Kyodo news service. Japanese exports dropped 16.4% to 71.1 trillion yen, while imports narrowed 4.1% to 71.9 trillion yen.
British Chancellor of the Exchequer Alistair Darling on Wednesday slashed his 2009 U.K. economic forecast, predicting a contraction of 3.5% in 2009. Daring last fall forecast a fall of around 0.75% to 1.25%. Delivering the government's annual budget statement, Darling said growth would return by the end of the year, with the economy growing by 1.25% in 2010 and expanding by 3.5% in 2011. Darling had previously forecast growth of 1.5% to 2% in 2010.
For the full-year of 2009, Boeing lowered its forecast to $4.70 to $5.00 due to lower price expectaions. "The expanded global economic downturn is presenting unprecedented challenges in our commercial airplane markets," said Boeing Chief Executive Officer Jim McNerney.
Earnings for 2009 from continuing operations are expected to be in the range of $1.40 to $1.90 a share. Ingersoll-Rand said it will cut its quarterly common dividend to 7 cents a share from 18 cents a share, effective from the September 2009 payment.
Altria forecast 2009 earnings from continuing operations of $1.47 a share to $1.52 a share, compared to the analyst target of $1.73 a share. Altria said its first-quarter results were impacted by higher interest expense versus the prior-year period, charges related to the acquisition of UST Inc. and lower SABMiller plc equity earnings.
Air Products said it expects third-quarter earnings from continuing operations of 93 cents to $1.02 a share and full-year earnings of $3.85 to $4.05. Consensus expectations were for full-year earnings of $4.06 a share. Given a lack of "economic momentum," the company said it continues to look at additional cost actions that could result in a charge in its fiscal third quarter.
For the year, WellPoint lowered its 2009 earnings outlook to a range of $5.14 and $5.20 a share, from $5.51 to $5.66 per share.
Swedish truckmaker Volvo will cut 1,543 jobs at its operations in Sweden. It said that it will make the move as a result of a sharp decline on world markets for heavy vehicles.
Britain's unemployment rate in the three months ending in February rose to 6.7%, up from 6.1% in the previous quarter, the Office for National Statistics reported Wednesday. The unemployment level rose to 177,000 in the same period to 2.1 million.
The Ministry of Finance on Wednesday downgraded its overall assessment of Japan's regional economies for the fifth straight quarter, saying that conditions worsened steadily in the January-March period, the Nikkei reported. The downgrade came after the heads of MOF's 11 local finance bureaus met earlier in the day to report on conditions in their regions, the report said. The ministry lowered its assessment of 10 regions, with only Hokuriku avoiding a downgrade, it said.
Volkswagen reported a 74% drop in first-quarter net profit as the slump in the global auto markets took its toll.
Continental Airlines Inc. says it lost $136 million in the first quarter as air travel fell and business travelers bought cheaper tickets.
The number of people older than 55 who are collecting unemployment benefits in the Houston area has jumped 145 percent since this time last year. Labor statistics show the overall increase in unemployment was 130 percent, suggesting that a disproportionately larger number of laid-off employees were in the older age group.
McDonald's Corp. said Wednesday profit rose to $979.5 million, or 87 cents per share, from $946.1 million, or 81 cents per share, last year.
Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment
rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April -- the biggest month for tax collection -- are likely to come in well below April 2008, analysts said.
“Tax receipts are just collapsing,” said
Chris Ahrens, head of interest-rate strategy at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid at Treasury auctions. The need to sell more debt “is a big issue in the Treasury market and it is ongoing. The surging budget deficit is the primary cause.”
The government will have to sell $2.4 trillion in new bills, notes and bonds in fiscal 2009, according to UBS. From October through December, the Treasury sold a record $569 billion, up from $82 billion in the same period a year earlier, and auctioned another $493 billion in the last quarter, up from $156 billion. That helps to make up for the drop in tax receipts, pay for the rise in spending and refinance maturing debt. Along with the principal, the sales add additional interest costs to the deficit for years to come.
Reggie Middleton: "According to Fitch, of the nearly $200 bn of option ARMs outstanding, roughly $29 bn of loans are expected to recast by 2009. Of this $6.6 bn constitute 2004 vintage (that would be recast as a result of completion of the end of five-year term in 2009) and $23 bn constitute 2005 and 2006 vintage loans that would recast early due to the 110% balance cap limit.
Further an additional $67 bn is expected to recast in 2010 of which $37 bn belong to 2005 vintage (that would be recast as a result of completion of the end of five-year term in 2010) and the balance $30 bn consist of 2006 and 2007 vintage loans that would be recast early due to the 110% balance limit cap....Long story short, if you are bullish on commercial real estate and CLOs, then you may want to be bullish on Goldman. However, if you foresee any real estate problems, then this heavily laden, heavily valued, publicly traded fixed income and real estate hedge fund may not be seeing the best of days in the near to medium term!"
Morgan Stanley, the fifth-biggest U.S. bank by assets, reported a bigger-than-estimated loss after real estate and debt-related writedowns overwhelmed trading gains. The company also cut its dividend to 5 cents a share.
The first-quarter loss was $177 million, or 57 cents a share, New York-based Morgan Stanley said today in a statement. The average estimate of 19 analysts
surveyed by Bloomberg was for a loss of 8 cents a share. The company had a loss of $1.3 billion in December before the start of the new fiscal year.
A recently transplanted New Yorker named Michael Houtkin won the bidding on a one-bedroom condominium on the outskirts of Boca Raton, a few blocks from three golf courses, for the incredible price of $30,000. “Things were almost being given away,” he said later.
As is often the case at these auctions, the seller of the condo — Fannie Mae — retained the right to refuse the winning bid and keep the property. But Mr. Houtkin told me he was optimistic his bid would be accepted. An R.E.D.C. employee suggested to him that $30,000 wasn’t much below the minimum price that Fannie Mae had hoped to receive.
Jan Hatzius, the chief economist at Goldman Sachs, says that the “massive amount of excess supply” means that home prices nationwide will probably fall an additional 15 percent. This estimate hides a lot of variation, too. In Miami, Goldman forecasts, prices could drop an additional 33 percent, which is pretty amazing since they’ve already fallen 50 percent from their 2006 peak.
The American Petroleum Institute reported that crude stocks declined by 1 million barrels last week. Crude for June delivery fell 12 cents to $48.44 a barrel in electronic trading on Globex. The API also reported late Tuesday that gasoline supplies rose by 107,000 barrels and distillate stocks increased by 458,000 barrels.
Northrop Grumman raised its 2009 earnings-per-share forecast for continuing operations to a range of $4.65-$4.90 from $4.50-$4.75.
For 2009, Genzyme said it expects adjusted earnings of $4.58 a share on revenue of $5.15 billion to $5.35 billion.
AT&T Inc posted a decline in quarterly profit on Wednesday but beat Wall Street estimates as growth in wireless and video services helped offset declines in its traditional telephone business.
Freeport-McMoRan Copper & Gold Inc. on Wednesday said its first-quarter net income applicable to common stock fell 96 percent amid a global economic downturn that has crushed commodity prices as demand for base metals has dropped
General Motors Corp. will idle most of its U.S. plants for up to 9 weeks because of diving sales and growing inventories, The Associated Press reported late Wednesday, citing two sources briefed on the plans. The shutdowns are expected to coincide with GM's normal two-week closure in July, according to the AP.
For the quarter ended March 31, Apple reported net income of $1.2 billion, or $1.33 per share, compared to earnings of $1 billion, or $1.16 a share, for the same period the previous year. Sales grew 9% to $8.17 billion for the quarter. Analysts were expecting Apple to report earnings of $1.09 per share on revenue of $8 billion, according to consensus estimates from FactSet Research.
Excluding special items, eBay said earnings for the quarter were 39 cents a share. Analysts on average had estimated eBay would post earnings excluding special items of 33 cents a share, on $1.94 billion in revenue, according to data from Thomson Reuters.
VMWare's revenue was $470.3 million, up from $438.2 million for the same period last year. Adjusted income was 25 cents a share. Analysts had expected the business software company to report earnings of 20 cents a share on revenue of $474.4 million, according to a consensus survey by Thomson Reuters.
The Dow Jones Industrial Average fell 82.99 points to 7,886.57. The S&P 500 fell 6.54 points to 843.54. The Nasdaq Composite remained 2 points higher to stand at 1,645.85.
Crude for June delivery rose 30 cents, or 0.6%, to end at $48.85 a barrel on the New York Mercantile Exchange.
Boeing Co.said Wednesday it saw about 60 delivery deferrals for its commercial aircraft in the first quarter, pushing new delivery dates from 2010 and 2011 to future periods.
United Parcel Service Inc reported lower-than-expected quarterly earnings, saying the global downturn had taken a bite out of revenue and profitability as fewer businesses and consumers sent packages.
The world's largest package delivery company reported first-quarter net income of $401 million, or 40 cents a share, compared with $906 million, or 87 cents a share, a year earlier.
The company expects second-quarter earnings of 45 to 55 cent a share, compared to the latest estimate of 65 cents a share.
First-time claims for state unemployment benefits rose a seasonally adjusted 27,000 to 640,000 in the week ended April 18, the Labor Department reported Thursday. For the week ended April 11, the number of people collecting state unemployment benefits reached yet another new record, gaining 93,000 to hit 6.14 million - more than double the level in the prior year. These continuing claims have reached new weekly records since late January, signaling that workers are having a tough time finding jobs. The four-week average of continuing claims rose 142,500 to a record 5.94 million. The insured unemployment rate - the proportion of covered workers who are receiving benefits - rose to 4.6% from 4.5%, reaching the highest level since January 1983.
Union Pacific Corp reported first-quarter net income fell 18% to $362 million, or 72 cents a share, from $443 million, or 85 cents, in the year-earlier period. Revenue fell 20% to $3.42 billion from $4.27 billion.
Hershey said it expects full-year net sales growth of 2% to 3%, but that year-on-year pension and commodity cost increases will be "significant." The Hershey, Pa., based candy maker added that it has confidence that earnings per share from operations will increase, though less than its long-term objective of 6% to 8%.
Philip Morris said net revenue, excluding excise taxes rose 6.3%, helped by favorable pricing and the acquisition of Rothmans Inc., Canada. The company reaffirmed its forecast for 2009 earnings per share of $2.85 to $3.00.
Walter Shorenstein: "Many wealthy people have learned that you don't have to be super smart to succeed, because there are always dumber people out there."
Japan's trade surplus shriveled by 99% in March from the year-earlier month as exports tumbled even more rapidly than the sharp decline in imports, official data showed Wednesday. The trade surplus for the month was 10.96 billion yen ($109.6 million), compared with 1.1 trillion yen in March 2008, according to provisional figures. Despite the small surplus in March, Japan's trade balance for the year ended March 31 showed a deficit of 725.3 billion yen, the country's first trade deficit in 28 years, according to Kyodo news service. Japanese exports dropped 16.4% to 71.1 trillion yen, while imports narrowed 4.1% to 71.9 trillion yen.
British Chancellor of the Exchequer Alistair Darling on Wednesday slashed his 2009 U.K. economic forecast, predicting a contraction of 3.5% in 2009. Daring last fall forecast a fall of around 0.75% to 1.25%. Delivering the government's annual budget statement, Darling said growth would return by the end of the year, with the economy growing by 1.25% in 2010 and expanding by 3.5% in 2011. Darling had previously forecast growth of 1.5% to 2% in 2010.
For the full-year of 2009, Boeing lowered its forecast to $4.70 to $5.00 due to lower price expectaions. "The expanded global economic downturn is presenting unprecedented challenges in our commercial airplane markets," said Boeing Chief Executive Officer Jim McNerney.
Earnings for 2009 from continuing operations are expected to be in the range of $1.40 to $1.90 a share. Ingersoll-Rand said it will cut its quarterly common dividend to 7 cents a share from 18 cents a share, effective from the September 2009 payment.
Altria forecast 2009 earnings from continuing operations of $1.47 a share to $1.52 a share, compared to the analyst target of $1.73 a share. Altria said its first-quarter results were impacted by higher interest expense versus the prior-year period, charges related to the acquisition of UST Inc. and lower SABMiller plc equity earnings.
Air Products said it expects third-quarter earnings from continuing operations of 93 cents to $1.02 a share and full-year earnings of $3.85 to $4.05. Consensus expectations were for full-year earnings of $4.06 a share. Given a lack of "economic momentum," the company said it continues to look at additional cost actions that could result in a charge in its fiscal third quarter.
For the year, WellPoint lowered its 2009 earnings outlook to a range of $5.14 and $5.20 a share, from $5.51 to $5.66 per share.
Swedish truckmaker Volvo will cut 1,543 jobs at its operations in Sweden. It said that it will make the move as a result of a sharp decline on world markets for heavy vehicles.
Britain's unemployment rate in the three months ending in February rose to 6.7%, up from 6.1% in the previous quarter, the Office for National Statistics reported Wednesday. The unemployment level rose to 177,000 in the same period to 2.1 million.
The Ministry of Finance on Wednesday downgraded its overall assessment of Japan's regional economies for the fifth straight quarter, saying that conditions worsened steadily in the January-March period, the Nikkei reported. The downgrade came after the heads of MOF's 11 local finance bureaus met earlier in the day to report on conditions in their regions, the report said. The ministry lowered its assessment of 10 regions, with only Hokuriku avoiding a downgrade, it said.
Volkswagen reported a 74% drop in first-quarter net profit as the slump in the global auto markets took its toll.
Continental Airlines Inc. says it lost $136 million in the first quarter as air travel fell and business travelers bought cheaper tickets.
The number of people older than 55 who are collecting unemployment benefits in the Houston area has jumped 145 percent since this time last year. Labor statistics show the overall increase in unemployment was 130 percent, suggesting that a disproportionately larger number of laid-off employees were in the older age group.
McDonald's Corp. said Wednesday profit rose to $979.5 million, or 87 cents per share, from $946.1 million, or 81 cents per share, last year.
Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment
rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April -- the biggest month for tax collection -- are likely to come in well below April 2008, analysts said.
“Tax receipts are just collapsing,” said
Chris Ahrens, head of interest-rate strategy at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid at Treasury auctions. The need to sell more debt “is a big issue in the Treasury market and it is ongoing. The surging budget deficit is the primary cause.”
The government will have to sell $2.4 trillion in new bills, notes and bonds in fiscal 2009, according to UBS. From October through December, the Treasury sold a record $569 billion, up from $82 billion in the same period a year earlier, and auctioned another $493 billion in the last quarter, up from $156 billion. That helps to make up for the drop in tax receipts, pay for the rise in spending and refinance maturing debt. Along with the principal, the sales add additional interest costs to the deficit for years to come.
Reggie Middleton: "According to Fitch, of the nearly $200 bn of option ARMs outstanding, roughly $29 bn of loans are expected to recast by 2009. Of this $6.6 bn constitute 2004 vintage (that would be recast as a result of completion of the end of five-year term in 2009) and $23 bn constitute 2005 and 2006 vintage loans that would recast early due to the 110% balance cap limit.
Further an additional $67 bn is expected to recast in 2010 of which $37 bn belong to 2005 vintage (that would be recast as a result of completion of the end of five-year term in 2010) and the balance $30 bn consist of 2006 and 2007 vintage loans that would be recast early due to the 110% balance limit cap....Long story short, if you are bullish on commercial real estate and CLOs, then you may want to be bullish on Goldman. However, if you foresee any real estate problems, then this heavily laden, heavily valued, publicly traded fixed income and real estate hedge fund may not be seeing the best of days in the near to medium term!"
Morgan Stanley, the fifth-biggest U.S. bank by assets, reported a bigger-than-estimated loss after real estate and debt-related writedowns overwhelmed trading gains. The company also cut its dividend to 5 cents a share.
The first-quarter loss was $177 million, or 57 cents a share, New York-based Morgan Stanley said today in a statement. The average estimate of 19 analysts
surveyed by Bloomberg was for a loss of 8 cents a share. The company had a loss of $1.3 billion in December before the start of the new fiscal year.
A recently transplanted New Yorker named Michael Houtkin won the bidding on a one-bedroom condominium on the outskirts of Boca Raton, a few blocks from three golf courses, for the incredible price of $30,000. “Things were almost being given away,” he said later.
As is often the case at these auctions, the seller of the condo — Fannie Mae — retained the right to refuse the winning bid and keep the property. But Mr. Houtkin told me he was optimistic his bid would be accepted. An R.E.D.C. employee suggested to him that $30,000 wasn’t much below the minimum price that Fannie Mae had hoped to receive.
Jan Hatzius, the chief economist at Goldman Sachs, says that the “massive amount of excess supply” means that home prices nationwide will probably fall an additional 15 percent. This estimate hides a lot of variation, too. In Miami, Goldman forecasts, prices could drop an additional 33 percent, which is pretty amazing since they’ve already fallen 50 percent from their 2006 peak.
The American Petroleum Institute reported that crude stocks declined by 1 million barrels last week. Crude for June delivery fell 12 cents to $48.44 a barrel in electronic trading on Globex. The API also reported late Tuesday that gasoline supplies rose by 107,000 barrels and distillate stocks increased by 458,000 barrels.
Northrop Grumman raised its 2009 earnings-per-share forecast for continuing operations to a range of $4.65-$4.90 from $4.50-$4.75.
For 2009, Genzyme said it expects adjusted earnings of $4.58 a share on revenue of $5.15 billion to $5.35 billion.
AT&T Inc posted a decline in quarterly profit on Wednesday but beat Wall Street estimates as growth in wireless and video services helped offset declines in its traditional telephone business.
Freeport-McMoRan Copper & Gold Inc. on Wednesday said its first-quarter net income applicable to common stock fell 96 percent amid a global economic downturn that has crushed commodity prices as demand for base metals has dropped
General Motors Corp. will idle most of its U.S. plants for up to 9 weeks because of diving sales and growing inventories, The Associated Press reported late Wednesday, citing two sources briefed on the plans. The shutdowns are expected to coincide with GM's normal two-week closure in July, according to the AP.
For the quarter ended March 31, Apple reported net income of $1.2 billion, or $1.33 per share, compared to earnings of $1 billion, or $1.16 a share, for the same period the previous year. Sales grew 9% to $8.17 billion for the quarter. Analysts were expecting Apple to report earnings of $1.09 per share on revenue of $8 billion, according to consensus estimates from FactSet Research.
Excluding special items, eBay said earnings for the quarter were 39 cents a share. Analysts on average had estimated eBay would post earnings excluding special items of 33 cents a share, on $1.94 billion in revenue, according to data from Thomson Reuters.
VMWare's revenue was $470.3 million, up from $438.2 million for the same period last year. Adjusted income was 25 cents a share. Analysts had expected the business software company to report earnings of 20 cents a share on revenue of $474.4 million, according to a consensus survey by Thomson Reuters.
The Dow Jones Industrial Average fell 82.99 points to 7,886.57. The S&P 500 fell 6.54 points to 843.54. The Nasdaq Composite remained 2 points higher to stand at 1,645.85.
Crude for June delivery rose 30 cents, or 0.6%, to end at $48.85 a barrel on the New York Mercantile Exchange.
Boeing Co.said Wednesday it saw about 60 delivery deferrals for its commercial aircraft in the first quarter, pushing new delivery dates from 2010 and 2011 to future periods.
United Parcel Service Inc reported lower-than-expected quarterly earnings, saying the global downturn had taken a bite out of revenue and profitability as fewer businesses and consumers sent packages.
The world's largest package delivery company reported first-quarter net income of $401 million, or 40 cents a share, compared with $906 million, or 87 cents a share, a year earlier.
The company expects second-quarter earnings of 45 to 55 cent a share, compared to the latest estimate of 65 cents a share.
First-time claims for state unemployment benefits rose a seasonally adjusted 27,000 to 640,000 in the week ended April 18, the Labor Department reported Thursday. For the week ended April 11, the number of people collecting state unemployment benefits reached yet another new record, gaining 93,000 to hit 6.14 million - more than double the level in the prior year. These continuing claims have reached new weekly records since late January, signaling that workers are having a tough time finding jobs. The four-week average of continuing claims rose 142,500 to a record 5.94 million. The insured unemployment rate - the proportion of covered workers who are receiving benefits - rose to 4.6% from 4.5%, reaching the highest level since January 1983.
Union Pacific Corp reported first-quarter net income fell 18% to $362 million, or 72 cents a share, from $443 million, or 85 cents, in the year-earlier period. Revenue fell 20% to $3.42 billion from $4.27 billion.
Hershey said it expects full-year net sales growth of 2% to 3%, but that year-on-year pension and commodity cost increases will be "significant." The Hershey, Pa., based candy maker added that it has confidence that earnings per share from operations will increase, though less than its long-term objective of 6% to 8%.
Philip Morris said net revenue, excluding excise taxes rose 6.3%, helped by favorable pricing and the acquisition of Rothmans Inc., Canada. The company reaffirmed its forecast for 2009 earnings per share of $2.85 to $3.00.
Tuesday, April 21, 2009
Suckers Rally?
4/21/09 Suckers Rally?
Nouriel Roubini said Tuesday a recent "suckers rally" in stock markets would fade as the U.S. economy continues to wither and the financial system suffers unexpected shocks.
Caterpillar cut its revenue outlook, saying it expects 2009 sales in a range of plus or minus 10% around a midpoint of $35 billion. At that midpoint, earnings would be around $1.25 a share, excluding redundancy costs of around 75 cents.
For the full year, Lockheed raised its earnings forecast to the range of $7.15 to $7.35 a share, compared to its prior outlook of $7.05 to $7.25 a share.
Crude for May delivery was last up 36 cents, or 0.8%, at $46.24 a barrel.
Norfolk Southern Corp. reported late Tuesday first-quarter net income fell to $177 million, or 47 cents a share, from $291 million, or 76 cents, a year ago. Revenue for the railroad fell 22% to $1.94 billion from $2.5 billion, with coal hauling, general merchandise and container traffic all posting declines.
John Hussman: "The U.S. dollar continues to be vulnerable in the face of massive monetization and the likelihood of a longer period of economic weakness than investors may be envisioning. Our overall investment position remains generally conservative, but is biased toward performing better in an environment of dollar weakness and pressure on U.S. real interest rates, which is consistent with the larger economic picture."
Coca-Cola Co. said Tuesday is first-quarter profit fell 10% to $1.35 billion, or 58 cents a share, from $1.5 billion, or 64 cents a share in the year-ago period. Adjusted net income in the latest period totaled 65 cents a share. Operating revenue for the three months ended April 3 fell 3% to $7.17 billion from $7.38 billion in the year-ago period.
Bank of New York Mellon Corp. said Tuesday that its first-quarter profit dropped an unexpectedly steep 57 percent and that it was slashing its dividend to shore up capital. Its shares fell more than 8 percent in premarket trading.
The New York-based trust bank cut its dividend to nine cents a share from 24 cents as it said investment losses and higher credit costs hurt its quarterly results.
DuPont reported a 59 percent fall in quarterly earnings, cut its full year 2009 earnings forecast due to weak demand, and said it will undertake additional cost cutting measures.
First-quarter net income fell to $488.0 million, or 54 cents a share, compared with $1.19 billion, or $1.31 a share, last year. Sales fell 20 percent to $6.87 billion.
Lexmark International Inc on Tuesday said first-quarter sales and profits fell sharply as businesses and consumers cut back on purchases of printers and ink, prompting the company to announce it will close a plant in Mexico to save money.
Coach Inc. said that its third-quarter profit fell to $114.9 million, or 36 cents a share, from $162.4 million, or 46 cents, a year earlier. Sales fell to $739.9 million from $744.5 million.
BJ Services said Tuesday its second-quarter net income fell 66% to $43 million, or 15 cents a share, from $127.3 million, or 43 cents a share in the year-ago period. Revenue at the Houston-based oil service firm fell 26% to $1.05 billion.
United Technologies Corp. said Tuesday its first-quarter earnings fell 24% to $722 million, or 78 cents a share, from $1 billion, or $1.03 a share, in the year-ago period. Revenue fell 12% to $12.2 billion, reflecting a negative foreign-exchange rate and declines in organic sales.
Merck & Co. cut its 2009 revenue view and delayed the filing of a migraine drug as it reported a 56% decline in first-quarter profit. Its first-quarter net dropped to $1.46 billion, or 67 cents a share, and sales fell 8% to $5.39 billion.
Johnson Controls Inc.said it swung to a second-quarter loss of $193 million, or 33 cents a share, from net income of $289 million, or 48 cents a share in the year-ago period. The company's adjusted loss amounted to 16 cents a share.
U.S. Bancorp earned $545 million, or 24 cents a share in the first quarter, compared to $1.09 billion, or 62 cents a share a year ago.
United Health still sees 2009 earnings between $2.90 to $3.15 per share.
Sweden's central bank on Tuesday cut its key lending rate to 0.5% from 1%, in line with expectations.
The Reserve Bank of India Tuesday cut its benchmark lending rate by a quarter-point to 4.75%, citing the economic downturn.
Obama administration officials worry that the repayment of bailout money, combined with a general disinclination toward partnering with the U.S., could undermine their efforts to restore health to the financial sector and the broader economy.
"We want to be out of the financial system. We want people to be paying back the government. But we don't want people to be paying back the government in ways that will put themselves right back in trouble and leaving themselves with inadequate capital," Lawrence Summers, chairman of the president's National Economic Council, said Sunday on NBC's "Meet the Press."
Manpower says its first-quarter profit sank 97 percent as continued deterioration of labor markets worldwide put pressure on its profitability.
Manpower Inc. said Tuesday it earned $2.3 million, or 3 cents per share, compared with $75.5 million, or 94 cents per share.
Revenue fell 32 percent to $3.65 billion from $5.39 billion last year.
Tesco, the world's No.3 retailer, showed its resilience to the economic downturn, posting a 10 percent rise in underlying annual profit to 3.128 billion pounds ($4.57 billion), a record for a British retailer.
New York Times Q1 loss from cont ops 52 cents a share.
Analysts surveyed by Platts expect U.S. crude inventories increased 3 million barrels last week, rising from their highest level in nearly two decades.
After an earlier rebuff, Broadcom Corp. on Tuesday made an unsolicited offer to buy Emulex Corp.for $764 million, or $9.25 a share, in a bid that represents a 40% premium over Emulex's closing price on Monday of $6.61.
May copper fell 7.6 cents, or 3.6%, to $2.0275 a pound in early North American electronic trading. June gold rose $3.30, or 0.4%, to $890.30.
General Motors Corp. will get up to $5 billion and Chrysler LLC $500 million in short-term aid, according to a 250-page government report obtained Monday by The Detroit News.
Oil and gas drilling activity is still falling, and it's unclear when it will rebound, Halliburton Co. Chief Executive David Lesar said Monday.
"There can be no certainty about when the decline in activity will bottom out," Lesar said during a conference call with investors on the company's first-quarter earnings.
Delta Air Lines Inc., the world's biggest airline operator, said Tuesday it was hit hard by the weak economy in the first quarter, but narrowed its net loss to $794 million.
Gary North: "Yesterday, the U.S. Treasury released the Treasury International Capital (TIC) report for February 2009. It shows another outflow of capital. “Monthly net TIC flows were negative $97.0 billion. Of this, net foreign private flows were negative $106.3 billion, and net foreign official flows were positive $9.3 billion.”
The figure for January was updated to minus $147b from the previously reported minus $149b....The bailouts from outside the country have gone into reverse.
This will put upward pressure on Treasury interest rates. If and when the recovery overcomes fear of other assets, the sell-off of Treasuries by Americans will begin. The Treasury will have to offer higher rates. Goodbye recovery.
Or the FED will have to buy. Goodbye dollar.."
John Hussman: "At present, the advance we've seen over the past several weeks is looking increasingly speculative. We certainly cannot rule out a further advance, but the basis for expecting one is currently weak. Better internals, higher quality leadership, broader sponsorship, and needless to say, a credible foreclosure abatement plan, would all be helpful "legs" if this advance is to be durable. For now, we don't observe enough of that evidence....Overall, the picture looks a lot like the bounce we observed in May 2001 (just before unemployment shot up and the market plunged again to fresh lows) ....Put bluntly, the economy is not improving, and it is not likely to improve within a few months, because we have far more defaults, foreclosures, and credit excesses to work through. It is simply not true that the stock market heads higher 6 months before the economy bottoms. That simplification was true of 1970 and 1975, but not much else. Rather, there is enormous variation, and about the only reliable tendency is that stocks are usually advancing strongly within about 3 months of a recession's end. That said, in the 2000-2002 plunge, the market didn't bottom until about a year after the recovery started. "
Van Hoisington and Dr. Lacy Hunt: "The bottom line, however, is that it is totally incorrect to assume that the massive expansion in reserves created by the Fed is inflationary. Economic activity cannot move forward unless credit expansion follows reserves expansion. That is not happening. Too much and poorly financed debt has rendered monetary policy ineffective."
Banks and other financial institutions that are so big that their failure poses risks to the economy should be broken up, economist Joseph Stiglitz told lawmakers Tuesday.
Randall W. Forsyth: "Credit problems have not improved nearly as much as stock prices, and a correction is in order."
Jim Rogers: "I am skeptical about the rally, and the world economy for the next year or two or three," he says. "But if stocks go down, I can make money with commodities."
With the global economic downturn deepening and confidence in the financial system still elusive, the International Monetary Fund estimates that banks and other financial institutions face aggregate losses of $4.1 trillion in the value of their holdings as a result of the crisis.
Treasury secretary Timothy Geithner on Tuesday said difficulty in setting a value on banks' toxic assets was a continuing hindrance to their ability to lend and borrow.
In prepared testimony for delivery to the Congressional Oversight Panel that monitors Treasury's efforts to bail out troubled banks, Geithner said toxic assets were "congesting" the U.S. financial system and making it hard to get credit flowing normally again.
"Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital," he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.
Treasury secretary Timothy Geithner on Tuesday said difficulty in setting a value on banks' toxic assets was a continuing hindrance to their ability to lend and borrow.
In prepared testimony for delivery to the Congressional Oversight Panel that monitors Treasury's efforts to bail out troubled banks, Geithner said toxic assets were "congesting" the U.S. financial system and making it hard to get credit flowing normally again.
"Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital," he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.
The Dow Jones industrials closed up 128 points, or 1.6%, to 7,970. The Standard & Poor's 500 Index added, 2.1%, to 850, and the Nasdaq Composite Index was up 36 points, or 2.2%, to 1,644. The Nasdaq-100 Index, which tracks the largest Nasdaq stocks, was up 20 points, or 1.5%, to 1,329.
Yahoo said it will cut 600 to 700 jobs, roughly 5% of its work force of 13,600.
The disclosure came as the company reported that it earned 15 cents a share after one-item items, down from 18 cents a year ago -- but better than the Wall Street estimate of 8 cents a share. The results were helped by a one-time $350 million payment from AT&T.
Oil driller Nabors Industries Ltd.posted late Tuesday first-quarter net income of $125 million, or 44 cents a share, down from $212 million, or 74 cents a share, a year ago.
Capital One Financial Corp.Tuesday afternoon reported a net loss of $111.9 million, or 45 cents a share, for the first quarter. A year ago, the financial services company posted a profit of $548.5 million, or $1.47 a share. Capital One also said 2009 managed charge-off dollars -- a measure of losses in its main credit card business -- will be higher than the $8.6 billion it had previously forecast. Capital One said in the first quarter it added $124.1 million to allowance for loan losses in anticipation of higher expected charge-offs this year. Capital One shares fell 6.5% during after-hours action.
Diana Olick: "Non-prime loan delinquencies increased by 23 percent. Prime loan delinquencies increased by 70 percent.
The prime loan delinquency increase is driven not by faulty loan products or falling home prices, but by job losses, plain and simple."
Nouriel Roubini said Tuesday a recent "suckers rally" in stock markets would fade as the U.S. economy continues to wither and the financial system suffers unexpected shocks.
Caterpillar cut its revenue outlook, saying it expects 2009 sales in a range of plus or minus 10% around a midpoint of $35 billion. At that midpoint, earnings would be around $1.25 a share, excluding redundancy costs of around 75 cents.
For the full year, Lockheed raised its earnings forecast to the range of $7.15 to $7.35 a share, compared to its prior outlook of $7.05 to $7.25 a share.
Crude for May delivery was last up 36 cents, or 0.8%, at $46.24 a barrel.
Norfolk Southern Corp. reported late Tuesday first-quarter net income fell to $177 million, or 47 cents a share, from $291 million, or 76 cents, a year ago. Revenue for the railroad fell 22% to $1.94 billion from $2.5 billion, with coal hauling, general merchandise and container traffic all posting declines.
John Hussman: "The U.S. dollar continues to be vulnerable in the face of massive monetization and the likelihood of a longer period of economic weakness than investors may be envisioning. Our overall investment position remains generally conservative, but is biased toward performing better in an environment of dollar weakness and pressure on U.S. real interest rates, which is consistent with the larger economic picture."
Coca-Cola Co. said Tuesday is first-quarter profit fell 10% to $1.35 billion, or 58 cents a share, from $1.5 billion, or 64 cents a share in the year-ago period. Adjusted net income in the latest period totaled 65 cents a share. Operating revenue for the three months ended April 3 fell 3% to $7.17 billion from $7.38 billion in the year-ago period.
Bank of New York Mellon Corp. said Tuesday that its first-quarter profit dropped an unexpectedly steep 57 percent and that it was slashing its dividend to shore up capital. Its shares fell more than 8 percent in premarket trading.
The New York-based trust bank cut its dividend to nine cents a share from 24 cents as it said investment losses and higher credit costs hurt its quarterly results.
DuPont reported a 59 percent fall in quarterly earnings, cut its full year 2009 earnings forecast due to weak demand, and said it will undertake additional cost cutting measures.
First-quarter net income fell to $488.0 million, or 54 cents a share, compared with $1.19 billion, or $1.31 a share, last year. Sales fell 20 percent to $6.87 billion.
Lexmark International Inc on Tuesday said first-quarter sales and profits fell sharply as businesses and consumers cut back on purchases of printers and ink, prompting the company to announce it will close a plant in Mexico to save money.
Coach Inc. said that its third-quarter profit fell to $114.9 million, or 36 cents a share, from $162.4 million, or 46 cents, a year earlier. Sales fell to $739.9 million from $744.5 million.
BJ Services said Tuesday its second-quarter net income fell 66% to $43 million, or 15 cents a share, from $127.3 million, or 43 cents a share in the year-ago period. Revenue at the Houston-based oil service firm fell 26% to $1.05 billion.
United Technologies Corp. said Tuesday its first-quarter earnings fell 24% to $722 million, or 78 cents a share, from $1 billion, or $1.03 a share, in the year-ago period. Revenue fell 12% to $12.2 billion, reflecting a negative foreign-exchange rate and declines in organic sales.
Merck & Co. cut its 2009 revenue view and delayed the filing of a migraine drug as it reported a 56% decline in first-quarter profit. Its first-quarter net dropped to $1.46 billion, or 67 cents a share, and sales fell 8% to $5.39 billion.
Johnson Controls Inc.said it swung to a second-quarter loss of $193 million, or 33 cents a share, from net income of $289 million, or 48 cents a share in the year-ago period. The company's adjusted loss amounted to 16 cents a share.
U.S. Bancorp earned $545 million, or 24 cents a share in the first quarter, compared to $1.09 billion, or 62 cents a share a year ago.
United Health still sees 2009 earnings between $2.90 to $3.15 per share.
Sweden's central bank on Tuesday cut its key lending rate to 0.5% from 1%, in line with expectations.
The Reserve Bank of India Tuesday cut its benchmark lending rate by a quarter-point to 4.75%, citing the economic downturn.
Obama administration officials worry that the repayment of bailout money, combined with a general disinclination toward partnering with the U.S., could undermine their efforts to restore health to the financial sector and the broader economy.
"We want to be out of the financial system. We want people to be paying back the government. But we don't want people to be paying back the government in ways that will put themselves right back in trouble and leaving themselves with inadequate capital," Lawrence Summers, chairman of the president's National Economic Council, said Sunday on NBC's "Meet the Press."
Manpower says its first-quarter profit sank 97 percent as continued deterioration of labor markets worldwide put pressure on its profitability.
Manpower Inc. said Tuesday it earned $2.3 million, or 3 cents per share, compared with $75.5 million, or 94 cents per share.
Revenue fell 32 percent to $3.65 billion from $5.39 billion last year.
Tesco, the world's No.3 retailer, showed its resilience to the economic downturn, posting a 10 percent rise in underlying annual profit to 3.128 billion pounds ($4.57 billion), a record for a British retailer.
New York Times Q1 loss from cont ops 52 cents a share.
Analysts surveyed by Platts expect U.S. crude inventories increased 3 million barrels last week, rising from their highest level in nearly two decades.
After an earlier rebuff, Broadcom Corp. on Tuesday made an unsolicited offer to buy Emulex Corp.for $764 million, or $9.25 a share, in a bid that represents a 40% premium over Emulex's closing price on Monday of $6.61.
May copper fell 7.6 cents, or 3.6%, to $2.0275 a pound in early North American electronic trading. June gold rose $3.30, or 0.4%, to $890.30.
General Motors Corp. will get up to $5 billion and Chrysler LLC $500 million in short-term aid, according to a 250-page government report obtained Monday by The Detroit News.
Oil and gas drilling activity is still falling, and it's unclear when it will rebound, Halliburton Co. Chief Executive David Lesar said Monday.
"There can be no certainty about when the decline in activity will bottom out," Lesar said during a conference call with investors on the company's first-quarter earnings.
Delta Air Lines Inc., the world's biggest airline operator, said Tuesday it was hit hard by the weak economy in the first quarter, but narrowed its net loss to $794 million.
Gary North: "Yesterday, the U.S. Treasury released the Treasury International Capital (TIC) report for February 2009. It shows another outflow of capital. “Monthly net TIC flows were negative $97.0 billion. Of this, net foreign private flows were negative $106.3 billion, and net foreign official flows were positive $9.3 billion.”
The figure for January was updated to minus $147b from the previously reported minus $149b....The bailouts from outside the country have gone into reverse.
This will put upward pressure on Treasury interest rates. If and when the recovery overcomes fear of other assets, the sell-off of Treasuries by Americans will begin. The Treasury will have to offer higher rates. Goodbye recovery.
Or the FED will have to buy. Goodbye dollar.."
John Hussman: "At present, the advance we've seen over the past several weeks is looking increasingly speculative. We certainly cannot rule out a further advance, but the basis for expecting one is currently weak. Better internals, higher quality leadership, broader sponsorship, and needless to say, a credible foreclosure abatement plan, would all be helpful "legs" if this advance is to be durable. For now, we don't observe enough of that evidence....Overall, the picture looks a lot like the bounce we observed in May 2001 (just before unemployment shot up and the market plunged again to fresh lows) ....Put bluntly, the economy is not improving, and it is not likely to improve within a few months, because we have far more defaults, foreclosures, and credit excesses to work through. It is simply not true that the stock market heads higher 6 months before the economy bottoms. That simplification was true of 1970 and 1975, but not much else. Rather, there is enormous variation, and about the only reliable tendency is that stocks are usually advancing strongly within about 3 months of a recession's end. That said, in the 2000-2002 plunge, the market didn't bottom until about a year after the recovery started. "
Van Hoisington and Dr. Lacy Hunt: "The bottom line, however, is that it is totally incorrect to assume that the massive expansion in reserves created by the Fed is inflationary. Economic activity cannot move forward unless credit expansion follows reserves expansion. That is not happening. Too much and poorly financed debt has rendered monetary policy ineffective."
Banks and other financial institutions that are so big that their failure poses risks to the economy should be broken up, economist Joseph Stiglitz told lawmakers Tuesday.
Randall W. Forsyth: "Credit problems have not improved nearly as much as stock prices, and a correction is in order."
Jim Rogers: "I am skeptical about the rally, and the world economy for the next year or two or three," he says. "But if stocks go down, I can make money with commodities."
With the global economic downturn deepening and confidence in the financial system still elusive, the International Monetary Fund estimates that banks and other financial institutions face aggregate losses of $4.1 trillion in the value of their holdings as a result of the crisis.
Treasury secretary Timothy Geithner on Tuesday said difficulty in setting a value on banks' toxic assets was a continuing hindrance to their ability to lend and borrow.
In prepared testimony for delivery to the Congressional Oversight Panel that monitors Treasury's efforts to bail out troubled banks, Geithner said toxic assets were "congesting" the U.S. financial system and making it hard to get credit flowing normally again.
"Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital," he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.
Treasury secretary Timothy Geithner on Tuesday said difficulty in setting a value on banks' toxic assets was a continuing hindrance to their ability to lend and borrow.
In prepared testimony for delivery to the Congressional Oversight Panel that monitors Treasury's efforts to bail out troubled banks, Geithner said toxic assets were "congesting" the U.S. financial system and making it hard to get credit flowing normally again.
"Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital," he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.
The Dow Jones industrials closed up 128 points, or 1.6%, to 7,970. The Standard & Poor's 500 Index added, 2.1%, to 850, and the Nasdaq Composite Index was up 36 points, or 2.2%, to 1,644. The Nasdaq-100 Index, which tracks the largest Nasdaq stocks, was up 20 points, or 1.5%, to 1,329.
Yahoo said it will cut 600 to 700 jobs, roughly 5% of its work force of 13,600.
The disclosure came as the company reported that it earned 15 cents a share after one-item items, down from 18 cents a year ago -- but better than the Wall Street estimate of 8 cents a share. The results were helped by a one-time $350 million payment from AT&T.
Oil driller Nabors Industries Ltd.posted late Tuesday first-quarter net income of $125 million, or 44 cents a share, down from $212 million, or 74 cents a share, a year ago.
Capital One Financial Corp.Tuesday afternoon reported a net loss of $111.9 million, or 45 cents a share, for the first quarter. A year ago, the financial services company posted a profit of $548.5 million, or $1.47 a share. Capital One also said 2009 managed charge-off dollars -- a measure of losses in its main credit card business -- will be higher than the $8.6 billion it had previously forecast. Capital One said in the first quarter it added $124.1 million to allowance for loan losses in anticipation of higher expected charge-offs this year. Capital One shares fell 6.5% during after-hours action.
Diana Olick: "Non-prime loan delinquencies increased by 23 percent. Prime loan delinquencies increased by 70 percent.
The prime loan delinquency increase is driven not by faulty loan products or falling home prices, but by job losses, plain and simple."
Monday, April 20, 2009
The National Economic Interest
4/20/09 The National Economic Interest
Bank of America earned $4.25 billion, or 44 cents a share in the first quarter ended March 31. . Merrill Lynch contributed more than $3 billion to its net income. Bank of America's tangible common equity ratio improved to 3.13%. The company extended $183 billion in credit in the first quarter and added $6.4 billion to its loan loss reserves. Bank of America
said on Monday that it booked a gain of $2.2 billion in the first quarter based on the declining value of debt issued by its recently-acquired Merrill Lynch unit. Bank of America said it set aside $13.4 billion to cover lending losses even as it posted earnings that beat expectations.
"Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve." Bank of America CEO Lewis said during a conference call with analysts, noting that the bank continues to face challenges. "Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess."
Halliburton said revenue and profit was hit by a steep downturn in North America drilling activity.
GlaxoSmithKline said it's reached a deal to buy privately held Stiefel Laboratories for at least $2.9 billion in cash. Glaxo also is assuming $400 million in debt and will pay up to $300 million more in cash depending on performance. Glaxo said it would combine its existing prescription dermatological products business with Stiefel's. Stiefel makes Duac for acne and Olux E for dermatitis and had $1.5 billion in 2008 revenue.
The credit crunch and ensuing recession will cost the City of London a further 29,000 jobs in 2009, the Center for Economics and Business Research said in a report published Monday.
The latest quarterly survey by the National Association for Business Economics indicates that the economy is at an inflection point, but not quite a turning point, said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight.
However, she said, the results show the recession is abating.
"Key indicators — industry demand, employment, capital spending, and profitability — are still declining, but the breadth of decline is narrowing," she said.
About 1,600 workers at General Motors Corp. will lose their jobs in the next few days as the troubled automaker accelerates cost cuts in order to qualify for more government aid.
GM North America President Troy Clarke said in an e-mail to employees sent Monday that the layoffs are needed to ensure the company's long-term viability.
May crude down $2.52, or 5%, to $47.81 a barrel on Globex.
Oracle Corp. stepped in to buy Sun Microsystems Inc. for $9.50 a share in a deal valued at $7.4 billion, just weeks after a reported deal by IBM to buy the maker of Java software fell apart. Oracle will pay a premium of $2.81 a share, or 42%, over Sun Micro's closing price of $6.69 a share on Friday.
According to Bloomberg, “Citigroup Inc.’s credit losses are growing at a “rapid rate,” undermining Chief Executive Officer Vikram Pandit’s efforts to stabilize the U.S. bank”, according to Goldman.
Rob Hanna: "The most overbought ever would seem to suggest the market is unlikely to continue to rise at anywhere near its recent pace. On the other hand, those expecting a sharp, sustained selloff from here had better be basing their expectation on evidence other than just overbought breadth."
Brett Steenbarger: "The pace of the rally has been slowing. That, in itself, does not necessarily mean that we're in for a fresh bear market leg, but it does raise the possibility that the rise of six consecutive weeks may take a breather."
Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times.
“Our general objective is going to be what is good for the system,” the senior official said. “We want the system to have enough capital.” The national economic interest would be a currency that holds its buying power and not a debt structure close to $60 trillion that breeds economic instability and incubates black swans.
According to The Wall Street Journal, “the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program.” The financial firms may be using the capital to brace their troubled balance sheets.
"Men have lost almost 80 per cent of the 5.1m jobs that have gone in the US since the recession started, pushing the male unemployment rate to 8.8 per cent. The female jobless rate has hit 7 per cent. " Not surprising since women receive 75% of the pay made by men for the same work.
Treasury said loans from TARP recipients fell 2.2% in February M/M. According to the WSJ's number crunching, the real figure should be closer to 4.7% M/M, with a 23% drop in new or refinanced loans from October to February.
Paul Krugman says the latest bank-rescue scheme - converting preferred shares to common ones - doesn't sound like much more than a reshuffling of the deck. "Who is supposed to be fooled by this? The markets? The pundits?"
A private sector group's index of leading economic indicators fell more than expected in March.
The Conference Board says its monthly forecast of economic activity fell 0.3 percent in March and has not risen in nine months. Economists surveyed by Thomson Reuters expected a 0.2 percent decline.
The index is designed to forecast economic activity in the next three to six months based on 10 components, such as stock prices, the money supply, jobless claims, new orders by manufacturers and building permits. Building permits were the largest negative contributor in March, while the real money supply was the largest positive contributor.
The index for February was better than previously reported, falling 0.2 percent instead of 0.4 percent. But it was revised lower in January to a 0.2 percent decline, instead of a 0.1 percent increase.
On Monday the Dow dropped 290 points, the Standard & Poor's 500 index fell 37.20, or 4.3%, to 832.40, and the Nasdaq composite index fell 64.86, or 3.9%, to 1,608.21. About 10 stocks fell for every one that rose on the NYSE. The VIX rose 5 1/4 points to 39+.
IBM Corp. saw its earnings fall slightly in the first quarter as cost controls did not fully offset a decline in revenue. For the period ended March 31, IBM reported net income of $2.3 billion, or $1.71 a share, compared to net income of $2.32 billion, or $1.67 a share, for the same period the previous year. Revenue fell 11% to $21.7 billion. Excluding the effects of foreign currency, revenue was down 4% for the quarter. Analysts were expecting earnings of $1.67 per share on revenue of $22.5 billion, according to consensus estimates from FactSet Research. In after hours trading IBM dropped 3%.
Crude oil for May delivery fell $4.45 to end at $45.88 a barrel on the New York Mercantile Exchange, the lowest close for a front-month contract since March 11. The 8.8% loss is the biggest since March 2.
Texas Instruments on Monday posted a small quarterly profit and better-than-expected revenue as demand for its chips appeared to stabilize even though it emphasized "caution about the business climate."
The company also said that it expected to moderately increase production levels in its factories in the current quarter.
Shares rose to $18.05, or more than 4 percent, in late trade after closing at $17.32 in the regular session on the New York Stock Exchange.
The Nikkei 225 Stock Average declined 126.91, or 1.4 percent, to 8,797.84 as of 9:03 a.m. in Tokyo. The broader Topix index fell 11.11, or 1.3 percent, to 837.19. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday.
Bank of America earned $4.25 billion, or 44 cents a share in the first quarter ended March 31. . Merrill Lynch contributed more than $3 billion to its net income. Bank of America's tangible common equity ratio improved to 3.13%. The company extended $183 billion in credit in the first quarter and added $6.4 billion to its loan loss reserves. Bank of America
said on Monday that it booked a gain of $2.2 billion in the first quarter based on the declining value of debt issued by its recently-acquired Merrill Lynch unit. Bank of America said it set aside $13.4 billion to cover lending losses even as it posted earnings that beat expectations.
"Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve." Bank of America CEO Lewis said during a conference call with analysts, noting that the bank continues to face challenges. "Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess."
Halliburton said revenue and profit was hit by a steep downturn in North America drilling activity.
GlaxoSmithKline said it's reached a deal to buy privately held Stiefel Laboratories for at least $2.9 billion in cash. Glaxo also is assuming $400 million in debt and will pay up to $300 million more in cash depending on performance. Glaxo said it would combine its existing prescription dermatological products business with Stiefel's. Stiefel makes Duac for acne and Olux E for dermatitis and had $1.5 billion in 2008 revenue.
The credit crunch and ensuing recession will cost the City of London a further 29,000 jobs in 2009, the Center for Economics and Business Research said in a report published Monday.
The latest quarterly survey by the National Association for Business Economics indicates that the economy is at an inflection point, but not quite a turning point, said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight.
However, she said, the results show the recession is abating.
"Key indicators — industry demand, employment, capital spending, and profitability — are still declining, but the breadth of decline is narrowing," she said.
About 1,600 workers at General Motors Corp. will lose their jobs in the next few days as the troubled automaker accelerates cost cuts in order to qualify for more government aid.
GM North America President Troy Clarke said in an e-mail to employees sent Monday that the layoffs are needed to ensure the company's long-term viability.
May crude down $2.52, or 5%, to $47.81 a barrel on Globex.
Oracle Corp. stepped in to buy Sun Microsystems Inc. for $9.50 a share in a deal valued at $7.4 billion, just weeks after a reported deal by IBM to buy the maker of Java software fell apart. Oracle will pay a premium of $2.81 a share, or 42%, over Sun Micro's closing price of $6.69 a share on Friday.
According to Bloomberg, “Citigroup Inc.’s credit losses are growing at a “rapid rate,” undermining Chief Executive Officer Vikram Pandit’s efforts to stabilize the U.S. bank”, according to Goldman.
Rob Hanna: "The most overbought ever would seem to suggest the market is unlikely to continue to rise at anywhere near its recent pace. On the other hand, those expecting a sharp, sustained selloff from here had better be basing their expectation on evidence other than just overbought breadth."
Brett Steenbarger: "The pace of the rally has been slowing. That, in itself, does not necessarily mean that we're in for a fresh bear market leg, but it does raise the possibility that the rise of six consecutive weeks may take a breather."
Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times.
“Our general objective is going to be what is good for the system,” the senior official said. “We want the system to have enough capital.” The national economic interest would be a currency that holds its buying power and not a debt structure close to $60 trillion that breeds economic instability and incubates black swans.
According to The Wall Street Journal, “the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program.” The financial firms may be using the capital to brace their troubled balance sheets.
"Men have lost almost 80 per cent of the 5.1m jobs that have gone in the US since the recession started, pushing the male unemployment rate to 8.8 per cent. The female jobless rate has hit 7 per cent. " Not surprising since women receive 75% of the pay made by men for the same work.
Treasury said loans from TARP recipients fell 2.2% in February M/M. According to the WSJ's number crunching, the real figure should be closer to 4.7% M/M, with a 23% drop in new or refinanced loans from October to February.
Paul Krugman says the latest bank-rescue scheme - converting preferred shares to common ones - doesn't sound like much more than a reshuffling of the deck. "Who is supposed to be fooled by this? The markets? The pundits?"
A private sector group's index of leading economic indicators fell more than expected in March.
The Conference Board says its monthly forecast of economic activity fell 0.3 percent in March and has not risen in nine months. Economists surveyed by Thomson Reuters expected a 0.2 percent decline.
The index is designed to forecast economic activity in the next three to six months based on 10 components, such as stock prices, the money supply, jobless claims, new orders by manufacturers and building permits. Building permits were the largest negative contributor in March, while the real money supply was the largest positive contributor.
The index for February was better than previously reported, falling 0.2 percent instead of 0.4 percent. But it was revised lower in January to a 0.2 percent decline, instead of a 0.1 percent increase.
On Monday the Dow dropped 290 points, the Standard & Poor's 500 index fell 37.20, or 4.3%, to 832.40, and the Nasdaq composite index fell 64.86, or 3.9%, to 1,608.21. About 10 stocks fell for every one that rose on the NYSE. The VIX rose 5 1/4 points to 39+.
IBM Corp. saw its earnings fall slightly in the first quarter as cost controls did not fully offset a decline in revenue. For the period ended March 31, IBM reported net income of $2.3 billion, or $1.71 a share, compared to net income of $2.32 billion, or $1.67 a share, for the same period the previous year. Revenue fell 11% to $21.7 billion. Excluding the effects of foreign currency, revenue was down 4% for the quarter. Analysts were expecting earnings of $1.67 per share on revenue of $22.5 billion, according to consensus estimates from FactSet Research. In after hours trading IBM dropped 3%.
Crude oil for May delivery fell $4.45 to end at $45.88 a barrel on the New York Mercantile Exchange, the lowest close for a front-month contract since March 11. The 8.8% loss is the biggest since March 2.
Texas Instruments on Monday posted a small quarterly profit and better-than-expected revenue as demand for its chips appeared to stabilize even though it emphasized "caution about the business climate."
The company also said that it expected to moderately increase production levels in its factories in the current quarter.
Shares rose to $18.05, or more than 4 percent, in late trade after closing at $17.32 in the regular session on the New York Stock Exchange.
The Nikkei 225 Stock Average declined 126.91, or 1.4 percent, to 8,797.84 as of 9:03 a.m. in Tokyo. The broader Topix index fell 11.11, or 1.3 percent, to 837.19. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday.
Sunday, April 19, 2009
Derivatives
4/19/09 Derivatives
A year ago, employers filed 163,000 applications for H-1B visas during the first 7 days of April, far more than the 65,000 permits available for highly trained foreigners. This year only 42,000 apllications have been received as of April 9.
New Zealand hoped China could become its third largest source of inbound tourists,New Zealand's Prime Minister John Key said here Friday. When attending the celebration marking the 10th anniversary of New Zealand's becoming a destination for Chinese tourist groups, Key said the number of Chinese citizens traveling to New Zealand reached 112,000 in the past year, an increase of nearly six times compared to the figure ten years ago.
The visiting Prime Minister said the two peoples considered each other's country as an ideal tourist destination, and the two countries extended a warm welcome to each other's tourists, which would be conducive to promoting people-to-people relationship, and enhance the two sides' common development in tourism, trade, education and business.
Canada already has a trade presence in Beijing, Shanghai, Guangzhou and Chongqing.
Canada is eager to grow business with its second largest trading partner in part because of the dwindling buying power of its largest trading partner, the U.S., Wenran Jiang, political science professor and Canada-China relations expert at the University of Alberta, said in a recent interview with Xinhua.
It is estimated that Canada's economy will not begin to emerge from recession until the United States recovers; some 70 percent of all trade Canada does is with America. But resources-rich Canada is also looking to diversify.
"In order to have commodity prices and other resources prices to go up, the key factor is not the United States, but China," Jiang said, "China is the manufacturing powerhouse of the world."
The World Bank is forecasting that the Chinese economy will grow by 6.5 percent this year and expects it to really take off in2010. Day thinks it might grow by as much as eight percent, adding that he is satisfied with China's stimulus package.
A spokesman for the general staff of the army of the Democratic People's Republic of Korea (DPRK) said Saturday that the DPRK would view as a declaration of war any sanctions imposed on the country because of its recent rocket launch.
The DPRK "will consider sanctions to be applied against the DPRK over its satellite launch or any pressure to be put upon it through "total participation" in the U.S.-led Proliferation Security Initiative (PSI) as a declaration of a war against it," the official KCNA news agency quoted an unnamed general staff spokesman as saying.
"Its revolutionary armed forces will opt for increasing the nation's defense capability, including nuclear deterrent in every way, without being bound to the agreement adopted at the six-party talks," the spokesman said.
"There is no limit to the strike to be made by the revolutionary armed forces of the DPRK," the spokesman said.
J.S. Kim : "According to the Bank for International Settlements [BIS], the global Over the Counter [OTC] derivatives market has grown almost 65% from $414.8 trillion in December, 2006 to $683.7 trillion in June of 2008. On the BIS’s own website, there are no updated figures for the notional derivatives market since June 2008, so we can likely assume, with some margin of safety, that this market has now grown to more than $700 trillion. Comparatively speaking, the total market cap of all major global stock markets is approximately $30 trillion.
(1)The notional value of derivatives is recorded OFF the balance sheet of an institution, although the market value of derivatives is recorded ON the balance sheet; and
(2)OTC derivatives are not traded on an exchange, there is no central counterparty. Therefore, they are subject to counterparty risk, like an ordinary contract, since each counterparty relies on the other to perform.
As I’ve noted before, the $700 trillion global derivatives market is the notional value of this market, not the market value of these derivatives. Thus, if the off-balance sheet assets of major international banks are growing so rapidly in the form of their notional values of their held financial derivative products, how can so many of these banks be in trouble?
The answer, quite simply, is that the market value of these derivatives is nowhere near the notional values of these derivatives maintained and reported by these banks, and that the global derivatives market is in serious trouble. Because derivative products are subject to counterparty risks as well, this means that the failure of one major financial institution could cause the evaporation of assets for many other financial institutions that have derivative products with exposure to that one financial institution. In other words, when the notional values of a good percent of these financial derivative products start evaporating into thin air, and they will, it will have a negative domino effect on the balance sheet of not just one major financial institution, but many."
Paul Volcker: "I don’t think the political system will tolerate the degree of activity that the Federal Reserve, in conjunction with the Treasury, has taken."
The Oil Drum: "About 40% of the food we eat in Britain is imported. That includes an astounding 95% of our fruit and most of the wheat in our bread. This reliance on goods from abroad is perilous. During the 2000 fuel strike, Sainsbury’s chief executive wrote to the prime minister to warn that food supplies would run out “in days rather than weeks”. Supermarkets rationed bread, sugar and milk. The situation is now arguably worse: world food reserves are at historically low levels, and last year several countries stopped exporting staples because their own populations were going hungry.
If the problems were only temporary, it would be bad enough. But they’re not. We have become dependent on fossil fuels that are starting to run out. Taking account of all the oil- and gas-derived fertilisers, pesticides, distribution and retail practices, our modern farming uses an incredibly wasteful 10 calories of energy to put a single calorie of food on your plate."
Mike Burk: "Between the low of March 9 and last Friday:
The Russell 2000 (R2K) was up 39.7%.
The NASDAQ composite (OTC) was up 31.9%.
The S&P 500 (SPX) was up 28.5%.
The Dow Jones Industrial Average (DJIA) was up 24.2%.
After 6 weeks straight up, the market is overbought....I expect the major indices to be lower on Friday April 24 than they were on Friday April 17."
Brown-Forman, the U.S. maker of Jack Daniel's whiskey and Southern Comfort, has hired investment bankers to look at a possible merger with rival Bacardi, Britain's Sunday Telegraph reported.
According to the WSJ, California's unemployment rate jumped to 11.2% in March, while North Carolina rose to 10.8%, the highest for both since the U.S. government began a comprehensive tally of state joblessness in 1976.
The state-by-state employment figures showed only a few states avoiding the deterioration seen nationwide. Unemployment rose in 46 states during the month, and 12 states plus the District of Columbia posted unemployment rates in March that were significantly higher than the 8.5% nationwide figure the government released earlier this month.
A third of the 600 companies responding to a recent survey by the National Investor Relations Institute said their policies about financial guidance had changed. Most eliminated or limited the amount of guidance they provide about earnings and revenue.
"If you don't know what the future holds and you can't accurately predict it, you don't want to be out there telling somebody something you don't have confidence in," said the Institute's Chief Executive Jeff Morgan.
According to the LA Times, bolstered by sales of discounted foreclosures, Bay Area sales were up 29.1% last month from March 2008, MDA DataQuick reported, while the median home and condo price was down 45.9% to $290,000. The area price peak was $665,000 in June and July of 2007.
The March statistic overstates the price decline as sales in higher-end communities have been slower, according to DataQuick analysis. For example, Santa Clara County, home to the majority of Silicon Valley communities, saw only a 16.6% increase in sales for the same period and a median price drop of 37.1%.
June gold gains $2.10 to $870/oz on Globex. May crude falls 11 cents to $50.22/brl on Globex.
According to Bloomberg, the last time U.S. Treasury bill rates headed toward zero percent investors were panicking. Now it’s an indication Federal Reserve Chairman Ben S. Bernanke’s efforts to revive credit markets are starting to work. Anyone who believes this nonsense should take their head out their ass.
“Although volatility levels have peaked, they are still pricing in significant market uncertainty in the years ahead,” said Geoffrey Yu, a London-based foreign-exchange strategist at UBS AG, the world’s second-biggest currency trader. “So long as the banking system is still under stress, people will want protection. We are far from giving banks a clean bill of health, which means there will be more nasty shocks along the way.”
Since the start of 2007, the world’s largest financial firms have reported loan-related writedowns and losses of $1.3 trillion, about the size of Russia’s economy. Global losses may total $4 trillion, the International Monetary Fund will announce on April 20, according to an April 8 report in the Financial Times.
A year ago, employers filed 163,000 applications for H-1B visas during the first 7 days of April, far more than the 65,000 permits available for highly trained foreigners. This year only 42,000 apllications have been received as of April 9.
New Zealand hoped China could become its third largest source of inbound tourists,New Zealand's Prime Minister John Key said here Friday. When attending the celebration marking the 10th anniversary of New Zealand's becoming a destination for Chinese tourist groups, Key said the number of Chinese citizens traveling to New Zealand reached 112,000 in the past year, an increase of nearly six times compared to the figure ten years ago.
The visiting Prime Minister said the two peoples considered each other's country as an ideal tourist destination, and the two countries extended a warm welcome to each other's tourists, which would be conducive to promoting people-to-people relationship, and enhance the two sides' common development in tourism, trade, education and business.
Canada already has a trade presence in Beijing, Shanghai, Guangzhou and Chongqing.
Canada is eager to grow business with its second largest trading partner in part because of the dwindling buying power of its largest trading partner, the U.S., Wenran Jiang, political science professor and Canada-China relations expert at the University of Alberta, said in a recent interview with Xinhua.
It is estimated that Canada's economy will not begin to emerge from recession until the United States recovers; some 70 percent of all trade Canada does is with America. But resources-rich Canada is also looking to diversify.
"In order to have commodity prices and other resources prices to go up, the key factor is not the United States, but China," Jiang said, "China is the manufacturing powerhouse of the world."
The World Bank is forecasting that the Chinese economy will grow by 6.5 percent this year and expects it to really take off in2010. Day thinks it might grow by as much as eight percent, adding that he is satisfied with China's stimulus package.
A spokesman for the general staff of the army of the Democratic People's Republic of Korea (DPRK) said Saturday that the DPRK would view as a declaration of war any sanctions imposed on the country because of its recent rocket launch.
The DPRK "will consider sanctions to be applied against the DPRK over its satellite launch or any pressure to be put upon it through "total participation" in the U.S.-led Proliferation Security Initiative (PSI) as a declaration of a war against it," the official KCNA news agency quoted an unnamed general staff spokesman as saying.
"Its revolutionary armed forces will opt for increasing the nation's defense capability, including nuclear deterrent in every way, without being bound to the agreement adopted at the six-party talks," the spokesman said.
"There is no limit to the strike to be made by the revolutionary armed forces of the DPRK," the spokesman said.
J.S. Kim : "According to the Bank for International Settlements [BIS], the global Over the Counter [OTC] derivatives market has grown almost 65% from $414.8 trillion in December, 2006 to $683.7 trillion in June of 2008. On the BIS’s own website, there are no updated figures for the notional derivatives market since June 2008, so we can likely assume, with some margin of safety, that this market has now grown to more than $700 trillion. Comparatively speaking, the total market cap of all major global stock markets is approximately $30 trillion.
(1)The notional value of derivatives is recorded OFF the balance sheet of an institution, although the market value of derivatives is recorded ON the balance sheet; and
(2)OTC derivatives are not traded on an exchange, there is no central counterparty. Therefore, they are subject to counterparty risk, like an ordinary contract, since each counterparty relies on the other to perform.
As I’ve noted before, the $700 trillion global derivatives market is the notional value of this market, not the market value of these derivatives. Thus, if the off-balance sheet assets of major international banks are growing so rapidly in the form of their notional values of their held financial derivative products, how can so many of these banks be in trouble?
The answer, quite simply, is that the market value of these derivatives is nowhere near the notional values of these derivatives maintained and reported by these banks, and that the global derivatives market is in serious trouble. Because derivative products are subject to counterparty risks as well, this means that the failure of one major financial institution could cause the evaporation of assets for many other financial institutions that have derivative products with exposure to that one financial institution. In other words, when the notional values of a good percent of these financial derivative products start evaporating into thin air, and they will, it will have a negative domino effect on the balance sheet of not just one major financial institution, but many."
Paul Volcker: "I don’t think the political system will tolerate the degree of activity that the Federal Reserve, in conjunction with the Treasury, has taken."
The Oil Drum: "About 40% of the food we eat in Britain is imported. That includes an astounding 95% of our fruit and most of the wheat in our bread. This reliance on goods from abroad is perilous. During the 2000 fuel strike, Sainsbury’s chief executive wrote to the prime minister to warn that food supplies would run out “in days rather than weeks”. Supermarkets rationed bread, sugar and milk. The situation is now arguably worse: world food reserves are at historically low levels, and last year several countries stopped exporting staples because their own populations were going hungry.
If the problems were only temporary, it would be bad enough. But they’re not. We have become dependent on fossil fuels that are starting to run out. Taking account of all the oil- and gas-derived fertilisers, pesticides, distribution and retail practices, our modern farming uses an incredibly wasteful 10 calories of energy to put a single calorie of food on your plate."
Mike Burk: "Between the low of March 9 and last Friday:
The Russell 2000 (R2K) was up 39.7%.
The NASDAQ composite (OTC) was up 31.9%.
The S&P 500 (SPX) was up 28.5%.
The Dow Jones Industrial Average (DJIA) was up 24.2%.
After 6 weeks straight up, the market is overbought....I expect the major indices to be lower on Friday April 24 than they were on Friday April 17."
Brown-Forman, the U.S. maker of Jack Daniel's whiskey and Southern Comfort, has hired investment bankers to look at a possible merger with rival Bacardi, Britain's Sunday Telegraph reported.
According to the WSJ, California's unemployment rate jumped to 11.2% in March, while North Carolina rose to 10.8%, the highest for both since the U.S. government began a comprehensive tally of state joblessness in 1976.
The state-by-state employment figures showed only a few states avoiding the deterioration seen nationwide. Unemployment rose in 46 states during the month, and 12 states plus the District of Columbia posted unemployment rates in March that were significantly higher than the 8.5% nationwide figure the government released earlier this month.
A third of the 600 companies responding to a recent survey by the National Investor Relations Institute said their policies about financial guidance had changed. Most eliminated or limited the amount of guidance they provide about earnings and revenue.
"If you don't know what the future holds and you can't accurately predict it, you don't want to be out there telling somebody something you don't have confidence in," said the Institute's Chief Executive Jeff Morgan.
According to the LA Times, bolstered by sales of discounted foreclosures, Bay Area sales were up 29.1% last month from March 2008, MDA DataQuick reported, while the median home and condo price was down 45.9% to $290,000. The area price peak was $665,000 in June and July of 2007.
The March statistic overstates the price decline as sales in higher-end communities have been slower, according to DataQuick analysis. For example, Santa Clara County, home to the majority of Silicon Valley communities, saw only a 16.6% increase in sales for the same period and a median price drop of 37.1%.
June gold gains $2.10 to $870/oz on Globex. May crude falls 11 cents to $50.22/brl on Globex.
According to Bloomberg, the last time U.S. Treasury bill rates headed toward zero percent investors were panicking. Now it’s an indication Federal Reserve Chairman Ben S. Bernanke’s efforts to revive credit markets are starting to work. Anyone who believes this nonsense should take their head out their ass.
“Although volatility levels have peaked, they are still pricing in significant market uncertainty in the years ahead,” said Geoffrey Yu, a London-based foreign-exchange strategist at UBS AG, the world’s second-biggest currency trader. “So long as the banking system is still under stress, people will want protection. We are far from giving banks a clean bill of health, which means there will be more nasty shocks along the way.”
Since the start of 2007, the world’s largest financial firms have reported loan-related writedowns and losses of $1.3 trillion, about the size of Russia’s economy. Global losses may total $4 trillion, the International Monetary Fund will announce on April 20, according to an April 8 report in the Financial Times.
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