10/17/09 The Retail Sector
Regulators shut down San Joaquin Bank in California on Friday, marking the 99th failure this year of a federally insured bank. It's now 3,731 branches that have been reorganized since IndyMac went down in July 2008.
International reserve assets (excluding gold) - as accumulated by Bloomberg’s Alex Tanzi – were up $453bn y-o-y to a record $7.399 TN. Reserves have increased $635bn year-to-date.
During the 2009 fiscal year, revenue declined 16.6% to $2.1 trillion… Fiscal year spending increased 18.2% to $3.5 trillion. Corporate tax receipts declined 54.6% to $138.2 billion during fiscal 2009, and individual income tax collections dropped 20.1% to $915.3 billion.
U.S. state tax collections in the second quarter tumbled a record 16.6%, the most in almost half a century.
“There’s no good news for the dollar,” said Dale Thomas, head of currencies in London at Insight Investment Management, which oversees about $121 billion. “The underlying trend is still for a gradual recovery of the global economy and a weak dollar.” The dollar will remain a “funding currency” for investors to buy higher-yielding assets as U.S. borrowing costs stay low, Thomas said.
Doug Noland: "Yet there are two particular facets of today’s inflationism that make “Keynesian” policymaking extraordinarily dangerous. First, the global backdrop is one of unchecked Credit and the absence of any disciplining global monetary regime. Policy mistakes are free to run longer and with enormous global financial and economic consequences. Second, policymakers and pundits herald incredible post-Bubble policy responses, while failing to recognize that aggressive stimulus is, once again, fostering problematic Bubbles. For too long the inflationists have been negligent in their disregard for Bubble dynamics."
Dan Basch: "Today's QQQQ chart shows a Double Top formation with heavily sloped negative divergences on oscillators, which bares striking similarities to that of the Nasdaq Crash of 1987. The two charts have a nearly identical pattern with the primary difference being the slope of ascent....
If one is to estimate that the anticipated decline ahead would be as ruthless as it was then, based on the percentage decline on the Nasdaq 1987 chart which was 36.8% from the Double Top highs, a target for the Qs would be 27.34, as annotated.
In addition to the Qs, a trifecta of bearish Double Top formations would include those which have developed on the Russell 2000 and Dow Jones Transportation index as well. Also consider that although the S&P 500 and DJIA have ascended past their Double Top patterns, the negative divergences on their oscillators are as bearish as those above which doesn't lend confidence to those indices moving to new highs anytime soon, although anything is possible."
Eric Savitz: "AMD 'fessed up that it sees a less-than-seasonal rise in revenue, due to the mammoth PC build the computer makers already have undertaken in advance of the arrival of Windows 7. Do you see the problem? AMD is effectively warning the Street that if consumers don't buy a ton of Windows 7-based PCs, the chip sector could suffer a double-dip, with a quick return to the days of glutted inventory. So, people running Vista and XP, time to get out there and buy yourself a new PC. The stock market is counting on you."
A little more than 10 years after buying his first jet in Brazil, Bolivian-born German Efromovich is set to control the second-largest airline in Latin America, with a total fleet of almost 150 airplanes.
Last week, he unveiled plans to merge Colombia's largest airline, Avianca SA, which he owns, with El Salvador's Grupo Taca under a new holding company. Efromovich's Synergy Aerospace Corp. will control two thirds of the new company, while El Salvador's Kriete family, which owns Grupo Taca, will have the remaining third.
A combined Avianca and Taca will be the second-largest airline in the region in terms of revenue, behind Chile's LAN Airlines.
The office vacancy rate increased .6% to 16.1%, at the end of the third quarter. This was the eighth consecutive quarter of rising vacancy rates.
Houston cafeteria chain Luby's is closing 25 of its 120 restaurant locations.
Halliburton Co. CEO Dave Lesar expressed optimism Friday that the current downturn in international oil and gas activity will be less severe and shorter than previously thought, helping offset continued weakness in North America.
But even as business improves, profits in international regions could fall as oil companies delay projects and continue to pressure oil field services providers to reduce prices, he said during a conference call Friday to discuss the company’s third-quarter earnings.
And in North America, while pricing for services has stabilized in most basins, customers have been cautious about spending to bring more wells online, awaiting more signs of a recovery in commodity prices and energy demand, he said.
LA Times: "In another sign of how deep the global recession has become, the ports of Los Angeles and Long Beach on Friday reported their worst combined import statistics for September in nine years.
September is often the busiest month at the nation's biggest port complex, making it one of the best barometers of the health of the economy and international trade.
The port of Los Angeles received 309,078 containers packed with imported goods in September, representing a decline of 16% from the same month last year and 27% from September 2006, L.A.'s best month ever for imports. Long Beach received 224,924 import containers in September, a drop of 19% from a year earlier and 32% from September 2007, the port's best September ever.
For the first nine months of the year, imports, exports and empty containers through the port of Los Angeles were down 16% at just under 5 million containers while the Long Beach port saw a decline of nearly 25% at just under 3.7 million containers, compared with the same period last year.
As dismal as those figures are for the two ports, which rank first and second in the U.S. in container volume and together rank fifth in the world, a greater worry goes beyond the immediate and substantial loss of local trade-related jobs: Some of the ports' most important tenants were so poorly positioned for the downturn that they might sink completely in a sea of billions of dollars of red ink, experts say.
"Without a doubt, the Southern California ports should be worried," said Neil Dekker, an analyst at Drewry Shipping Consultants in London who produces container industry forecasts. "Companies will go bust; freight rates may take years to recover."
The outlook could hardly be more ominous, said John Husing, an independent analyst with Economics and Politics Inc. in Redlands who follows the effects of global trade on the Inland Empire.
Seeing nothing but smooth sailing ahead for the globalization that has reshaped international trade, the world's shipping lines committed themselves years into the future to orders for new container ships that have as much as 69% more cargo carrying capacity than the vessels that were the world's largest in 2004, Husing said.
He described it as "the worst recession in modern times hitting an industry that was geared for the opposite of what they are facing."
Through the first half of 2009, each of the world's 17 biggest shipping lines were in the red, according to Paris-based AXS-Alphaliner, which maintains online databases for shipping industry professionals."
With retailers bringing in goods for the holiday season and the port traffic so weak, it is obvious retailers are expecting a poor holiday shopping season. The retail stocks, with the exception of Wal-Mart, are up big in price from their lows and I would suggest you think about clearing out positions in this sector. Expectations are unrealistic.
The Oil Drum: "Trying to acquire a foothold in the American oil patch, a Chinese company is closing in on a deal to buy stakes in a few drilling leases in the Gulf of Mexico from a Norwegian company, an executive close to the talks said.
The prospective purchase would not do much to quench China’s huge and growing thirst for energy, which makes it the second-leading consumer of oil after the United States. But such an oil acquisition would be symbolically important as the first by China in the United States, coming four years after the Chinese company’s $18.5 billion bid for the American oil company Unocal collapsed under pressure from Congress."
Saturday, October 17, 2009
Friday, October 16, 2009
Wal-Mart
10/16/09 Wal-Mart
Jeff Clark: "Today, the amount of bubble gum you get for $1 could have been purchased for 18¢ in 1971.
In sharp contrast, you can buy about 3½ times more bubble gum today with the same gold coin you had in 1971."
Bank of America Corp. said it set aside $11.7 billion in the third quarter to cover expected loan losses, which compares with $13.4 billion in the second quarter and about $6.5 billion in the year-ago period. Net charge-offs rose to $9.6 billion from $8.7 billion in the second quarter. Nonperforming assets -- loans that are at least 90 days past due -- increased to $33.8 billion, or 3.72% of outstanding loans, leases and foreclosed properties, from $31 billion, or 3.31%, quarter-over-quarter. B. of A. shares were down 3% in premarket trading Friday following the bank's third-quarter earnings report.
Halliburton Co.said Friday its third-quarter net income fell to $262 million, or 29 cents a share, from $672 million, or 74 cents a share in the year-ago period. Excluding 2 cents a share in employee separation costs, the Houston oil service giant earned 31 cents a share. Revenue dropped to $3.59 billion from $4.85 billion. Wall Street analysts expected Halliburton to earn 26 cents a share on revenue of $3.43 billion, according to a survey by FactSet Research. "We are seeing signs that margins are bottoming in the third quarter, but it is likely that fourth quarter margins will continue to be under pressure due to typical weather issues, winter stipulations in the Rockies, and customers who are likely to continue drilling but deferring completions until they see a more favorable pricing outlook," the company said.
General Electric said its third-quarter profit dropped 44% to $2.42 billion, or 23 cents a share, as revenue fell 20% to $37.8 billion. The downturn was led by a 87% profit drop in GE Capital, while NBC Universal segment profit improved 13%. From continuing operations, it earned 22 cents a share, including 5 cents a share of charges. CEO Jeff Immelt said the firm saw signs of stabilization in the GE Capital while it remains a "tough" environment.
The 16-nation euro zone posted a trade deficit of 4 billion euros ($5.98 billion) in August, narrowing from 11.3 billion in the same month last year, the statistics agency Eurostat reported Friday. In July, the euro zone posted a revised surplus of 12.3 billion euros. Economists had forecast a 300 million euro August deficit. Eurostat said seasonally-adjusted exports fell by 5.8% between July and August, while imports dropped by 1.3%.
China reported a fiscal deficit of 96.81 billion yuan ($14.2 billion) in September, reversing from five straight months of surpluses, according to Ministry of Finance data released Friday. Revenue was up 33% to 560.94 billion yuan, while spending rose 32.9% to 657.74 billion yuan, according to a Dow Jones Newswires report which cited data published on the Finance Ministry's Web site Friday.
"U.S. personal income growth was offset by inflation, as measured by the national price index for personal consumption expenditures, which rose 0.3 percent in the second quarter after falling 0.4 percent in the first quarter. "
HARRY REID: "He talked about CBO saying that there would be $54 billion saved each year if we put caps on medical malpractice and put some restrictions — tort reform — $54 billion. Sounds like a lot of money, doesnt it, Mr. President? The answer is yes. But remember, were talking about $2 trillion, $54 billion compared to $2 trillion. You can do the math. We can all do the math. Its a very small percent."
Barry Ritholtz: "During Q3, one in every 136 U.S. housing units received a foreclosure filing — a record high. This quarter was the worst 3 month period since the great Depression.
In yet another astonishing data point, just 6 states account for 62% of US total foreclosures: California, Florida, Arizona, Nevada, Illinois and Michigan are the leading states in terms of receiving foreclosure filings."
Sept. Industrial Production: +0.7% vs. +0.8% in August and consensus of +0.2%, the sharpest quarterly rise in four years. Capacity utilization surged to 70.5% vs. 69.6% last month and 69.8% expected.
Net foreign purchases of long-term securities were $28.6B, up from $15.3B in July but well short of June's $90.7B. Consensus was for $30B.
Seeking Alpha: " Kraft is reportedly in talks to sell Maxwell House to Sara Lee, which would give it enough cash to sweeten its bid for Cadbury. Sources say Kraft is already close to raising the $9B it needs to make a formal offer for Cadbury ahead of the Nov. 9 put up or shut up deadline, but would need more than that to raise the stakes. "
Oct. 15 (Bloomberg) -- International Business Machines Corp. dropped in extended trading after new contract signings declined last quarter, a sign that customers aren’t yet ready to increase spending as the economy begins to recover.
Signed services contracts, an indicator of future business, dropped 7 percent to $11.8 billion, the Armonk, New York-based company said today in a statement. That marks the smallest level of services signings in six quarters. Signed consulting and systems integration contracts declined 16 percent.
Wal-Mart Stores Inc. announced Thursday that its online site, walmart.com, would charge just $10, with free shipping, for such upcoming hardcover releases as Sarah Palin's "Going Rogue" and John Grisham's "Ford County," a cut of 60 percent or more from the regular cost.
Amazon.com, the leading online book seller, has responded, also slashing its price to $10 for "Going Rogue," "Ford County," Michael Crichton's "Pirate Latitudes" and other leading pre-orders.
"At Walmart.com, we remain committed to providing our customers with the lowest prices available online. That commitment extends to the nation's best-selling books, especially during an increasingly challenging year for many of our customers," Raul Vazquez, Walmart.com's CEO, said in a statement.
"Our newest offering — the Top 10 pre-selling books at just $10, with free home delivery — is a true reflection of this commitment to better help our customers shop and save money online, just in time for the approaching holiday season."
In a new program called "America's Reading List," Bentonville, Ark.-based Wal-Mart also will offer 50 percent off or more on 200 current best-sellers, including Dan Brown's "The Lost Symbol" and Kathryn Stockett's "The Help."
The Italian oil company Eni and Spain's Repsol on Friday said tests have confirmed that their natural gas discovery offshore Venezuela is the largest ever in the country.
Rigzone: "Vagit Alekperov, President of Lukoil, and Anatoly Chubais, General Director of Rosnano, signed a strategic partnership agreement (the Agreement) in Moscow today.
Under the Agreement, the parties will promote cooperation in commercializing nanotechnologies and introducing them into the oil and gas industry, including at Lukoil Group companies."
The consumer sentiment index fell to 69.4 from 73.5 in September. The decrease was sharper than expected. The consensus forecast of Wall Street economists was for sentiment to slip to 72.0.
Two American soldiers were instantly killed and two others died of their wounds after their patrol vehicle hit an improvised explosive device in southern Afghanistan, military officials said on Friday.
Crude oil ended the day over $78 a barrel.
The number of bankruptcies in Washington state this year is now at its highest level in four years, and the pace has barely slowed.
There were 2,664 bankruptcy filings in September, 33 percent more than in September a year ago. So far this year, more than 23,000 people have declared bankruptcy in Washington, a nearly 50 percent increase over the same time last year, amid a sluggish housing market and high levels of unemployment. The state's unemployment rate rose to 9.3 percent last month.
The Dow Jones Industrial Average fell 67.03 points, or 0.7%, to finish at 9,995.91, leaving it with a weekly gain of 1.3%. The S&P 500 Index declined 8.88 points, or 0.8%, to 1,087.68, off 1.5% from last Friday's close. The Nasdaq Composite Index dropped 16.49 points, or 0.8%, to end at 2,156.80, a level that translates into a 0.8% weekly rise for the technology-laden index.
Jeff Clark: "Today, the amount of bubble gum you get for $1 could have been purchased for 18¢ in 1971.
In sharp contrast, you can buy about 3½ times more bubble gum today with the same gold coin you had in 1971."
Bank of America Corp. said it set aside $11.7 billion in the third quarter to cover expected loan losses, which compares with $13.4 billion in the second quarter and about $6.5 billion in the year-ago period. Net charge-offs rose to $9.6 billion from $8.7 billion in the second quarter. Nonperforming assets -- loans that are at least 90 days past due -- increased to $33.8 billion, or 3.72% of outstanding loans, leases and foreclosed properties, from $31 billion, or 3.31%, quarter-over-quarter. B. of A. shares were down 3% in premarket trading Friday following the bank's third-quarter earnings report.
Halliburton Co.said Friday its third-quarter net income fell to $262 million, or 29 cents a share, from $672 million, or 74 cents a share in the year-ago period. Excluding 2 cents a share in employee separation costs, the Houston oil service giant earned 31 cents a share. Revenue dropped to $3.59 billion from $4.85 billion. Wall Street analysts expected Halliburton to earn 26 cents a share on revenue of $3.43 billion, according to a survey by FactSet Research. "We are seeing signs that margins are bottoming in the third quarter, but it is likely that fourth quarter margins will continue to be under pressure due to typical weather issues, winter stipulations in the Rockies, and customers who are likely to continue drilling but deferring completions until they see a more favorable pricing outlook," the company said.
General Electric said its third-quarter profit dropped 44% to $2.42 billion, or 23 cents a share, as revenue fell 20% to $37.8 billion. The downturn was led by a 87% profit drop in GE Capital, while NBC Universal segment profit improved 13%. From continuing operations, it earned 22 cents a share, including 5 cents a share of charges. CEO Jeff Immelt said the firm saw signs of stabilization in the GE Capital while it remains a "tough" environment.
The 16-nation euro zone posted a trade deficit of 4 billion euros ($5.98 billion) in August, narrowing from 11.3 billion in the same month last year, the statistics agency Eurostat reported Friday. In July, the euro zone posted a revised surplus of 12.3 billion euros. Economists had forecast a 300 million euro August deficit. Eurostat said seasonally-adjusted exports fell by 5.8% between July and August, while imports dropped by 1.3%.
China reported a fiscal deficit of 96.81 billion yuan ($14.2 billion) in September, reversing from five straight months of surpluses, according to Ministry of Finance data released Friday. Revenue was up 33% to 560.94 billion yuan, while spending rose 32.9% to 657.74 billion yuan, according to a Dow Jones Newswires report which cited data published on the Finance Ministry's Web site Friday.
"U.S. personal income growth was offset by inflation, as measured by the national price index for personal consumption expenditures, which rose 0.3 percent in the second quarter after falling 0.4 percent in the first quarter. "
HARRY REID: "He talked about CBO saying that there would be $54 billion saved each year if we put caps on medical malpractice and put some restrictions — tort reform — $54 billion. Sounds like a lot of money, doesnt it, Mr. President? The answer is yes. But remember, were talking about $2 trillion, $54 billion compared to $2 trillion. You can do the math. We can all do the math. Its a very small percent."
Barry Ritholtz: "During Q3, one in every 136 U.S. housing units received a foreclosure filing — a record high. This quarter was the worst 3 month period since the great Depression.
In yet another astonishing data point, just 6 states account for 62% of US total foreclosures: California, Florida, Arizona, Nevada, Illinois and Michigan are the leading states in terms of receiving foreclosure filings."
Sept. Industrial Production: +0.7% vs. +0.8% in August and consensus of +0.2%, the sharpest quarterly rise in four years. Capacity utilization surged to 70.5% vs. 69.6% last month and 69.8% expected.
Net foreign purchases of long-term securities were $28.6B, up from $15.3B in July but well short of June's $90.7B. Consensus was for $30B.
Seeking Alpha: " Kraft is reportedly in talks to sell Maxwell House to Sara Lee, which would give it enough cash to sweeten its bid for Cadbury. Sources say Kraft is already close to raising the $9B it needs to make a formal offer for Cadbury ahead of the Nov. 9 put up or shut up deadline, but would need more than that to raise the stakes. "
Oct. 15 (Bloomberg) -- International Business Machines Corp. dropped in extended trading after new contract signings declined last quarter, a sign that customers aren’t yet ready to increase spending as the economy begins to recover.
Signed services contracts, an indicator of future business, dropped 7 percent to $11.8 billion, the Armonk, New York-based company said today in a statement. That marks the smallest level of services signings in six quarters. Signed consulting and systems integration contracts declined 16 percent.
Wal-Mart Stores Inc. announced Thursday that its online site, walmart.com, would charge just $10, with free shipping, for such upcoming hardcover releases as Sarah Palin's "Going Rogue" and John Grisham's "Ford County," a cut of 60 percent or more from the regular cost.
Amazon.com, the leading online book seller, has responded, also slashing its price to $10 for "Going Rogue," "Ford County," Michael Crichton's "Pirate Latitudes" and other leading pre-orders.
"At Walmart.com, we remain committed to providing our customers with the lowest prices available online. That commitment extends to the nation's best-selling books, especially during an increasingly challenging year for many of our customers," Raul Vazquez, Walmart.com's CEO, said in a statement.
"Our newest offering — the Top 10 pre-selling books at just $10, with free home delivery — is a true reflection of this commitment to better help our customers shop and save money online, just in time for the approaching holiday season."
In a new program called "America's Reading List," Bentonville, Ark.-based Wal-Mart also will offer 50 percent off or more on 200 current best-sellers, including Dan Brown's "The Lost Symbol" and Kathryn Stockett's "The Help."
The Italian oil company Eni and Spain's Repsol on Friday said tests have confirmed that their natural gas discovery offshore Venezuela is the largest ever in the country.
Rigzone: "Vagit Alekperov, President of Lukoil, and Anatoly Chubais, General Director of Rosnano, signed a strategic partnership agreement (the Agreement) in Moscow today.
Under the Agreement, the parties will promote cooperation in commercializing nanotechnologies and introducing them into the oil and gas industry, including at Lukoil Group companies."
The consumer sentiment index fell to 69.4 from 73.5 in September. The decrease was sharper than expected. The consensus forecast of Wall Street economists was for sentiment to slip to 72.0.
Two American soldiers were instantly killed and two others died of their wounds after their patrol vehicle hit an improvised explosive device in southern Afghanistan, military officials said on Friday.
Crude oil ended the day over $78 a barrel.
The number of bankruptcies in Washington state this year is now at its highest level in four years, and the pace has barely slowed.
There were 2,664 bankruptcy filings in September, 33 percent more than in September a year ago. So far this year, more than 23,000 people have declared bankruptcy in Washington, a nearly 50 percent increase over the same time last year, amid a sluggish housing market and high levels of unemployment. The state's unemployment rate rose to 9.3 percent last month.
The Dow Jones Industrial Average fell 67.03 points, or 0.7%, to finish at 9,995.91, leaving it with a weekly gain of 1.3%. The S&P 500 Index declined 8.88 points, or 0.8%, to 1,087.68, off 1.5% from last Friday's close. The Nasdaq Composite Index dropped 16.49 points, or 0.8%, to end at 2,156.80, a level that translates into a 0.8% weekly rise for the technology-laden index.
Thursday, October 15, 2009
Delinquent Accounts
10/15/09 Delinquent Accounts
Foreclosure filings -- including mortgage default notices, house auctions and home repossessions by banks -- were reported on 343,638 properties in September, down 4 percent from August, but up 29 percent from the year-earlier month, real estate data firm RealtyTrac said.
“Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,” said James J. Saccacio, chief executive officer of RealtyTrac. “REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties.”
The number of people filing for state unemployment benefits fell by 10,000 to a seasonally adjusted 514,000 in the week ending Oct. 10, the Labor Department reported Thursday. It was the fifth decline in the past six weeks. The number of people collecting state benefits fell by 75,000 to a seasonally adjusted 5.99 million in the week ending Oct. 3, the lowest since March. Including federal programs, the number of people claiming benefits of any kind in the week ending Sept. 26 was 9.24 million, not seasonally adjusted, down 127,000 from 9.36 million in the previous week.
U.S. consumer prices drifted higher in September, led by higher prices for cars, energy and medical care that offset the first declines ever recorded in residential rents and home ownership costs, the Labor Department reported Thursday. The consumer price index rose a seasonally adjusted 0.2% in September. The core CPI -- which excludes volatile food and energy prices -- also increased 0.2% in September on a seasonally adjusted basis. Both the food and energy indexes have declined over the past 12 months. The decline in the food index is the first 12-month decrease in that index in over 40 years.
Manufacturing activity in the New York rose to its highest level in five years in October, the New York Federal Reserve Bank said Thursday. The bank's Empire State Manufacturing index rose to 34.6 in October from 18.9 in September. The new orders index climbed in October, while shipments shot up 30 points. The employment index was positive for the first time in more than a year.
Ten-year note yields rose 4 basis points to 3.45%.
Goldman Sachs said on Thursday that its third-quarter profit rose to $3.19 billion, or $5.25 a share, from $810 million, or $1.81 a share a year ago.
Citigroup Inc posted a quarterly loss to shareholders as it suffered $8 billion of credit losses, raising further questions about the future of the bank that is one-third owned by the U.S. government.
Citigroup, which has posted more than $100 billion of writedowns and consumer credit losses since the credit crisis began, posted a third-quarter net loss to shareholders of $3.2 billion, or 27 cents a share, compared with a loss of $2.9 billion, or 61 cents a share, in the third quarter last year.
Rob Hanna: "Wednesday’s move may look especially strong on a chart. Historically when large gaps continue higher intraday and make new intermediate-term highs it has most often led to a pullback over the next few days."
CEO of Chesapeake Energy noted: "The U.S. today consumes about 63 billion cubic feet of natural gas per day - in energy BTU equivalency terms, that’s 10.5 million barrels of oil per day, or about half of the amount of oil that the U.S. consumes each day. Of that 63 bcf per day of natural gas consumption, we import about 1 bcf in the form of liquefied natural gas, or LNG, and we import about 8 bcf per day from Canada. This means that we are about 98.5% self-reliant on natural gas supply from North America and about 86% self-reliant on natural gas supply from the U.S. Contrast that with oil, where we are only about 41% North American self-reliant and only about 27% self-reliant from U.S. sources."
Doug Noland: "So much of our economic structure evolved during - and for - a different era. Our bubbles were inflating; market dynamics had created great power and flexibility for policymaking; the US consumer was the king; and our securities and economic booms were the focus globally. While some of our multinational companies will benefit, too much of our economic structure is poorly positioned for today's new global landscape. Not only does our maladjusted economic structure today require too much non-productive credit creation, it lacks the type of real economic returns necessary to attract global financial flows. This is a big predicament not easily remedied."
Real average hourly earnings fell 0.1 percent from August to September 2009.
The U.S. Import Price Index edged up 0.1 percent in September. The price index for U.S. exports declined 0.3 percent in September.
The U.S. dollar hit index hit another 14-month low at 75.21.
Capital One's net charge-off rate - debts it believes it will never collect - rose to 9.77% in Sept. from 9.32% in Aug. Accounts at least 30 days delinquent - an indicator of future loan losses - increased to 5.38% from 5.09%.
Shareholders representing 24% of the shares in Tandberg reject Cisco's $3B offer for the videoconferencing equipment maker, fuelling hopes Cisco might raise its bid. "The shareholders are convinced that Tandberg will generate strong returns as an independent company, but are open to evaluate a higher offer from Cisco or a third party," a brokerage representing 21 top shareholders said.
Google plans to launch an online store by next year to deliver electronic books to any device with a web browser, a direct attack on Amazon.com's hugely successful Kindle. Google Editions will offer about half a million books initally in partnership with publishers with whom it already cooperates.
Manufacturing activity in the Philalphia region expanded at a weaker pace in October than in September, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed index fell to 11.5 in October from 14.1 in September. The index has indicated expansion in the factory sector in the region for three consecutive months. The new orders index rose to 6.2 from 3.3, while the employment index rose to negative 6.8 from negative 14.3.
The cost of jet fuel fell about 75% in August to $2.02 a gallon, versus $3.54 a gallon in the year-ago period, the Bureau of Transportation Statistics said Thursday. In July, the price of jet cost U.S. airlines $1.90 a gallon.
Xstrata Plc dropped a proposed 29.6 billion-pound ($48 billion) offer to merge with Anglo American Plc and create one of the world’s largest mining companies, five days before a deadline for it to make a formal bid or walk away.
Working gas in storage was 3,716 Bcf as of Friday, October 9, 2009, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week. Stocks were 450 Bcf higher than last year at this time and 474 Bcf above the 5-year average of 3,242 Bcf. In the East Region, stocks were 138 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 266 Bcf above the 5-year average of 916 Bcf after a net injection of 13 Bcf. Stocks in the West Region were 69 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,716 Bcf, total working gas is above the 5-year historical range.
Pfizer Inc.completed its $68 billion acquisition of Wyeth after having received its final regulatory approvals on Wednesday. Under the acquisition agreement, each outstanding share of Wyeth common stock has been converted into the right to receive $33 in cash without interest and 0.985 of a share of Pfizer common stock. Wyeth shares will stop trading after the closing bell today.
December gold ends down 1.3% at $1,050.60.
The Dow Jones Industrial Average ended 47 points, or 0.5%, higher at 10,063, its highest level since early October 2008. The S&P 500 gained 4.5 points, or 0.4%, to 1,097. The Nasdaq Composite gained 1 point, or 0.1%, to 2,173.
IBM Corp.reported a fiscal third-quarter profit of $3.2 billion, or $2.40 a share, on revenue of $23.6 billion. IBM's earnings rose 14% from the same period a year ago, when the tech giant posted a profit of $2.8 billion, or $2.04 a share on revenue of $25.3 billion in the same period a year ago. Analysts surveyed by Thomson Reuters estimated IBM would earn $2.38 a share on $23.86 billion in sales. IBM also raised its full-year earnings forecast to a profit of at least $9.85 a share from $9.70 a share.
Google Inc. said Thursday its third-quarter net income rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06 a share in the same period last year. Net revenue for the period ended in September rose nearly 1% to $4.38 billion. Excluding special items, earnings for the quarter were $5.89 a share. Analysts polled by Thomson Reuters had expected Google to post earnings excluding items of $5.42 a share, and $4.24 billion in net revenue.
Foreclosure filings -- including mortgage default notices, house auctions and home repossessions by banks -- were reported on 343,638 properties in September, down 4 percent from August, but up 29 percent from the year-earlier month, real estate data firm RealtyTrac said.
“Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters,” said James J. Saccacio, chief executive officer of RealtyTrac. “REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties.”
The number of people filing for state unemployment benefits fell by 10,000 to a seasonally adjusted 514,000 in the week ending Oct. 10, the Labor Department reported Thursday. It was the fifth decline in the past six weeks. The number of people collecting state benefits fell by 75,000 to a seasonally adjusted 5.99 million in the week ending Oct. 3, the lowest since March. Including federal programs, the number of people claiming benefits of any kind in the week ending Sept. 26 was 9.24 million, not seasonally adjusted, down 127,000 from 9.36 million in the previous week.
U.S. consumer prices drifted higher in September, led by higher prices for cars, energy and medical care that offset the first declines ever recorded in residential rents and home ownership costs, the Labor Department reported Thursday. The consumer price index rose a seasonally adjusted 0.2% in September. The core CPI -- which excludes volatile food and energy prices -- also increased 0.2% in September on a seasonally adjusted basis. Both the food and energy indexes have declined over the past 12 months. The decline in the food index is the first 12-month decrease in that index in over 40 years.
Manufacturing activity in the New York rose to its highest level in five years in October, the New York Federal Reserve Bank said Thursday. The bank's Empire State Manufacturing index rose to 34.6 in October from 18.9 in September. The new orders index climbed in October, while shipments shot up 30 points. The employment index was positive for the first time in more than a year.
Ten-year note yields rose 4 basis points to 3.45%.
Goldman Sachs said on Thursday that its third-quarter profit rose to $3.19 billion, or $5.25 a share, from $810 million, or $1.81 a share a year ago.
Citigroup Inc posted a quarterly loss to shareholders as it suffered $8 billion of credit losses, raising further questions about the future of the bank that is one-third owned by the U.S. government.
Citigroup, which has posted more than $100 billion of writedowns and consumer credit losses since the credit crisis began, posted a third-quarter net loss to shareholders of $3.2 billion, or 27 cents a share, compared with a loss of $2.9 billion, or 61 cents a share, in the third quarter last year.
Rob Hanna: "Wednesday’s move may look especially strong on a chart. Historically when large gaps continue higher intraday and make new intermediate-term highs it has most often led to a pullback over the next few days."
CEO of Chesapeake Energy noted: "The U.S. today consumes about 63 billion cubic feet of natural gas per day - in energy BTU equivalency terms, that’s 10.5 million barrels of oil per day, or about half of the amount of oil that the U.S. consumes each day. Of that 63 bcf per day of natural gas consumption, we import about 1 bcf in the form of liquefied natural gas, or LNG, and we import about 8 bcf per day from Canada. This means that we are about 98.5% self-reliant on natural gas supply from North America and about 86% self-reliant on natural gas supply from the U.S. Contrast that with oil, where we are only about 41% North American self-reliant and only about 27% self-reliant from U.S. sources."
Doug Noland: "So much of our economic structure evolved during - and for - a different era. Our bubbles were inflating; market dynamics had created great power and flexibility for policymaking; the US consumer was the king; and our securities and economic booms were the focus globally. While some of our multinational companies will benefit, too much of our economic structure is poorly positioned for today's new global landscape. Not only does our maladjusted economic structure today require too much non-productive credit creation, it lacks the type of real economic returns necessary to attract global financial flows. This is a big predicament not easily remedied."
Real average hourly earnings fell 0.1 percent from August to September 2009.
The U.S. Import Price Index edged up 0.1 percent in September. The price index for U.S. exports declined 0.3 percent in September.
The U.S. dollar hit index hit another 14-month low at 75.21.
Capital One's net charge-off rate - debts it believes it will never collect - rose to 9.77% in Sept. from 9.32% in Aug. Accounts at least 30 days delinquent - an indicator of future loan losses - increased to 5.38% from 5.09%.
Shareholders representing 24% of the shares in Tandberg reject Cisco's $3B offer for the videoconferencing equipment maker, fuelling hopes Cisco might raise its bid. "The shareholders are convinced that Tandberg will generate strong returns as an independent company, but are open to evaluate a higher offer from Cisco or a third party," a brokerage representing 21 top shareholders said.
Google plans to launch an online store by next year to deliver electronic books to any device with a web browser, a direct attack on Amazon.com's hugely successful Kindle. Google Editions will offer about half a million books initally in partnership with publishers with whom it already cooperates.
Manufacturing activity in the Philalphia region expanded at a weaker pace in October than in September, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed index fell to 11.5 in October from 14.1 in September. The index has indicated expansion in the factory sector in the region for three consecutive months. The new orders index rose to 6.2 from 3.3, while the employment index rose to negative 6.8 from negative 14.3.
The cost of jet fuel fell about 75% in August to $2.02 a gallon, versus $3.54 a gallon in the year-ago period, the Bureau of Transportation Statistics said Thursday. In July, the price of jet cost U.S. airlines $1.90 a gallon.
Xstrata Plc dropped a proposed 29.6 billion-pound ($48 billion) offer to merge with Anglo American Plc and create one of the world’s largest mining companies, five days before a deadline for it to make a formal bid or walk away.
Working gas in storage was 3,716 Bcf as of Friday, October 9, 2009, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week. Stocks were 450 Bcf higher than last year at this time and 474 Bcf above the 5-year average of 3,242 Bcf. In the East Region, stocks were 138 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 266 Bcf above the 5-year average of 916 Bcf after a net injection of 13 Bcf. Stocks in the West Region were 69 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,716 Bcf, total working gas is above the 5-year historical range.
Pfizer Inc.completed its $68 billion acquisition of Wyeth after having received its final regulatory approvals on Wednesday. Under the acquisition agreement, each outstanding share of Wyeth common stock has been converted into the right to receive $33 in cash without interest and 0.985 of a share of Pfizer common stock. Wyeth shares will stop trading after the closing bell today.
December gold ends down 1.3% at $1,050.60.
The Dow Jones Industrial Average ended 47 points, or 0.5%, higher at 10,063, its highest level since early October 2008. The S&P 500 gained 4.5 points, or 0.4%, to 1,097. The Nasdaq Composite gained 1 point, or 0.1%, to 2,173.
IBM Corp.reported a fiscal third-quarter profit of $3.2 billion, or $2.40 a share, on revenue of $23.6 billion. IBM's earnings rose 14% from the same period a year ago, when the tech giant posted a profit of $2.8 billion, or $2.04 a share on revenue of $25.3 billion in the same period a year ago. Analysts surveyed by Thomson Reuters estimated IBM would earn $2.38 a share on $23.86 billion in sales. IBM also raised its full-year earnings forecast to a profit of at least $9.85 a share from $9.70 a share.
Google Inc. said Thursday its third-quarter net income rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06 a share in the same period last year. Net revenue for the period ended in September rose nearly 1% to $4.38 billion. Excluding special items, earnings for the quarter were $5.89 a share. Analysts polled by Thomson Reuters had expected Google to post earnings excluding items of $5.42 a share, and $4.24 billion in net revenue.
Wednesday, October 14, 2009
Dow 10,000
10/14/09 Dow 10,000
Delinquencies among U.S. commercial mortgage-backed securities surged to by a record amount to 3.64% in September, vs. just 0.54% one year ago, Moody's said today. Hotel loans were worst off, rising to 4.97% from 4.18% in August. Multi-family delinquency rates hit 6.09% from 5.51%.
Cargill Inc., the largest privately held U.S. company, said fiscal first-quarter profit fell 65 percent because of declining sales of fertilizers.
Net income in the three months through August dropped to $525 million from $1.49 billion a year earlier, Minnetonka, Minnesota-based Cargill said today in a statement.
Cargill’s fertilizer unit, Mosaic Co., has cut production of potash as farmers delayed purchases after corn, soybean and wheat prices tumbled from records last year. Cargill, which distributes and processes grains, has cut discretionary capital spending and debt as the recession reduces demand for food and livestock feed.
JPMorgan Chase & Co reported a sharp rise in third-quarter results as underwriting revenue at its investment bank offset deeper losses on credit cards and other consumer loans.
The second-largest U.S. bank posted net income of $3.6 billion, or 82 cents a share. That compares with $527 million, or 9 cents a share, in the year-earlier quarter.
Analysts on average had forecast earnings of 52 cents a share, according to Thomson Reuters I/B/E/S.
China is working on plans to curb excess capacity in the steel industry as it faces a "severe oversupply," Bloomberg News reported Wednesday, citing an industry official. Deng Qilin, general manager at Wuhan Iron & Steel Group, said in an interview China may have detailed plans on how to close obsolete mills, advance mergers and cut the number of iron ore importers by the end of the year, the report added. "We bigger players will surely benefit from such a move," said Deng, also the chairman of the China Iron & Steel Association, according to the report.
China's exports contracted at a slower pace in September than August, indicating global trade conditions may be improving, data showed Wednesday. Shipments fell 15.2% for the month, compared to a 23.4% contraction in August, marking the shallowest on-year drop in nine months.
WSJ: "The sprawling Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town -- acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of BlackRock Inc. -- is running out of cash. As of the end of September, it had $33.7 million left of the $400 million in interest reserves set up to service its debt, according to the people familiar with the matter. At its current burn rate of about $16 million per month, the reserve could be depleted before the end of the year, the people said. Others have said the venture could avoid default until February.
The spokesman for Tishman Speyer declined to comment on behalf of the partnership.
The ownership, which includes a roster of high-profile investors from the Church of England to the California Public Employees' Retirement System, has no current plans to inject more capital into the venture, according to the people. Lenders who financed the deal first projected the complex's net operating income would triple to $336 million in 2011 from $112 million in 2006, according to Deutsche Bank AG. But net income is projected to be $139 million this year, according to Realpoint LLC, a credit-rating agency.
Investors who bought into the deal were confident that real-estate manager Tishman Speyer would be able to greatly boost profits by raising rents in Manhattan's sizzling apartment market. But today, the 56-building, 11,000-apartment property is suffering from a slowing New York economy, a lawsuit that has hindered the owner's ability to convert rent-controlled units to market rentals, and the debt load."
Washington has lost almost 1 out of every 20 jobs since the state's economy began slumping early last year. And it isn't likely to regain them any time soon.
That was the stark message from the latest jobs report released Tuesday by the state Employment Security Department. The report showed Washington's unemployment rate climbing to 9.3 percent, the highest level in decades, from a revised 9 percent in August.
The dollar stayed near 14-month lows on Wednesday after a report showed U.S. retail sales, excluding autos, increased 0.5% in September. Analysts surveyed by MarketWatch expected the figure to rise 0.3%. Including automobiles, sales dropped 1.5%, largely due to the end of the cash-for-clunkers program. Economists predicted a 2.3% drop in the headline level. The dollar index fell to 75.44, down from 75.941 in late North American trading Tuesday.
Higher nonfuel prices drove import prices up by 0.1% in September, the sixth increase in the past seven months, the Labor Department reported Wednesday. Import prices have risen 7.3% so far in 2009 but are down 12% over the past 12 months. Prices of nonfuel imports into the United States rose 0.6% in September, the largest gain since July 2008. Economists say the weaker dollar is behind the increase. Imported fuel prices fell 1.8% in September, and are down 34.4% in the past 12 months.
China Foreign-Exchange Reserves Rise to Record $2.273 Trillion.
According to Bloomberg, Codelco, the world’s largest copper producer, predicts demand will weaken and producers will restart mines closed during the economic crisis last year.
Global output will exceed worldwide demand this year and next, Codelco Executive President and Chief Executive Officer Jose Pablo Arellano said today in an interview in London.
Demand will be “not that strong” compared with previous quarters, he said. Rising prices for the metal used in plumbing and wiring will prompt companies to restart shuttered mines and attract more scrap metal to the marketplace, he said.
Qatar Airways said it has completed the world's first commercial passenger flight powered by kerosene made from natural gas.
Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,311.4 billion, down 1.5 percent (±0.1%) from July 2009 and down 13.3 percent (±0.4%) from August 2008. The total business inventories/sales ratio based on seasonally adjusted data at the end of August was 1.33. The August 2008 ratio was 1.30.
API's Monthly Report: U.S. Sept. gasoline demand +6.6% vs. year earlier to 9.058 mbd. Oil demand +4.1%.
The National Association of Manufacturers said Wednesday it still has significant concerns over the Senate's heath-reform bill that passed in committee last night. "NAM remains deeply concerned that the Senate Finance Committee's bill overall will add costs to the health care system and, by extension, the manufacturing community, on top of the already spiraling costs manufacturers and their employees face today," said Executive Vice President Jay Timmons. Specifically, NAM objects to an excise tax for insurance plans with high premiums, health-industry specific fees to help pay for the plan, flexible spending account limits, and the lack of malpractice tort reform.
AccuWeather.com said Wednesday a fading El Niño pattern will lead to a stormier and colder winter in the southern and eastern United States. Chief meteorologist Joe Bastardi said the winter will be similar to 2002-2003.
Moody's drops Boeing's credit rating outlook to Negative: "A series of negative developments have had the cumulative effect of weakening Boeing's financial flexibility at the A2 level, and led to the revision in the rating outlook to negative," firm says.
The Dow Jones industrial average has reclaimed 10,000 for the first time in a year. The Dow crossed five figures in afternoon trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9.
Wednesday natural gas settlement: Dec 5.357 vs Nov 4.436.
Google Inc. increased its share of the U.S. online search market to 64.9% in September, while Microsoft Corp. increased its share to 9.4% and Yahoo Inc.'s share declined to 18.8%, according to new data published by comScore Inc.
Crude oil for November delivery gained $1.03, or 1.4%, to $75.18 a barrel on the New York Mercantile Exchange, marking the highest settlement level for a front-month contract since October 2008.
"The cost of the economy turning out to be weaker than anticipated could be relatively high," the Fed minutes said.
Treasurys stayed at afternoon lows, with the 30-year yield +0.08 to 4.27%; 10-year +0.07 to 3.42%; 5-year +0.04 to 2.34%; 2-year +0.02 to 0.93%.
The Dow Jones industrial average was up 144.88 points, or 1.47 percent, at 10,015.94. The Standard & Poor's 500 Index rose 18.95 points, or 1.77 percent, at 1,092.14. The Nasdaq Composite Index was up 32.34 points, or 1.51 percent, at 2,172.23.
Federal Reserve Governor Daniel Tarullo, who is leading an overhaul of the Fed’s bank examinations, plans to tell a Senate subcommittee today that U.S. banks face the risk of further “sizable” credit losses.
“While there have been some positive signals of late, the financial system remains fragile and key trouble spots remain,” Tarullo, 56, said in remarks prepared for a hearing in Washington. He added that it will be some time before the banking industry will “fully recover and serve as a source of strength for the real economy.”
Delinquencies among U.S. commercial mortgage-backed securities surged to by a record amount to 3.64% in September, vs. just 0.54% one year ago, Moody's said today. Hotel loans were worst off, rising to 4.97% from 4.18% in August. Multi-family delinquency rates hit 6.09% from 5.51%.
Cargill Inc., the largest privately held U.S. company, said fiscal first-quarter profit fell 65 percent because of declining sales of fertilizers.
Net income in the three months through August dropped to $525 million from $1.49 billion a year earlier, Minnetonka, Minnesota-based Cargill said today in a statement.
Cargill’s fertilizer unit, Mosaic Co., has cut production of potash as farmers delayed purchases after corn, soybean and wheat prices tumbled from records last year. Cargill, which distributes and processes grains, has cut discretionary capital spending and debt as the recession reduces demand for food and livestock feed.
JPMorgan Chase & Co reported a sharp rise in third-quarter results as underwriting revenue at its investment bank offset deeper losses on credit cards and other consumer loans.
The second-largest U.S. bank posted net income of $3.6 billion, or 82 cents a share. That compares with $527 million, or 9 cents a share, in the year-earlier quarter.
Analysts on average had forecast earnings of 52 cents a share, according to Thomson Reuters I/B/E/S.
China is working on plans to curb excess capacity in the steel industry as it faces a "severe oversupply," Bloomberg News reported Wednesday, citing an industry official. Deng Qilin, general manager at Wuhan Iron & Steel Group, said in an interview China may have detailed plans on how to close obsolete mills, advance mergers and cut the number of iron ore importers by the end of the year, the report added. "We bigger players will surely benefit from such a move," said Deng, also the chairman of the China Iron & Steel Association, according to the report.
China's exports contracted at a slower pace in September than August, indicating global trade conditions may be improving, data showed Wednesday. Shipments fell 15.2% for the month, compared to a 23.4% contraction in August, marking the shallowest on-year drop in nine months.
WSJ: "The sprawling Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town -- acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of BlackRock Inc. -- is running out of cash. As of the end of September, it had $33.7 million left of the $400 million in interest reserves set up to service its debt, according to the people familiar with the matter. At its current burn rate of about $16 million per month, the reserve could be depleted before the end of the year, the people said. Others have said the venture could avoid default until February.
The spokesman for Tishman Speyer declined to comment on behalf of the partnership.
The ownership, which includes a roster of high-profile investors from the Church of England to the California Public Employees' Retirement System, has no current plans to inject more capital into the venture, according to the people. Lenders who financed the deal first projected the complex's net operating income would triple to $336 million in 2011 from $112 million in 2006, according to Deutsche Bank AG. But net income is projected to be $139 million this year, according to Realpoint LLC, a credit-rating agency.
Investors who bought into the deal were confident that real-estate manager Tishman Speyer would be able to greatly boost profits by raising rents in Manhattan's sizzling apartment market. But today, the 56-building, 11,000-apartment property is suffering from a slowing New York economy, a lawsuit that has hindered the owner's ability to convert rent-controlled units to market rentals, and the debt load."
Washington has lost almost 1 out of every 20 jobs since the state's economy began slumping early last year. And it isn't likely to regain them any time soon.
That was the stark message from the latest jobs report released Tuesday by the state Employment Security Department. The report showed Washington's unemployment rate climbing to 9.3 percent, the highest level in decades, from a revised 9 percent in August.
The dollar stayed near 14-month lows on Wednesday after a report showed U.S. retail sales, excluding autos, increased 0.5% in September. Analysts surveyed by MarketWatch expected the figure to rise 0.3%. Including automobiles, sales dropped 1.5%, largely due to the end of the cash-for-clunkers program. Economists predicted a 2.3% drop in the headline level. The dollar index fell to 75.44, down from 75.941 in late North American trading Tuesday.
Higher nonfuel prices drove import prices up by 0.1% in September, the sixth increase in the past seven months, the Labor Department reported Wednesday. Import prices have risen 7.3% so far in 2009 but are down 12% over the past 12 months. Prices of nonfuel imports into the United States rose 0.6% in September, the largest gain since July 2008. Economists say the weaker dollar is behind the increase. Imported fuel prices fell 1.8% in September, and are down 34.4% in the past 12 months.
China Foreign-Exchange Reserves Rise to Record $2.273 Trillion.
According to Bloomberg, Codelco, the world’s largest copper producer, predicts demand will weaken and producers will restart mines closed during the economic crisis last year.
Global output will exceed worldwide demand this year and next, Codelco Executive President and Chief Executive Officer Jose Pablo Arellano said today in an interview in London.
Demand will be “not that strong” compared with previous quarters, he said. Rising prices for the metal used in plumbing and wiring will prompt companies to restart shuttered mines and attract more scrap metal to the marketplace, he said.
Qatar Airways said it has completed the world's first commercial passenger flight powered by kerosene made from natural gas.
Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,311.4 billion, down 1.5 percent (±0.1%) from July 2009 and down 13.3 percent (±0.4%) from August 2008. The total business inventories/sales ratio based on seasonally adjusted data at the end of August was 1.33. The August 2008 ratio was 1.30.
API's Monthly Report: U.S. Sept. gasoline demand +6.6% vs. year earlier to 9.058 mbd. Oil demand +4.1%.
The National Association of Manufacturers said Wednesday it still has significant concerns over the Senate's heath-reform bill that passed in committee last night. "NAM remains deeply concerned that the Senate Finance Committee's bill overall will add costs to the health care system and, by extension, the manufacturing community, on top of the already spiraling costs manufacturers and their employees face today," said Executive Vice President Jay Timmons. Specifically, NAM objects to an excise tax for insurance plans with high premiums, health-industry specific fees to help pay for the plan, flexible spending account limits, and the lack of malpractice tort reform.
AccuWeather.com said Wednesday a fading El Niño pattern will lead to a stormier and colder winter in the southern and eastern United States. Chief meteorologist Joe Bastardi said the winter will be similar to 2002-2003.
Moody's drops Boeing's credit rating outlook to Negative: "A series of negative developments have had the cumulative effect of weakening Boeing's financial flexibility at the A2 level, and led to the revision in the rating outlook to negative," firm says.
The Dow Jones industrial average has reclaimed 10,000 for the first time in a year. The Dow crossed five figures in afternoon trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9.
Wednesday natural gas settlement: Dec 5.357 vs Nov 4.436.
Google Inc. increased its share of the U.S. online search market to 64.9% in September, while Microsoft Corp. increased its share to 9.4% and Yahoo Inc.'s share declined to 18.8%, according to new data published by comScore Inc.
Crude oil for November delivery gained $1.03, or 1.4%, to $75.18 a barrel on the New York Mercantile Exchange, marking the highest settlement level for a front-month contract since October 2008.
"The cost of the economy turning out to be weaker than anticipated could be relatively high," the Fed minutes said.
Treasurys stayed at afternoon lows, with the 30-year yield +0.08 to 4.27%; 10-year +0.07 to 3.42%; 5-year +0.04 to 2.34%; 2-year +0.02 to 0.93%.
The Dow Jones industrial average was up 144.88 points, or 1.47 percent, at 10,015.94. The Standard & Poor's 500 Index rose 18.95 points, or 1.77 percent, at 1,092.14. The Nasdaq Composite Index was up 32.34 points, or 1.51 percent, at 2,172.23.
Federal Reserve Governor Daniel Tarullo, who is leading an overhaul of the Fed’s bank examinations, plans to tell a Senate subcommittee today that U.S. banks face the risk of further “sizable” credit losses.
“While there have been some positive signals of late, the financial system remains fragile and key trouble spots remain,” Tarullo, 56, said in remarks prepared for a hearing in Washington. He added that it will be some time before the banking industry will “fully recover and serve as a source of strength for the real economy.”
Tuesday, October 13, 2009
Friendly Takeover
10/13/09 Friendly Takeover
Hoisington Investment Management: "The promise of the government to revive growth through increased indebtedness is, indeed, an impossible promise....the six-month change in M2 has fallen to a 1% growth rate, meaning that monetary stimulus is on hold. Get set for negative GDP in 2010....Next year the core GDP deflator will fall to zero, with the possibility of negative levels. Likewise, long-term interest rates, which are highly sensitive to inflation, will continue to move toward lower levels. As stated in previous letters, we see no reason why longer dated Treasury interest rates will not mirror those of Japan, which provides a modern signpost for a deflationary environment. Currently the Japanese ten-year note stands at 1.3% with their thirty-year bond yielding 2.1%."
Johnson & Johnson on Tuesday reported disappointing third-quarter sales on Tuesday, but beat earnings forecasts thanks to cost-cutting and raised its full-year profit forecast. The company said prescription drug sales fell more than 14 percent, hurt by generic competition for its Topamax epilepsy drug and Risperdal schizophrenia treatment.
Australian business confidence in September fell from a nearly six-year high, according to reported results Tuesday from a monthly survey of businesses by National Australia Bank. The index fell 4 points in September from August to reach a reading of 14 points. The NAB's survey in August had shown a reading of 18 points, the highest since Oct. 2003.
The Oil Drum: "At the end of the first day of the ASPO conference in Denver, we were treated to a fantastic presentation on the oil potential of the sub-salt basins on the margins of the South Atlantic Ocean given by Dr Marcio Mello who presented the evidence for a half trillion barrels of reserves in this new frontier province. So has a new Saudi Arabia been found?"
“The dollar had been strong because the U.S. was a haven in the storm, and now that the storm is abating, who needs the dollar?” said Edmund Phelps, who won the 2006 Nobel Prize in economics and teaches at Columbia University in New York. “People got exasperated with the tiny returns on safe assets.”
Currently GDP stands at $14.2 trillion or approximately $3.73 in debt for every dollar of output in the United States.
China will continue to enforce its minimum purchasing price policy in main wheat and rice production areas and will increase the prices, according to a brief posted today on the website of the National Development and Reform Commission, China's top economic planner.
Bill Moyers: "Was the Financial Bailout Just a Slick, Friendly Takeover of the Federal Government?"
On September 9, 2009 the owners of Quail Lodge Resort and Golf Club ("Quail Lodge") announced the closing of the hotel portion of Quail Lodge on November 16, 2009. Acquired in 1997, Quail Lodge has been unable to produce a net profit for the last eight years, despite tens of millions of dollars invested to fund capital expenditure and operating losses to maintain the AAA Four Diamond property in Carmel, CA.
The current intention is for the Golf Club and its Clubhouse to remain open for its 300-plus members and to service events, although services will be reduced.
At this time there are no plans for the sale, re-development or other uses for the hotel property. The owners do not anticipate the reopening of the hotel.
Goldman Sachs, ahead of its third quarter results on Thursday, was downgraded by Meredith Whitney Advisors. In pre-market activity, Goldman was down 1.6 per cent at $187.10.
ThomsonReuters estimates the earnings growth rate for S&P 500 companies for the third quarter at minus 24.6 per cent. The estimated rate has been revised lower from 2.6 per cent at the start of the year, then minus 17.2 per cent at the beginning of April, and minus 20.9 per cent at the start of July.
The main Russian gas exporter signed a general trade agreement with China’s largest state-run energy company here on Tuesday, but failed to work out pricing details and other mechanisms that would actually put the agreement into effect.
The agreement was signed in the presence of Russian Prime Minister Vladimir Putin and Chinese Prime Minister Wen Jiabao and was called a “framework” by Alexei Miller, the head of Gazprom, the Russian state-run gas exporter that made the deal with the China National Petroleum Corp., China’s largest oil and gas producer.
The deal calls for the supply of up to 70 billion cubic meters of gas per year via two potential routes originating from Siberia. China has one of the fastest-growing economies in the world and has been searching far and wide for new sources of energy. It has focused on Central Asian nations and Russia as potential suppliers of large amounts of natural gas.
Cisco Systems Inc. says it has agreed to buy Starent Networks Corp., which helps wireless carriers support smart phones, for $2.9 billion.
Starent, of Tewksbury, Mass., makes equipment that allows carriers to tie their wireless networks to the Internet.
Cisco is paying $35 per share in cash and expects the deal to close early next year.
Russian official opposes threat of Iran sanctions
Japan Airlines Corp. is asking creditors to forgive about $2.8 billion in debt as part of its turnaround plan, Kyodo News reported Tuesday. The Tokyo-based carrier owes $15 billion, which is weighing down its ability to raise capital.
"With the U.S. oil demand bouncing back from a steep historical decline, the forecast for 2009 world oil demand growth has been revised up by 200,000 barrels a day to now show a contraction of 1.4 million barrels a day," OPEC said in its widely-watched monthly market report.
U.S. Dollar index made a new 52-week low at 75.74.
Most consumers plan to spend about the same amount this holiday season that they did in 2009, according to NPD's Holiday Retail Outlook. 59% of those surveyed plan to hold spending steady (down from 63%), 30% plan to spend less (up from 26%), and 11% plan to spend more. Not surprisingly, consumers say 'value' has the biggest impact on where they shop and what they buy.
Oct. gold ends up 0.7% at $1,064.20 an ounce.
The economy recovery will be moderate and not a quick snap-back commonly referred to as a V-shaped growth path, said Donald Kohn, the vice-chairman of the Federal Reserve Board on Tuesday. The financial headwinds holding back growth are likely to abate slowly, he said. The sluggish growth rate means the risk of further declines in the underlying rate of inflation are greater than the risk of increases, Kohn said. With output and inflation likely to stay below the Fed's target levels for some time, the FOMC decided that economic conditions are likely to warrant unusually low levels of interest rates for an extended period.
Americans paid $23.7 billion in bank overdraft fees in 2008 -- up a whopping 35% from two years ago, according to the Center for Responsible Lending, citing data collected from the FDIC.
The Federal Housing Administration (FHA) has guaranteed about 25% of all new U.S. mortgages written in 2009 from just 2% in 2005. How worthy is that guarantee?
Intel Corp. reported a third-quarter profit of $1.9 billion, or 33 cents a share, compared with a profit of $2 billion, or 35 cents a share for the year-earlier period. Revenue was $9.4 billion, down from $10.2 billion for the same period last year. Analysts had expected the Santa Clara, Calif.-based chip giant to report earnings of 28 cents a share, on revenue of $9 billion, according to a consensus survey by FactSet Research. For the current quarter, Intel said it expects revenue of $10.1 billion, plus or minus $400 million. Analysts had expected the company to report sales of $9.5 billion, according to FactSet Research data.
The Dow Jones Industrial Average fell 14.74 points to end at 9,871.06. The S&P 500 Index declined 2.98 points to 1,073.20, while the technology-laden Nasdaq Composite stood at 2,139.89, up less than 1 point.
CSX Corp. reported a third-quarter profit of $293 million, or 74 cents a share, down from $382 million, or 94 cents a share, a year ago. Sales came to nearly $2.3 billion, down 23% from a year ago due to lower volume and lower fuel surcharge recovery, the railroad operator said.
Hoisington Investment Management: "The promise of the government to revive growth through increased indebtedness is, indeed, an impossible promise....the six-month change in M2 has fallen to a 1% growth rate, meaning that monetary stimulus is on hold. Get set for negative GDP in 2010....Next year the core GDP deflator will fall to zero, with the possibility of negative levels. Likewise, long-term interest rates, which are highly sensitive to inflation, will continue to move toward lower levels. As stated in previous letters, we see no reason why longer dated Treasury interest rates will not mirror those of Japan, which provides a modern signpost for a deflationary environment. Currently the Japanese ten-year note stands at 1.3% with their thirty-year bond yielding 2.1%."
Johnson & Johnson on Tuesday reported disappointing third-quarter sales on Tuesday, but beat earnings forecasts thanks to cost-cutting and raised its full-year profit forecast. The company said prescription drug sales fell more than 14 percent, hurt by generic competition for its Topamax epilepsy drug and Risperdal schizophrenia treatment.
Australian business confidence in September fell from a nearly six-year high, according to reported results Tuesday from a monthly survey of businesses by National Australia Bank. The index fell 4 points in September from August to reach a reading of 14 points. The NAB's survey in August had shown a reading of 18 points, the highest since Oct. 2003.
The Oil Drum: "At the end of the first day of the ASPO conference in Denver, we were treated to a fantastic presentation on the oil potential of the sub-salt basins on the margins of the South Atlantic Ocean given by Dr Marcio Mello who presented the evidence for a half trillion barrels of reserves in this new frontier province. So has a new Saudi Arabia been found?"
“The dollar had been strong because the U.S. was a haven in the storm, and now that the storm is abating, who needs the dollar?” said Edmund Phelps, who won the 2006 Nobel Prize in economics and teaches at Columbia University in New York. “People got exasperated with the tiny returns on safe assets.”
Currently GDP stands at $14.2 trillion or approximately $3.73 in debt for every dollar of output in the United States.
China will continue to enforce its minimum purchasing price policy in main wheat and rice production areas and will increase the prices, according to a brief posted today on the website of the National Development and Reform Commission, China's top economic planner.
Bill Moyers: "Was the Financial Bailout Just a Slick, Friendly Takeover of the Federal Government?"
On September 9, 2009 the owners of Quail Lodge Resort and Golf Club ("Quail Lodge") announced the closing of the hotel portion of Quail Lodge on November 16, 2009. Acquired in 1997, Quail Lodge has been unable to produce a net profit for the last eight years, despite tens of millions of dollars invested to fund capital expenditure and operating losses to maintain the AAA Four Diamond property in Carmel, CA.
The current intention is for the Golf Club and its Clubhouse to remain open for its 300-plus members and to service events, although services will be reduced.
At this time there are no plans for the sale, re-development or other uses for the hotel property. The owners do not anticipate the reopening of the hotel.
Goldman Sachs, ahead of its third quarter results on Thursday, was downgraded by Meredith Whitney Advisors. In pre-market activity, Goldman was down 1.6 per cent at $187.10.
ThomsonReuters estimates the earnings growth rate for S&P 500 companies for the third quarter at minus 24.6 per cent. The estimated rate has been revised lower from 2.6 per cent at the start of the year, then minus 17.2 per cent at the beginning of April, and minus 20.9 per cent at the start of July.
The main Russian gas exporter signed a general trade agreement with China’s largest state-run energy company here on Tuesday, but failed to work out pricing details and other mechanisms that would actually put the agreement into effect.
The agreement was signed in the presence of Russian Prime Minister Vladimir Putin and Chinese Prime Minister Wen Jiabao and was called a “framework” by Alexei Miller, the head of Gazprom, the Russian state-run gas exporter that made the deal with the China National Petroleum Corp., China’s largest oil and gas producer.
The deal calls for the supply of up to 70 billion cubic meters of gas per year via two potential routes originating from Siberia. China has one of the fastest-growing economies in the world and has been searching far and wide for new sources of energy. It has focused on Central Asian nations and Russia as potential suppliers of large amounts of natural gas.
Cisco Systems Inc. says it has agreed to buy Starent Networks Corp., which helps wireless carriers support smart phones, for $2.9 billion.
Starent, of Tewksbury, Mass., makes equipment that allows carriers to tie their wireless networks to the Internet.
Cisco is paying $35 per share in cash and expects the deal to close early next year.
Russian official opposes threat of Iran sanctions
Japan Airlines Corp. is asking creditors to forgive about $2.8 billion in debt as part of its turnaround plan, Kyodo News reported Tuesday. The Tokyo-based carrier owes $15 billion, which is weighing down its ability to raise capital.
"With the U.S. oil demand bouncing back from a steep historical decline, the forecast for 2009 world oil demand growth has been revised up by 200,000 barrels a day to now show a contraction of 1.4 million barrels a day," OPEC said in its widely-watched monthly market report.
U.S. Dollar index made a new 52-week low at 75.74.
Most consumers plan to spend about the same amount this holiday season that they did in 2009, according to NPD's Holiday Retail Outlook. 59% of those surveyed plan to hold spending steady (down from 63%), 30% plan to spend less (up from 26%), and 11% plan to spend more. Not surprisingly, consumers say 'value' has the biggest impact on where they shop and what they buy.
Oct. gold ends up 0.7% at $1,064.20 an ounce.
The economy recovery will be moderate and not a quick snap-back commonly referred to as a V-shaped growth path, said Donald Kohn, the vice-chairman of the Federal Reserve Board on Tuesday. The financial headwinds holding back growth are likely to abate slowly, he said. The sluggish growth rate means the risk of further declines in the underlying rate of inflation are greater than the risk of increases, Kohn said. With output and inflation likely to stay below the Fed's target levels for some time, the FOMC decided that economic conditions are likely to warrant unusually low levels of interest rates for an extended period.
Americans paid $23.7 billion in bank overdraft fees in 2008 -- up a whopping 35% from two years ago, according to the Center for Responsible Lending, citing data collected from the FDIC.
The Federal Housing Administration (FHA) has guaranteed about 25% of all new U.S. mortgages written in 2009 from just 2% in 2005. How worthy is that guarantee?
Intel Corp. reported a third-quarter profit of $1.9 billion, or 33 cents a share, compared with a profit of $2 billion, or 35 cents a share for the year-earlier period. Revenue was $9.4 billion, down from $10.2 billion for the same period last year. Analysts had expected the Santa Clara, Calif.-based chip giant to report earnings of 28 cents a share, on revenue of $9 billion, according to a consensus survey by FactSet Research. For the current quarter, Intel said it expects revenue of $10.1 billion, plus or minus $400 million. Analysts had expected the company to report sales of $9.5 billion, according to FactSet Research data.
The Dow Jones Industrial Average fell 14.74 points to end at 9,871.06. The S&P 500 Index declined 2.98 points to 1,073.20, while the technology-laden Nasdaq Composite stood at 2,139.89, up less than 1 point.
CSX Corp. reported a third-quarter profit of $293 million, or 74 cents a share, down from $382 million, or 94 cents a share, a year ago. Sales came to nearly $2.3 billion, down 23% from a year ago due to lower volume and lower fuel surcharge recovery, the railroad operator said.
Monday, October 12, 2009
Slack
10/12/09 Slack
The average price of regular gasoline in the United States has dropped 4.5 cents to $2.47 over a two-week period.
According to Bloomberg, Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.
John Hussman: "When we look at the current market environment today, it is clear that the enthusiasm about the market here is largely based on the idea that the recent recession is over, and that the economy will form a “V” shaped recovery similar, but much stronger quantitatively, to standard post-war recoveries. This is a very difficult argument to make, because the drivers of economic growth that existed in typical economic recoveries – particularly debt origination and consumption growth – are very compromised at present. Our perspective on the ongoing credit risk in the economy is much like that of economists Kenneth Rogoff and Carmen Reinhart, who foresaw the recent financial crisis, and are far less sanguine about the prospects for sustained recovery.
As I've discussed in several weekly comments, this is a subject that I have struggled with in recent months. Even if we could assume that the recent crisis was a standard post-war downturn, and that we are now in a standard post-war recovery, valuations would still concern us because at these levels, stocks are not priced to deliver satisfactory long-term returns in any event. However, we would have a greater willingness to take a moderate speculative exposure based on market action and prospects for sustained economic improvement. On the other hand, when we include other post-crash periods into our data set, and allow for the possibility that those instances better describe present conditions, the case for accepting speculative exposure is much more limited. Of specific concern is the tendency in those periods for strong advances (as we've seen in recent months) to be followed by spectacular failures....Presently, my primary concern is that stocks are now overvalued, to about the same extent as they were in the late 1960's, and just prior to the 1987 crash, but certainly less overvalued than they were at the 2000 or 2007 peaks. Our 10-year total return projection for the S&P 500 is centered modestly above 6% annually, even if one assumes that the long-term path of earnings has been unchanged by the events of recent years. If we assume that the economy will require a much longer period to recover than has been typical of post-war recessions, the prospects for long-term returns are lower, but we don't need to assume this in order to be concerned about valuation here."
Since Nixon severed gold from the greenback in 1971, the dollar's comparative value has fallen 97%.
Lars Olofsson, CEO of Carrefour, the world's second-biggest retailer, does not see significant signs of improvement in the world economy, he told the Wall Street Journal in an interview on Monday. "I don't see any significant signs of an immediate change. The only part of the world where they are still dancing the samba is Latin America," Olofsson, who took over the top spot at Carrefour in January, told the paper.
Accounting to Bloomberg, under U.S. accounting rules in place since 1995, banks are supposed to report the value of their mortgage-servicing rights on a fair-market basis, or roughly what they would fetch in a sale. A bank must record a loss whenever it sells MSRs for a price below where they’re marked on the books.
Because there’s no active trading in the contracts, there are no reliable prices to gauge whether banks are valuing the rights accurately, analysts said.
“It’s an accounting game,” said Richard Bove, an analyst at Rochdale Securities Inc. in Lutz, Florida. “The deeper you get into the subject, the more items you find that are impossible to determine, and therefore it becomes a give up. Whatever they want to show, they show.”
“The valuation of MSRs can be highly subjective and involve complex judgments by management about matters that are inherently unpredictable,” San Francisco-based Wells Fargo said in its second-quarter regulatory filing.
Stockpiles of distillates, including heating oil and diesel, rose 679,000 barrels to 171.8 million last week. Supplies are the highest since Jan. 14, 1983, and 30 percent above the five-year average for the period. Demand over the past four weeks was 9.5 percent below a year earlier.
Rex Nutting: "U.S. banks are reducing their lending at the fastest rate on record, tightening the credit squeeze and threatening to leave many otherwise viable businesses unable to borrow money to expand their businesses, meet their payroll or refinance their maturing debts.
According to weekly figures provided by the Federal Reserve, total loans at commercial banks have fallen at a 19% annual rate over the past three months, while loans to businesses have dropped at a 28% annualized pace."
The Globe and Mail: "Widespread industrial overcapacity in Canada and abroad – what Bank of Canada Governor Mark Carney calls slack – weighs like an anvil on economic growth in these critical early days of the fragile rebound.
Slack is a typical headache of recession hangovers.
But as companies across the country struggle to dig themselves out of the slump, indicators point to an overcapacity legacy that is much deeper and more widespread than those of past downturns.
Mr. Carney warned last week of “a very large gap” between the economy's supply and demand , and said “it will take sustained private demand growth to return our economy to its productive potential.”
From emptier airplanes and office towers to idled factories, anchored cargo ships and sawmills running at half capacity, the mismatch between supply and demand means the economy faces long-term headwinds as it strains to gain pace."
Nouriel Roubini: "The real economy still looks very weak"
By Michelle Fleury
Business reporter, BBC News, New York
The US economist widely credited with having predicted the financial crisis has warned we are already "planting the seeds of the next crisis".
Nouriel Roubini told the BBC that he is concerned about the growing gap between the "bubbly and frothy" stock markets and the real economy.
Over the last six months, the Dow Jones Industrial Average has risen about 45%.
But Mr Roubini says he sees an economy where consumers are "shopped out" and "debt burdened".
"The financial system is damaged... and for the corporate sector I don't see a lot of capital spending because there is a glut of capacity."
"There is a wall of liquidity chasing assets," he said. "But I think that there is a growing gap between what is the asset prices and the real economy."
“I'd like to talk to people who are saying the recession is over and get them to explain that to me,” says Duane Mather, president of Nabors Industries Ltd.'s Canadian arm, the country's third-largest driller. “Let them go talk to the 160,000 people who are unemployed in Alberta.”
Nabors, with 86 rigs, has idle equipment scattered around Western Canada, in farmer's fields, trucking yards and at its industrial hub in Nisku, south of Edmonton. Only 18 rigs are working, far less than normal for this time of year.
The industry will be “damn lucky” if half of the 840 rigs are working this winter, the industry's busiest time, Mr. Mather says. In good times, almost every rig is tapping the frozen ground in the foothills of the Rocky Mountains.
Though some old rigs have been put down for good, the metal sold for scrap, and others have been moved to the United States or overseas, as many as 200 more have to disappear to rebalance with demand, Mr. Mather calculates. That will take time.
Buyers paid a median of 3% below the last listing price for properties in August. While that amounts to $6,525 in savings for homebuyers, it’s less than the median 3.3% — $7,018 — buyers paid below asking price in July, according to the latest Zillow Real Estate Market Report.
Sellers are continuing to cut prices on unsold homes. Sellers of nearly 25% of all properties listed on Zillow.com reduced their asking price at least once, with a median reduction of 6.6% off the original listing price. Foreclosures are expected to increase supply during the traditionally slower winter months.
“Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow chief economist Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”
John Burns Real Estate Consulting also indicated Wednesday the volume of inventory in the foreclosure pipeline “will certainly drive home prices down even further when they are sold.”
The 7.2 million jobs lost in the recession won't return until 2012 or beyond, according to a new survey of top business economists released Monday. 33% project it will take until 2013 to recover the lost jobs. Five percent say it will take even longer.
Jim Rogers is "quite sure gold will go over $2000 per ounce during this bull market."
Rogers' confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world's reserve currency.
"Is it going to happen? Yes," Rogers says. "I don't like saying it [and] I'm extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was]."
Over the weekend Denver broke a 104-year record for cold temperatures. The Mountain states experienced heavy snows and low temperatures as did Minnesota.
Oct.gold ends up 0.8% at $1,056.70 an ounce. Crude oil ends up 2% at $73.27 a barrel.
NY Times: ""For the first eight months of the year, the United States trade deficit with China is down by about 14 percent or $20 billion, compared with one year ago. The nation's trade deficit with Japan has shrunk by almost 20 percent, and its deficits with Mexico, Canada and the European Union are down more than 40 percent.
"The huge shift stems mainly from the staggering collapse in trade. With credit markets frozen and Americans facing the highest unemployment in more than 30 years, the United States suddenly stopped shopping overseas at anywhere near the volumes that had become normal."
Finishing at its highest level since early October of 2008, the Dow Jones Industrial Average added 20.86 points to end at 9,885.80. The S&P 500 Index gained 4.7 points to 1,076.19, while the Nasdaq composite skidded fractionally lower to end at 2,139.14.
CIT Group Inc is seeing little interest from bondholders in a debt exchange offer aimed at repairing its fragile balance sheet, making bankruptcy increasingly likely, sources familiar with the matter said.
The economy will probably grow at a 2.4 percent annual rate this quarter after expanding at a 3.2 percent pace from July through September, according to a Bloomberg survey of economists taken from Oct. 1 to Oct. 8. The jobless rate will exceed 10 percent in the first quarter of 2010, it showed.
The average price of regular gasoline in the United States has dropped 4.5 cents to $2.47 over a two-week period.
According to Bloomberg, Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.
John Hussman: "When we look at the current market environment today, it is clear that the enthusiasm about the market here is largely based on the idea that the recent recession is over, and that the economy will form a “V” shaped recovery similar, but much stronger quantitatively, to standard post-war recoveries. This is a very difficult argument to make, because the drivers of economic growth that existed in typical economic recoveries – particularly debt origination and consumption growth – are very compromised at present. Our perspective on the ongoing credit risk in the economy is much like that of economists Kenneth Rogoff and Carmen Reinhart, who foresaw the recent financial crisis, and are far less sanguine about the prospects for sustained recovery.
As I've discussed in several weekly comments, this is a subject that I have struggled with in recent months. Even if we could assume that the recent crisis was a standard post-war downturn, and that we are now in a standard post-war recovery, valuations would still concern us because at these levels, stocks are not priced to deliver satisfactory long-term returns in any event. However, we would have a greater willingness to take a moderate speculative exposure based on market action and prospects for sustained economic improvement. On the other hand, when we include other post-crash periods into our data set, and allow for the possibility that those instances better describe present conditions, the case for accepting speculative exposure is much more limited. Of specific concern is the tendency in those periods for strong advances (as we've seen in recent months) to be followed by spectacular failures....Presently, my primary concern is that stocks are now overvalued, to about the same extent as they were in the late 1960's, and just prior to the 1987 crash, but certainly less overvalued than they were at the 2000 or 2007 peaks. Our 10-year total return projection for the S&P 500 is centered modestly above 6% annually, even if one assumes that the long-term path of earnings has been unchanged by the events of recent years. If we assume that the economy will require a much longer period to recover than has been typical of post-war recessions, the prospects for long-term returns are lower, but we don't need to assume this in order to be concerned about valuation here."
Since Nixon severed gold from the greenback in 1971, the dollar's comparative value has fallen 97%.
Lars Olofsson, CEO of Carrefour, the world's second-biggest retailer, does not see significant signs of improvement in the world economy, he told the Wall Street Journal in an interview on Monday. "I don't see any significant signs of an immediate change. The only part of the world where they are still dancing the samba is Latin America," Olofsson, who took over the top spot at Carrefour in January, told the paper.
Accounting to Bloomberg, under U.S. accounting rules in place since 1995, banks are supposed to report the value of their mortgage-servicing rights on a fair-market basis, or roughly what they would fetch in a sale. A bank must record a loss whenever it sells MSRs for a price below where they’re marked on the books.
Because there’s no active trading in the contracts, there are no reliable prices to gauge whether banks are valuing the rights accurately, analysts said.
“It’s an accounting game,” said Richard Bove, an analyst at Rochdale Securities Inc. in Lutz, Florida. “The deeper you get into the subject, the more items you find that are impossible to determine, and therefore it becomes a give up. Whatever they want to show, they show.”
“The valuation of MSRs can be highly subjective and involve complex judgments by management about matters that are inherently unpredictable,” San Francisco-based Wells Fargo said in its second-quarter regulatory filing.
Stockpiles of distillates, including heating oil and diesel, rose 679,000 barrels to 171.8 million last week. Supplies are the highest since Jan. 14, 1983, and 30 percent above the five-year average for the period. Demand over the past four weeks was 9.5 percent below a year earlier.
Rex Nutting: "U.S. banks are reducing their lending at the fastest rate on record, tightening the credit squeeze and threatening to leave many otherwise viable businesses unable to borrow money to expand their businesses, meet their payroll or refinance their maturing debts.
According to weekly figures provided by the Federal Reserve, total loans at commercial banks have fallen at a 19% annual rate over the past three months, while loans to businesses have dropped at a 28% annualized pace."
The Globe and Mail: "Widespread industrial overcapacity in Canada and abroad – what Bank of Canada Governor Mark Carney calls slack – weighs like an anvil on economic growth in these critical early days of the fragile rebound.
Slack is a typical headache of recession hangovers.
But as companies across the country struggle to dig themselves out of the slump, indicators point to an overcapacity legacy that is much deeper and more widespread than those of past downturns.
Mr. Carney warned last week of “a very large gap” between the economy's supply and demand , and said “it will take sustained private demand growth to return our economy to its productive potential.”
From emptier airplanes and office towers to idled factories, anchored cargo ships and sawmills running at half capacity, the mismatch between supply and demand means the economy faces long-term headwinds as it strains to gain pace."
Nouriel Roubini: "The real economy still looks very weak"
By Michelle Fleury
Business reporter, BBC News, New York
The US economist widely credited with having predicted the financial crisis has warned we are already "planting the seeds of the next crisis".
Nouriel Roubini told the BBC that he is concerned about the growing gap between the "bubbly and frothy" stock markets and the real economy.
Over the last six months, the Dow Jones Industrial Average has risen about 45%.
But Mr Roubini says he sees an economy where consumers are "shopped out" and "debt burdened".
"The financial system is damaged... and for the corporate sector I don't see a lot of capital spending because there is a glut of capacity."
"There is a wall of liquidity chasing assets," he said. "But I think that there is a growing gap between what is the asset prices and the real economy."
“I'd like to talk to people who are saying the recession is over and get them to explain that to me,” says Duane Mather, president of Nabors Industries Ltd.'s Canadian arm, the country's third-largest driller. “Let them go talk to the 160,000 people who are unemployed in Alberta.”
Nabors, with 86 rigs, has idle equipment scattered around Western Canada, in farmer's fields, trucking yards and at its industrial hub in Nisku, south of Edmonton. Only 18 rigs are working, far less than normal for this time of year.
The industry will be “damn lucky” if half of the 840 rigs are working this winter, the industry's busiest time, Mr. Mather says. In good times, almost every rig is tapping the frozen ground in the foothills of the Rocky Mountains.
Though some old rigs have been put down for good, the metal sold for scrap, and others have been moved to the United States or overseas, as many as 200 more have to disappear to rebalance with demand, Mr. Mather calculates. That will take time.
Buyers paid a median of 3% below the last listing price for properties in August. While that amounts to $6,525 in savings for homebuyers, it’s less than the median 3.3% — $7,018 — buyers paid below asking price in July, according to the latest Zillow Real Estate Market Report.
Sellers are continuing to cut prices on unsold homes. Sellers of nearly 25% of all properties listed on Zillow.com reduced their asking price at least once, with a median reduction of 6.6% off the original listing price. Foreclosures are expected to increase supply during the traditionally slower winter months.
“Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow chief economist Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”
John Burns Real Estate Consulting also indicated Wednesday the volume of inventory in the foreclosure pipeline “will certainly drive home prices down even further when they are sold.”
The 7.2 million jobs lost in the recession won't return until 2012 or beyond, according to a new survey of top business economists released Monday. 33% project it will take until 2013 to recover the lost jobs. Five percent say it will take even longer.
Jim Rogers is "quite sure gold will go over $2000 per ounce during this bull market."
Rogers' confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world's reserve currency.
"Is it going to happen? Yes," Rogers says. "I don't like saying it [and] I'm extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was]."
Over the weekend Denver broke a 104-year record for cold temperatures. The Mountain states experienced heavy snows and low temperatures as did Minnesota.
Oct.gold ends up 0.8% at $1,056.70 an ounce. Crude oil ends up 2% at $73.27 a barrel.
NY Times: ""For the first eight months of the year, the United States trade deficit with China is down by about 14 percent or $20 billion, compared with one year ago. The nation's trade deficit with Japan has shrunk by almost 20 percent, and its deficits with Mexico, Canada and the European Union are down more than 40 percent.
"The huge shift stems mainly from the staggering collapse in trade. With credit markets frozen and Americans facing the highest unemployment in more than 30 years, the United States suddenly stopped shopping overseas at anywhere near the volumes that had become normal."
Finishing at its highest level since early October of 2008, the Dow Jones Industrial Average added 20.86 points to end at 9,885.80. The S&P 500 Index gained 4.7 points to 1,076.19, while the Nasdaq composite skidded fractionally lower to end at 2,139.14.
CIT Group Inc is seeing little interest from bondholders in a debt exchange offer aimed at repairing its fragile balance sheet, making bankruptcy increasingly likely, sources familiar with the matter said.
The economy will probably grow at a 2.4 percent annual rate this quarter after expanding at a 3.2 percent pace from July through September, according to a Bloomberg survey of economists taken from Oct. 1 to Oct. 8. The jobless rate will exceed 10 percent in the first quarter of 2010, it showed.
Sunday, October 11, 2009
Foreclosures
10/11/09 Foreclosures
Every 13 seconds in America, there is another foreclosure filing.
That's the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.
There are more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.
If anything, the country's worst housing downturn since record-keeping began in the late 19th century may only get worse since foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment.
Dan Basch: "Technicals indicate a 1987-style stock market crash is anticipated for the current month. The Rising Wedge pattern on today's DJIA daily chart is technically perfect as was the 1987 Nasdaq weekly chart before the crash of that fateful year. Soon, I anticipate opening a position in QID to take advantage of this event."
Mike Burk: "The market jumped off an oversold low last week. In the previous 2 occurrences (July and September) it continued upward for another week.
I expect the major indices to be higher on Friday October 16 than they were on Friday October 9."
An analyst at credit rating firm Standard & Poor's says Dubai has "insufficient" funds to pay back billions of dollars worth of debt coming due, putting added pressure on the city-state to raise additional cash.
Farouk Soussa, S&P's head of Middle East government ratings, said Sunday that the sheikdom has about $4 billion left from a February bond issue, but must find a way to cover as much as $50 billion over the next three years.
Russia's gross domestic product will drop by about 7.5% this year, compared with earlier forecasts of 3% to 3.5%, and industrial production fell by nearly 14% in the first half of 2009, Mr. Medvedev said.
"I must admit that we sunk below our lowest expectations," Mr. Medvedev told the state-owned Channel One network in an interview that aired Sunday. "The real damage to our economy was far greater that anything predicted by ourselves, the World Bank and other expert organizations."
Within 15 years, public systems on average will have less than half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.
After losing about $1 trillion in the markets, state and local governments are facing a devil's choice: Either slash retirement benefits or pursue high-return investments that come with high risk.
Natural gas may climb to $7 per million British thermal units after the commodity last month rebounded from a long-term support level, according to Abu Dhabi-based Invest AD.
Natural gas futures have almost doubled to $4.77 per million British thermal units since reaching a more than seven- year low on Sept. 4.
“Holding above a 20-year support and rebounding sharply from that level, signals an increase in demand for natural gas,” said Aksel Kibar, a portfolio manager at Invest AD, the investment firm owned by the Abu Dhabi Investment Council. “Any break above the $5.00-$5.50 range will push the prices toward the $6 to $7 area.”
Gas for November delivery fell 3.9 percent to $4.77 on the New York Mercantile Exchange Oct. 9. The fuel is down 15 percent this year, while crude oil is up 61 percent.
“Natural gas underperformed crude oil in the last 10 years and in September the natural gas and crude oil ratio reached the lowest level in 20 years,” Kibar said. “This clearly shows an oversold condition for natural gas.”
Rocky Vega: "There are few signs of financial desperation as severe as filing for bankruptcy. It’s the final step taken after every other possible way of meeting bills and obligations has been fully tried and failed. For this reason it can be viewed as one of the most credible ways of figuring out the economy’s health.
To dig into this measure, My Budget 360 looks at the 119,874 consumer bankruptcy filings in August, an increase of 24 percent since last year, and considers the data in terms of filings over the past five years. The pattern that emerges is ominous to say the least.
The number of August bankruptcy filings is the worst since December of 2005. This is especially disconcerting since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in 2005 making it more difficult to file bankruptcy and the subsequent terms of bankruptcy more burdensome. Yet, since the initial drop off beginning in 2006, bankruptcy rates have only been steadily increasing."
Every 13 seconds in America, there is another foreclosure filing.
That's the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.
There are more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.
If anything, the country's worst housing downturn since record-keeping began in the late 19th century may only get worse since foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment.
Dan Basch: "Technicals indicate a 1987-style stock market crash is anticipated for the current month. The Rising Wedge pattern on today's DJIA daily chart is technically perfect as was the 1987 Nasdaq weekly chart before the crash of that fateful year. Soon, I anticipate opening a position in QID to take advantage of this event."
Mike Burk: "The market jumped off an oversold low last week. In the previous 2 occurrences (July and September) it continued upward for another week.
I expect the major indices to be higher on Friday October 16 than they were on Friday October 9."
An analyst at credit rating firm Standard & Poor's says Dubai has "insufficient" funds to pay back billions of dollars worth of debt coming due, putting added pressure on the city-state to raise additional cash.
Farouk Soussa, S&P's head of Middle East government ratings, said Sunday that the sheikdom has about $4 billion left from a February bond issue, but must find a way to cover as much as $50 billion over the next three years.
Russia's gross domestic product will drop by about 7.5% this year, compared with earlier forecasts of 3% to 3.5%, and industrial production fell by nearly 14% in the first half of 2009, Mr. Medvedev said.
"I must admit that we sunk below our lowest expectations," Mr. Medvedev told the state-owned Channel One network in an interview that aired Sunday. "The real damage to our economy was far greater that anything predicted by ourselves, the World Bank and other expert organizations."
Within 15 years, public systems on average will have less than half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.
After losing about $1 trillion in the markets, state and local governments are facing a devil's choice: Either slash retirement benefits or pursue high-return investments that come with high risk.
Natural gas may climb to $7 per million British thermal units after the commodity last month rebounded from a long-term support level, according to Abu Dhabi-based Invest AD.
Natural gas futures have almost doubled to $4.77 per million British thermal units since reaching a more than seven- year low on Sept. 4.
“Holding above a 20-year support and rebounding sharply from that level, signals an increase in demand for natural gas,” said Aksel Kibar, a portfolio manager at Invest AD, the investment firm owned by the Abu Dhabi Investment Council. “Any break above the $5.00-$5.50 range will push the prices toward the $6 to $7 area.”
Gas for November delivery fell 3.9 percent to $4.77 on the New York Mercantile Exchange Oct. 9. The fuel is down 15 percent this year, while crude oil is up 61 percent.
“Natural gas underperformed crude oil in the last 10 years and in September the natural gas and crude oil ratio reached the lowest level in 20 years,” Kibar said. “This clearly shows an oversold condition for natural gas.”
Rocky Vega: "There are few signs of financial desperation as severe as filing for bankruptcy. It’s the final step taken after every other possible way of meeting bills and obligations has been fully tried and failed. For this reason it can be viewed as one of the most credible ways of figuring out the economy’s health.
To dig into this measure, My Budget 360 looks at the 119,874 consumer bankruptcy filings in August, an increase of 24 percent since last year, and considers the data in terms of filings over the past five years. The pattern that emerges is ominous to say the least.
The number of August bankruptcy filings is the worst since December of 2005. This is especially disconcerting since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in 2005 making it more difficult to file bankruptcy and the subsequent terms of bankruptcy more burdensome. Yet, since the initial drop off beginning in 2006, bankruptcy rates have only been steadily increasing."
Subscribe to:
Posts (Atom)