5/1/10 Raid
Continental Airlines Inc and UAL Corp's United Airlines have ironed out the last remaining wrinkle in their merger talks, paving the way for a deal that would create the world's largest carrier, two sources familiar with the matter said on Friday.
The airlines have agreed to an exchange ratio of 1.05 UAL shares for each Continental share in all-stock deal yet to be approved by the companies' boards, the sources said.
Barry Ritholtz: "The sentiment extreme is the biggest threat to ongoing market gains. Of all of the data that people are using to call an end to the rally, extreme sentiment is the one I pay the closest attention to.
Mike Santoli points out the “question of whether the past week’s cocktail of Goldman Sachs vilification, abiding Greek-debt drama and the stock market’s 2% loss will suffice to put a scare into what was a worrisomely unworried crowd.”
Tim Wood: "From a Dow theory perspective, the bullish trend confirmation that occurred in 2009 remains intact. From a cyclical perspective, the higher degree low that began at the March 2009 low remains intact as well. Longer-term, my opinion has not changed in that based on my research, I continue to believe that this is a counter-trend advance within the context of a much longer-term secular bear market. I also continue to believe that we are operating in an environment much like that of the 1966 to 1974 bear market period. During that time, there were very broad swings with both new highs and new lows."
Regulators closed two banks in Missouri late Friday, bringing the U.S. bank-failure total for the year so far to 63. Creve Coeur, Mo.-based Champion Bank was closed with $187.3 million in assets and $153.8 million in deposits as of Dec. 31, the Federal Deposit Insurance Corp. said. Butler, Mo.-based BC National Banks was also closed, with $67.2 million in assets and $54.9 million in deposits as of Dec. 31. The two bank failures will cost the deposit-insurance fund $64.1 million, the FDIC said.
From September 2008 through the end of 2009, households' stock holdings fell $66,000 and real estate dropped $30,000, according to... the Pew Economic Policy Group."
"The U.S. housing market won't recover for three to five years as mounting foreclosures hold down prices, according to mortgage-bond pioneer Lewis Ranieri. 'There's another big leg down and the question is how long does it stay,' Ranieri...said... 'You can't have much of a rally when you've got this big overhang.' Home foreclosures probably will reach a record this year with more than 1 million properties seized by banks, according to data seller RealtyTrac Inc."
Doug Noland: "From my analytical perspective, the system has found its way into another "terminal phase" of excess - this time emanating from the Global Government Finance Bubble. Intoxicated yet again by the effects of loose "money," the bulls see inflating markets confirming sound system underpinnings. I, in contrast, see another policy-induced absolute mess in the pricing and distribution of finance throughout the entire system. As always, calling the timing of a Bubble's demise is a perilous proposition. But I can sure see the makings of acute systemic fragilities....But fragility is inherent to Bubbles, and contagion is fundamental to Bubble risk. It is the nature of things that the weakest link tends to be the first to succumb. And as confidence falters, previous risk misperceptions are comprehended and complacency is abandoned - greed morphs to fear and the dominoes begin to tumble. I don't know how much or for how long it might take for contagion to find its way to U.S. debt markets. I am, however, confident that we face enormous structural debt issues that the markets won't disregard forever....And I would argue that Goldman and Wall Street's problems ensure that the markets for risk intermediation - interest-rate, Credit, equities, currency, etc. - become less liquid and more vulnerable to dislocation...global markets are in the early stage of adjusting to new uncertainties and risk realities. Many that have planned on using derivatives markets to hedge future market risks may begin to reevaluate their approach to risk taking and management."
New estimates from the NOAA show that the pace at which oil is leaking has not slowed “Oil continues to flow into the Gulf of Mexico at an estimated to 5000 barrels (210,000 gallons) per day from three leaks in damaged piping on the sea floor from the,” the agency said. NOAA released its new maps of the leaks effects.
Frontier Bank, the second-largest headquartered in Western Washington, was closed Friday by regulators and sold to Union Bank of San Francisco.
All 50 Frontier branches will reopen Monday as branches of Union Bank.
Union Bank, one of the nation's largest banks with $85.2 billion in assets, already has three Washington branches — in Seattle, Bellevue and Tacoma. It's a subsidiary of Tokyo-based Mitsubishi UFJ Financial Group, which owns Japan's largest bank.
Henry Blodget: "If the Justice Department were to file criminal charges against Goldman Sachs (the firm, not just some executives), Goldman would likely go bust. It is highly unlikely that a financial firm could survive criminal charges. If prosecutors confined the charges to executives and didn't charge the firm itself, which is the more likely result, the firm would survive, but the headlines would stay nasty for years.
If the Justice Department has cast a wider net than the SEC investigation, moreover, there's a chance that the Justice Department will uncover something that the SEC didn't. And that's where the real risk lies.
Also, Goldman can't make a criminal investigation go away by just settling and writing a massive check, the way it can with the SEC case. Instead, the firm and its shareholders and employees will just have to wait and sweat.
If the Justice Department only recently opened its investigation, it could take months or even years."
Richard Russell: "Goldman Sachs, the “smartest guys on Wall Street,” are under siege. What’s the complaint? These guys sold poisoned pill-products to their customers, and then made billions of dollars selling short the products they sold to their customers. Goldman has to decide whether to plead dumb and innocent or smart and sleazy. Of course, they’ll plead dumb and decent (“they had no idea of what was going on”)."
Chinese automaker BYD said Friday it has chosen sunny Los Angeles as the site of its North American headquarters.
BYD, a manufacturer of electric and hybrid vehicles backed by investor Warren Buffett, said it was lured by L.A.'s green energy policies, such as incentives for zero emission vehicles and solar roofs.
In April, the Treasury redeemed about $650 billion in bills and notes. No wonder, our Treasury has no cash. Maybe redemptions will now be
accomplished with IOUs backed by Fannie and Freddie. Our credit rating has not been cut---yet. No worries. When they raid the whorehouse,
they take all the girls-- even our Treasury and Goldman.
Unemployment remains above 14 percent in Michigan.
Saturday, May 01, 2010
Friday, April 30, 2010
GDP
4/30/10 GDP
U.S. consumer spending rose at the fastest rate in three years in the first quarter, powering the economy to a 3.2% growth rate, the Commerce Department estimated Friday. The 3.2% increase in real seasonally adjusted gross domestic product was exactly as expected by economists surveyed by MarketWatch. In the first quarter, private domestic demand was the main engine of growth. Consumer spending rose at a 3.6% annual rate, while business investments in equipment and software increased at 13.4% pace. Final sales to domestic purchasers increased at a 2.2% rate, up from 1.4% in the fourth quarter. The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by decreases in state and local government spending and in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, and a larger decrease in state and local government spending that were partly offset by an acceleration in PCE and a deceleration in imports.
Real disposable incomes were flat, the data showed. And after having risen in the third and fourth quarters, investments in homes reverted, falling at a 10.9% annual rate.
Investments in business structures dropped at a 14% rate, the seventh straight decline. Spending by state and local governments fell 3.8%, the largest decline in 29 years. Export growth slowed.
Inflation was muted. Prices for gross domestic purchases increased by an annualized 1.7%, while core consumer inflation decelerated to a 0.6% rate, the lowest since 1959.
Inventories increased by $31.1 billion, the first increase in two years. The change in inventories added 1.6 percentage points to growth. exports rose 5.8%. Imports increased at an 8.9% annual rate. Net exports subtracted 0.6 of a percentage point from growth.
Government spending fell at a 1.8% annual pace in the quarter, subtracting 0.4 percentage points from growth. Federal spending increased 1.4%, while state and local spending decreased 3.8%.
The price index for domestic purchases (prices paid by U.S. residents) rose 1.7% annualized in the quarter as energy prices climbed. Consumer prices increased at a 1.5% annual rate, while core consumer prices (which exclude food and energy) rose 0.6%, the slowest growth pace recorded in 51 years.
Federal prosecutors in New York have begun investigating Goldman Sachs Group Inc , raising the possibility of criminal charges against the company or its employees, a source familiar with the situation said on Thursday.
Mark Hulbert: " Investment advisers are bullish right now -- more bullish, in fact, at least by some measures, than they have been in a decade."
Gold prices climbed to a four-month high as a drop in the value of the dollar spurred demand and some investors bought the metal as a haven from possible losses in the credit markets.
Assets in the SPDR Gold Trust, the biggest investment fund that buys bullion, jumped the most in a year this week through yesterday. The dollar fell for a third day against the euro after European Commission President Jose Barroso said he’s confident a rescue package for Greece will be done “in days.”
“On the one hand, gold is benefiting from dollar weakness, but it’s starting to decouple from currency movements,” said Suki Cooper, an analyst at Barclays Capital in London. “It is very much the safe-haven appeal of gold that is boosting prices.”
Gold for immediate delivery jumped $7.65, or 0.7 percent, to $1,174.50 an ounce at 11:25 a.m. local time and earlier rose to $1,176.78, the highest since Dec. 4. The record is $1,226.56 an ounce, set on Dec. 3. Futures for June delivery climbed 0.5 percent to $1,174.80 on the Comex in New York.
Bailout Bill Would Require Banks to Track and Report Personal Checking Accounts to Feds.
"More Than a Million in U.S. May Lose Jobless Benefits" this summer. ""They are quietly drawing the line at 99 weeks of aid, a mark that hundreds of thousands of Americans have already reached. In coming months, the number of those who will receive their final government check is projected to top 1 million."
Japan Consumer Prices Fall 1.2%, 13th Straight Drop.
European Options at Highest Versus U.S. on Debt Fear. Investors are paying the most in seven years for options to protect against losses in European stocks relative to U.S. contracts, speculating Greece’s debt crisis will spread to other nations. Europe’s VStoxx Index, a gauge of options on the Euro Stoxx 50 Index, closed at 29.52 yesterday. That’s 60 percent higher than the VIX, the biggest premium versus the benchmark index for U.S. equity options since May 2003. “Contagion risk is high,” said Justin Golden, a strategist at New York-based Macro Risk Advisors LLC, which advises institutions on equity derivatives. “The market is more fearful of European stocks than they are of U.S. stocks.”
FT: "In 2009 alone, corporations filed more than 11,000 Chapter 11 bankruptcy proceedings. Since 1937, there have been a little more than 600 cases of Chapter 9, the part of the federal bankruptcy code applicable to municipalities, said James Spiotto, a partner at the Chapman and Cutler law firm.
Probably the most high-profile case came in 1994 with Orange County, California. Since the downturn hit, the city of Vallejo, California, went bankrupt in 2008. Last year, filings more than doubled from the previous year but still only came to 10. Among the larger cities, Harrisburg and Detroit have raised the idea, without formal plans.
“Most municipal bankruptcies have been special districts with recourse to only one source of revenue and not large cities that are more diverse and have some sway to get investors to forbear,” said Matt Fabian, managing director of Municipal Market Advisors. The belief that municipalities rarely go bankrupt, or even default, is the bedrock of the $2,800bn (€2,100bn, £1,825bn) municipal bond market where they raise money at relatively low cost for public projects. If filings increase, market experts expect them to be mostly small, special cases.
They have long argued that the fear of higher borrowing rates associated with bankruptcy is severe enough to discourage most.
But with cities such as Harrisburg considering it, these long-standing beliefs are being challenged. “ ... The more bankruptcy is publicly discussed as an option for financial relief, the more its tarnish wears off, increasing the likelihood of its actual use”, Fitch Ratings warned in a report earlier this year."
Opec crude oil supply has risen in April, led by Nigeria and Saudi Arabia, a Reuters survey showed, as compliance with agreed output targets extended a year-long slide.
Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, has averaged 26.88 million barrels per day (bpd), up from a revised 26.78 million bpd in March, according to the survey of oil firms, Opec officials and analysts.
Including Iraq, total Opec supply has risen 60,000 bpd to 29.16 million bpd, the survey found. That was within sight of February's total of 29.21 million bpd, which was the highest since December 2008.
Nigeria contributed the most to the supply increase in April as exports climbed and oil use at domestic refineries increased.
Analysts at Standard & Poor's on Friday downgraded shares of Goldman Sachs to sell from hold and trimmed their price target for Wall Street's most profitable investment bank to $140 from $180. The rating agency cited a Wall Street Journal report that said the company is now the target of a federal criminal probe into its mortgage dealings as the reason for the downgrade. "Though traditionally difficult to prove, we think the risk of a formal securities fraud charge, on top of the SEC fraud charge and pending legislation to reshape the financial industry, further muddies Goldman's outlook," S&P analysts wrote to clients Friday morning. Goldman Sachs shares fell 6.8% in early trade.
The UMich index rose to 72.2 from 69.5 in mid-April.
Businesses in the Chicago region were expanding strongly in April, according to the Chicago purchasing managers' index released Friday. The Chicago index rose to 63.8% in April from 58.8% in March. It's the highest level in four years.
Three bank failures in Puerto Rico on Friday raised the tally of failed U.S. banks for the year to 60, according to the Federal Deposit Insurance Corp.
CF Bancorp of Port Huron, Mich., became the 61st bank failure of the year on Friday.
U.S. stocks fell sharply on Friday, leading major equity benchmarks to their worst week since late January, as concern over criminal investigations of Goldman Sachs spread to financial stocks and other areas of the market. For the month of April, however, stocks held on to firm gains. On Friday, the Dow Jones Industrial Average fell 158.71 points, or 1.4%, to 11,008.61, weighed down by a 3.8% drop in shares of Caterpillar Inc. and heavy declines in shares of JP Morgan Chase, American Express and Bank of America. The S&P 500 index fell 20.09 points, or 1.7%, to 1,186.69, while the Nasdaq Composite slumped 50.73 points, or 2%, to 2,461.19. For the week, the Dow fell 1.8%, the S&P was down 2.5%, and the Nasdaq dropped 2.7%. For April, the Dow still gained 1.4%, the S&P rose 1.5% and the Nasdaq gained 2.6%.
Shares of Goldman Sachs Group Inc slumped 9.4 percent on Friday to a more than nine-month low, a day after news of a criminal investigation by U.S. federal prosecutors accelerated the company's crisis.The reported criminal investigation also prompted at least three analysts to downgrade their ratings for Goldman.
U.S. consumer spending rose at the fastest rate in three years in the first quarter, powering the economy to a 3.2% growth rate, the Commerce Department estimated Friday. The 3.2% increase in real seasonally adjusted gross domestic product was exactly as expected by economists surveyed by MarketWatch. In the first quarter, private domestic demand was the main engine of growth. Consumer spending rose at a 3.6% annual rate, while business investments in equipment and software increased at 13.4% pace. Final sales to domestic purchasers increased at a 2.2% rate, up from 1.4% in the fourth quarter. The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by decreases in state and local government spending and in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, and a larger decrease in state and local government spending that were partly offset by an acceleration in PCE and a deceleration in imports.
Real disposable incomes were flat, the data showed. And after having risen in the third and fourth quarters, investments in homes reverted, falling at a 10.9% annual rate.
Investments in business structures dropped at a 14% rate, the seventh straight decline. Spending by state and local governments fell 3.8%, the largest decline in 29 years. Export growth slowed.
Inflation was muted. Prices for gross domestic purchases increased by an annualized 1.7%, while core consumer inflation decelerated to a 0.6% rate, the lowest since 1959.
Inventories increased by $31.1 billion, the first increase in two years. The change in inventories added 1.6 percentage points to growth. exports rose 5.8%. Imports increased at an 8.9% annual rate. Net exports subtracted 0.6 of a percentage point from growth.
Government spending fell at a 1.8% annual pace in the quarter, subtracting 0.4 percentage points from growth. Federal spending increased 1.4%, while state and local spending decreased 3.8%.
The price index for domestic purchases (prices paid by U.S. residents) rose 1.7% annualized in the quarter as energy prices climbed. Consumer prices increased at a 1.5% annual rate, while core consumer prices (which exclude food and energy) rose 0.6%, the slowest growth pace recorded in 51 years.
Federal prosecutors in New York have begun investigating Goldman Sachs Group Inc , raising the possibility of criminal charges against the company or its employees, a source familiar with the situation said on Thursday.
Mark Hulbert: " Investment advisers are bullish right now -- more bullish, in fact, at least by some measures, than they have been in a decade."
Gold prices climbed to a four-month high as a drop in the value of the dollar spurred demand and some investors bought the metal as a haven from possible losses in the credit markets.
Assets in the SPDR Gold Trust, the biggest investment fund that buys bullion, jumped the most in a year this week through yesterday. The dollar fell for a third day against the euro after European Commission President Jose Barroso said he’s confident a rescue package for Greece will be done “in days.”
“On the one hand, gold is benefiting from dollar weakness, but it’s starting to decouple from currency movements,” said Suki Cooper, an analyst at Barclays Capital in London. “It is very much the safe-haven appeal of gold that is boosting prices.”
Gold for immediate delivery jumped $7.65, or 0.7 percent, to $1,174.50 an ounce at 11:25 a.m. local time and earlier rose to $1,176.78, the highest since Dec. 4. The record is $1,226.56 an ounce, set on Dec. 3. Futures for June delivery climbed 0.5 percent to $1,174.80 on the Comex in New York.
Bailout Bill Would Require Banks to Track and Report Personal Checking Accounts to Feds.
"More Than a Million in U.S. May Lose Jobless Benefits" this summer. ""They are quietly drawing the line at 99 weeks of aid, a mark that hundreds of thousands of Americans have already reached. In coming months, the number of those who will receive their final government check is projected to top 1 million."
Japan Consumer Prices Fall 1.2%, 13th Straight Drop.
European Options at Highest Versus U.S. on Debt Fear. Investors are paying the most in seven years for options to protect against losses in European stocks relative to U.S. contracts, speculating Greece’s debt crisis will spread to other nations. Europe’s VStoxx Index, a gauge of options on the Euro Stoxx 50 Index, closed at 29.52 yesterday. That’s 60 percent higher than the VIX, the biggest premium versus the benchmark index for U.S. equity options since May 2003. “Contagion risk is high,” said Justin Golden, a strategist at New York-based Macro Risk Advisors LLC, which advises institutions on equity derivatives. “The market is more fearful of European stocks than they are of U.S. stocks.”
FT: "In 2009 alone, corporations filed more than 11,000 Chapter 11 bankruptcy proceedings. Since 1937, there have been a little more than 600 cases of Chapter 9, the part of the federal bankruptcy code applicable to municipalities, said James Spiotto, a partner at the Chapman and Cutler law firm.
Probably the most high-profile case came in 1994 with Orange County, California. Since the downturn hit, the city of Vallejo, California, went bankrupt in 2008. Last year, filings more than doubled from the previous year but still only came to 10. Among the larger cities, Harrisburg and Detroit have raised the idea, without formal plans.
“Most municipal bankruptcies have been special districts with recourse to only one source of revenue and not large cities that are more diverse and have some sway to get investors to forbear,” said Matt Fabian, managing director of Municipal Market Advisors. The belief that municipalities rarely go bankrupt, or even default, is the bedrock of the $2,800bn (€2,100bn, £1,825bn) municipal bond market where they raise money at relatively low cost for public projects. If filings increase, market experts expect them to be mostly small, special cases.
They have long argued that the fear of higher borrowing rates associated with bankruptcy is severe enough to discourage most.
But with cities such as Harrisburg considering it, these long-standing beliefs are being challenged. “ ... The more bankruptcy is publicly discussed as an option for financial relief, the more its tarnish wears off, increasing the likelihood of its actual use”, Fitch Ratings warned in a report earlier this year."
Opec crude oil supply has risen in April, led by Nigeria and Saudi Arabia, a Reuters survey showed, as compliance with agreed output targets extended a year-long slide.
Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, has averaged 26.88 million barrels per day (bpd), up from a revised 26.78 million bpd in March, according to the survey of oil firms, Opec officials and analysts.
Including Iraq, total Opec supply has risen 60,000 bpd to 29.16 million bpd, the survey found. That was within sight of February's total of 29.21 million bpd, which was the highest since December 2008.
Nigeria contributed the most to the supply increase in April as exports climbed and oil use at domestic refineries increased.
Analysts at Standard & Poor's on Friday downgraded shares of Goldman Sachs to sell from hold and trimmed their price target for Wall Street's most profitable investment bank to $140 from $180. The rating agency cited a Wall Street Journal report that said the company is now the target of a federal criminal probe into its mortgage dealings as the reason for the downgrade. "Though traditionally difficult to prove, we think the risk of a formal securities fraud charge, on top of the SEC fraud charge and pending legislation to reshape the financial industry, further muddies Goldman's outlook," S&P analysts wrote to clients Friday morning. Goldman Sachs shares fell 6.8% in early trade.
The UMich index rose to 72.2 from 69.5 in mid-April.
Businesses in the Chicago region were expanding strongly in April, according to the Chicago purchasing managers' index released Friday. The Chicago index rose to 63.8% in April from 58.8% in March. It's the highest level in four years.
Three bank failures in Puerto Rico on Friday raised the tally of failed U.S. banks for the year to 60, according to the Federal Deposit Insurance Corp.
CF Bancorp of Port Huron, Mich., became the 61st bank failure of the year on Friday.
U.S. stocks fell sharply on Friday, leading major equity benchmarks to their worst week since late January, as concern over criminal investigations of Goldman Sachs spread to financial stocks and other areas of the market. For the month of April, however, stocks held on to firm gains. On Friday, the Dow Jones Industrial Average fell 158.71 points, or 1.4%, to 11,008.61, weighed down by a 3.8% drop in shares of Caterpillar Inc. and heavy declines in shares of JP Morgan Chase, American Express and Bank of America. The S&P 500 index fell 20.09 points, or 1.7%, to 1,186.69, while the Nasdaq Composite slumped 50.73 points, or 2%, to 2,461.19. For the week, the Dow fell 1.8%, the S&P was down 2.5%, and the Nasdaq dropped 2.7%. For April, the Dow still gained 1.4%, the S&P rose 1.5% and the Nasdaq gained 2.6%.
Shares of Goldman Sachs Group Inc slumped 9.4 percent on Friday to a more than nine-month low, a day after news of a criminal investigation by U.S. federal prosecutors accelerated the company's crisis.The reported criminal investigation also prompted at least three analysts to downgrade their ratings for Goldman.
Thursday, April 29, 2010
Debt Contagion
4/29/10 Debt Contagion
The number of people filing an initial claim for unemployment benefits declined by 11,000 in the week ended April 24 to a seasonally adjusted 448,000, the Labor Department reported Thursday. The level perfectly matched expectations of economists surveyed by MarketWatch. The four-week average of new claims -- considered a better gauge of underlying trends than the volatile weekly number - rose 1,500 to 462,500. The number of people collecting regular state benefits dropped 18,000 to a seasonally adjusted 4.65 million in the week ended April 17. The four-week average of continuing claims fell 9,000 to 4.64 million, the lowest level since January 2009. In the week ended April 10, about 10.39 million people were collecting some type of unemployment benefits, down 148,000 from the previous week's 10.54 million.
The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.186 million.
Bunge expects annual earnings between $5.30 and $5.80 a share, down from $5.75 to $6.25.
Potash Corp. said it expected 2010 net income per share in the range of $4.50-$5.25, including $1.00-$1.30 in the second quarter. "We believe the higher demand we are seeing today is a precursor to a longer-term rebound as farmers strive to catch up on applications missed in 2009 and work to meet the increasing need for food production in the years ahead," the firm said.
Governing Council member Axel Weber said on Thursday the impact of any Greek debt default on other states would be "incalculable" and urged quick approval of an aid package to prevent market upheaval and contagion to other states.
A leading German parliamentarian expressed confidence that the Bundestag could move quickly to approve aid despite deep reservations in Germany about helping Greece, as momentum toward a long-delayed rescue appeared to build.
George Ure: "
1) to get Social Security, SSI, Veterans, Railroad Retirement and OPP benefits, you're going to have to have direct deposit or a Treasury Direct debit card.
2) Starting in 2011 all but the tiniest small businesses (under $10,000 in annual tax liability) will have to do online quarterly tax payments and
3) Paper Savings Bonds are toast come the end of this year.
Food stamp usage in the U.S. has now increased for 14 consecutive months. There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. The U.S. government is now paying out more to Americans in benefits than it collects in taxes. As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs."
Greece will eventually have to default on its bonds because it will prove impossible for the country to cut its budget deficit below the European Union limit by 2012, said Harvard University Professor Martin Feldstein.
“There simply is no way around the arithmetic implied by the scale of deficit reduction and the accompanying economic decline: Greece’s default on its debt is inevitable,” said Feldstein in an article on the Public Syndicate Web site.
Greece could choose to service existing debt with new debt rather than pay cash, said Feldstein. It could also allow the International Monetary Fund to restructure its debt, “swapping new bonds with lower principal and interest for existing bonds,” he said.
The Oil Drum: "A massive oil spill in the Gulf of Mexico is even worse than believed and as the government grows concerned that the rig’s operator is ill-equipped to contain it, officials are offering a military response to try to avert a massive environmental disaster along the ecologically fragile U.S. coastline.
But time may be running out. Not only was a third leak discovered — which government officials said is spewing five times as much oil into the water than originally estimated — but it might be closer to shore than previously known, and could have oil washing up on shore by Friday.
At the same time, there appeared to be a growing rift developing between BP PLC, the operator of the oil rig that exploded last week in the deep waters of the Gulf, and the Coast Guard, which is overseeing the increasingly desperate operation to contain the spill and clean it up."
Europe's current bailout plan for Greece "is not going to work" because "Greece is nearly insolvent," well-known economist Nouriel Roubini told CNBC Wednesday. "A restructuring of its debt is going to be necessary," said Roubini, RGEmonitor.com chairman and NYU professor.
"It's not a question of the danger of contagion," Organization for Economic Cooperation and Development Secretary General Angel Gurria told Bloomberg. "Contagion has already happened. This is like Ebola. When you realize you have it you have to cut your leg off in order to survive."
Analysts predict the debt contagion will shake Italy next. The news of its " PIIGS" counterparts being downgraded caused a bond sell-off, with two-year bond yields rising from 1.95% to 2.08% Wednesday.
Brazil lifts benchmark rate to 9.5% from 8.75%.
For the first time since 1997, the unemployment rate in Spain surpassed 20%.
Willem Buiter courtesy of ZeroHedge:
"
* Unless the US, the UK, France, Japan (currently AA rated) and even Germany change course quite radically and sooner rather than later towards a sustained higher degree of fiscal tightening, there may not be a single AAA-rate sovereign left 5 years from now.
* For the US, with a structural primary deficit in 2009 of 7.3 percent of GDP, the arithmetic of solvency indicates the need for at least 7.3 percent of GDP worth of permanent fiscal tightening (not counting the long-term fiscal tightening required to accommodate future age-related public spending ambitions). For the UK, with a structural primary deficit in 2009 of 6.8 percent of GDP, the required permanent fiscal tightening (beyond what is achieved automatically by a cyclical recovery) would be at least 6.8 percent of GDP. In neither country are policy makers debating how to achieve anything like these degrees of fiscal tightening. In the US, beyond the expiration of part of the Bush tax cuts, no additional fiscal tightening has been planned. With the policy makers in denial, the fiscal situation is likely to deteriorate further, with the result that the magnitude of the permanent fiscal tightening that is required, when the markets eventually demand an immediate fiscal adjustment, will keep on rising.
* The US is, in our view, a more polarized and divided society today than at any time since World War II, including the Vietnam war era. Its government institutions are so encumbered by checks and balances that decisive prompt action is only possible during times of national emergencies – times, that is, that are widely recognized across the political spectrum as national emergencies. We don’t believe that the fiscal threat is as yet perceived as a likely candidate for a national emergency. Things will have to get worse, say through the country being put on negative outlook for its sovereign credit rating, or indeed losing its triple-A sovereign credit rating, before a fiscal burden sharing agreement is likely to be achieved. The way things are now, the Republicans will veto all tax increases and the Democrats all public spending cuts.
* As regards motive, a significant share of the US nominally denominated debt is held abroad. Between 55% and 70% of total US currency stock (around $928 bn in circulation at the end of 2009) is estimated to be held abroad. As this is non-interest-bearing, it is eroded by both unanticipated and anticipated inflation. In addition, about 51.4 percent of US Treasuries are held abroad – $3.6 trillion out of $7.0 trillion held outside the Fed and excluding Intragovernmental Holdings - at end of December 2009. Motive is strengthened by a longer maturity or duration of the nominally denominated debt. Here the situation is currently less inviting for the US than it was in 1946, the all-time peak of the US public debt to GDP ratio, as the average maturity of the US Treasury debt is only half of what it was in 1946, falling to around 4 years by the end of 2009. Unanticipated inflation also affects the real burden of servicing private domestic-currency denominated debt: it redistributes resources from private creditors who hold domestic currency denominated private debt to the issuers of that debt. Such intra-private sector redistribution of wealth is not politically neutral (nor is it likely to be devoid of macroeconomic effects). With much US mortgage debt still at fixed rates for long maturities, unanticipated inflation would redistribute wealth towards households owing mortgage debt and away from banks and other mortgage lenders. In the current political climate, this might not be unwelcome to many would-be voters and their representatives.
* There is, we believe, a greater chance of the Fed being cajoled or pushed into inflationary monetisation of public sector debt and deficits than the other leading central banks. For this to happen, it would be necessary that the current majorities on the Board and the FOMC, which would not go along with an inflationary solution to the US public debt problem, be replaced, or for the mandate of the Fed to be changed. In practice this would require either a strongly populist majority in both houses of the Congress and a strongly populist president in the White House, or a sufficiently large populist majority in the Congress to override a presidential veto. Either configuration looks currently unlikely but not impossible – a low-probability event but not a tail event, although were it to occur, it is likely to be at least 3 to 5 years in the future.
* We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.
* We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.
* An inflationary solution to the problem of an excessive public debt is all but impossible in the Euro Area and unlikely in all advanced industrial nations. It is least unlikely for the US."
Working gas in storage was 1,912 Bcf as of Friday, April 23, 2010, according to EIA estimates. This represents a net increase of 83 Bcf from the previous week. Stocks were 101 Bcf higher than last year at this time and 303 Bcf above the 5-year average of 1,609 Bcf. In the East Region, stocks were 146 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 83 Bcf above the 5-year average of 644 Bcf after a net injection of 31 Bcf. Stocks in the West Region were 74 Bcf above the 5-year average after a net addition of 14 Bcf. At 1,912 Bcf, total working gas is above the 5-year historical range.
President Barack Obama on Thursday nominated San Francisco Federal Reserve Bank President Janet Yellen to be the vice chairman of the Fed's board of governors. At the same time, Obama nominated Peter Diamond, an economist at the Massachusetts Institute of Technology, and Sara Bloom Raskin, the Maryland state banking regulator, to the two vacancies on the seven member Fed board. The Senate is likely to confirm the nominees. If confirmed, the Fed board would be at full-strength with all seven board member seats filled for the first time in almost four years. Yellen is considered one of the most-influential Fed officials on the economy and interest rate policy. Neither Raskin nor Diamond have much monetary policy experience. Diamond is an expert on Social Security and pensions. Raskin is an expert on bank regulations.
Spain is the eurozone's fourth largest economy and is running a deficit of 11.2% of GDP (compared to 9.4% in Portugal and 13.6% in Greece).
Foreclosure activity fell in 14 of the top 20 U.S. metropolitan areas in the first quarter compared with a year earlier, even though total U.S. foreclosures rose, RealtyTrac said on Thursday.
At precisely 9 AM on May Day, hundreds of new turnstiles will begin to spin along the banks of Shanghai's Huangpu River, giving way to more than half a million visitors as they inaugurate the opening of Expo 2010, the most expensive and well-attended World's Fair in history. To American ears, the concept of a World's Fair sounds archaic, and when applied to Shanghai, a contemporary symbol of all that is new, vibrant, and even threatening, it's disconcerting. But in Shanghai, where the future is an obsession, this reported $46 billion hat-tip to the past makes perfect sense: just as New York once announced its global pre-eminence via World's Fairs in 1939 and, again, in 1964, the organizers of Expo 2010 view the six month event as nothing less than Shanghai's coronation as the next great world city.
Paul Kasriel: "The record decline in commercial bank loans/leases that the U.S. experienced in 2009 was dominated by pay-downs of loans rather than write-offs. Pay-downs have negative implications for new aggregate demand whereas write-downs are irrelevant (at least directly) with regard to new aggregate demand. Write-downs do have indirect negative implications for new aggregate demand to the degree that write-downs result in the reduction of bank capital. The decline in capital limits the ability of banks to create new credit. This might explain why banks allowed their outstanding loan balances to contract net of write-downs. The continued contraction in commercial bank loan/lease balances is cause for caution with regard to the near-term growth in economic activity."
Billions of dollars generated by outdoor sports, commercial fishing and beach tourism along the Gulf of Mexico coast are at risk if crude oil leaking from a damaged well off the coast of Louisiana washes aground. BP Plc, which owns the well, says it is leaking five times faster than previously thought, spewing 5,000 barrels of oil a day into the Gulf.
The spill may threaten wildlife and seafood production in a state known as “Sportsman’s Paradise,” as well as in Mississippi, Alabama, Florida or Texas, said Robert Shipp, chairman of the Marine Sciences Department at the University of South Alabama.
“If this thing really gets to the coast, to those sugar- white beaches from Gulf Shores, Alabama, to Panama City, Florida, that would be just a horrible disaster,” Shipp said in an interview.
Bank of North Dakota (BND) is the only state-owned bank in the nation. "Our mission, established by legislative action in 1919, is to promote agriculture, commerce and industry in North Dakota. In this role, the Bank acts as a funding resource in partnership with other financial institutions, economic development groups and guaranty agencies."
North Dakota is the only state out of 50 currently running a surplus – and expected to do so into the future – as well as the only state adding jobs, rather than losing them.
Shares of Dendreon Corp. jumped Thursday following the Food and Drug Administration's approval of the biotech's drug Provenge to treat advanced prostate cancer. Dendreon shares rose 14.8% to $45.50 before being halted on the Nasdaq. The biotech said it will make the drug available through about 50 clinical centers and plans to increase manufacturing capacity over the next year.
The Dow Jones Industrial Average gained 122.05 points, or 1.1%, to 11,167.32, with 27 of its 30 components advancing. The S&P 500 index rose 15.41 points, or 1.3%, to end at 1,206.77. It was the biggest one-day point gain for both the Dow industrials and the S&P since March 5. The Nasdaq Composite rose 40.19 points, or 1.6%, to 2,511.92.
Natural gas for June delivery lost 37 cents, or 8.5%, to $3.98 per million British thermal units.
The number of people filing an initial claim for unemployment benefits declined by 11,000 in the week ended April 24 to a seasonally adjusted 448,000, the Labor Department reported Thursday. The level perfectly matched expectations of economists surveyed by MarketWatch. The four-week average of new claims -- considered a better gauge of underlying trends than the volatile weekly number - rose 1,500 to 462,500. The number of people collecting regular state benefits dropped 18,000 to a seasonally adjusted 4.65 million in the week ended April 17. The four-week average of continuing claims fell 9,000 to 4.64 million, the lowest level since January 2009. In the week ended April 10, about 10.39 million people were collecting some type of unemployment benefits, down 148,000 from the previous week's 10.54 million.
The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.186 million.
Bunge expects annual earnings between $5.30 and $5.80 a share, down from $5.75 to $6.25.
Potash Corp. said it expected 2010 net income per share in the range of $4.50-$5.25, including $1.00-$1.30 in the second quarter. "We believe the higher demand we are seeing today is a precursor to a longer-term rebound as farmers strive to catch up on applications missed in 2009 and work to meet the increasing need for food production in the years ahead," the firm said.
Governing Council member Axel Weber said on Thursday the impact of any Greek debt default on other states would be "incalculable" and urged quick approval of an aid package to prevent market upheaval and contagion to other states.
A leading German parliamentarian expressed confidence that the Bundestag could move quickly to approve aid despite deep reservations in Germany about helping Greece, as momentum toward a long-delayed rescue appeared to build.
George Ure: "
1) to get Social Security, SSI, Veterans, Railroad Retirement and OPP benefits, you're going to have to have direct deposit or a Treasury Direct debit card.
2) Starting in 2011 all but the tiniest small businesses (under $10,000 in annual tax liability) will have to do online quarterly tax payments and
3) Paper Savings Bonds are toast come the end of this year.
Food stamp usage in the U.S. has now increased for 14 consecutive months. There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. The U.S. government is now paying out more to Americans in benefits than it collects in taxes. As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs."
Greece will eventually have to default on its bonds because it will prove impossible for the country to cut its budget deficit below the European Union limit by 2012, said Harvard University Professor Martin Feldstein.
“There simply is no way around the arithmetic implied by the scale of deficit reduction and the accompanying economic decline: Greece’s default on its debt is inevitable,” said Feldstein in an article on the Public Syndicate Web site.
Greece could choose to service existing debt with new debt rather than pay cash, said Feldstein. It could also allow the International Monetary Fund to restructure its debt, “swapping new bonds with lower principal and interest for existing bonds,” he said.
The Oil Drum: "A massive oil spill in the Gulf of Mexico is even worse than believed and as the government grows concerned that the rig’s operator is ill-equipped to contain it, officials are offering a military response to try to avert a massive environmental disaster along the ecologically fragile U.S. coastline.
But time may be running out. Not only was a third leak discovered — which government officials said is spewing five times as much oil into the water than originally estimated — but it might be closer to shore than previously known, and could have oil washing up on shore by Friday.
At the same time, there appeared to be a growing rift developing between BP PLC, the operator of the oil rig that exploded last week in the deep waters of the Gulf, and the Coast Guard, which is overseeing the increasingly desperate operation to contain the spill and clean it up."
Europe's current bailout plan for Greece "is not going to work" because "Greece is nearly insolvent," well-known economist Nouriel Roubini told CNBC Wednesday. "A restructuring of its debt is going to be necessary," said Roubini, RGEmonitor.com chairman and NYU professor.
"It's not a question of the danger of contagion," Organization for Economic Cooperation and Development Secretary General Angel Gurria told Bloomberg. "Contagion has already happened. This is like Ebola. When you realize you have it you have to cut your leg off in order to survive."
Analysts predict the debt contagion will shake Italy next. The news of its " PIIGS" counterparts being downgraded caused a bond sell-off, with two-year bond yields rising from 1.95% to 2.08% Wednesday.
Brazil lifts benchmark rate to 9.5% from 8.75%.
For the first time since 1997, the unemployment rate in Spain surpassed 20%.
Willem Buiter courtesy of ZeroHedge:
"
* Unless the US, the UK, France, Japan (currently AA rated) and even Germany change course quite radically and sooner rather than later towards a sustained higher degree of fiscal tightening, there may not be a single AAA-rate sovereign left 5 years from now.
* For the US, with a structural primary deficit in 2009 of 7.3 percent of GDP, the arithmetic of solvency indicates the need for at least 7.3 percent of GDP worth of permanent fiscal tightening (not counting the long-term fiscal tightening required to accommodate future age-related public spending ambitions). For the UK, with a structural primary deficit in 2009 of 6.8 percent of GDP, the required permanent fiscal tightening (beyond what is achieved automatically by a cyclical recovery) would be at least 6.8 percent of GDP. In neither country are policy makers debating how to achieve anything like these degrees of fiscal tightening. In the US, beyond the expiration of part of the Bush tax cuts, no additional fiscal tightening has been planned. With the policy makers in denial, the fiscal situation is likely to deteriorate further, with the result that the magnitude of the permanent fiscal tightening that is required, when the markets eventually demand an immediate fiscal adjustment, will keep on rising.
* The US is, in our view, a more polarized and divided society today than at any time since World War II, including the Vietnam war era. Its government institutions are so encumbered by checks and balances that decisive prompt action is only possible during times of national emergencies – times, that is, that are widely recognized across the political spectrum as national emergencies. We don’t believe that the fiscal threat is as yet perceived as a likely candidate for a national emergency. Things will have to get worse, say through the country being put on negative outlook for its sovereign credit rating, or indeed losing its triple-A sovereign credit rating, before a fiscal burden sharing agreement is likely to be achieved. The way things are now, the Republicans will veto all tax increases and the Democrats all public spending cuts.
* As regards motive, a significant share of the US nominally denominated debt is held abroad. Between 55% and 70% of total US currency stock (around $928 bn in circulation at the end of 2009) is estimated to be held abroad. As this is non-interest-bearing, it is eroded by both unanticipated and anticipated inflation. In addition, about 51.4 percent of US Treasuries are held abroad – $3.6 trillion out of $7.0 trillion held outside the Fed and excluding Intragovernmental Holdings - at end of December 2009. Motive is strengthened by a longer maturity or duration of the nominally denominated debt. Here the situation is currently less inviting for the US than it was in 1946, the all-time peak of the US public debt to GDP ratio, as the average maturity of the US Treasury debt is only half of what it was in 1946, falling to around 4 years by the end of 2009. Unanticipated inflation also affects the real burden of servicing private domestic-currency denominated debt: it redistributes resources from private creditors who hold domestic currency denominated private debt to the issuers of that debt. Such intra-private sector redistribution of wealth is not politically neutral (nor is it likely to be devoid of macroeconomic effects). With much US mortgage debt still at fixed rates for long maturities, unanticipated inflation would redistribute wealth towards households owing mortgage debt and away from banks and other mortgage lenders. In the current political climate, this might not be unwelcome to many would-be voters and their representatives.
* There is, we believe, a greater chance of the Fed being cajoled or pushed into inflationary monetisation of public sector debt and deficits than the other leading central banks. For this to happen, it would be necessary that the current majorities on the Board and the FOMC, which would not go along with an inflationary solution to the US public debt problem, be replaced, or for the mandate of the Fed to be changed. In practice this would require either a strongly populist majority in both houses of the Congress and a strongly populist president in the White House, or a sufficiently large populist majority in the Congress to override a presidential veto. Either configuration looks currently unlikely but not impossible – a low-probability event but not a tail event, although were it to occur, it is likely to be at least 3 to 5 years in the future.
* We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.
* We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.
* An inflationary solution to the problem of an excessive public debt is all but impossible in the Euro Area and unlikely in all advanced industrial nations. It is least unlikely for the US."
Working gas in storage was 1,912 Bcf as of Friday, April 23, 2010, according to EIA estimates. This represents a net increase of 83 Bcf from the previous week. Stocks were 101 Bcf higher than last year at this time and 303 Bcf above the 5-year average of 1,609 Bcf. In the East Region, stocks were 146 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 83 Bcf above the 5-year average of 644 Bcf after a net injection of 31 Bcf. Stocks in the West Region were 74 Bcf above the 5-year average after a net addition of 14 Bcf. At 1,912 Bcf, total working gas is above the 5-year historical range.
President Barack Obama on Thursday nominated San Francisco Federal Reserve Bank President Janet Yellen to be the vice chairman of the Fed's board of governors. At the same time, Obama nominated Peter Diamond, an economist at the Massachusetts Institute of Technology, and Sara Bloom Raskin, the Maryland state banking regulator, to the two vacancies on the seven member Fed board. The Senate is likely to confirm the nominees. If confirmed, the Fed board would be at full-strength with all seven board member seats filled for the first time in almost four years. Yellen is considered one of the most-influential Fed officials on the economy and interest rate policy. Neither Raskin nor Diamond have much monetary policy experience. Diamond is an expert on Social Security and pensions. Raskin is an expert on bank regulations.
Spain is the eurozone's fourth largest economy and is running a deficit of 11.2% of GDP (compared to 9.4% in Portugal and 13.6% in Greece).
Foreclosure activity fell in 14 of the top 20 U.S. metropolitan areas in the first quarter compared with a year earlier, even though total U.S. foreclosures rose, RealtyTrac said on Thursday.
At precisely 9 AM on May Day, hundreds of new turnstiles will begin to spin along the banks of Shanghai's Huangpu River, giving way to more than half a million visitors as they inaugurate the opening of Expo 2010, the most expensive and well-attended World's Fair in history. To American ears, the concept of a World's Fair sounds archaic, and when applied to Shanghai, a contemporary symbol of all that is new, vibrant, and even threatening, it's disconcerting. But in Shanghai, where the future is an obsession, this reported $46 billion hat-tip to the past makes perfect sense: just as New York once announced its global pre-eminence via World's Fairs in 1939 and, again, in 1964, the organizers of Expo 2010 view the six month event as nothing less than Shanghai's coronation as the next great world city.
Paul Kasriel: "The record decline in commercial bank loans/leases that the U.S. experienced in 2009 was dominated by pay-downs of loans rather than write-offs. Pay-downs have negative implications for new aggregate demand whereas write-downs are irrelevant (at least directly) with regard to new aggregate demand. Write-downs do have indirect negative implications for new aggregate demand to the degree that write-downs result in the reduction of bank capital. The decline in capital limits the ability of banks to create new credit. This might explain why banks allowed their outstanding loan balances to contract net of write-downs. The continued contraction in commercial bank loan/lease balances is cause for caution with regard to the near-term growth in economic activity."
Billions of dollars generated by outdoor sports, commercial fishing and beach tourism along the Gulf of Mexico coast are at risk if crude oil leaking from a damaged well off the coast of Louisiana washes aground. BP Plc, which owns the well, says it is leaking five times faster than previously thought, spewing 5,000 barrels of oil a day into the Gulf.
The spill may threaten wildlife and seafood production in a state known as “Sportsman’s Paradise,” as well as in Mississippi, Alabama, Florida or Texas, said Robert Shipp, chairman of the Marine Sciences Department at the University of South Alabama.
“If this thing really gets to the coast, to those sugar- white beaches from Gulf Shores, Alabama, to Panama City, Florida, that would be just a horrible disaster,” Shipp said in an interview.
Bank of North Dakota (BND) is the only state-owned bank in the nation. "Our mission, established by legislative action in 1919, is to promote agriculture, commerce and industry in North Dakota. In this role, the Bank acts as a funding resource in partnership with other financial institutions, economic development groups and guaranty agencies."
North Dakota is the only state out of 50 currently running a surplus – and expected to do so into the future – as well as the only state adding jobs, rather than losing them.
Shares of Dendreon Corp. jumped Thursday following the Food and Drug Administration's approval of the biotech's drug Provenge to treat advanced prostate cancer. Dendreon shares rose 14.8% to $45.50 before being halted on the Nasdaq. The biotech said it will make the drug available through about 50 clinical centers and plans to increase manufacturing capacity over the next year.
The Dow Jones Industrial Average gained 122.05 points, or 1.1%, to 11,167.32, with 27 of its 30 components advancing. The S&P 500 index rose 15.41 points, or 1.3%, to end at 1,206.77. It was the biggest one-day point gain for both the Dow industrials and the S&P since March 5. The Nasdaq Composite rose 40.19 points, or 1.6%, to 2,511.92.
Natural gas for June delivery lost 37 cents, or 8.5%, to $3.98 per million British thermal units.
Purchasing Power
4/28/10 Purchasing Power
A Texas lawmaker says she plans to push for a law similar to Arizona's get-tough immigration measure. Mexico has issued a travel warning over the Arizona law.
Greece's government bond market was under renewed pressure Wednesday, a day after Standard & Poor's cut the country's credit rating to junk status. The yield on two-year Greek government bonds was at 20.8% in recent action.
The cost of insuring Greek and Portuguese government debt against default continued to soar Wednesday amid the deepening euro-zone debt crisis. The spread on five-year Greek credit default swaps widened to 871.5 basis points from 824 basis points late Tuesday, according to CMA DataVision. That means it would now cost an unprecedented $871,500 a year to insure $10 million of Greek government debt against default for five years. The Portuguese five-year CDS spread rose to a record 421 basis points from a close Tuesday of 386 basis points.
George Ure: "
CNNMoney reported the price of gasoline in March 2003 at $1.72 a gallon. So if I'd taken $145,000 (the 2003 price of a 20-City Index home back then - and bought gasoline - instead of the house, I could have bought 84,302 gallons of gasoline.Fast forward to the present: the price of gasoline - even here at the ranch which is a one lane county road from a 600 acre oil production patch, and we're paying $3.17 a gallon for premium. But let's use apples - to -apples and apply the Triple A $2.87 a gallon this week.
If I had the $145,000 from a house sale I'd get only 50,522 gallons of gas. In terms of purchasing power of gasoline, I'd be down about 40%."
Shares of Buffalo Wild Wings Inc fell almost 21 percent after the restaurant chain reported a decline in April same-store sales.
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,050,000 barrels versus a +1,894,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +800,000 barrels versus a +3,587,000 barrel gain the prior week. Distillate inventories are expected to rise by +1,500,000 barrels versus a +2,096,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to remain unch. versus a +.34% gain the prior week.
Minyanville: "The Baltic Dry index surged 6% closing over 3,203. According to Gregory Lewis from Credit Suisse the rally was caused by a, “20% upward move in Cape rates driven by strength in the Atlantic basin.” Yesterday’s rally came after the index had been range bound for almost a month."
A euro-zone/International Monetary Fund aid package for Greece could be worth between 100 billion to 120 billion euros ($159 billion) over three years, according to Juergen Trittin, a leader for the German opposition Green Party said, as reported by news station N-TV. The existing package is 45 billion euros this year.
Frank Holmes: "Nearly 30 percent of Taiwan’s total exports, accounting for 15 percent of its GDP, now go to the mainland. A quarter of South Korea’s exports (10 percent of GDP) are China-bound. For both of these countries, and others as well, China is more than twice as important as the United States in terms of exports."
China’s policy makers have indicated they are waiting for clearer signs of a sustained global rebound before deciding to allow gains in the yuan, which has been pegged at about 6.83 per dollar since July 2008. Evidence of a “very certain” recovery is needed before China can roll back stimulus measures adopted during the crisis, central bank Governor Zhou Xiaochuan said last month.
China’s 10-year government bonds fell after the finance ministry failed to draw enough bids in its planned 28 billion yuan ($4.1 billion) one-year bond auction as Chinese banks, faced with lending curbs, favored higher returns offered from longer-dated debt.
Crude +1.96M barrels vs. consensus of +800K. Gasoline -1.24M vs. consensus of +600K. Distillates +2.94M vs. consensus of +1.2M. Crude futures -0.22% to $82.26.
PPL Corp. is close to buying a unit of E.ON AG for $7 billion, CNBC’s David Faber reported.
24/7WallSt: "Problems with supply chain and parts shortages have caused Boeing to yet again delay building some of its 787 Dreamliners . The company said it would halt the building of the 23rd and 24th airplanes for a month and the shipment of fuselages would be kept in abeyance. The estimate of a month may turn out not to be true. Most other forecasts from Boeing about 787 schedule have been wrong."
Standard & Poors ratings agency delivered more bad news by cutting Spain's rating to AA from AA+.
The Dow Jones Industrial Average ended up 53.28 points, or 0.5%, to 11,045.27. The S&P 500 rose 7.65 points, or 0.7%, to 1,191.36. The Nasdaq Composite rose 0.26 point, or 0.01%, to 2,471.73.
ExxonMobil and Chevron both raised their quarterly dividends.
Hewlett-Packard Co. said it has agreed to buy Palm Inc. in a $1.2 billion deal. H-P said Palm shareholders will receive $5.70 in cash for each share of Palm common stock. H-P said the boards of both companies have approved the transaction.
The Federal Reserve kept its benchmark interest rate at a record low level Wednesday and made no changes to the key "extended period" policy pledge. The Fed's policy statement, released after a closed-door meeting, said the economic situation is "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The Fed's description of the economy was a little more upbeat but still very cautious. It said that the "labor market is beginning to improve," but quickly noted that employers are still reluctant to add to payrolls. The statement repeated that inflation is likely to be subdued. The Fed statement made no mention of asset sales. Thomas Hoenig, the president of the Kansas City Federal Bank dissented, saying that the extended period language was "limiting the Fed's flexibility to begin raising rates modestly."
Thursday's U.S. government report on natural gas in storage is expected to show a 72 to 76 billion cubic feet increase in the week ended April 23, analysts surveyed by Platts said Wednesday. Such an increase would compare to a 77 bcf injection during the same week last week and a five-year average of a 66 bcf, Platts said. Natural gas for June delivery, the most active contract, added 5 cents, or 1.2%, to $4.37 per million British thermal units on Comex.
A Texas lawmaker says she plans to push for a law similar to Arizona's get-tough immigration measure. Mexico has issued a travel warning over the Arizona law.
Greece's government bond market was under renewed pressure Wednesday, a day after Standard & Poor's cut the country's credit rating to junk status. The yield on two-year Greek government bonds was at 20.8% in recent action.
The cost of insuring Greek and Portuguese government debt against default continued to soar Wednesday amid the deepening euro-zone debt crisis. The spread on five-year Greek credit default swaps widened to 871.5 basis points from 824 basis points late Tuesday, according to CMA DataVision. That means it would now cost an unprecedented $871,500 a year to insure $10 million of Greek government debt against default for five years. The Portuguese five-year CDS spread rose to a record 421 basis points from a close Tuesday of 386 basis points.
George Ure: "
CNNMoney reported the price of gasoline in March 2003 at $1.72 a gallon. So if I'd taken $145,000 (the 2003 price of a 20-City Index home back then - and bought gasoline - instead of the house, I could have bought 84,302 gallons of gasoline.Fast forward to the present: the price of gasoline - even here at the ranch which is a one lane county road from a 600 acre oil production patch, and we're paying $3.17 a gallon for premium. But let's use apples - to -apples and apply the Triple A $2.87 a gallon this week.
If I had the $145,000 from a house sale I'd get only 50,522 gallons of gas. In terms of purchasing power of gasoline, I'd be down about 40%."
Shares of Buffalo Wild Wings Inc fell almost 21 percent after the restaurant chain reported a decline in April same-store sales.
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,050,000 barrels versus a +1,894,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +800,000 barrels versus a +3,587,000 barrel gain the prior week. Distillate inventories are expected to rise by +1,500,000 barrels versus a +2,096,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to remain unch. versus a +.34% gain the prior week.
Minyanville: "The Baltic Dry index surged 6% closing over 3,203. According to Gregory Lewis from Credit Suisse the rally was caused by a, “20% upward move in Cape rates driven by strength in the Atlantic basin.” Yesterday’s rally came after the index had been range bound for almost a month."
A euro-zone/International Monetary Fund aid package for Greece could be worth between 100 billion to 120 billion euros ($159 billion) over three years, according to Juergen Trittin, a leader for the German opposition Green Party said, as reported by news station N-TV. The existing package is 45 billion euros this year.
Frank Holmes: "Nearly 30 percent of Taiwan’s total exports, accounting for 15 percent of its GDP, now go to the mainland. A quarter of South Korea’s exports (10 percent of GDP) are China-bound. For both of these countries, and others as well, China is more than twice as important as the United States in terms of exports."
China’s policy makers have indicated they are waiting for clearer signs of a sustained global rebound before deciding to allow gains in the yuan, which has been pegged at about 6.83 per dollar since July 2008. Evidence of a “very certain” recovery is needed before China can roll back stimulus measures adopted during the crisis, central bank Governor Zhou Xiaochuan said last month.
China’s 10-year government bonds fell after the finance ministry failed to draw enough bids in its planned 28 billion yuan ($4.1 billion) one-year bond auction as Chinese banks, faced with lending curbs, favored higher returns offered from longer-dated debt.
Crude +1.96M barrels vs. consensus of +800K. Gasoline -1.24M vs. consensus of +600K. Distillates +2.94M vs. consensus of +1.2M. Crude futures -0.22% to $82.26.
PPL Corp. is close to buying a unit of E.ON AG for $7 billion, CNBC’s David Faber reported.
24/7WallSt: "Problems with supply chain and parts shortages have caused Boeing to yet again delay building some of its 787 Dreamliners . The company said it would halt the building of the 23rd and 24th airplanes for a month and the shipment of fuselages would be kept in abeyance. The estimate of a month may turn out not to be true. Most other forecasts from Boeing about 787 schedule have been wrong."
Standard & Poors ratings agency delivered more bad news by cutting Spain's rating to AA from AA+.
The Dow Jones Industrial Average ended up 53.28 points, or 0.5%, to 11,045.27. The S&P 500 rose 7.65 points, or 0.7%, to 1,191.36. The Nasdaq Composite rose 0.26 point, or 0.01%, to 2,471.73.
ExxonMobil and Chevron both raised their quarterly dividends.
Hewlett-Packard Co. said it has agreed to buy Palm Inc. in a $1.2 billion deal. H-P said Palm shareholders will receive $5.70 in cash for each share of Palm common stock. H-P said the boards of both companies have approved the transaction.
The Federal Reserve kept its benchmark interest rate at a record low level Wednesday and made no changes to the key "extended period" policy pledge. The Fed's policy statement, released after a closed-door meeting, said the economic situation is "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The Fed's description of the economy was a little more upbeat but still very cautious. It said that the "labor market is beginning to improve," but quickly noted that employers are still reluctant to add to payrolls. The statement repeated that inflation is likely to be subdued. The Fed statement made no mention of asset sales. Thomas Hoenig, the president of the Kansas City Federal Bank dissented, saying that the extended period language was "limiting the Fed's flexibility to begin raising rates modestly."
Thursday's U.S. government report on natural gas in storage is expected to show a 72 to 76 billion cubic feet increase in the week ended April 23, analysts surveyed by Platts said Wednesday. Such an increase would compare to a 77 bcf injection during the same week last week and a five-year average of a 66 bcf, Platts said. Natural gas for June delivery, the most active contract, added 5 cents, or 1.2%, to $4.37 per million British thermal units on Comex.
Wednesday, April 28, 2010
Purchasing Power
4/28/10 Purchasing Power
A Texas lawmaker says she plans to push for a law similar to Arizona's get-tough immigration measure. Mexico has issued a travel warning over the Arizona law.
Greece's government bond market was under renewed pressure Wednesday, a day after Standard & Poor's cut the country's credit rating to junk status. The yield on two-year Greek government bonds was at 20.8% in recent action.
The cost of insuring Greek and Portuguese government debt against default continued to soar Wednesday amid the deepening euro-zone debt crisis. The spread on five-year Greek credit default swaps widened to 871.5 basis points from 824 basis points late Tuesday, according to CMA DataVision. That means it would now cost an unprecedented $871,500 a year to insure $10 million of Greek government debt against default for five years. The Portuguese five-year CDS spread rose to a record 421 basis points from a close Tuesday of 386 basis points.
George Ure: "
CNNMoney reported the price of gasoline in March 2003 at $1.72 a gallon. So if I'd taken $145,000 (the 2003 price of a 20-City Index home back then - and bought gasoline - instead of the house, I could have bought 84,302 gallons of gasoline.Fast forward to the present: the price of gasoline - even here at the ranch which is a one lane county road from a 600 acre oil production patch, and we're paying $3.17 a gallon for premium. But let's use apples - to -apples and apply the Triple A $2.87 a gallon this week.
If I had the $145,000 from a house sale I'd get only 50,522 gallons of gas. In terms of purchasing power of gasoline, I'd be down about 40%."
Shares of Buffalo Wild Wings Inc fell almost 21 percent after the restaurant chain reported a decline in April same-store sales.
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,050,000 barrels versus a +1,894,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +800,000 barrels versus a +3,587,000 barrel gain the prior week. Distillate inventories are expected to rise by +1,500,000 barrels versus a +2,096,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to remain unch. versus a +.34% gain the prior week.
Minyanville: "The Baltic Dry index surged 6% closing over 3,203. According to Gregory Lewis from Credit Suisse the rally was caused by a, “20% upward move in Cape rates driven by strength in the Atlantic basin.” Yesterday’s rally came after the index had been range bound for almost a month."
A euro-zone/International Monetary Fund aid package for Greece could be worth between 100 billion to 120 billion euros ($159 billion) over three years, according to Juergen Trittin, a leader for the German opposition Green Party said, as reported by news station N-TV. The existing package is 45 billion euros this year.
Frank Holmes: "Nearly 30 percent of Taiwan’s total exports, accounting for 15 percent of its GDP, now go to the mainland. A quarter of South Korea’s exports (10 percent of GDP) are China-bound. For both of these countries, and others as well, China is more than twice as important as the United States in terms of exports."
China’s policy makers have indicated they are waiting for clearer signs of a sustained global rebound before deciding to allow gains in the yuan, which has been pegged at about 6.83 per dollar since July 2008. Evidence of a “very certain” recovery is needed before China can roll back stimulus measures adopted during the crisis, central bank Governor Zhou Xiaochuan said last month.
China’s 10-year government bonds fell after the finance ministry failed to draw enough bids in its planned 28 billion yuan ($4.1 billion) one-year bond auction as Chinese banks, faced with lending curbs, favored higher returns offered from longer-dated debt.
Crude +1.96M barrels vs. consensus of +800K. Gasoline -1.24M vs. consensus of +600K. Distillates +2.94M vs. consensus of +1.2M. Crude futures -0.22% to $82.26.
PPL Corp. is close to buying a unit of E.ON AG for $7 billion, CNBC’s David Faber reported.
24/7WallSt: "Problems with supply chain and parts shortages have caused Boeing to yet again delay building some of its 787 Dreamliners . The company said it would halt the building of the 23rd and 24th airplanes for a month and the shipment of fuselages would be kept in abeyance. The estimate of a month may turn out not to be true. Most other forecasts from Boeing about 787 schedule have been wrong."
Standard & Poors ratings agency delivered more bad news by cutting Spain's rating to AA from AA+.
The Dow Jones Industrial Average ended up 53.28 points, or 0.5%, to 11,045.27. The S&P 500 rose 7.65 points, or 0.7%, to 1,191.36. The Nasdaq Composite rose 0.26 point, or 0.01%, to 2,471.73.
ExxonMobil and Chevron both raised their quarterly dividends.
Hewlett-Packard Co. said it has agreed to buy Palm Inc. in a $1.2 billion deal. H-P said Palm shareholders will receive $5.70 in cash for each share of Palm common stock. H-P said the boards of both companies have approved the transaction.
The Federal Reserve kept its benchmark interest rate at a record low level Wednesday and made no changes to the key "extended period" policy pledge. The Fed's policy statement, released after a closed-door meeting, said the economic situation is "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The Fed's description of the economy was a little more upbeat but still very cautious. It said that the "labor market is beginning to improve," but quickly noted that employers are still reluctant to add to payrolls. The statement repeated that inflation is likely to be subdued. The Fed statement made no mention of asset sales. Thomas Hoenig, the president of the Kansas City Federal Bank dissented, saying that the extended period language was "limiting the Fed's flexibility to begin raising rates modestly."
Thursday's U.S. government report on natural gas in storage is expected to show a 72 to 76 billion cubic feet increase in the week ended April 23, analysts surveyed by Platts said Wednesday. Such an increase would compare to a 77 bcf injection during the same week last week and a five-year average of a 66 bcf, Platts said. Natural gas for June delivery, the most active contract, added 5 cents, or 1.2%, to $4.37 per million British thermal units on Comex.
A Texas lawmaker says she plans to push for a law similar to Arizona's get-tough immigration measure. Mexico has issued a travel warning over the Arizona law.
Greece's government bond market was under renewed pressure Wednesday, a day after Standard & Poor's cut the country's credit rating to junk status. The yield on two-year Greek government bonds was at 20.8% in recent action.
The cost of insuring Greek and Portuguese government debt against default continued to soar Wednesday amid the deepening euro-zone debt crisis. The spread on five-year Greek credit default swaps widened to 871.5 basis points from 824 basis points late Tuesday, according to CMA DataVision. That means it would now cost an unprecedented $871,500 a year to insure $10 million of Greek government debt against default for five years. The Portuguese five-year CDS spread rose to a record 421 basis points from a close Tuesday of 386 basis points.
George Ure: "
CNNMoney reported the price of gasoline in March 2003 at $1.72 a gallon. So if I'd taken $145,000 (the 2003 price of a 20-City Index home back then - and bought gasoline - instead of the house, I could have bought 84,302 gallons of gasoline.Fast forward to the present: the price of gasoline - even here at the ranch which is a one lane county road from a 600 acre oil production patch, and we're paying $3.17 a gallon for premium. But let's use apples - to -apples and apply the Triple A $2.87 a gallon this week.
If I had the $145,000 from a house sale I'd get only 50,522 gallons of gas. In terms of purchasing power of gasoline, I'd be down about 40%."
Shares of Buffalo Wild Wings Inc fell almost 21 percent after the restaurant chain reported a decline in April same-store sales.
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,050,000 barrels versus a +1,894,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +800,000 barrels versus a +3,587,000 barrel gain the prior week. Distillate inventories are expected to rise by +1,500,000 barrels versus a +2,096,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to remain unch. versus a +.34% gain the prior week.
Minyanville: "The Baltic Dry index surged 6% closing over 3,203. According to Gregory Lewis from Credit Suisse the rally was caused by a, “20% upward move in Cape rates driven by strength in the Atlantic basin.” Yesterday’s rally came after the index had been range bound for almost a month."
A euro-zone/International Monetary Fund aid package for Greece could be worth between 100 billion to 120 billion euros ($159 billion) over three years, according to Juergen Trittin, a leader for the German opposition Green Party said, as reported by news station N-TV. The existing package is 45 billion euros this year.
Frank Holmes: "Nearly 30 percent of Taiwan’s total exports, accounting for 15 percent of its GDP, now go to the mainland. A quarter of South Korea’s exports (10 percent of GDP) are China-bound. For both of these countries, and others as well, China is more than twice as important as the United States in terms of exports."
China’s policy makers have indicated they are waiting for clearer signs of a sustained global rebound before deciding to allow gains in the yuan, which has been pegged at about 6.83 per dollar since July 2008. Evidence of a “very certain” recovery is needed before China can roll back stimulus measures adopted during the crisis, central bank Governor Zhou Xiaochuan said last month.
China’s 10-year government bonds fell after the finance ministry failed to draw enough bids in its planned 28 billion yuan ($4.1 billion) one-year bond auction as Chinese banks, faced with lending curbs, favored higher returns offered from longer-dated debt.
Crude +1.96M barrels vs. consensus of +800K. Gasoline -1.24M vs. consensus of +600K. Distillates +2.94M vs. consensus of +1.2M. Crude futures -0.22% to $82.26.
PPL Corp. is close to buying a unit of E.ON AG for $7 billion, CNBC’s David Faber reported.
24/7WallSt: "Problems with supply chain and parts shortages have caused Boeing to yet again delay building some of its 787 Dreamliners . The company said it would halt the building of the 23rd and 24th airplanes for a month and the shipment of fuselages would be kept in abeyance. The estimate of a month may turn out not to be true. Most other forecasts from Boeing about 787 schedule have been wrong."
Standard & Poors ratings agency delivered more bad news by cutting Spain's rating to AA from AA+.
The Dow Jones Industrial Average ended up 53.28 points, or 0.5%, to 11,045.27. The S&P 500 rose 7.65 points, or 0.7%, to 1,191.36. The Nasdaq Composite rose 0.26 point, or 0.01%, to 2,471.73.
ExxonMobil and Chevron both raised their quarterly dividends.
Hewlett-Packard Co. said it has agreed to buy Palm Inc. in a $1.2 billion deal. H-P said Palm shareholders will receive $5.70 in cash for each share of Palm common stock. H-P said the boards of both companies have approved the transaction.
The Federal Reserve kept its benchmark interest rate at a record low level Wednesday and made no changes to the key "extended period" policy pledge. The Fed's policy statement, released after a closed-door meeting, said the economic situation is "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The Fed's description of the economy was a little more upbeat but still very cautious. It said that the "labor market is beginning to improve," but quickly noted that employers are still reluctant to add to payrolls. The statement repeated that inflation is likely to be subdued. The Fed statement made no mention of asset sales. Thomas Hoenig, the president of the Kansas City Federal Bank dissented, saying that the extended period language was "limiting the Fed's flexibility to begin raising rates modestly."
Thursday's U.S. government report on natural gas in storage is expected to show a 72 to 76 billion cubic feet increase in the week ended April 23, analysts surveyed by Platts said Wednesday. Such an increase would compare to a 77 bcf injection during the same week last week and a five-year average of a 66 bcf, Platts said. Natural gas for June delivery, the most active contract, added 5 cents, or 1.2%, to $4.37 per million British thermal units on Comex.
Tuesday, April 27, 2010
Greece and Portugal
4/27/10 Greece and Portugal
Ford Motor Co. reported a $2.1 billion quarterly profit, raised its forecast for the year and boosted its second-quarter North America production by another 30000 vehicles. Ford expects 2010 U.S. industry sales will be in the range of 11.5 million to 12.5 million and that European industry volume will be in the 14 million to 15 million range, somewhat higher than previous guidance.
For April, ICSC continues to expect monthly retail sales to be flat to down 3%.
MMM raised its full-year profit outlook to a range of $5.40 to $5.60 a share, from a prior view of $4.90 to $5.10 a share. Shares of 3M rose 3% to $90.20.
U.S. Feb. Case-Shiller home prices fall 0.9%.
The developer of the luxury Bravern complex in downtown Bellevue, WA, bowing to new market realities, is converting one of the project's two nearly finished condo towers to apartments.
Bellevue's supply of high-end high-rise condos still exceeds demand, said Dan Ivanoff, managing investment partner at Bravern's developer, Schnitzer West. "So we're shorting the supply," he said.
The switch isn't permanent, Ivanoff added: The 236 units now for lease in the southern tower will be put up for sale as condos again if the housing market recovers.
Schnitzer West also said prices will be reduced for the 215 remaining condo units in the northern tower but didn't give details.
ZerroHedge: "The US is turning into Japan. As a silver tsunami of 80 million baby boomers retires, they will be followed by only 65 million from generation "X". The intractable problems that unhappy Japan is facing will soon arrive at our shores. Boomers, therefore, better not count on the next generation to buy them out of their homes at nice premiums, especially if they are still living in the basement, and not paying any rent. They are looking at best at an "L" shaped recovery, which is a polite way of saying no recovery at all. What are the investment implications of all of this? Get your money out of America and Japan, and pour it into Vietnam, China, India, Brazil, Mongolia and other emerging markets with healthy population pyramids. You want the wind behind your investment sails, not in your face with hurricane category five violence. Use any serious dip to load the boat with the emerging market ETF (EEM)."
Cost of insuring Greece's debt against default soared to a new record. Germany says country may have to leave the Eurozone. Worries that Greece's fiscal crisis will spread to other debt-strapped euro-zone countries continued to rise Tuesday, with the cost of insuring Greek, Portuguese and Spanish government debt against default through credit default swaps hitting new record highs. Standard & Poor's cut Greece's credit rating to junk status. The spread on five-year CDS neared 800 basis points following the announcement, according to Markit. That means it would cost nearly $800,000 a year to insure $10 million of Greek debt against default for five years. The spread had widened to a record 760 basis points earlier in the session before narrowing toward 700 basis points.
Portugal's five-year CDS widened to 355 basis points from 314, while Spain widened to 203 basis points from 187.
A budget expert from Germany's ruling party pressured private banks to accept a discount on the Greek debt they own, spreading the pain of an international bailout.
Germany is to almost double its underground storage capacity for natural gas, most .of which is imported by pipeline from Russia.
U.S. April consumer confidence 57.9 vs. 52.3 March.
Bernanke said Congress and the White House will have to choose among modifying programs like Social Security, restraining federal spending and accepting higher taxes. "In the absence of further policy actions, the federal budget appears set to remain on an unsustainable path," Bernanke said.
US oil and gas completions dropped in the first quarter, ending 6 months of growth, the American Petroleum Institute said on Apr. 23. The estimated 7,663 oil and gas wells and dry holes that were drilled was 24% lower than 2009’s first 3 months, API said in its latest quarterly report.
“This drop in drilling activity was somewhat unexpected. Looking at the rig activity, we expected first-quarter completions to at least maintain their fourth-quarter 2009 level,” said Hazem Arafa, director of API’s statistics department.
IBM on Tuesday said its board approved hiking the quarterly dividend by 18% to 65 cents a share and buying back $8 billion in shares. With the new stock buyback plan, IBM will have about $10 billion at its disposal to repurchase stock. The technology giant expects to request additional share buyback authorization in October.
Macy's Inc said Tuesday that it raised its 2010 earnings outlook to $1.75 to $1.80 a share from $1.55 to $1.60 while same-store sales are expected to rise by 3% to 3.5% versus 1% to 2% previously.
For those with a set of cohones: Greek 10-year bonds mature on May 19 and now sell for 98.7. That's a yield of about 30% to maturity.
Standard & Poor's Ratings Services on Tuesday lowered Portugal's long-term local and foreign currency sovereign issuer credit ratings to A- from A+. "The two-notch downgrade reflects our view of the amplified fiscal risks Portugal faces.
Wall Street's so-called fear gauge, the CBOE Market Volatility Index (VIX), finished with a surge of 30.6% on Tuesday, its biggest percentage leap since Oct. 22, 2008 when the index closed up 31.1%. The VIX jumped as a sell-off in U.S. stocks was spurred by ratings cuts of Greece and Portugal by Standard & Poor's, moves that heightened worries about a fresh round of global financial problems. The Dow Jones Industrial Average slid 213 points to 10,991.99, the biggest one-day decline for the blue-chip average since Feb. 4. The S&P 500 Index fell 2.3% to 1,183.71. The Nasdaq Composite fell 51.48 points, or 2%, to 2,471.47.
The euro bought as little as $1.3165, down 1.4% from late in the prior session. Against the yen, the euro fell more than 2% to 122.8 yen. The dollar index added to gains, rising to 82.313 for a 1.1% daily gain.
Ford Motor Co. reported a $2.1 billion quarterly profit, raised its forecast for the year and boosted its second-quarter North America production by another 30000 vehicles. Ford expects 2010 U.S. industry sales will be in the range of 11.5 million to 12.5 million and that European industry volume will be in the 14 million to 15 million range, somewhat higher than previous guidance.
For April, ICSC continues to expect monthly retail sales to be flat to down 3%.
MMM raised its full-year profit outlook to a range of $5.40 to $5.60 a share, from a prior view of $4.90 to $5.10 a share. Shares of 3M rose 3% to $90.20.
U.S. Feb. Case-Shiller home prices fall 0.9%.
The developer of the luxury Bravern complex in downtown Bellevue, WA, bowing to new market realities, is converting one of the project's two nearly finished condo towers to apartments.
Bellevue's supply of high-end high-rise condos still exceeds demand, said Dan Ivanoff, managing investment partner at Bravern's developer, Schnitzer West. "So we're shorting the supply," he said.
The switch isn't permanent, Ivanoff added: The 236 units now for lease in the southern tower will be put up for sale as condos again if the housing market recovers.
Schnitzer West also said prices will be reduced for the 215 remaining condo units in the northern tower but didn't give details.
ZerroHedge: "The US is turning into Japan. As a silver tsunami of 80 million baby boomers retires, they will be followed by only 65 million from generation "X". The intractable problems that unhappy Japan is facing will soon arrive at our shores. Boomers, therefore, better not count on the next generation to buy them out of their homes at nice premiums, especially if they are still living in the basement, and not paying any rent. They are looking at best at an "L" shaped recovery, which is a polite way of saying no recovery at all. What are the investment implications of all of this? Get your money out of America and Japan, and pour it into Vietnam, China, India, Brazil, Mongolia and other emerging markets with healthy population pyramids. You want the wind behind your investment sails, not in your face with hurricane category five violence. Use any serious dip to load the boat with the emerging market ETF (EEM)."
Cost of insuring Greece's debt against default soared to a new record. Germany says country may have to leave the Eurozone. Worries that Greece's fiscal crisis will spread to other debt-strapped euro-zone countries continued to rise Tuesday, with the cost of insuring Greek, Portuguese and Spanish government debt against default through credit default swaps hitting new record highs. Standard & Poor's cut Greece's credit rating to junk status. The spread on five-year CDS neared 800 basis points following the announcement, according to Markit. That means it would cost nearly $800,000 a year to insure $10 million of Greek debt against default for five years. The spread had widened to a record 760 basis points earlier in the session before narrowing toward 700 basis points.
Portugal's five-year CDS widened to 355 basis points from 314, while Spain widened to 203 basis points from 187.
A budget expert from Germany's ruling party pressured private banks to accept a discount on the Greek debt they own, spreading the pain of an international bailout.
Germany is to almost double its underground storage capacity for natural gas, most .of which is imported by pipeline from Russia.
U.S. April consumer confidence 57.9 vs. 52.3 March.
Bernanke said Congress and the White House will have to choose among modifying programs like Social Security, restraining federal spending and accepting higher taxes. "In the absence of further policy actions, the federal budget appears set to remain on an unsustainable path," Bernanke said.
US oil and gas completions dropped in the first quarter, ending 6 months of growth, the American Petroleum Institute said on Apr. 23. The estimated 7,663 oil and gas wells and dry holes that were drilled was 24% lower than 2009’s first 3 months, API said in its latest quarterly report.
“This drop in drilling activity was somewhat unexpected. Looking at the rig activity, we expected first-quarter completions to at least maintain their fourth-quarter 2009 level,” said Hazem Arafa, director of API’s statistics department.
IBM on Tuesday said its board approved hiking the quarterly dividend by 18% to 65 cents a share and buying back $8 billion in shares. With the new stock buyback plan, IBM will have about $10 billion at its disposal to repurchase stock. The technology giant expects to request additional share buyback authorization in October.
Macy's Inc said Tuesday that it raised its 2010 earnings outlook to $1.75 to $1.80 a share from $1.55 to $1.60 while same-store sales are expected to rise by 3% to 3.5% versus 1% to 2% previously.
For those with a set of cohones: Greek 10-year bonds mature on May 19 and now sell for 98.7. That's a yield of about 30% to maturity.
Standard & Poor's Ratings Services on Tuesday lowered Portugal's long-term local and foreign currency sovereign issuer credit ratings to A- from A+. "The two-notch downgrade reflects our view of the amplified fiscal risks Portugal faces.
Wall Street's so-called fear gauge, the CBOE Market Volatility Index (VIX), finished with a surge of 30.6% on Tuesday, its biggest percentage leap since Oct. 22, 2008 when the index closed up 31.1%. The VIX jumped as a sell-off in U.S. stocks was spurred by ratings cuts of Greece and Portugal by Standard & Poor's, moves that heightened worries about a fresh round of global financial problems. The Dow Jones Industrial Average slid 213 points to 10,991.99, the biggest one-day decline for the blue-chip average since Feb. 4. The S&P 500 Index fell 2.3% to 1,183.71. The Nasdaq Composite fell 51.48 points, or 2%, to 2,471.47.
The euro bought as little as $1.3165, down 1.4% from late in the prior session. Against the yen, the euro fell more than 2% to 122.8 yen. The dollar index added to gains, rising to 82.313 for a 1.1% daily gain.
Monday, April 26, 2010
Great Britain
4/26/10 Great Britain
Brutal choices over British deficit
By Chris Giles, Alex Barker and Nicholas Timmins
Published: April 25 2010 22:10 | Last updated: April 25 2010 22:10
The next government will have to cut public sector pay, freeze benefits, slash jobs, abolish a range of welfare entitlements and take the axe to programmes such as school building and road maintenance – or make a set of equally politically perilous choices, according to an analysis by the Financial Times.
Packages of measures such as these are already under consideration in the Treasury and will be needed if further big tax rises are to be avoided as the next chancellor seeks, at a minimum, to halve the deficit by 2014 – a goal to which all the main parties are signed up.
The spending choices are so difficult that senior officials believe that an incoming chancellor may be forced to resort to additional tax increases.
One senior Whitehall official pointed out that the tax burden rose almost 5 percentage points in both the 1980s and the 1990s when Britain last reduced budget deficits that were large, but much smaller than the £163bn of borrowing the government has had to resort to this year.
Without similar increases, it might be difficult to reduce borrowing sufficiently over the coming years, the official said. Under current plans, which include the national insurance increase that the Conservatives say they would largely reverse, a rise in the tax burden of less than half of that is envisaged.
At the very least, Treasury officials believe the next government must bring down the cost of social security benefits to prevent drastic cuts in the areas of government activity that the parties have said they will not protect. “If you take 25 per cent out of defence, you would not have much of an army left,” one official said.
FT costings of a range of the choices that the next chancellor will face show that almost the whole population would be hit as the new government makes £30bn-£40bn of cuts in real terms to halve the deficit.
An online simulator, developed by the FT using government figures, suggests a saving of that scale would require all of the following: a 5 per cent cut in public sector pay; freezing benefits for a year; means-testing child benefit; abolishing winter fuel payments and free television licences; reducing prison numbers by a quarter; axing the two planned aircraft carriers; withdrawing free bus passes for pensioners; delaying Crossrail for three years; halving roads maintenance; stopping school building; halving the spend on teaching assistants and NHS dentistry; and cutting funding to Scotland and Wales by 10 per cent."
Caterpillar said it raised its profit outlook to $2.50 to $3.25 a share, from a prior view of about $2.50 a share. Wall Street is looking for 2010 earnings of $2.65 a share. The company said it would ramp up its production rates to meet higher demand. Shares of Caterpillar rose 2% premarket to $70.51.
U.S. car rental firm Hertz Global Holdings Inc had agreed to buy smaller rival Dollar Thrifty Automotive Group Inc for about $1.2 billion to boost its presence in the leisure rental market.
The deal marks a significant consolidation for the car rental industry, which is starting to recover from the global economic downturn helped by a pickup in travel and the used car market.
The cash-and-stock offer of $41 per share is at a 5.5 percent premium to Dollar Thrifty's Friday close of $38.85.
The cost of insuring Greek debt against default jumping to a new record.
Mike Burk: "All of the major indices closed at recovery highs on Friday and those highs were led by the secondaries and confirmed by most of the indicators. The implication is there will be more highs in the near future. On the other hand the market is about as overbought as it has ever been.
I expect the major averages to be lower on Friday April 30 than they were on Thursday April 23."
Rob Hanna: "The NDX has now had a remarkable streak of 50 closes above the 10ma. That’s over 2 months without even a mild pullback. This is the longest streak since the index’s inception in 1986.....The general finding was that such persistent upmoves have a very strong tendency to continue up after the 1st pullback occurs. Rarely will you see an abrupt end to these kind of moves."
The most recent rail traffic numbers are still down 12.4% compared with where things were in 2007.
Venezuela May Nationalize Gold Mining, Says Chavez.
Bill Gross: "In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like. It's a game that can never be finished."
ZeroHedge: "The Greek bond holiday is here. Greece's bond pricing administration HDAT has withdrawn bond prices as spreads have hit 650 bps. Greece acknowledges it is game over as 10 Years are at 10%, and 3 Years at 13%. Stock liquidation are rampant as Greeks are on the verge of panic: the ASE is down 3% and investors are now widely expecting a 10% correction to below 1,700 on the ASE. And Portugal is now officially part of the party Portuguese - CDS just hit 310 bps.In the meantime Germany is starting to feel the burn - German FinMin Schaeuble has stated he is determined to defend the stability of the euro by asking that Greek talks with IMF conclude by weekend. He also said that he anticipates that Euro zone and IMF want to free up Greek aid simultaneously and does not favour idea of granting Greece moratorium on debt. Alas, the time for speeches is over. Making matters worse, Germany’s SPD says will not back accelerated parliamentary process to approve Greek aid, rendering all rhetoric useless. Lastly, Angela Merkel will make a statementon Greece at 13:00 GMT. We can't wait to hear the powerlessness in her voice."
John Hussman: "As of last week, our most comprehensive measure of market valuation reached a price-to-normalized earnings multiple of 19.1, exceeding the peaks of August 1987 (18.6) and December 1973 (18.3). Outside of the valuations achieved during the late 1990's bubble and the approach to the 2007 market peak, the only other historical observation exceeding the current level of valuation was the extreme of 20.1 reached just prior to the 1929 crash. The corollary to this level of rich valuation is that our projection for 10-year total returns for the S&P 500 is now just 5.3% annually."
The cost of insuring Portuguese government debt against default jumped to a record high on concern that it could be next to suffer a Greek- style debt crisis.
Earthfiles: "Cryptcoccus gattii fungus, native to Papua New Guinea,
Australia and parts of South America, is now spreading airborne in Oregon
and has killed six of twenty-one infected people, or about 25%. Currently,
there is no vaccination or other preventative measure available
for this new lethal fungus. Symptoms of severe cough and shortness
of breath do not develop until months after exposure. The fungus has
also infected domestic and wild animals."
Jon Markman says contrary to popular sentiment, consumers are not deleveraging; "The consumer is releveraging," he says.
The number of vacant housing units in the United States increased to a record 19 million in the first quarter of the year, up from 18.9 million in the fourth quarter, the Commerce Department reported Monday. About 14.5% of homes were vacant, with 4.4 million available to be rented and 2 million available to be sold. The vacancy rate for rentable units fell to 10.6% from 10.7% in the fourth quarter. The vacancy rate for homes ready to be sold was steady at 2.7%. In the past year, the housing inventory rose by 1.14 million to 130.9 million, while occupied homes increased by 1.07 million to 111.9 million.
Active traders are less bullish about the stock market than they were in December, according to a survey released Monday. Only 28 percent expressed a bullish outlook for the market in the next six months, down from 50 percent in the previous survey.Another key finding was that 40 percent of traders polled are hedging their portfolios against risk by trading options.
Analysts polled by Platts expect an increase of 1.4 million barrels of oil in U.S. inventories in the week ended April 23, Platts said Monday. The analysts surveyed also expect an increase of 500,000 barrels in gasoline stocks and an increase of 1.2 million barrels in inventories of distillates, which include heating oil and diesel.
The Dow Jones industrial average edged up 0.75 point, or 0.01 percent, to close at 11,205.03. The Standard & Poor's 500 Index dropped 5.23 points, or 0.43 percent, to 1,212.05. The Nasdaq Composite Index lost 7.20 points, or 0.28 percent, to 2,522.95.
On the New York Stock Exchange, nearly eight shares fell for every seven that rose, while on the Nasdaq, decliners beat advancers by a ratio of about 14 to 13.
Brutal choices over British deficit
By Chris Giles, Alex Barker and Nicholas Timmins
Published: April 25 2010 22:10 | Last updated: April 25 2010 22:10
The next government will have to cut public sector pay, freeze benefits, slash jobs, abolish a range of welfare entitlements and take the axe to programmes such as school building and road maintenance – or make a set of equally politically perilous choices, according to an analysis by the Financial Times.
Packages of measures such as these are already under consideration in the Treasury and will be needed if further big tax rises are to be avoided as the next chancellor seeks, at a minimum, to halve the deficit by 2014 – a goal to which all the main parties are signed up.
The spending choices are so difficult that senior officials believe that an incoming chancellor may be forced to resort to additional tax increases.
One senior Whitehall official pointed out that the tax burden rose almost 5 percentage points in both the 1980s and the 1990s when Britain last reduced budget deficits that were large, but much smaller than the £163bn of borrowing the government has had to resort to this year.
Without similar increases, it might be difficult to reduce borrowing sufficiently over the coming years, the official said. Under current plans, which include the national insurance increase that the Conservatives say they would largely reverse, a rise in the tax burden of less than half of that is envisaged.
At the very least, Treasury officials believe the next government must bring down the cost of social security benefits to prevent drastic cuts in the areas of government activity that the parties have said they will not protect. “If you take 25 per cent out of defence, you would not have much of an army left,” one official said.
FT costings of a range of the choices that the next chancellor will face show that almost the whole population would be hit as the new government makes £30bn-£40bn of cuts in real terms to halve the deficit.
An online simulator, developed by the FT using government figures, suggests a saving of that scale would require all of the following: a 5 per cent cut in public sector pay; freezing benefits for a year; means-testing child benefit; abolishing winter fuel payments and free television licences; reducing prison numbers by a quarter; axing the two planned aircraft carriers; withdrawing free bus passes for pensioners; delaying Crossrail for three years; halving roads maintenance; stopping school building; halving the spend on teaching assistants and NHS dentistry; and cutting funding to Scotland and Wales by 10 per cent."
Caterpillar said it raised its profit outlook to $2.50 to $3.25 a share, from a prior view of about $2.50 a share. Wall Street is looking for 2010 earnings of $2.65 a share. The company said it would ramp up its production rates to meet higher demand. Shares of Caterpillar rose 2% premarket to $70.51.
U.S. car rental firm Hertz Global Holdings Inc had agreed to buy smaller rival Dollar Thrifty Automotive Group Inc for about $1.2 billion to boost its presence in the leisure rental market.
The deal marks a significant consolidation for the car rental industry, which is starting to recover from the global economic downturn helped by a pickup in travel and the used car market.
The cash-and-stock offer of $41 per share is at a 5.5 percent premium to Dollar Thrifty's Friday close of $38.85.
The cost of insuring Greek debt against default jumping to a new record.
Mike Burk: "All of the major indices closed at recovery highs on Friday and those highs were led by the secondaries and confirmed by most of the indicators. The implication is there will be more highs in the near future. On the other hand the market is about as overbought as it has ever been.
I expect the major averages to be lower on Friday April 30 than they were on Thursday April 23."
Rob Hanna: "The NDX has now had a remarkable streak of 50 closes above the 10ma. That’s over 2 months without even a mild pullback. This is the longest streak since the index’s inception in 1986.....The general finding was that such persistent upmoves have a very strong tendency to continue up after the 1st pullback occurs. Rarely will you see an abrupt end to these kind of moves."
The most recent rail traffic numbers are still down 12.4% compared with where things were in 2007.
Venezuela May Nationalize Gold Mining, Says Chavez.
Bill Gross: "In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like. It's a game that can never be finished."
ZeroHedge: "The Greek bond holiday is here. Greece's bond pricing administration HDAT has withdrawn bond prices as spreads have hit 650 bps. Greece acknowledges it is game over as 10 Years are at 10%, and 3 Years at 13%. Stock liquidation are rampant as Greeks are on the verge of panic: the ASE is down 3% and investors are now widely expecting a 10% correction to below 1,700 on the ASE. And Portugal is now officially part of the party Portuguese - CDS just hit 310 bps.In the meantime Germany is starting to feel the burn - German FinMin Schaeuble has stated he is determined to defend the stability of the euro by asking that Greek talks with IMF conclude by weekend. He also said that he anticipates that Euro zone and IMF want to free up Greek aid simultaneously and does not favour idea of granting Greece moratorium on debt. Alas, the time for speeches is over. Making matters worse, Germany’s SPD says will not back accelerated parliamentary process to approve Greek aid, rendering all rhetoric useless. Lastly, Angela Merkel will make a statementon Greece at 13:00 GMT. We can't wait to hear the powerlessness in her voice."
John Hussman: "As of last week, our most comprehensive measure of market valuation reached a price-to-normalized earnings multiple of 19.1, exceeding the peaks of August 1987 (18.6) and December 1973 (18.3). Outside of the valuations achieved during the late 1990's bubble and the approach to the 2007 market peak, the only other historical observation exceeding the current level of valuation was the extreme of 20.1 reached just prior to the 1929 crash. The corollary to this level of rich valuation is that our projection for 10-year total returns for the S&P 500 is now just 5.3% annually."
The cost of insuring Portuguese government debt against default jumped to a record high on concern that it could be next to suffer a Greek- style debt crisis.
Earthfiles: "Cryptcoccus gattii fungus, native to Papua New Guinea,
Australia and parts of South America, is now spreading airborne in Oregon
and has killed six of twenty-one infected people, or about 25%. Currently,
there is no vaccination or other preventative measure available
for this new lethal fungus. Symptoms of severe cough and shortness
of breath do not develop until months after exposure. The fungus has
also infected domestic and wild animals."
Jon Markman says contrary to popular sentiment, consumers are not deleveraging; "The consumer is releveraging," he says.
The number of vacant housing units in the United States increased to a record 19 million in the first quarter of the year, up from 18.9 million in the fourth quarter, the Commerce Department reported Monday. About 14.5% of homes were vacant, with 4.4 million available to be rented and 2 million available to be sold. The vacancy rate for rentable units fell to 10.6% from 10.7% in the fourth quarter. The vacancy rate for homes ready to be sold was steady at 2.7%. In the past year, the housing inventory rose by 1.14 million to 130.9 million, while occupied homes increased by 1.07 million to 111.9 million.
Active traders are less bullish about the stock market than they were in December, according to a survey released Monday. Only 28 percent expressed a bullish outlook for the market in the next six months, down from 50 percent in the previous survey.Another key finding was that 40 percent of traders polled are hedging their portfolios against risk by trading options.
Analysts polled by Platts expect an increase of 1.4 million barrels of oil in U.S. inventories in the week ended April 23, Platts said Monday. The analysts surveyed also expect an increase of 500,000 barrels in gasoline stocks and an increase of 1.2 million barrels in inventories of distillates, which include heating oil and diesel.
The Dow Jones industrial average edged up 0.75 point, or 0.01 percent, to close at 11,205.03. The Standard & Poor's 500 Index dropped 5.23 points, or 0.43 percent, to 1,212.05. The Nasdaq Composite Index lost 7.20 points, or 0.28 percent, to 2,522.95.
On the New York Stock Exchange, nearly eight shares fell for every seven that rose, while on the Nasdaq, decliners beat advancers by a ratio of about 14 to 13.
Sunday, April 25, 2010
Trouble Brewing
4/25/10 Trouble Brewing
Jeremy Grantham: "Bubbles are when you should cash in your "career risk units" and do something brave to protect the investors. There is nothing more dangerous and damaging to the economy than a great asset bubble that breaks, and this is something that the Fed never seems to get. Under Greenspan's incredible leadership he managed to give us the tech bubble, and by keeping interest rates at negative levels for three years drove up the housing bubble, and finally the risk bubble. And Bernanke has happily picked up the mantle, and seems totally unconcerned about creating yet another bubble. He has interest rates so low banks can't possible not make a fortune. Savers are being penalized, anyone who wants to buy cash faces a painful experience, and so we are all tempted into speculating, which is apparently what he wants and we've just had one of the great speculative rallies in history, second only to 1932-33."
Market Oracle: "Released in March, before the passage of the Obama administration’s health care legislation, a survey entitled “Health Care Reform—Can’t Live With It, or Without It” indicates that 92 percent of Americans give the national economy a negative rating. No fewer than 70 percent of the respondents report having suffered job-related and financial problems in the past year, an increase from 59 percent the year before. Fifty-four percent report someone in their home has been without a job and looking for work in the past year, up from 39 percent in 2009.
The poll saw an aggravation of conditions in every area of economic life studied the year before. Increasing numbers of people are reporting difficulty receiving or affording medical care (26 percent) or paying their rent or mortgage payments (24 percent). More Americans faced problems with collections and credit agencies (21 percent), or had mortgages, loans or credit card applications denied (19 percent).
As could be expected, the poorest Americans are suffering the most. Some 44 percent of those making $30,000 per year or less report difficulty obtaining medical care, compared to 11 percent of those making $75,000 per year or more. A similar gap can be found in the category of rents and mortgages, with 37 percent of those making $30,000 or less reporting difficulty making rent or mortgage payments, compared to 11 percent of those making $75,000 or more. However, the percentage of those facing difficulties paying rent has increased dramatically for both groups since 2009.
Large numbers of workers polled in the study say they have little confidence in job security and prospects for the future, with almost half (49 percent) saying it is “very or somewhat likely” they will suffer “job-related financial stress” in the next year. Twenty-five percent of workers say they expect to be forced to take a pay cut this year, while 24 percent expect to be laid off.
The Pew survey found that 85 percent of Americans reported difficulty finding jobs in their communities. This and other statistics revealing the increasingly dismal employment opportunities facing millions of Americans are provided context in another study released this month by the Pew Economic Policy Group.
“A Year or More: The High Cost of Long-Term Unemployment” reports that no fewer than 44 percent of unemployed Americans met or exceeded the standard measure of long-term unemployment (six months or more) in March 2010. This marks the highest rate for long-term unemployment levels since World War II.
In addition to this, the Pew study reports that “23 percent of the nearly 15 million Americans who are unemployed have been jobless for a year or more.” This translates to 3.4 million people, “roughly equivalent,” the study points out, “to the population of the state of Connecticut.”
These alarming numbers should be considered along with findings in another recent Pew research study entitled “The People and Their Government,” released April 18. This report finds that “by almost every conceivable measure Americans are less positive and more critical of government these days.”
Only 22 percent of Americans say their government can be trusted, according to the new survey. The report puts this among the lowest measures of trust in the government in half a century."
ZeroHedge: "The rally, which is driven purely by Primary Dealers recycling money they lend to the treasury which in turn is repoed back by the Fed, so that the banks can buy 100x P/E risky stocks with the same money used to keep the treasury curve diagonal. This is nothing but Fed-sponsored monetary pornography at its NC-17 best. Of course, those who grasp it are few and far between, while the rest of the population is ignorant in its hopes that S&P 1,500 is just over the horizon, without a resultant crash back to 0 on the other side of the bubble."
The gap between the cost of renting a modest apartment and the wages of working families continues to widen, according to a report released last week from the National Low Income Housing Coalition.
Out of Reach 2010 paints a gloomy picture for the nation's nearly 38 million renters, who make up a third of U.S. households.
On average, a family must earn $38,355 a year, $18.44 an hour, to afford a simple two-bedroom apartment at the 2010 national average fair market rent of $959.
However, the average wage for U.S. renters is $14.44 an hour, down from $14.69 last year. Further, more than 60 percent of U.S. renters live in counties where even the average one-bedroom fair market rent of $805 isn't affordable for average wage earners, the study found.
Minimum wage earners are at the greatest disadvantage. Under the standard measure of affordability — housing costs should account for no more than 30 percent of income — full-time minimum wage earners can't afford one-bedroom apartments in any county in the country, even though Congress hiked the minimum wage from $6.55 an hour to $7.25 last year.
Rescuers spread out Sunday to scour Mississippi neighborhoods a day after a tornado sliced through the state and killed 10 people, including three children.
Arizona Gov. Jan Brewer on Friday signed a law making it a state crime to be an illegal immigrant.
World Bank members have agreed to pour more capital into the lender and give developing countries a greater voice in running the bank, Treasury Secretary Timothy Geithner said on Sunday.
The head of the International Monetary Fund said Sunday that talks on a big emergency loan for Greece, crippled by soaring borrowing costs, were accelerating and he expressed optimism about a deal before a large debt payment comes due for Athens next month.
Jeremy Grantham: "Bubbles are when you should cash in your "career risk units" and do something brave to protect the investors. There is nothing more dangerous and damaging to the economy than a great asset bubble that breaks, and this is something that the Fed never seems to get. Under Greenspan's incredible leadership he managed to give us the tech bubble, and by keeping interest rates at negative levels for three years drove up the housing bubble, and finally the risk bubble. And Bernanke has happily picked up the mantle, and seems totally unconcerned about creating yet another bubble. He has interest rates so low banks can't possible not make a fortune. Savers are being penalized, anyone who wants to buy cash faces a painful experience, and so we are all tempted into speculating, which is apparently what he wants and we've just had one of the great speculative rallies in history, second only to 1932-33."
Market Oracle: "Released in March, before the passage of the Obama administration’s health care legislation, a survey entitled “Health Care Reform—Can’t Live With It, or Without It” indicates that 92 percent of Americans give the national economy a negative rating. No fewer than 70 percent of the respondents report having suffered job-related and financial problems in the past year, an increase from 59 percent the year before. Fifty-four percent report someone in their home has been without a job and looking for work in the past year, up from 39 percent in 2009.
The poll saw an aggravation of conditions in every area of economic life studied the year before. Increasing numbers of people are reporting difficulty receiving or affording medical care (26 percent) or paying their rent or mortgage payments (24 percent). More Americans faced problems with collections and credit agencies (21 percent), or had mortgages, loans or credit card applications denied (19 percent).
As could be expected, the poorest Americans are suffering the most. Some 44 percent of those making $30,000 per year or less report difficulty obtaining medical care, compared to 11 percent of those making $75,000 per year or more. A similar gap can be found in the category of rents and mortgages, with 37 percent of those making $30,000 or less reporting difficulty making rent or mortgage payments, compared to 11 percent of those making $75,000 or more. However, the percentage of those facing difficulties paying rent has increased dramatically for both groups since 2009.
Large numbers of workers polled in the study say they have little confidence in job security and prospects for the future, with almost half (49 percent) saying it is “very or somewhat likely” they will suffer “job-related financial stress” in the next year. Twenty-five percent of workers say they expect to be forced to take a pay cut this year, while 24 percent expect to be laid off.
The Pew survey found that 85 percent of Americans reported difficulty finding jobs in their communities. This and other statistics revealing the increasingly dismal employment opportunities facing millions of Americans are provided context in another study released this month by the Pew Economic Policy Group.
“A Year or More: The High Cost of Long-Term Unemployment” reports that no fewer than 44 percent of unemployed Americans met or exceeded the standard measure of long-term unemployment (six months or more) in March 2010. This marks the highest rate for long-term unemployment levels since World War II.
In addition to this, the Pew study reports that “23 percent of the nearly 15 million Americans who are unemployed have been jobless for a year or more.” This translates to 3.4 million people, “roughly equivalent,” the study points out, “to the population of the state of Connecticut.”
These alarming numbers should be considered along with findings in another recent Pew research study entitled “The People and Their Government,” released April 18. This report finds that “by almost every conceivable measure Americans are less positive and more critical of government these days.”
Only 22 percent of Americans say their government can be trusted, according to the new survey. The report puts this among the lowest measures of trust in the government in half a century."
ZeroHedge: "The rally, which is driven purely by Primary Dealers recycling money they lend to the treasury which in turn is repoed back by the Fed, so that the banks can buy 100x P/E risky stocks with the same money used to keep the treasury curve diagonal. This is nothing but Fed-sponsored monetary pornography at its NC-17 best. Of course, those who grasp it are few and far between, while the rest of the population is ignorant in its hopes that S&P 1,500 is just over the horizon, without a resultant crash back to 0 on the other side of the bubble."
The gap between the cost of renting a modest apartment and the wages of working families continues to widen, according to a report released last week from the National Low Income Housing Coalition.
Out of Reach 2010 paints a gloomy picture for the nation's nearly 38 million renters, who make up a third of U.S. households.
On average, a family must earn $38,355 a year, $18.44 an hour, to afford a simple two-bedroom apartment at the 2010 national average fair market rent of $959.
However, the average wage for U.S. renters is $14.44 an hour, down from $14.69 last year. Further, more than 60 percent of U.S. renters live in counties where even the average one-bedroom fair market rent of $805 isn't affordable for average wage earners, the study found.
Minimum wage earners are at the greatest disadvantage. Under the standard measure of affordability — housing costs should account for no more than 30 percent of income — full-time minimum wage earners can't afford one-bedroom apartments in any county in the country, even though Congress hiked the minimum wage from $6.55 an hour to $7.25 last year.
Rescuers spread out Sunday to scour Mississippi neighborhoods a day after a tornado sliced through the state and killed 10 people, including three children.
Arizona Gov. Jan Brewer on Friday signed a law making it a state crime to be an illegal immigrant.
World Bank members have agreed to pour more capital into the lender and give developing countries a greater voice in running the bank, Treasury Secretary Timothy Geithner said on Sunday.
The head of the International Monetary Fund said Sunday that talks on a big emergency loan for Greece, crippled by soaring borrowing costs, were accelerating and he expressed optimism about a deal before a large debt payment comes due for Athens next month.
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