8/21/10 The Cliff
Doug Noland: "The critical issue these days is whether global debt markets have succumbed to Bubble Dynamics. Are investors and speculators, once again, participating in a historic bout of (Hyman Minsky) “Ponzi Finance”? Is flawed policymaking fomenting yet another dangerous speculative Bubble and period of deepening economic maladjustment? Are central bankers and markets accommodating history’s greatest expansion/inflation of non-productive government debt?
As an analyst who has for some time been warning of mounting risks associated with a Global Government Finance Bubble, it now seems obvious that the situation has taken a decided turn for the worst: Bubble Dynamics have become more entrenched and dangerous, while policymaking has reached the precipice of outright failure...There reaches a point in the evolution of a Credit Bubble where things really begin to get out of hand; the “terminal phase of excess.” If policymakers fail to act forcefully to rein in “terminal” government borrowing excesses, they will be held hostage to escalating risks from an out of control Bubble (think mortgage finance Bubble 2005/’06). There would be no turning back. A consensus view is taking shape that would amount to the worst-case policy scenario from a Credit Bubble analysis perspective....From my analytical perspective, we’re in the midst of history’s greatest and most perilous financial Bubble. And I am beside myself that nobody in a position of influence seems to care. We’ve witnessed momentous analytical and policy errors over the years – and these blunders are allowed to repeat themselves without thorough analysis and review. All this talk about fighting deflation and helping Main Street misses the point – and only feeds the Bubble. I’m fed up with ideology trumping sound analysis.
Why is there no consensus recognizing that the number one priority must be to protect the soundness of our government debt market – the heart of contemporary “money.” For me, talk emanating from bond fund managers about how to help the average guy rings hollow. It is fundamental to our nation’s future that we stabilize the government debt Bubble and secure the integrity of our monetary system. The chorus of calls for larger deficits and greater Fed monetization is fueling distortions that risk financial calamity."
Living at risk is jumping off the cliff and building your wings on the way down.
Ray Bradbury
David Rosenberg figures GDP could go negative this quarter, planning for a -1.5% rate vs. others' 2.5-3.5%. It's not about a double-dip, he says; the recession never ended.
The Obama administration disclosed its deliberations about the effects of its moratorium on deepwater drilling, saying it would cost 23,000 jobs and freeze up to $10.2 billion in investment.
Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.
Regulators on Friday shut down a big community bank based in Chicago that has been known for its social activism but racked by financial troubles in recent months. A consortium funded by several of the biggest U.S. financial firms is buying its assets and pledging to operate the new bank by the same principles.
The Federal Deposit Insurance Corp. took over ShoreBank, with $2.16 billion in assets and $1.54 billion in deposits. Urban Partnership Bank, the newly chartered financial institution, agreed to assume ShoreBank's deposits and nearly all its assets.
The FDIC also seized seven other banks Friday, bringing to 118 the number of U.S. bank failures this year amid the recession and mounting loan defaults.
Bloomberg (Dunstan McNichol): “Taxpayers must cover at least a third of a $3 trillion bill for public employee pensions even if lawmakers eliminate cost-of-living increases and raise the retirement age, according to an academic study. ‘Even if states uniformly eliminated generous early retirement deals and raised the retirement age to 74, the unfunded liability for promises already made would still be more than $1 trillion,’ Joshua D. Rauh, associate professor of finance at Northwestern University’s Kellogg School… said…”
San Francisco Bay Area home sales dropped to the lowest July total in 15 years as unemployment and the end of a federal tax credit kept buyers from making purchases, according to MDA DataQuick.
Tim W. Wood: "Thus, housing is at a significant crossroads. Any further decline below the recent low could prove to simply be an additional leg down into the intermediate-term cycle low. But based on what I see at this time, if the recent intermediate-term cycle low is violated, it will, until proven otherwise, appear to set another left-translated cycle into motion. It is my opinion that housing is a key economic indicator and it is at an important juncture. If another left-translated cycle does in fact unfold, then I fail to see how the so-called "recovery" can continue. The key at that point will be the cyclical developments in other areas such as equities, bonds and commodities.
Developments surrounding Dow theory will also be important as will the development of the DNA Marker I’ve found that has occurred at all major tops since 1896. I sincerely hope that people are listening. As I have warned all along, this is a bear market rally and the economy has not been in recovery mode, but rather in dead cat bounce mode in association with the bear market rally. The commentators on TV did not warn you of the top in housing in 2005, the top in commodities in 2008 or of the top in the stock market in 2000 or 2007, and they are not warning you of what is occurring now. Reason being, they don’t know and even if they did, they could not and would not tell you."
Calculated Risk: "July existing home sales will be reported next Tuesday.
Housing economist Tom Lawler's preliminary forecast was 3.95 million SAAR (based on a bottom up analysis)."
Texas July home sales lowest in 13 years.
ZeroHedge: "Longs may be forgiven if they are sweating their long positions over the weekend: not only did we just have a second, and far more solid Hindenburg Omen confirmation today, with 82 new highs, and 94 new lows, but the Saturday is the day when Iran launches its nuclear reactor, and everyone will be very jumpy regarding any piece of news out of the middle east. As for the H.O., the more validations we receive, the greater the confusion in the market, and the greater the possibility for a melt down (or up, as the case may be now that the market is unlike what it has ever been in the past). Furthermore, with implied correlation at record levels (JCJ at around 78), any potential crash will be like never before, as virtually all stocks now go up or down as one, more so than ever before. And should the HFT STOP command take place, the future should be very interesting indeed (at least for the primary dealers, and the Atari consoles which are unable to VWAP dump their holdings in the nano second before stuff goes bidless)."
Saturday, August 21, 2010
Friday, August 20, 2010
BP
8/20/10 BP
Yields on 2-year notes did fall 4 basis points to 0.45% in early trading and then reversed course.
"Scores of millions of American consumers have made the decision that reducing their debt burden is in their best interests right now. But a few hundred individuals in government believe they know better than the collective wisdom of the entire free market. By leveraging up the public sector, they have used their power to confiscate our savings. In short, they are forbidding us from following the common sense path to fiscal health." - Michael Pento
BP Plc’s senior manager on the Deepwater Horizon rig saw no indications that natural gas was surging up a pipe before the explosion that set off the biggest U.S. oil spill, according to notes from an internal inquiry.
Donald Vidrine, BP’s well-site leader aboard the rig in the Gulf of Mexico on the night of the catastrophe that killed 11 workers, told company representatives conducting the probe that a BP engineer in Houston and employees of rig owner Transocean Ltd. assured him everything was normal during tests conducted shortly before the blast.
A top oil expert and member of the Deepwater Horizon Study Group asserts that the geology of the area is "fractured," raising the potential for relief wells to fail and oil to leak from the area for years, while BP is using a "cloak of silence" and refusing to share information with the government. Transocean, which owned the Deepwater Horizon drilling rig and leased it to BP, says BP has refused to hand over lab tests and other data that could help explain why the well it was drilling blew out April 20.
Sinochem, the Chinese-state owned chemical group, said on Friday it would “pay close attention” to BHP Billiton’s $39bn hostile bid for PotashCorp, but added that it was “interested in overseas potash investment opportunities”.
The comments by Li Qiang, spokesman for Sinochem, are the first signs of interest from Beijing. Rival interest from China in the Canadian fertiliser company is expected to disrupt BHP’s bid, which so far is uncontested at $130 per share.
Bloomberg: Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, probably doesn’t want China to win control in a takeover war with BHP Billiton Ltd., an analyst at Beijing Orient Agribusiness Consultant Co. said.
“China’s potash demand will be more substantial in the long run than that of Brazil’s or India’s,” Xu Hongzhi, a Beijing-based analyst, said by phone. “Who would want their biggest customer potentially to take control and tell them what to do with their product sales prices?”
BHP Billiton, the world’s biggest mining company, this week made a hostile $40 billion offer for Potash Corp. after the Canadian company rejected an approach as “grossly inadequate.” China may bid for Potash Corp. because it’s dependant on imports from the company, Ian Henderson, manager of $7 billion in resource assets at JPMorgan Chase & Co., said yesterday. China is the second-biggest importer of the crop nutrient, after India. Chinese demand for potash may grow 5 percent to 6 percent annually in the next decade, Xu said. The country buys almost half of its potash need.
Potash fertilizer usage in China dropped to about 7.25 million metric tons of potassium chloride equivalent in 2009, from 12 million tons in 2007, Gavin Ju, a consultant at research company CRU, said in January.
Potash Corp. Chief Executive Officer Bill Doyle said demand from China this year was depressed because of weather conditions and that consumption will return to historical levels by 2011.
“A number of Chinese companies might be able to afford to buy Potash Corp.,” said Xu. “The question is whether the company or the Canadian government will allow their strategic resource to be controlled by the Chinese.”
Rival bidders for Potash Corp. may include Vale, Rio Tinto Group and groups in Russia and China, the world’s biggest user of fertilizer with about 30 percent of global consumption, according to Macquarie Group Ltd.
South Korea’s national oil company on Friday launched a landmark £1.87bn hostile takeover offer for Dana Petroleum, after shareholders owning almost half of the UK oil explorer offered their support.
The move is the first time an Asian state-owned company has taken a bid directly to shareholders in the UK, signalling a shift in the battle for overseas reserves by the region’s national energy groups. Korea National Oil Corporation said it had received letters of intent from shareholders owning 48.6 per cent of Dana to sell their shares at £18 each, meaning the Dana management, led by chief executive Tom Cross, face a battle to retain their grip on the company. Dana shares rose nearly 6 per cent in trading on Friday to £17.93.
India reportedly now has IBM’s largest workforce.
Salesforce raised its non-GAAP earnings per share forecast to a range of about $1.15 to $1.17 from $1.13 to $1.15. Chief Executive Marc Benioff said on a conference call he is "very bullish" about true cloud computing increasing efficiency at low levels of costs for client companies. Benioff said his company was benefiting from a shift by some companies away from major capital investments in technology hardware to using technology services provided by companies like Salesforce. "All of our clouds are growing, and it's tough to be a cloud at Salesforce because all of them are just moving so fast." The stock made a new 52-week high at $112+. It joins Priceline and Netflix in the stratosphere.
July Mass Layoffs: 1,609 mass layoff events (at least 50 workers), resulting in 143K job losses - down 38 layoff events from June. Total mass layoff events since Dec. 2007 beginning of the recession: 63,461, resulting in 6.35M job losses.
A big risk for markets is the fact that faith in the US government's ability to fight the economic markets, as well as in central banks' monetary policy tools, is eroding, Steen Jakobsen, Chief Investment Officer at Litmus Capital Partners told CNBC Friday.
Claimants under the Emergency Unemployment Compensation provision—who have exhausted their state benefits—surged 260,105 to 4,753,456 for the week ended July 31 (the data lags the weekly claims by two weeks). While that represents a weekly increase of 0.5 percent, the total is 60.5 percent higher than the 2009 figure of 2,961,457.
The Dow Jones Industrial Average fell 57.59 points, or 0.6%, to end at 10,213.62, with 22 of its 30 components falling. On Friday, the S&P 500 index fell 3.94 points, or 0.4%, to 1,071.69, weighed by the energy sector. The Nasdaq Composite, however, still rose fractionally on Friday, to end at 2,179.76, up 0.3% for the week.
Oil closed 1.3% lower on Friday, bringing losses for the week to 2.6%, the second consecutive weekly decline. Crude oil for September delivery, the expiring front-month contract, retreated 97 cents to $73.46 a barrel on the New York Mercantile Exchange as a rising dollar, coupled with lingering concerns about the pace of the economic recovery, hit the commodity. Natural-gas futures declined 1.3% as well, settling 5 cents off at $4.12 per million British thermal units.
Three banks were closed by U.S. regulators Friday, bringing the total number of failures for the year to 113, as the effects of the credit crisis continue to ripple through the financial system.
Martinsville, Va.-based Imperial Savings and Loan was closed, according to the Federal Deposit Insurance Corp. Imperial Savings and Loan had $10.1 million in deposits as of June 30, the FDIC said, and its failure will cost the deposit-insurance fund $3.5 million.
Two Florida banks -- Bartow-based Community National Bank and Ocala-based Independent National Bank -- were also closed by regulators.
Community National Bank had $63.7 million in deposits, and its failure will cost the deposit-insurance fund $10.3 million; Independent National Bank had $141.9 million in deposits, and its closure will cost the fund $23.2 million, the FDIC said.
Yields on 2-year notes did fall 4 basis points to 0.45% in early trading and then reversed course.
"Scores of millions of American consumers have made the decision that reducing their debt burden is in their best interests right now. But a few hundred individuals in government believe they know better than the collective wisdom of the entire free market. By leveraging up the public sector, they have used their power to confiscate our savings. In short, they are forbidding us from following the common sense path to fiscal health." - Michael Pento
BP Plc’s senior manager on the Deepwater Horizon rig saw no indications that natural gas was surging up a pipe before the explosion that set off the biggest U.S. oil spill, according to notes from an internal inquiry.
Donald Vidrine, BP’s well-site leader aboard the rig in the Gulf of Mexico on the night of the catastrophe that killed 11 workers, told company representatives conducting the probe that a BP engineer in Houston and employees of rig owner Transocean Ltd. assured him everything was normal during tests conducted shortly before the blast.
A top oil expert and member of the Deepwater Horizon Study Group asserts that the geology of the area is "fractured," raising the potential for relief wells to fail and oil to leak from the area for years, while BP is using a "cloak of silence" and refusing to share information with the government. Transocean, which owned the Deepwater Horizon drilling rig and leased it to BP, says BP has refused to hand over lab tests and other data that could help explain why the well it was drilling blew out April 20.
Sinochem, the Chinese-state owned chemical group, said on Friday it would “pay close attention” to BHP Billiton’s $39bn hostile bid for PotashCorp, but added that it was “interested in overseas potash investment opportunities”.
The comments by Li Qiang, spokesman for Sinochem, are the first signs of interest from Beijing. Rival interest from China in the Canadian fertiliser company is expected to disrupt BHP’s bid, which so far is uncontested at $130 per share.
Bloomberg: Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, probably doesn’t want China to win control in a takeover war with BHP Billiton Ltd., an analyst at Beijing Orient Agribusiness Consultant Co. said.
“China’s potash demand will be more substantial in the long run than that of Brazil’s or India’s,” Xu Hongzhi, a Beijing-based analyst, said by phone. “Who would want their biggest customer potentially to take control and tell them what to do with their product sales prices?”
BHP Billiton, the world’s biggest mining company, this week made a hostile $40 billion offer for Potash Corp. after the Canadian company rejected an approach as “grossly inadequate.” China may bid for Potash Corp. because it’s dependant on imports from the company, Ian Henderson, manager of $7 billion in resource assets at JPMorgan Chase & Co., said yesterday. China is the second-biggest importer of the crop nutrient, after India. Chinese demand for potash may grow 5 percent to 6 percent annually in the next decade, Xu said. The country buys almost half of its potash need.
Potash fertilizer usage in China dropped to about 7.25 million metric tons of potassium chloride equivalent in 2009, from 12 million tons in 2007, Gavin Ju, a consultant at research company CRU, said in January.
Potash Corp. Chief Executive Officer Bill Doyle said demand from China this year was depressed because of weather conditions and that consumption will return to historical levels by 2011.
“A number of Chinese companies might be able to afford to buy Potash Corp.,” said Xu. “The question is whether the company or the Canadian government will allow their strategic resource to be controlled by the Chinese.”
Rival bidders for Potash Corp. may include Vale, Rio Tinto Group and groups in Russia and China, the world’s biggest user of fertilizer with about 30 percent of global consumption, according to Macquarie Group Ltd.
South Korea’s national oil company on Friday launched a landmark £1.87bn hostile takeover offer for Dana Petroleum, after shareholders owning almost half of the UK oil explorer offered their support.
The move is the first time an Asian state-owned company has taken a bid directly to shareholders in the UK, signalling a shift in the battle for overseas reserves by the region’s national energy groups. Korea National Oil Corporation said it had received letters of intent from shareholders owning 48.6 per cent of Dana to sell their shares at £18 each, meaning the Dana management, led by chief executive Tom Cross, face a battle to retain their grip on the company. Dana shares rose nearly 6 per cent in trading on Friday to £17.93.
India reportedly now has IBM’s largest workforce.
Salesforce raised its non-GAAP earnings per share forecast to a range of about $1.15 to $1.17 from $1.13 to $1.15. Chief Executive Marc Benioff said on a conference call he is "very bullish" about true cloud computing increasing efficiency at low levels of costs for client companies. Benioff said his company was benefiting from a shift by some companies away from major capital investments in technology hardware to using technology services provided by companies like Salesforce. "All of our clouds are growing, and it's tough to be a cloud at Salesforce because all of them are just moving so fast." The stock made a new 52-week high at $112+. It joins Priceline and Netflix in the stratosphere.
July Mass Layoffs: 1,609 mass layoff events (at least 50 workers), resulting in 143K job losses - down 38 layoff events from June. Total mass layoff events since Dec. 2007 beginning of the recession: 63,461, resulting in 6.35M job losses.
A big risk for markets is the fact that faith in the US government's ability to fight the economic markets, as well as in central banks' monetary policy tools, is eroding, Steen Jakobsen, Chief Investment Officer at Litmus Capital Partners told CNBC Friday.
Claimants under the Emergency Unemployment Compensation provision—who have exhausted their state benefits—surged 260,105 to 4,753,456 for the week ended July 31 (the data lags the weekly claims by two weeks). While that represents a weekly increase of 0.5 percent, the total is 60.5 percent higher than the 2009 figure of 2,961,457.
The Dow Jones Industrial Average fell 57.59 points, or 0.6%, to end at 10,213.62, with 22 of its 30 components falling. On Friday, the S&P 500 index fell 3.94 points, or 0.4%, to 1,071.69, weighed by the energy sector. The Nasdaq Composite, however, still rose fractionally on Friday, to end at 2,179.76, up 0.3% for the week.
Oil closed 1.3% lower on Friday, bringing losses for the week to 2.6%, the second consecutive weekly decline. Crude oil for September delivery, the expiring front-month contract, retreated 97 cents to $73.46 a barrel on the New York Mercantile Exchange as a rising dollar, coupled with lingering concerns about the pace of the economic recovery, hit the commodity. Natural-gas futures declined 1.3% as well, settling 5 cents off at $4.12 per million British thermal units.
Three banks were closed by U.S. regulators Friday, bringing the total number of failures for the year to 113, as the effects of the credit crisis continue to ripple through the financial system.
Martinsville, Va.-based Imperial Savings and Loan was closed, according to the Federal Deposit Insurance Corp. Imperial Savings and Loan had $10.1 million in deposits as of June 30, the FDIC said, and its failure will cost the deposit-insurance fund $3.5 million.
Two Florida banks -- Bartow-based Community National Bank and Ocala-based Independent National Bank -- were also closed by regulators.
Community National Bank had $63.7 million in deposits, and its failure will cost the deposit-insurance fund $10.3 million; Independent National Bank had $141.9 million in deposits, and its closure will cost the fund $23.2 million, the FDIC said.
Thursday, August 19, 2010
Gulf Oil Spill
8/19/10 Gulf Oil Spill
First-time claims for state unemployment benefits rose unexpectedly in the latest week to their highest level in nine months, the Labor Department reported Thursday. The number of initial claims in the week ending Aug. 14 rose 12,000 to 500,000. This is the third consecutive weekly increase. Claims are at their highest level since Nov. 14, 2009. The consensus forecast of Wall Street economists was for claims to inch lower. The four-week average rose 8,000 to 482,500.Claims in the previous week were revised to an increase of 6,000 to 488,000 compared with the initial estimate of an increase of 2,000 to 484,000. Meanwhile, the number of Americans receiving state jobless benefits fell 13,000 to 4.48 million in the week ending Aug. 7. The four-week moving average of continuing claims fell 1,500 to 4.53 million. This is the lowest level since December 2008.
Intel Corp. said Thursday it'll pay $48 a share in cash to buy security software specialist McAfee Inc. in a deal valued at $7.7 billion. The price represents a premium of 62% over McAfee's closing price of $29.93 a share on Wednesday. Shares of McAfee jumped 58% to $47.40 in pre-market trades.
McDonald's sold 200M yuan ($29M) of 3% notes due in Sept. 2013. The numbers may seem small, but the sale is significant, as it's the first time a foreign non-financial company has sold yuan-denominated bonds in Hong Kong.
The government's point man for the Gulf oil spill said Wednesday he cannot provide a timeline right now for when BP's blown-out well will finally be plugged for good.
Retired Coast Guard Adm. Thad Allen told reporters he will give the order to complete the relief well when he is ready.
Since nearly the start of the disaster in April, the plan had been to complete the relief well by early to mid-August. But stormy weather and now questions of how to make the job less risky have delayed that process.
Allen said BP still needs to come up with a plan to alleviate pressure that may build up once the relief well intersects the blown-out well.
"We will know when we have satisfied ourselves and we have removed any shadow of doubt," Allen said when asked at what point he would give the order to move forward. He said the pause is "nothing more than an overabundance of caution and doing our jobs."
"No more beating up on BP," Kenneth Feinberg tells claimants. Next week, he will take over from the oil giant the $20-billion fund for spill compensation claims.
California Governor Arnold Schwarzenegger said 150,000 government workers must begin taking time off without pay starting Aug. 20 following a court ruling lifting an injunction temporarily blocking the furloughs.
Hundreds of people have been sickened in a salmonella outbreak linked to eggs in four states and possibly more, health officials said Wednesday as a company dramatically expanded a recall to 380 million eggs.
The Centers for Disease Control and Prevention is working with state health departments to investigate the illnesses. No deaths have been reported, said Dr. Christopher Braden, a CDC epidemiologist involved in the investigation.
Initially, 228 million eggs, or the equivalent of 19 million dozen-egg cartons, were recalled by the company Wright County Egg of Galt, Iowa. But that number was increased to nearly 32 million dozen-egg cartons.
Minnesota, a state with some of the best food-borne illness investigators in the country, has tied at least seven salmonella illnesses to the eggs.
Other states have seen a jump in reports of the type of salmonella. For example, California has reported 266 illnesses since June and believes many are related to the eggs. Colorado saw 28 cases in June and July, about four times the usual number. Spikes or clusters of suspicious cases have also been reported in Arizona, Illinois, Nevada, North Carolina, Texas and Wisconsin.
Salmonella is the most common bacterial form of food poisoning. And the strain involved in the outbreak is the most common strain of salmonella, accounting for roughly 20 percent of all salmonella food poisonings.
BNP Paribas expects the U.S. economy to grow at a 1.5% pace in the second half of 2010, slower than the firm's previous expectation for a 2% rate. "Recent downward revisions to both GDP and private payrolls have been substantial, and have essentially eliminated what had appeared to be a self-sustaining, albeit gradual, rotation from stimulus- and inventory-led growth to private-demand driven expansion," said BNP economist Julia Coronado, in a note emailed Thursday. BNP's forecast for gross domestic product in 2011 was also lowered, to 2.1% from 3.1%. That pace of growth will push the unemployment rate higher, back to 9.8% in the fourth quarter of this year from 9.5% currently. Core inflation will drift lower and the Federal Reserve will take "further unconventional steps to ease monetary policy in the months ahead" to "avoid an entrenched deflationary psychology from taking root and keep the U.S. economy on a modest growth path," she said. Also, incoming data suggests the economy only grew at a 1.3% pace in the second quarter, she said, after the government initially estimated it expanded 2.4%.
U.S. natural gas storage levels on average are expected to rise by 31 billion cubic feet when weekly data from the U.S. Energy Information Administration are released today.
In the weekly Reuters survey of 31 industry traders and analysts, injection estimates for the week ended Aug. 13 ranged from 23 to 41 bcf.
Stocks rose an adjusted 54 bcf for the same week last year, while the five-year average gain for that week is 50 bcf.
The median build in the survey was also 31 bcf.
Working gas in storage was 3,012 Bcf as of Friday, August 13, 2010, according to EIA estimates. This represents a net increase of 27 Bcf from the previous week. Stocks were 185 Bcf less than last year at this time and 196 Bcf above the 5-year average of 2,816 Bcf. In the East Region, stocks were 15 Bcf above the 5-year average following net injections of 40 Bcf. Stocks in the Producing Region were 94 Bcf above the 5-year average of 860 Bcf after a net withdrawal of 16 Bcf. Stocks in the West Region were 86 Bcf above the 5-year average after a net addition of 3 Bcf. At 3,012 Bcf, total working gas is within the 5-year historical range.
28% Say U.S. Heading in Right Direction. Twenty-eight percent (28%) of Likely Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, August 15. Sixty-seven percent (67%) of all voters say the country is heading down the wrong track, up two points from last week. 77% of voters not affiliated with either political party feel the country is heading down the wrong track.
The U.S. economy looks set to grow at a slower pace than earlier this year, the Conference Board said on Thursday as it reported its leading economic index rose 0.1% in July. The index is essentially flat since March, the Conference Board added, though it's still well above pre-recession levels. Economists polled by MarketWatch had expected a 0.2% advance. The leading economic index fell 0.3% in June and grew 0.5% in May.
Homeowners were more pessimistic about the short-term future of home values in their local market than they had been in the previous three quarters, according to the Zillow Second Quarter Homeowner Confidence Survey.
Indeed, 33 percent believed home values in their local housing market had not yet reached a bottom, while 38 percent believed they had already reached a bottom.
"After years of hearing news about the housing recession, homeowners really understand the realities of the market," Stan Humphries, Zillow's chief economist, said in an interview.
Nationally, 28 percent of homeowners said home values in their local real estate market would decrease in the next six months, up from 20 percent in the first quarter.
Philly Fed comes in at -7.7, trouncing expectations of 7.0, and is the lowest number since August 2009, and first contraction since July 2009.
The U.S. economy faces even more difficult times ahead with chronic high unemployment rates and slow manufacturing growth hurting the recovery, Congressional Budget Office Director Douglas Elmendorf said on Thursday.
CBO forecast the U.S. budget deficit will hit $1.342 trillion this year, down slightly from its March projection of $1.368 trillion.
CBO attributed most of the $27 billion change in its fiscal 2010 deficit projection to an estimated $50 billion reduction in the cost of TARP, the U.S. government's bailout of financial institutions in 2009.
CBO also forecast a $1.066 trillion deficit for fiscal year 2011, which begins on October 1, up slightly from the March estimate of $996 billion.
The survey, by real estate search site Trulia.com, found 27 percent of renters do not plan to ever buy a home. Although 72 percent still expect to buy eventually, that proportion is down from 77 percent six months ago.
Of those who do hope to become homeowners, two-thirds say they will wait two years or more.
The 10-year Treasury yielded 2.56, down from 4% just four months ago.
J.D. Power points to high joblessness and a flattening economy in lowering its auto sales forecast for this year and next: to 11.6M vehicles in 2010, from 11.7M, and to 13.2M vehicles from 13.7M next year. Both are well below the decade's average of 16.4M vehicles.
The Malaysian ringgit surged to a near 13-year high Thursday and may scale new heights in the next few months after the country's central bank eased foreign exchange rules further by allowing companies to use the currency to settle international trade, dealers said.
Sentiment that stock prices will rise over the next six months fell 9.7 percentage points from a week ago, according to the American Association of Individual Investors on Thursday. Bullish sentiment clocked in at a six-week low of 30.1%, compared with a historical average of 39%, AAII said. Bearish sentiment, or expectations stock prices will fall over the next six months, rose 12.4 percentage points to 42.5%, a four-week high. The historical average is 30%, AAII said.
ICI reports that the week ended August 11 saw a record 15th weekly outflow from domestic stock mutual funds, this time of $2.1 billion.
"As we've seen with the takeover of Inco, Falconbridge, Stelco, and Nortel there can be a devastating cost when governments give foreign corporations carte blanche to take over without any accountability or transparency," said Claude Gravelle of Canada's left-leaning New Democrat Party.
Canada is currently suing US Steel, alleging it failed to live up to investment commitments when it shut down its Canadian operations last year. U.S. Steel acquired the operation when it bought Stelco in 2007.
Canada also raised concerns last year with layoffs at Canadian mines owned by mining giants Vale and Xstrata, which bought Inco and Falconbridge, respectively, in 2006. Canada has since said it has no issue with the layoffs.
"As with any foreign investment agreement, the BHP proposal has the potential to strengthen the economy and create jobs, but it must be subject to a fully public review," said Gravelle.
Marc Garneau, the industry critic for the main opposition Liberals, said the party would not block the deal because it agreed with opening doors to foreign investors.
December gold added $4, or 0.3%, to $1,235.40.
Rob Hanna: "Wednesday the market posted an inside day. I haven't discussed inside days in a while. For those unfamiliar an inside day is simply a day that makes a lower high and a higher low than the day before. Over the last decade, when the market has been trading below the 200ma, inside days have suggested negative short-term implications."
The Dow Jones Industrial Average closed 144.33 points, or 1.4%, lower at 10,271.21. The S&P 500 fell 18.53 points, or 1.7%, to 1,075.63. The Nasdaq Composite fell 36.75 points, or 1.7%, to 2,178.95.
Scientists at the Woods Hole Oceanographic Institution measured a plume of hydrocarbons at least 22 miles long and more than 3,000 feet below the surface of the Gulf of Mexico as residue of the BP PLC Deepwater Horizon oil spill, according to an article released on Thursday. "Deep-sea microbes were degrading the plume relatively slowly, and that it was possible that the plume had and will persist for some time," the article said. The team combed through 57,000 discrete chemical analyses measured in real time during a June 19-28 scientific cruise aboard the R/V Endeavor. "We've shown conclusively not only that a plume exists, but also defined its origin and near-field structure," said Richard Camilli of WHOI's Applied Ocean Physics and Engineering Department, chief scientist of the cruise and lead author of the paper. "Until now, these have been treated as a theoretical matter in the literature."
ZeroHedge: "Today we got our first Hindenburg Omen confirmation. The number of new highs was 136, and new lows was at 69 (per the traditional WSJ source). Granted this particular criteria set was a little weak as the 69 is precisely on the borderline for confirmation (the 2.2%), and the new highs number was not more than double the new lows (although it was close). Less gating were the McClellan oscillator which was negative at -83.6, and the 10 week MVA, which rose, which were the two remaining conditions. The first omen was spotted on August 12 - a week later the H.O has been confirmed. The more confirmations, the scarier it gets from a technical perspective, not to mention the conversion into a self-fulfilling prophecy (like every other technical indicator)."
Taiwan’s economy expanded more than forecast last quarter, bolstering the case for further interest rate increases after the island’s exports weathered global risks.
Gross domestic product grew 12.53 percent in the three months through June from a year earlier, after climbing a revised 13.71 percent in the first quarter, the statistics bureau said yesterday in Taipei.
First-time claims for state unemployment benefits rose unexpectedly in the latest week to their highest level in nine months, the Labor Department reported Thursday. The number of initial claims in the week ending Aug. 14 rose 12,000 to 500,000. This is the third consecutive weekly increase. Claims are at their highest level since Nov. 14, 2009. The consensus forecast of Wall Street economists was for claims to inch lower. The four-week average rose 8,000 to 482,500.Claims in the previous week were revised to an increase of 6,000 to 488,000 compared with the initial estimate of an increase of 2,000 to 484,000. Meanwhile, the number of Americans receiving state jobless benefits fell 13,000 to 4.48 million in the week ending Aug. 7. The four-week moving average of continuing claims fell 1,500 to 4.53 million. This is the lowest level since December 2008.
Intel Corp. said Thursday it'll pay $48 a share in cash to buy security software specialist McAfee Inc. in a deal valued at $7.7 billion. The price represents a premium of 62% over McAfee's closing price of $29.93 a share on Wednesday. Shares of McAfee jumped 58% to $47.40 in pre-market trades.
McDonald's sold 200M yuan ($29M) of 3% notes due in Sept. 2013. The numbers may seem small, but the sale is significant, as it's the first time a foreign non-financial company has sold yuan-denominated bonds in Hong Kong.
The government's point man for the Gulf oil spill said Wednesday he cannot provide a timeline right now for when BP's blown-out well will finally be plugged for good.
Retired Coast Guard Adm. Thad Allen told reporters he will give the order to complete the relief well when he is ready.
Since nearly the start of the disaster in April, the plan had been to complete the relief well by early to mid-August. But stormy weather and now questions of how to make the job less risky have delayed that process.
Allen said BP still needs to come up with a plan to alleviate pressure that may build up once the relief well intersects the blown-out well.
"We will know when we have satisfied ourselves and we have removed any shadow of doubt," Allen said when asked at what point he would give the order to move forward. He said the pause is "nothing more than an overabundance of caution and doing our jobs."
"No more beating up on BP," Kenneth Feinberg tells claimants. Next week, he will take over from the oil giant the $20-billion fund for spill compensation claims.
California Governor Arnold Schwarzenegger said 150,000 government workers must begin taking time off without pay starting Aug. 20 following a court ruling lifting an injunction temporarily blocking the furloughs.
Hundreds of people have been sickened in a salmonella outbreak linked to eggs in four states and possibly more, health officials said Wednesday as a company dramatically expanded a recall to 380 million eggs.
The Centers for Disease Control and Prevention is working with state health departments to investigate the illnesses. No deaths have been reported, said Dr. Christopher Braden, a CDC epidemiologist involved in the investigation.
Initially, 228 million eggs, or the equivalent of 19 million dozen-egg cartons, were recalled by the company Wright County Egg of Galt, Iowa. But that number was increased to nearly 32 million dozen-egg cartons.
Minnesota, a state with some of the best food-borne illness investigators in the country, has tied at least seven salmonella illnesses to the eggs.
Other states have seen a jump in reports of the type of salmonella. For example, California has reported 266 illnesses since June and believes many are related to the eggs. Colorado saw 28 cases in June and July, about four times the usual number. Spikes or clusters of suspicious cases have also been reported in Arizona, Illinois, Nevada, North Carolina, Texas and Wisconsin.
Salmonella is the most common bacterial form of food poisoning. And the strain involved in the outbreak is the most common strain of salmonella, accounting for roughly 20 percent of all salmonella food poisonings.
BNP Paribas expects the U.S. economy to grow at a 1.5% pace in the second half of 2010, slower than the firm's previous expectation for a 2% rate. "Recent downward revisions to both GDP and private payrolls have been substantial, and have essentially eliminated what had appeared to be a self-sustaining, albeit gradual, rotation from stimulus- and inventory-led growth to private-demand driven expansion," said BNP economist Julia Coronado, in a note emailed Thursday. BNP's forecast for gross domestic product in 2011 was also lowered, to 2.1% from 3.1%. That pace of growth will push the unemployment rate higher, back to 9.8% in the fourth quarter of this year from 9.5% currently. Core inflation will drift lower and the Federal Reserve will take "further unconventional steps to ease monetary policy in the months ahead" to "avoid an entrenched deflationary psychology from taking root and keep the U.S. economy on a modest growth path," she said. Also, incoming data suggests the economy only grew at a 1.3% pace in the second quarter, she said, after the government initially estimated it expanded 2.4%.
U.S. natural gas storage levels on average are expected to rise by 31 billion cubic feet when weekly data from the U.S. Energy Information Administration are released today.
In the weekly Reuters survey of 31 industry traders and analysts, injection estimates for the week ended Aug. 13 ranged from 23 to 41 bcf.
Stocks rose an adjusted 54 bcf for the same week last year, while the five-year average gain for that week is 50 bcf.
The median build in the survey was also 31 bcf.
Working gas in storage was 3,012 Bcf as of Friday, August 13, 2010, according to EIA estimates. This represents a net increase of 27 Bcf from the previous week. Stocks were 185 Bcf less than last year at this time and 196 Bcf above the 5-year average of 2,816 Bcf. In the East Region, stocks were 15 Bcf above the 5-year average following net injections of 40 Bcf. Stocks in the Producing Region were 94 Bcf above the 5-year average of 860 Bcf after a net withdrawal of 16 Bcf. Stocks in the West Region were 86 Bcf above the 5-year average after a net addition of 3 Bcf. At 3,012 Bcf, total working gas is within the 5-year historical range.
28% Say U.S. Heading in Right Direction. Twenty-eight percent (28%) of Likely Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, August 15. Sixty-seven percent (67%) of all voters say the country is heading down the wrong track, up two points from last week. 77% of voters not affiliated with either political party feel the country is heading down the wrong track.
The U.S. economy looks set to grow at a slower pace than earlier this year, the Conference Board said on Thursday as it reported its leading economic index rose 0.1% in July. The index is essentially flat since March, the Conference Board added, though it's still well above pre-recession levels. Economists polled by MarketWatch had expected a 0.2% advance. The leading economic index fell 0.3% in June and grew 0.5% in May.
Homeowners were more pessimistic about the short-term future of home values in their local market than they had been in the previous three quarters, according to the Zillow Second Quarter Homeowner Confidence Survey.
Indeed, 33 percent believed home values in their local housing market had not yet reached a bottom, while 38 percent believed they had already reached a bottom.
"After years of hearing news about the housing recession, homeowners really understand the realities of the market," Stan Humphries, Zillow's chief economist, said in an interview.
Nationally, 28 percent of homeowners said home values in their local real estate market would decrease in the next six months, up from 20 percent in the first quarter.
Philly Fed comes in at -7.7, trouncing expectations of 7.0, and is the lowest number since August 2009, and first contraction since July 2009.
The U.S. economy faces even more difficult times ahead with chronic high unemployment rates and slow manufacturing growth hurting the recovery, Congressional Budget Office Director Douglas Elmendorf said on Thursday.
CBO forecast the U.S. budget deficit will hit $1.342 trillion this year, down slightly from its March projection of $1.368 trillion.
CBO attributed most of the $27 billion change in its fiscal 2010 deficit projection to an estimated $50 billion reduction in the cost of TARP, the U.S. government's bailout of financial institutions in 2009.
CBO also forecast a $1.066 trillion deficit for fiscal year 2011, which begins on October 1, up slightly from the March estimate of $996 billion.
The survey, by real estate search site Trulia.com, found 27 percent of renters do not plan to ever buy a home. Although 72 percent still expect to buy eventually, that proportion is down from 77 percent six months ago.
Of those who do hope to become homeowners, two-thirds say they will wait two years or more.
The 10-year Treasury yielded 2.56, down from 4% just four months ago.
J.D. Power points to high joblessness and a flattening economy in lowering its auto sales forecast for this year and next: to 11.6M vehicles in 2010, from 11.7M, and to 13.2M vehicles from 13.7M next year. Both are well below the decade's average of 16.4M vehicles.
The Malaysian ringgit surged to a near 13-year high Thursday and may scale new heights in the next few months after the country's central bank eased foreign exchange rules further by allowing companies to use the currency to settle international trade, dealers said.
Sentiment that stock prices will rise over the next six months fell 9.7 percentage points from a week ago, according to the American Association of Individual Investors on Thursday. Bullish sentiment clocked in at a six-week low of 30.1%, compared with a historical average of 39%, AAII said. Bearish sentiment, or expectations stock prices will fall over the next six months, rose 12.4 percentage points to 42.5%, a four-week high. The historical average is 30%, AAII said.
ICI reports that the week ended August 11 saw a record 15th weekly outflow from domestic stock mutual funds, this time of $2.1 billion.
"As we've seen with the takeover of Inco, Falconbridge, Stelco, and Nortel there can be a devastating cost when governments give foreign corporations carte blanche to take over without any accountability or transparency," said Claude Gravelle of Canada's left-leaning New Democrat Party.
Canada is currently suing US Steel, alleging it failed to live up to investment commitments when it shut down its Canadian operations last year. U.S. Steel acquired the operation when it bought Stelco in 2007.
Canada also raised concerns last year with layoffs at Canadian mines owned by mining giants Vale and Xstrata, which bought Inco and Falconbridge, respectively, in 2006. Canada has since said it has no issue with the layoffs.
"As with any foreign investment agreement, the BHP proposal has the potential to strengthen the economy and create jobs, but it must be subject to a fully public review," said Gravelle.
Marc Garneau, the industry critic for the main opposition Liberals, said the party would not block the deal because it agreed with opening doors to foreign investors.
December gold added $4, or 0.3%, to $1,235.40.
Rob Hanna: "Wednesday the market posted an inside day. I haven't discussed inside days in a while. For those unfamiliar an inside day is simply a day that makes a lower high and a higher low than the day before. Over the last decade, when the market has been trading below the 200ma, inside days have suggested negative short-term implications."
The Dow Jones Industrial Average closed 144.33 points, or 1.4%, lower at 10,271.21. The S&P 500 fell 18.53 points, or 1.7%, to 1,075.63. The Nasdaq Composite fell 36.75 points, or 1.7%, to 2,178.95.
Scientists at the Woods Hole Oceanographic Institution measured a plume of hydrocarbons at least 22 miles long and more than 3,000 feet below the surface of the Gulf of Mexico as residue of the BP PLC Deepwater Horizon oil spill, according to an article released on Thursday. "Deep-sea microbes were degrading the plume relatively slowly, and that it was possible that the plume had and will persist for some time," the article said. The team combed through 57,000 discrete chemical analyses measured in real time during a June 19-28 scientific cruise aboard the R/V Endeavor. "We've shown conclusively not only that a plume exists, but also defined its origin and near-field structure," said Richard Camilli of WHOI's Applied Ocean Physics and Engineering Department, chief scientist of the cruise and lead author of the paper. "Until now, these have been treated as a theoretical matter in the literature."
ZeroHedge: "Today we got our first Hindenburg Omen confirmation. The number of new highs was 136, and new lows was at 69 (per the traditional WSJ source). Granted this particular criteria set was a little weak as the 69 is precisely on the borderline for confirmation (the 2.2%), and the new highs number was not more than double the new lows (although it was close). Less gating were the McClellan oscillator which was negative at -83.6, and the 10 week MVA, which rose, which were the two remaining conditions. The first omen was spotted on August 12 - a week later the H.O has been confirmed. The more confirmations, the scarier it gets from a technical perspective, not to mention the conversion into a self-fulfilling prophecy (like every other technical indicator)."
Taiwan’s economy expanded more than forecast last quarter, bolstering the case for further interest rate increases after the island’s exports weathered global risks.
Gross domestic product grew 12.53 percent in the three months through June from a year earlier, after climbing a revised 13.71 percent in the first quarter, the statistics bureau said yesterday in Taipei.
Wednesday, August 18, 2010
BHP Billiton
8/18/10 BHP Billiton
The Central Bank of Iceland on Wednesday said its Monetary Policy Committee decided to lower its official interest rates by one percentage point, the latest in a string of cuts. The move brings the bank's seven-day collateralized lending rate to 7%. The rate stood at 11.5% at the beginning of the year.
BHP Billiton said on Wednesday that it would take its $130-a-share cash offer for Potash Corp. of Saskatchewan directly to the Canadian company's shareholders. The Australian mining giant's proposal was rejected on Tuesday by Potash Corp., which called the plan "grossly inadequate." The Saskatoon company also adopted a poison-pill antitakeover measure. BHP called the proposal "attractive," noting that the deal price was about a third higher than the volume-weighted-average prices of Potash Corp.'s shares for the 30 and 60 days of trading through Aug. 11. That was the day before BHP first approached Potash Corp., BHP said. Acquiring Potash Corp. will speed BHP's entry into the fertilizer industry, the Australian company said. BHP said the deal will add to earnings in the second full fiscal year after the businesses are consolidated. And BHP said the deal has benefits for Canada as well. The company said it would establish a global potash business in Canada, base that business in Saskatchewan, and maintain employment at Potash Corp.'s Saskatchewan and New Brunswick operations for the foreseeable future.BHP’s offer to shareholders is scheduled to start formally on Friday and remain valid until Oct. 19, the company announced Wednesday.
At $130 the bid would be worth 17.1 times forecast earnings for 2011, compared with BHP, trading on a multiple of 11.4, and Potash rival Mosaic Co, on a multiple of 14.8.
NYTimes: “Fertilizer, and in particular potash, is a particularly unique product,” said Murray Fulton, an economist at the University of Saskatchewan. “What you have in the potash industry are a set of players that are able to control supply and price.”
Rising standards of living and development in China, one of the world’s largest consumers of fertilizer, and in India are putting increasing pressure on farmers to produce more crops from a declining amount of agricultural land. Their most effective solution for increasing yields is commercial fertilizers from Potash and other fertilizer makers.
The mineral “potash, for all intents and purposes, is food,” said Vincent Andrews, the agriculture analyst for Morgan Stanley. “Because without potash, you are not making corn and soybean, and without corn and soybean, you are not making chicken or beef, and that’s what people want to eat.”
Of the three main ingredients in most fertilizers, potash is arguably the most valuable. Of the others, nitrogen is produced from natural gas, and good-quality phosphate deposits are found throughout the world. Potash Corp. produces all three ingredients in various countries.
Deere & Co reported stronger-than-expected quarterly results, lifted by robust U.S. demand for its biggest tractors and harvesters, but warned of growing weakness in Western Europe and gave a disappointing forecast.
Foxconn Technology Group plans to hire as many as 400,000 workers in China in the coming year and will build factories closer to employees’ homes after a spate of suicides at the maker of Apple Inc. iPhones and Dell Inc. computers.
The Taiwanese company aims to boost its China workforce to 1.2 million to 1.3 million people after revenue jumped 50 percent in the first half, Louis Woo, special assistant to the chief executive officer, said in an interview today. Foxconn will expand to inland provinces Henan and Sichuan because that’s “what the new generation of workers wants,” he said.
Foxconn’s hiring plan, equivalent to more than three times the combined workforces of Microsoft Corp. and Apple, signals an improving outlook for electronics demand as the global economy recovers. The company is shifting away from Shenzhen, the southern coastal city that’s a magnet for migrant workers, after the suicides of at least 12 workers this year prompted it to install safety nets to prevent employees jumping to their deaths.
The Automatic Earth: "There is not recovery in the US, and there never was. There was a short headfake provided by trillions of dollars in taxpayer funds that were thrown at Wall Street, and of which barely anything has stuck to that wall. Foreclosures have remained at near-record levels, as has unemployment. Another quantitative easing scheme announced last week by Ben Bernanke is dead before it was born, because Washington has run out of ways in which to fool Americans into thinking green shoots are here, or just around the corner. Record low home sales at record low interest rates tell the entire story.
But the government, despite all this, isn’t done yet. It will take as long as it takes to kick the Fannie and Freddie solution down the road. Till the next election, and then the next one after that. And it does make sense to do this from their point of view, since there is no solution available that would leave either the banking system or their own political careers intact. There is no way out, the exit doors are shut. They can't keep alive both Wall Street and Main Street. And so they live for the monent, make the best of what they got, and, alongside their banking buddies, pocket as many more -taxpayer- bucks along the way as they can, and damn the American people."
Discounter Target Corp posted uninspiring results while BJ's Wholesale Club Inc missed Wall Street profit estimates and cut its full-year forecast, sending shares in both companies lower.
EIA Petroleum Inventories: Crude -0.82M vs. consensus of -1.3M. Gasoline -0.04M vs. consensus of -0.5M. Distillates +1.07M vs. consensus of +1.2M. Futures -1.9% to $74.7.
Eleven weeks before the Nov. 2 balloting, just 41 percent of those surveyed approve of the president's performance on the economy, down from 44 percent in April, while 56 percent disapprove. And 61 percent say the economy has gotten worse or stayed the same on Obama's watch.
Brian Womack: " Facebook Inc. may unveil location services for its site today at a company event, taking a page from fast-growing startup Foursquare Labs Inc., analysts say.
Facebook, the biggest social-networking service, has said for months that it’s working on a location feature, without providing details. The company is holding a press conference this afternoon at its Palo Alto, California, headquarters.
Location-based services, which let users share information on their whereabouts and find friends nearby, could generate as much as $4.1 billion annually in advertising by 2015, according to Borrell Associates. The features help marketers more easily target customers, reaching shoppers when they’re close to making a purchasing decision. Facebook, which has more than 500 million members, is adding features and advertising options to its site to capitalize on its popularity.
“Facebook already has done a great job of growing its advertising products,” said Augie Ray, a Forrester Research Inc. analyst in San Francisco. “This is just another piece of information that will help it do a better job of that.”
The Dow Jones Industrial Average closed up 9.69 points, or 0.1%, to 10,415.54. The S&P 500 gained 1.62 points, or 0.2%, to 1,094.16. The Nasdaq Composite added 6.3 points, or 0.3%, to 2,215.7 points.
The Central Bank of Iceland on Wednesday said its Monetary Policy Committee decided to lower its official interest rates by one percentage point, the latest in a string of cuts. The move brings the bank's seven-day collateralized lending rate to 7%. The rate stood at 11.5% at the beginning of the year.
BHP Billiton said on Wednesday that it would take its $130-a-share cash offer for Potash Corp. of Saskatchewan directly to the Canadian company's shareholders. The Australian mining giant's proposal was rejected on Tuesday by Potash Corp., which called the plan "grossly inadequate." The Saskatoon company also adopted a poison-pill antitakeover measure. BHP called the proposal "attractive," noting that the deal price was about a third higher than the volume-weighted-average prices of Potash Corp.'s shares for the 30 and 60 days of trading through Aug. 11. That was the day before BHP first approached Potash Corp., BHP said. Acquiring Potash Corp. will speed BHP's entry into the fertilizer industry, the Australian company said. BHP said the deal will add to earnings in the second full fiscal year after the businesses are consolidated. And BHP said the deal has benefits for Canada as well. The company said it would establish a global potash business in Canada, base that business in Saskatchewan, and maintain employment at Potash Corp.'s Saskatchewan and New Brunswick operations for the foreseeable future.BHP’s offer to shareholders is scheduled to start formally on Friday and remain valid until Oct. 19, the company announced Wednesday.
At $130 the bid would be worth 17.1 times forecast earnings for 2011, compared with BHP, trading on a multiple of 11.4, and Potash rival Mosaic Co, on a multiple of 14.8.
NYTimes: “Fertilizer, and in particular potash, is a particularly unique product,” said Murray Fulton, an economist at the University of Saskatchewan. “What you have in the potash industry are a set of players that are able to control supply and price.”
Rising standards of living and development in China, one of the world’s largest consumers of fertilizer, and in India are putting increasing pressure on farmers to produce more crops from a declining amount of agricultural land. Their most effective solution for increasing yields is commercial fertilizers from Potash and other fertilizer makers.
The mineral “potash, for all intents and purposes, is food,” said Vincent Andrews, the agriculture analyst for Morgan Stanley. “Because without potash, you are not making corn and soybean, and without corn and soybean, you are not making chicken or beef, and that’s what people want to eat.”
Of the three main ingredients in most fertilizers, potash is arguably the most valuable. Of the others, nitrogen is produced from natural gas, and good-quality phosphate deposits are found throughout the world. Potash Corp. produces all three ingredients in various countries.
Deere & Co reported stronger-than-expected quarterly results, lifted by robust U.S. demand for its biggest tractors and harvesters, but warned of growing weakness in Western Europe and gave a disappointing forecast.
Foxconn Technology Group plans to hire as many as 400,000 workers in China in the coming year and will build factories closer to employees’ homes after a spate of suicides at the maker of Apple Inc. iPhones and Dell Inc. computers.
The Taiwanese company aims to boost its China workforce to 1.2 million to 1.3 million people after revenue jumped 50 percent in the first half, Louis Woo, special assistant to the chief executive officer, said in an interview today. Foxconn will expand to inland provinces Henan and Sichuan because that’s “what the new generation of workers wants,” he said.
Foxconn’s hiring plan, equivalent to more than three times the combined workforces of Microsoft Corp. and Apple, signals an improving outlook for electronics demand as the global economy recovers. The company is shifting away from Shenzhen, the southern coastal city that’s a magnet for migrant workers, after the suicides of at least 12 workers this year prompted it to install safety nets to prevent employees jumping to their deaths.
The Automatic Earth: "There is not recovery in the US, and there never was. There was a short headfake provided by trillions of dollars in taxpayer funds that were thrown at Wall Street, and of which barely anything has stuck to that wall. Foreclosures have remained at near-record levels, as has unemployment. Another quantitative easing scheme announced last week by Ben Bernanke is dead before it was born, because Washington has run out of ways in which to fool Americans into thinking green shoots are here, or just around the corner. Record low home sales at record low interest rates tell the entire story.
But the government, despite all this, isn’t done yet. It will take as long as it takes to kick the Fannie and Freddie solution down the road. Till the next election, and then the next one after that. And it does make sense to do this from their point of view, since there is no solution available that would leave either the banking system or their own political careers intact. There is no way out, the exit doors are shut. They can't keep alive both Wall Street and Main Street. And so they live for the monent, make the best of what they got, and, alongside their banking buddies, pocket as many more -taxpayer- bucks along the way as they can, and damn the American people."
Discounter Target Corp posted uninspiring results while BJ's Wholesale Club Inc missed Wall Street profit estimates and cut its full-year forecast, sending shares in both companies lower.
EIA Petroleum Inventories: Crude -0.82M vs. consensus of -1.3M. Gasoline -0.04M vs. consensus of -0.5M. Distillates +1.07M vs. consensus of +1.2M. Futures -1.9% to $74.7.
Eleven weeks before the Nov. 2 balloting, just 41 percent of those surveyed approve of the president's performance on the economy, down from 44 percent in April, while 56 percent disapprove. And 61 percent say the economy has gotten worse or stayed the same on Obama's watch.
Brian Womack: " Facebook Inc. may unveil location services for its site today at a company event, taking a page from fast-growing startup Foursquare Labs Inc., analysts say.
Facebook, the biggest social-networking service, has said for months that it’s working on a location feature, without providing details. The company is holding a press conference this afternoon at its Palo Alto, California, headquarters.
Location-based services, which let users share information on their whereabouts and find friends nearby, could generate as much as $4.1 billion annually in advertising by 2015, according to Borrell Associates. The features help marketers more easily target customers, reaching shoppers when they’re close to making a purchasing decision. Facebook, which has more than 500 million members, is adding features and advertising options to its site to capitalize on its popularity.
“Facebook already has done a great job of growing its advertising products,” said Augie Ray, a Forrester Research Inc. analyst in San Francisco. “This is just another piece of information that will help it do a better job of that.”
The Dow Jones Industrial Average closed up 9.69 points, or 0.1%, to 10,415.54. The S&P 500 gained 1.62 points, or 0.2%, to 1,094.16. The Nasdaq Composite added 6.3 points, or 0.3%, to 2,215.7 points.
Tuesday, August 17, 2010
Potash Corp.
8/17/10 Potash Corp
Producer prices climbed 0.2% in July, and core wholesale prices grew 0.3%, the Labor Department said Tuesday. Economists polled by MarketWatch expected a 0.1% rise in PPI and a 0.2% increase in core PPI.
New construction of U.S. houses increased slightly in July but the drop in the prior two months was steeper than previously estimated, the Commerce Department estimated Friday. Starts rose 1.7% in July to a seasonally adjusted 546,000 annualized units, weaker than the 555,000 pace expected by economists surveyed by MarketWatch. Starts in June were revised down to a 537,000 rate compared with prior estimate of 549,000. Starts of new single-family homes fell by 4.2% to 432,000 in July, while starts of large apartment units rose 32.6% to 114,000. Building permits, a leading indicator of housing construction, fell 3.1% to a seasonally adjusted annual rate of 565,000. This is the lowest level of permits since May 2009.
Wal-Mart Stores Inc. said Tuesday its second-quarter net income was $3.75 billion, or 97 cents a share, up from $3.58 billion, or 89 cents a share, in the year-ago period. The number of outstanding Wal-Mart shares fell to 3.71 billion from 3.9 billion. Net sales rose 2.8% to $103 billion from $100.17 billion. Analysts polled by FactSet Research were looking for earnings of 96 cents a share, on average, with sales of $105.46 billion. For the third quarter, the Bentonville, Ark., retailer forecast earnings in the range of 87 cents to 91 cents a share, and raised its full-year guidance to $3.95 to $4.05 a share, versus its prior guidance of $3.90 to $4 a share. The Wall Street consensus is for third-quarter earnings of 91 cents a share and 2010 earnings of $4.01 a share.
Home Depot reported that for the fiscal second quarter ended Aug. 1, net income reached $1.19 billion, or 72 cents a share, up 6.8% from $1.12 billion, or 66 cents, in the year-earlier quarter. Shares outstanding fell 1.7% to 1.66 billion. Net sales rose 1.8% to $19.41 billion from $19.07 billion. A survey of analysts by FactSet Research produced consensus estimates of 71 cents of earnings on revenue of $19.62 billion. Comparable-store sales for the quarter rose 1.7%. For fiscal 2011, Home Depot expects to earn $1.90 a share from continuing operations as sales rise 2.6%. FactSet's survey is looking for $1.92 a share of profit for the year.
Potash Corporation of Saskatchewan Inc. said Tuesday that its board has unanimously rejected an unsolicited takeover bid from mining giant BHP Billiton Ltd. BHP had proposed to acquire Potash Corp. for $130 per share in cash. The board of Potash decided the offer is "grossly inadequate" and undervalues the company. Shares of Potash Corp. soared 29% in U.S. premarket trading. Potash Corp. produces fertilizer, industrial and animal feed products. Consolidation in the fertilizer industry is increasing as the population grows, boosting the need for food. The global population will swell to 9.1 billion in 2050 from 6.8 billion, the United Nations’ Food and Agriculture Organization said in September.
“What is clear from this is that the potash industry is going to be consolidated by the mining industry,” Paul Cliff, an analyst at Nomura Holdings Inc. in London, said today by phone. “And that may happen a lot quicker than most people thought.”
Competitors Intrepid Potash Inc. and Mosaic Co. also advanced in pre-market trade. Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, jumped 4.8 percent to 251.4 kroner in Oslo.
Rising demand for potash, especially after the U.S. forecast a decline in wheat output because of adverse weather in Russia, Ukraine and Kazakhstan, is also driving acquisitions elsewhere. Last week OAO PhosAgro, the world’s second-largest maker of phosphate fertilizer, said it’s seeking a merger with Russian potash producer OAO Silvinit. Troika Dialog said Aug. 16 that Silvinit may merge with Russia’s OAO Uralkali.
BHP Chief Executive Officer Marius Kloppers said last August that his company would spend “billions of dollars” to develop its Jansen potash project in Canada, which is near Potash Corp.’s mines.
Bill Doyle, chief executive of PotashCorp, told the Financial Times on Tuesday that he had met with BHP Billiton last week and taken the takeover proposal directly to his board. After two meetings, Potash directors decided to reject the approach.
Potash also on Tuesday said it had put in place a shareholder rights plan – commonly known as a “poison pill” – to protect itself from BHP’s unsolicited interest. The plan is designed to prevent anyone acquiring more than 20 per cent of the company.
“Potash has the highest barriers to entry and is found in the fewest countries,” said Mr Doyle, explaining why he believes that the BHP proposal fails to reflect the Canadian company’s value.
PotashCorp has 20 per cent of the world’s global potash capacity, with further investments in producers in the Middle East, China and Chile. The mineral is found in only 12 countries globally and each mine takes at least seven years to build, compared with less than two years for other types of fertiliser. Fertilisers have excited significant interest among commodities investors and producers over the past two years, especially as food shortages have occurred in the developing world
“Coming out of this great recession, we are seeing demand come back into the system,” added Mr Doyle. “We believe we’re at an inflection point.”
"BHP Billiton would not be taking a run at Potash Corp. of Saskatchewan if it didn’t think fertilizer and agricultural commodity prices were heading higher. While potash prices fell significantly in the wake of the recession, they have yet to see a substantial rebound.
That mainly reflected a decline in Chinese demand, according to Pierre Lapointe, global macro strategist at Brockhouse Cooper. Chinese fertilizer imports fell to a multi-year low after the recent economic slowdown.
That virtually ground Canadian potash production to a halt, as China worked through its inventories. Canadian production volumes are still below 2007-2008 levels.
“Potash prices are currently low, leaving upside appreciation potential,” Mr. Lapointe said in a report. “Moreover, given the export bans and quotas put in place in Russia and Ukraine, importers of grains will need to increase domestic production in the short term in order to satisfy domestic demand, exerting further upward pressure on fertilizer prices.”
Jonathan Ratner
China saw foreign direct investment of $6.92 billion in July, a rise of 29.2% from a year earlier, though the figure was a sharp drop from the $12.5 billion it attracted in June, the Ministry of Commerce said Tuesday. The monthly figure brings total FDI investment flows for the first seven months of they year to $58.3 billion, a rise of 39.6% from a year earlier. In a separate announcement, the ministry said it expects export growth to cool in the coming few months. Howver, the statement wasn't clear whether it was referring to month-on-month data or year-on-year figures. China's export growth has already been on a cooling trend since May, but a contraction versus year-earlier figures would indicate a more serious deceleration.
A group of scientists say nearly 80% of the oil that spilled from BP's Macondo well remains in the Gulf of Mexico, contradicting government claims that 75% of the oil had been eliminated through evaporation, capture or dispersement.
Mexico said Monday it will increase tariffs on a total of 99 U.S. products to pressure Washington to lift a ban on Mexican cargo trucks entering the United States.
Copper Consumption Growth in China to Slow, Antaike Predicts. Copper usage in China, the world’s largest consumer, may grow at a slower pace this year as real- estate curbs cut demand, according to a state-owned researcher.
The output of the nation's factories, mines and utilities rose 1.0% in July, the Federal Reserve said Tuesday. The increase was stronger than expected. Economists surveyed by MarketWatch had expected a 0.6% increase. Output in June was revised down to a 0.1% fall compared with the prior estimate of a 0.1% gain. Factory activity alone rose 1.1% in July after falling 0.5% in June. There was a share rise in auto production that bolstered output in July but manufacturing ex-autos was up 0.6%. Capacity utilization - a gauge of slack in the economy -- rose to 74.8% in July from 74.1% in June. This is the highest level since November 2008.
China
buys 28 percent of Taiwan's exports, 25 percent of South Korea's and more than 20 percent of mining giant Australia's. More than half of Hong Kong's exports go to the mainland.
Japan, which Monday reported sharply lower second quarter growth, saw a significant slowing in exports to China during the period. Its exports to China in April were up 41 percent from a year earlier but by June the growth rate had slackened to 22 percent.
But suppliers of iron ore for steel production and other raw materials are expected to be hardest-hit by slowing growth in China. They range from Australia, Indonesia and Malaysia to Brazil and parts of Africa and profited from a construction boom fed by China's 4 trillion yuan ($586 billion) stimulus and a flood of bank lending.
"Chinese efforts to prevent overheating in asset markets will have negative effects on our markets," CEO Tom Albanese of Anglo-Australian miner Rio Tinto Ltd. said this month.
Charles Hugh Smith: "For some reason, people seem to expect the stock market to reflect the real-world economy. It doesn't, for several fundamental reasons. The stock market is nominally based on the idea of "discovering the price" of various assets and income flows, but in reality it is mostly a reflection of human emotions relating to hope, greed and fear.
Thus the only connections between the market and the real economy are the human emotions that swirl around both. At some points, a price-earnings ratio of 30 (in effect, paying $30 for $1 of earnings) makes sense to participants, while at other points a P/E of 10 is unattractive.
While the case can be made that this is "caused" by data, that is false; the "cause" is the perception of risk and the relative strength of hope, greed and fear in the herd mentality of the moment."
Pactiv Corp. said Tuesday it would be acquired by Reynolds Group Holdings Ltd. for $33.25 a share in a deal valued at about $6 billion. The offer represents a 39% premium to Pactiv's May 14 closing price, the last trading day before reports of a potential transaction. The deal is expected to close before the end of 2010. Reynolds has reportedly obtained committed financing for the transaction, consisting of a combination of equity from Reynolds and Rank Group Limited, and committed debt financing provided by affiliates of Credit Suisse, HSBC, and Australia New Zealand Bank.
Microsoft plans to launch the beta of the Internet Explorer browser on Sept. 15.
Investors should stay clear of 10 and 30-year U.S. government bonds, warns Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, following the Treasury Department's report that China's ownership of American debt has fallen to its lowest level in a year.
"I think eventually inflation will accelerate," he said. "Whenever food prices go up, and grains have been very strong recently, with the sum delay, you get inflationary pressures."
Starbucks Corp. is backing its profit guidance for next year even as it deals with higher coffee prices, saying it will be able to absorb the costs.
The Seattle-based coffee chain said Tuesday that despite spikes in the market, it will be able to offset the "short-term fluctuations."
"For many years Starbucks has diversified its coffee procurement into multiple coffee growing regions," the world's largest coffee company said in a statement. "We remain confident in our ability to manage this dynamic effectively."
Starbucks put the effect of the price hikes in the commodities market at 4 cents per share. But the company said it still expects to earn $1.36 to $1.41 per share for its 2011 fiscal year.
On average, analysts have forecast earnings of $1.23 per share for the year ending in September.
Kyle Bass: "Given my outlook on the world, I don't know how I can be long stocks."
"You have to think about the world and its totality. There is a finite amount of capital, so just to plug fiscal deficits the world has to issue $4.5 trillion worth of new debt—that assumes the existing debt stock rolls," Kyle Bass, managing partner of Hayman Capital, told CNBC's The Strategy Session on Tuesday, adding, "but where does this $4.5 trillion worth of new debt come from?"
"U.S. banks' securities portfolios have increased 26 percent year over year, all they are doing is buying Treasury Bonds. The Fed doesn't want that to happen—they want the yield curve to flatten and the banks to go lend," Bass said.
With the Q2 GDP (Gross Domestic Product) set to be finalized on August 27, Bass believes it will likely be revised to 1 percent or lower (the advanced estimate is currently 2.4 percent).
This opening stanza of William Butler Yeats’s poem “The Second Coming: "Turning and turning in the widening gyre
The falcon cannot hear the falconer;Things fall apart; the center cannot hold; Mere anarchy is loosed upon the world. "
The Dow industrials jumped 103.84 points, or 1%, to end at 10,405.85. The S&P 500 index rose 13.16 points, or 1.2%, to end at 1,092.54, lifted by a 2.3% gain in the materials sector. The Nasdaq Composite jumped 27.57 points, or 1.3%, to 2,209.44.
There were 422,061 bankruptcy filings between April and June, according to the Administrative Office of the U.S. Courts, up 9 percent from 388,148 in the prior three-month period, and up 11 percent from 381,073 a year earlier.
“If you go into what I call a bubble boom, every bubble bursts.”
Margaret Thatcher
Producer prices climbed 0.2% in July, and core wholesale prices grew 0.3%, the Labor Department said Tuesday. Economists polled by MarketWatch expected a 0.1% rise in PPI and a 0.2% increase in core PPI.
New construction of U.S. houses increased slightly in July but the drop in the prior two months was steeper than previously estimated, the Commerce Department estimated Friday. Starts rose 1.7% in July to a seasonally adjusted 546,000 annualized units, weaker than the 555,000 pace expected by economists surveyed by MarketWatch. Starts in June were revised down to a 537,000 rate compared with prior estimate of 549,000. Starts of new single-family homes fell by 4.2% to 432,000 in July, while starts of large apartment units rose 32.6% to 114,000. Building permits, a leading indicator of housing construction, fell 3.1% to a seasonally adjusted annual rate of 565,000. This is the lowest level of permits since May 2009.
Wal-Mart Stores Inc. said Tuesday its second-quarter net income was $3.75 billion, or 97 cents a share, up from $3.58 billion, or 89 cents a share, in the year-ago period. The number of outstanding Wal-Mart shares fell to 3.71 billion from 3.9 billion. Net sales rose 2.8% to $103 billion from $100.17 billion. Analysts polled by FactSet Research were looking for earnings of 96 cents a share, on average, with sales of $105.46 billion. For the third quarter, the Bentonville, Ark., retailer forecast earnings in the range of 87 cents to 91 cents a share, and raised its full-year guidance to $3.95 to $4.05 a share, versus its prior guidance of $3.90 to $4 a share. The Wall Street consensus is for third-quarter earnings of 91 cents a share and 2010 earnings of $4.01 a share.
Home Depot reported that for the fiscal second quarter ended Aug. 1, net income reached $1.19 billion, or 72 cents a share, up 6.8% from $1.12 billion, or 66 cents, in the year-earlier quarter. Shares outstanding fell 1.7% to 1.66 billion. Net sales rose 1.8% to $19.41 billion from $19.07 billion. A survey of analysts by FactSet Research produced consensus estimates of 71 cents of earnings on revenue of $19.62 billion. Comparable-store sales for the quarter rose 1.7%. For fiscal 2011, Home Depot expects to earn $1.90 a share from continuing operations as sales rise 2.6%. FactSet's survey is looking for $1.92 a share of profit for the year.
Potash Corporation of Saskatchewan Inc. said Tuesday that its board has unanimously rejected an unsolicited takeover bid from mining giant BHP Billiton Ltd. BHP had proposed to acquire Potash Corp. for $130 per share in cash. The board of Potash decided the offer is "grossly inadequate" and undervalues the company. Shares of Potash Corp. soared 29% in U.S. premarket trading. Potash Corp. produces fertilizer, industrial and animal feed products. Consolidation in the fertilizer industry is increasing as the population grows, boosting the need for food. The global population will swell to 9.1 billion in 2050 from 6.8 billion, the United Nations’ Food and Agriculture Organization said in September.
“What is clear from this is that the potash industry is going to be consolidated by the mining industry,” Paul Cliff, an analyst at Nomura Holdings Inc. in London, said today by phone. “And that may happen a lot quicker than most people thought.”
Competitors Intrepid Potash Inc. and Mosaic Co. also advanced in pre-market trade. Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, jumped 4.8 percent to 251.4 kroner in Oslo.
Rising demand for potash, especially after the U.S. forecast a decline in wheat output because of adverse weather in Russia, Ukraine and Kazakhstan, is also driving acquisitions elsewhere. Last week OAO PhosAgro, the world’s second-largest maker of phosphate fertilizer, said it’s seeking a merger with Russian potash producer OAO Silvinit. Troika Dialog said Aug. 16 that Silvinit may merge with Russia’s OAO Uralkali.
BHP Chief Executive Officer Marius Kloppers said last August that his company would spend “billions of dollars” to develop its Jansen potash project in Canada, which is near Potash Corp.’s mines.
Bill Doyle, chief executive of PotashCorp, told the Financial Times on Tuesday that he had met with BHP Billiton last week and taken the takeover proposal directly to his board. After two meetings, Potash directors decided to reject the approach.
Potash also on Tuesday said it had put in place a shareholder rights plan – commonly known as a “poison pill” – to protect itself from BHP’s unsolicited interest. The plan is designed to prevent anyone acquiring more than 20 per cent of the company.
“Potash has the highest barriers to entry and is found in the fewest countries,” said Mr Doyle, explaining why he believes that the BHP proposal fails to reflect the Canadian company’s value.
PotashCorp has 20 per cent of the world’s global potash capacity, with further investments in producers in the Middle East, China and Chile. The mineral is found in only 12 countries globally and each mine takes at least seven years to build, compared with less than two years for other types of fertiliser. Fertilisers have excited significant interest among commodities investors and producers over the past two years, especially as food shortages have occurred in the developing world
“Coming out of this great recession, we are seeing demand come back into the system,” added Mr Doyle. “We believe we’re at an inflection point.”
"BHP Billiton would not be taking a run at Potash Corp. of Saskatchewan if it didn’t think fertilizer and agricultural commodity prices were heading higher. While potash prices fell significantly in the wake of the recession, they have yet to see a substantial rebound.
That mainly reflected a decline in Chinese demand, according to Pierre Lapointe, global macro strategist at Brockhouse Cooper. Chinese fertilizer imports fell to a multi-year low after the recent economic slowdown.
That virtually ground Canadian potash production to a halt, as China worked through its inventories. Canadian production volumes are still below 2007-2008 levels.
“Potash prices are currently low, leaving upside appreciation potential,” Mr. Lapointe said in a report. “Moreover, given the export bans and quotas put in place in Russia and Ukraine, importers of grains will need to increase domestic production in the short term in order to satisfy domestic demand, exerting further upward pressure on fertilizer prices.”
Jonathan Ratner
China saw foreign direct investment of $6.92 billion in July, a rise of 29.2% from a year earlier, though the figure was a sharp drop from the $12.5 billion it attracted in June, the Ministry of Commerce said Tuesday. The monthly figure brings total FDI investment flows for the first seven months of they year to $58.3 billion, a rise of 39.6% from a year earlier. In a separate announcement, the ministry said it expects export growth to cool in the coming few months. Howver, the statement wasn't clear whether it was referring to month-on-month data or year-on-year figures. China's export growth has already been on a cooling trend since May, but a contraction versus year-earlier figures would indicate a more serious deceleration.
A group of scientists say nearly 80% of the oil that spilled from BP's Macondo well remains in the Gulf of Mexico, contradicting government claims that 75% of the oil had been eliminated through evaporation, capture or dispersement.
Mexico said Monday it will increase tariffs on a total of 99 U.S. products to pressure Washington to lift a ban on Mexican cargo trucks entering the United States.
Copper Consumption Growth in China to Slow, Antaike Predicts. Copper usage in China, the world’s largest consumer, may grow at a slower pace this year as real- estate curbs cut demand, according to a state-owned researcher.
The output of the nation's factories, mines and utilities rose 1.0% in July, the Federal Reserve said Tuesday. The increase was stronger than expected. Economists surveyed by MarketWatch had expected a 0.6% increase. Output in June was revised down to a 0.1% fall compared with the prior estimate of a 0.1% gain. Factory activity alone rose 1.1% in July after falling 0.5% in June. There was a share rise in auto production that bolstered output in July but manufacturing ex-autos was up 0.6%. Capacity utilization - a gauge of slack in the economy -- rose to 74.8% in July from 74.1% in June. This is the highest level since November 2008.
China
buys 28 percent of Taiwan's exports, 25 percent of South Korea's and more than 20 percent of mining giant Australia's. More than half of Hong Kong's exports go to the mainland.
Japan, which Monday reported sharply lower second quarter growth, saw a significant slowing in exports to China during the period. Its exports to China in April were up 41 percent from a year earlier but by June the growth rate had slackened to 22 percent.
But suppliers of iron ore for steel production and other raw materials are expected to be hardest-hit by slowing growth in China. They range from Australia, Indonesia and Malaysia to Brazil and parts of Africa and profited from a construction boom fed by China's 4 trillion yuan ($586 billion) stimulus and a flood of bank lending.
"Chinese efforts to prevent overheating in asset markets will have negative effects on our markets," CEO Tom Albanese of Anglo-Australian miner Rio Tinto Ltd. said this month.
Charles Hugh Smith: "For some reason, people seem to expect the stock market to reflect the real-world economy. It doesn't, for several fundamental reasons. The stock market is nominally based on the idea of "discovering the price" of various assets and income flows, but in reality it is mostly a reflection of human emotions relating to hope, greed and fear.
Thus the only connections between the market and the real economy are the human emotions that swirl around both. At some points, a price-earnings ratio of 30 (in effect, paying $30 for $1 of earnings) makes sense to participants, while at other points a P/E of 10 is unattractive.
While the case can be made that this is "caused" by data, that is false; the "cause" is the perception of risk and the relative strength of hope, greed and fear in the herd mentality of the moment."
Pactiv Corp. said Tuesday it would be acquired by Reynolds Group Holdings Ltd. for $33.25 a share in a deal valued at about $6 billion. The offer represents a 39% premium to Pactiv's May 14 closing price, the last trading day before reports of a potential transaction. The deal is expected to close before the end of 2010. Reynolds has reportedly obtained committed financing for the transaction, consisting of a combination of equity from Reynolds and Rank Group Limited, and committed debt financing provided by affiliates of Credit Suisse, HSBC, and Australia New Zealand Bank.
Microsoft plans to launch the beta of the Internet Explorer browser on Sept. 15.
Investors should stay clear of 10 and 30-year U.S. government bonds, warns Marc Faber, editor & publisher of The Gloom, Boom & Doom Report, following the Treasury Department's report that China's ownership of American debt has fallen to its lowest level in a year.
"I think eventually inflation will accelerate," he said. "Whenever food prices go up, and grains have been very strong recently, with the sum delay, you get inflationary pressures."
Starbucks Corp. is backing its profit guidance for next year even as it deals with higher coffee prices, saying it will be able to absorb the costs.
The Seattle-based coffee chain said Tuesday that despite spikes in the market, it will be able to offset the "short-term fluctuations."
"For many years Starbucks has diversified its coffee procurement into multiple coffee growing regions," the world's largest coffee company said in a statement. "We remain confident in our ability to manage this dynamic effectively."
Starbucks put the effect of the price hikes in the commodities market at 4 cents per share. But the company said it still expects to earn $1.36 to $1.41 per share for its 2011 fiscal year.
On average, analysts have forecast earnings of $1.23 per share for the year ending in September.
Kyle Bass: "Given my outlook on the world, I don't know how I can be long stocks."
"You have to think about the world and its totality. There is a finite amount of capital, so just to plug fiscal deficits the world has to issue $4.5 trillion worth of new debt—that assumes the existing debt stock rolls," Kyle Bass, managing partner of Hayman Capital, told CNBC's The Strategy Session on Tuesday, adding, "but where does this $4.5 trillion worth of new debt come from?"
"U.S. banks' securities portfolios have increased 26 percent year over year, all they are doing is buying Treasury Bonds. The Fed doesn't want that to happen—they want the yield curve to flatten and the banks to go lend," Bass said.
With the Q2 GDP (Gross Domestic Product) set to be finalized on August 27, Bass believes it will likely be revised to 1 percent or lower (the advanced estimate is currently 2.4 percent).
This opening stanza of William Butler Yeats’s poem “The Second Coming: "Turning and turning in the widening gyre
The falcon cannot hear the falconer;Things fall apart; the center cannot hold; Mere anarchy is loosed upon the world. "
The Dow industrials jumped 103.84 points, or 1%, to end at 10,405.85. The S&P 500 index rose 13.16 points, or 1.2%, to end at 1,092.54, lifted by a 2.3% gain in the materials sector. The Nasdaq Composite jumped 27.57 points, or 1.3%, to 2,209.44.
There were 422,061 bankruptcy filings between April and June, according to the Administrative Office of the U.S. Courts, up 9 percent from 388,148 in the prior three-month period, and up 11 percent from 381,073 a year earlier.
“If you go into what I call a bubble boom, every bubble bursts.”
Margaret Thatcher
Monday, August 16, 2010
Robert McHugh
8/16/10 Robert McHugh
Aug. Empire State Survey: Manufacturing 7.10 vs. 8.50 expected, 5.08 prior. Employment 14.29 vs. 7.94 prior. New orders -2.71 vs. 10.13 prior. Prices -2.86 vs. -1.59 prior. It is well below the high of 31.9 in April and 19.6 in June
John Hussman: "The stock market is currently priced in a manner that largely requires the economy to avoid a soft patch, and the likelihood of avoiding a downturn entirely is extremely low on a statistical basis. There is enough fragility in the housing and employment markets that even a moderate period of economic weakness would likely have very pronounced effects on variables such as confidence, credit spreads, mortgage delinquencies, and other sentiment-related measures. Stock prices seem unlikely to be excluded from that group."
Robert McHugh: "for a confirmed Hindenburg Omen, in other words for it to be "official," there must be more than one signal within a 36 day period, i.e., there must be a cluster of Hindenburg Omens (defined as two or more) to substantially increase the probability of a coming stock market plunge....Confirmed Hindenburg Omens are very rare. There have been only 27 confirmed Hindenburg Omen signals over the past 25 years. June 16th, 2008's was the 27th. This is amazing when you consider that during that time span, there were roughly 6,300 trading days. Of those 6,300 trading days where it was possible to generate a confirmed official Hindenburg Omen, only 191 (3.0 percent) generated one, clustering into 27 confirmed potential stock market crash signals....A confirmed Hindenburg Omen is not a guarantee of a stock market crash. The odds of a crash based upon the history since 1985 is 29.7 percent. That means the odds we will not have a crash are quite high, a 70.3 percent."
The cost of protecting Irish government debt against default rose to 17-month highs on Monday, according to monitor Markit, a day ahead of sales of up to 1.5 billion euros of Irish bonds.
No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced. But his will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer. - Egon von Greyerz, Matterhorn Asset Management (via zerohedge)
Were it not for the remaining 2010 Census jobs, state, local and federal government payrolls would be below their January 2009 low of 22.48 million. That level will certainly be breached in the coming months, as more Census jobs are shed and state and local governments follow through on job cuts.
Between 2009-2011, these governments are expected to slash 8.6 percent of their workers, according to a July outlook by three government associations.
Gold for December delivery, the most active contract, added $9.60, or 0.8%, to $1,226.20 an ounce on the Comex division of the New York Mercantile Exchange.
At current levels of return, some 59% of people aged 56-62 will be at risk of not having enough money to cover basic living and health care costs in retirement.
The 10-year yield US10YT=RR fell as low as 2.65 percent,its lowest since early April 2009.
The Obama administration has paid out less than a third of the nearly
less than a third of the nearly $230 billion allocated to big
infrastructure projects in the economic-stimulus program.
Chinese Treasury holdings dropped to a 1 year+ low of $843.7 billion.
Down for a fifth straight day, the Dow lost 1.1 point, or 0.01%, to 10,302.01. The S&P 500 added 0.1 point, or 0.01%, to 1,079.38. The Nasdaq
ended up 8.4 points at 2187.
8/16/10 Robert McHugh
Aug. Empire State Survey: Manufacturing 7.10 vs. 8.50 expected, 5.08 prior. Employment 14.29 vs. 7.94 prior. New orders -2.71 vs. 10.13 prior. Prices -2.86 vs. -1.59 prior. It is well below the high of 31.9 in April and 19.6 in June
John Hussman: "The stock market is currently priced in a manner that largely requires the economy to avoid a soft patch, and the likelihood of avoiding a downturn entirely is extremely low on a statistical basis. There is enough fragility in the housing and employment markets that even a moderate period of economic weakness would likely have very pronounced effects on variables such as confidence, credit spreads, mortgage delinquencies, and other sentiment-related measures. Stock prices seem unlikely to be excluded from that group."
Robert McHugh: "for a confirmed Hindenburg Omen, in other words for it to be "official," there must be more than one signal within a 36 day period, i.e., there must be a cluster of Hindenburg Omens (defined as two or more) to substantially increase the probability of a coming stock market plunge....Confirmed Hindenburg Omens are very rare. There have been only 27 confirmed Hindenburg Omen signals over the past 25 years. June 16th, 2008's was the 27th. This is amazing when you consider that during that time span, there were roughly 6,300 trading days. Of those 6,300 trading days where it was possible to generate a confirmed official Hindenburg Omen, only 191 (3.0 percent) generated one, clustering into 27 confirmed potential stock market crash signals....A confirmed Hindenburg Omen is not a guarantee of a stock market crash. The odds of a crash based upon the history since 1985 is 29.7 percent. That means the odds we will not have a crash are quite high, a 70.3 percent."
The cost of protecting Irish government debt against default rose to 17-month highs on Monday, according to monitor Markit, a day ahead of sales of up to 1.5 billion euros of Irish bonds.
No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced. But his will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer. - Egon von Greyerz, Matterhorn Asset Management (via zerohedge)
Were it not for the remaining 2010 Census jobs, state, local and federal government payrolls would be below their January 2009 low of 22.48 million. That level will certainly be breached in the coming months, as more Census jobs are shed and state and local governments follow through on job cuts.
Between 2009-2011, these governments are expected to slash 8.6 percent of their workers, according to a July outlook by three government associations.
Gold for December delivery, the most active contract, added $9.60, or 0.8%, to $1,226.20 an ounce on the Comex division of the New York Mercantile Exchange.
At current levels of return, some 59% of people aged 56-62 will be at risk of not having enough money to cover basic living and health care costs in retirement.
The 10-year yield US10YT=RR fell as low as 2.65 percent,its lowest since early April 2009.
The Obama administration has paid out less than a third of the nearly
less than a third of the nearly $230 billion allocated to big
infrastructure projects in the economic-stimulus program.
Chinese Treasury holdings dropped to a 1 year+ low of $843.7 billion.
Down for a fifth straight day, the Dow lost 1.1 point, or 0.01%, to 10,302.01. The S&P 500 added 0.1 point, or 0.01%, to 1,079.38. The Nasdaq
ended up 8.4 points at 2187.
Russia lowers wheat harvest estimate by 38%.
The National Association of Home Builders/Wells Fargo Housing Market Index fell by one point to 13, its
worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15.
Aug. Empire State Survey: Manufacturing 7.10 vs. 8.50 expected, 5.08 prior. Employment 14.29 vs. 7.94 prior. New orders -2.71 vs. 10.13 prior. Prices -2.86 vs. -1.59 prior. It is well below the high of 31.9 in April and 19.6 in June
John Hussman: "The stock market is currently priced in a manner that largely requires the economy to avoid a soft patch, and the likelihood of avoiding a downturn entirely is extremely low on a statistical basis. There is enough fragility in the housing and employment markets that even a moderate period of economic weakness would likely have very pronounced effects on variables such as confidence, credit spreads, mortgage delinquencies, and other sentiment-related measures. Stock prices seem unlikely to be excluded from that group."
Robert McHugh: "for a confirmed Hindenburg Omen, in other words for it to be "official," there must be more than one signal within a 36 day period, i.e., there must be a cluster of Hindenburg Omens (defined as two or more) to substantially increase the probability of a coming stock market plunge....Confirmed Hindenburg Omens are very rare. There have been only 27 confirmed Hindenburg Omen signals over the past 25 years. June 16th, 2008's was the 27th. This is amazing when you consider that during that time span, there were roughly 6,300 trading days. Of those 6,300 trading days where it was possible to generate a confirmed official Hindenburg Omen, only 191 (3.0 percent) generated one, clustering into 27 confirmed potential stock market crash signals....A confirmed Hindenburg Omen is not a guarantee of a stock market crash. The odds of a crash based upon the history since 1985 is 29.7 percent. That means the odds we will not have a crash are quite high, a 70.3 percent."
The cost of protecting Irish government debt against default rose to 17-month highs on Monday, according to monitor Markit, a day ahead of sales of up to 1.5 billion euros of Irish bonds.
No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced. But his will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer. - Egon von Greyerz, Matterhorn Asset Management (via zerohedge)
Were it not for the remaining 2010 Census jobs, state, local and federal government payrolls would be below their January 2009 low of 22.48 million. That level will certainly be breached in the coming months, as more Census jobs are shed and state and local governments follow through on job cuts.
Between 2009-2011, these governments are expected to slash 8.6 percent of their workers, according to a July outlook by three government associations.
Gold for December delivery, the most active contract, added $9.60, or 0.8%, to $1,226.20 an ounce on the Comex division of the New York Mercantile Exchange.
At current levels of return, some 59% of people aged 56-62 will be at risk of not having enough money to cover basic living and health care costs in retirement.
The 10-year yield US10YT=RR fell as low as 2.65 percent,its lowest since early April 2009.
The Obama administration has paid out less than a third of the nearly
less than a third of the nearly $230 billion allocated to big
infrastructure projects in the economic-stimulus program.
Chinese Treasury holdings dropped to a 1 year+ low of $843.7 billion.
Down for a fifth straight day, the Dow lost 1.1 point, or 0.01%, to 10,302.01. The S&P 500 added 0.1 point, or 0.01%, to 1,079.38. The Nasdaq
ended up 8.4 points at 2187.
8/16/10 Robert McHugh
Aug. Empire State Survey: Manufacturing 7.10 vs. 8.50 expected, 5.08 prior. Employment 14.29 vs. 7.94 prior. New orders -2.71 vs. 10.13 prior. Prices -2.86 vs. -1.59 prior. It is well below the high of 31.9 in April and 19.6 in June
John Hussman: "The stock market is currently priced in a manner that largely requires the economy to avoid a soft patch, and the likelihood of avoiding a downturn entirely is extremely low on a statistical basis. There is enough fragility in the housing and employment markets that even a moderate period of economic weakness would likely have very pronounced effects on variables such as confidence, credit spreads, mortgage delinquencies, and other sentiment-related measures. Stock prices seem unlikely to be excluded from that group."
Robert McHugh: "for a confirmed Hindenburg Omen, in other words for it to be "official," there must be more than one signal within a 36 day period, i.e., there must be a cluster of Hindenburg Omens (defined as two or more) to substantially increase the probability of a coming stock market plunge....Confirmed Hindenburg Omens are very rare. There have been only 27 confirmed Hindenburg Omen signals over the past 25 years. June 16th, 2008's was the 27th. This is amazing when you consider that during that time span, there were roughly 6,300 trading days. Of those 6,300 trading days where it was possible to generate a confirmed official Hindenburg Omen, only 191 (3.0 percent) generated one, clustering into 27 confirmed potential stock market crash signals....A confirmed Hindenburg Omen is not a guarantee of a stock market crash. The odds of a crash based upon the history since 1985 is 29.7 percent. That means the odds we will not have a crash are quite high, a 70.3 percent."
The cost of protecting Irish government debt against default rose to 17-month highs on Monday, according to monitor Markit, a day ahead of sales of up to 1.5 billion euros of Irish bonds.
No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced. But his will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer. - Egon von Greyerz, Matterhorn Asset Management (via zerohedge)
Were it not for the remaining 2010 Census jobs, state, local and federal government payrolls would be below their January 2009 low of 22.48 million. That level will certainly be breached in the coming months, as more Census jobs are shed and state and local governments follow through on job cuts.
Between 2009-2011, these governments are expected to slash 8.6 percent of their workers, according to a July outlook by three government associations.
Gold for December delivery, the most active contract, added $9.60, or 0.8%, to $1,226.20 an ounce on the Comex division of the New York Mercantile Exchange.
At current levels of return, some 59% of people aged 56-62 will be at risk of not having enough money to cover basic living and health care costs in retirement.
The 10-year yield US10YT=RR fell as low as 2.65 percent,its lowest since early April 2009.
The Obama administration has paid out less than a third of the nearly
less than a third of the nearly $230 billion allocated to big
infrastructure projects in the economic-stimulus program.
Chinese Treasury holdings dropped to a 1 year+ low of $843.7 billion.
Down for a fifth straight day, the Dow lost 1.1 point, or 0.01%, to 10,302.01. The S&P 500 added 0.1 point, or 0.01%, to 1,079.38. The Nasdaq
ended up 8.4 points at 2187.
Russia lowers wheat harvest estimate by 38%.
The National Association of Home Builders/Wells Fargo Housing Market Index fell by one point to 13, its
worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15.
Sunday, August 15, 2010
Japan
8/15/10 Japan
Just 59% of men age 20 or over currently have a full-time job.
Independents who embraced President BarackObama's call for change in 2008 are ready for a shift again, and that's worrisome news for Democrats. Only 32 percent of those citing no allegiance to either major party say they want Democrats to keep control of Congress in this November's elections, according to combined results of recent Associated Press-GfK polls. That's way down from the 52 percent of independents who backed Obama over Republican Sen. John McCain two years ago, and the 49 percent to 41 percent edge by which they preferred Democratic candidates for the House in that election, according to exit polls of voters.
Home resales in the U.S. may have tumbled to a record low in July as the expiration of federal tax credits dragged down the housing market, according to Josh Levin, a Citigroup Inc. analyst who follows homebuilders.
Calculated Risk: "There is a general relationship between GDP and the unemployment rate (see Okun's Law), and since I expect a 2nd half slowdown (from a sluggish 1st half), I also expect few payroll jobs to be added in the 2nd half - and that suggests the unemployment rate will rise."
Agricultural Bank of China Ltd. boosted the size of its initial public offering to $22.1 billion after selling more stock in Shanghai, making it the world’s largest first-time share sale.
China’s biggest lender by customers sold a further 3.34 billion shares at the IPO price of 2.68 yuan apiece, it said in a stock exchange filing today. That increased the Shanghai portion of the lender’s IPO to 67.6 billion yuan ($9.9 billion).
Myron Ullman III, J.C. Penney's chairman and CEO, told analysts during a conference call Friday that while earlier in the year retailers recognized they wouldn't be able to rely on the "consumer economy" to drive business, now he says it could be a "drag" given the slowdown and Penney's will have to work even harder to woo shoppers to buy in the final months of 2010. Ullman said J.C. Penney's shoppers, who are primarily middle income, are bearing the biggest brunt of the economy's woes as they grapple with tight credit, job losses and a protracted housing slump."Our customer tends to be more urban, more ethnic and more impacted by the economy than many others in the overall retail landscape," Ullman said.
Japan's gross domestic product rose at an annualized pace of just 0.4% in real terms in the April-June quarter, government data showed Monday, much worse than the median forecast for 2.3% growth in Dow Jones Newswires' poll of economists. Growth slowed from a revised 4.4% increase in the January-March quarter, and was up only 0.1% from that period. Consumer spending, which accounts for almost 60% of GDP, was flat in the latest quarter, compared with revised growth of 0.5% in the previous quarter.
A senior government official said on Monday the risks posed by a strong yen to Japan's economic recovery are increasing, after data showed growth in gross domestic product slowed sharply in the April-June second quarter.
Keisuke Tsumura, a parliamentary secretary at the Cabinet Office, also told reporters that the government stands by its view that the economy is recovering slowly. Japanese stocks fell, sending benchmark indexes to November lows, after economic growth missed estimates and U.S. retail sales increased less than expected.
Bank of America Corp is weighing a possible reduction in its holdings of BlackRock Inc, the Wall Street Journal reported on Sunday, citing people familiar with the situation.
China, whose $2.45 trillion in foreign-exchange reserves are the world’s largest, is turning bullish on Europe and Japan at the expense of the U.S.
The nation has been buying “quite a lot” of Europe’s bonds, said Yu Yongding, a former adviser to the People’s Bank of China who was part of a foreign-policy advisory committee that visited France, Spain and Germany from June 20 to July 2. Japan’s Ministry of Finance said Aug. 9 that China bought 1.73 trillion yen ($20 billion) more Japanese debt than it sold in the first half of 2010, the fastest pace of purchases in at least five years.
“Diversification should be a basic principle,” Yu said in an interview, adding that a “top-level Chinese central banker” told him to convey to European policy makers China’s confidence in the region’s economy and currency. “We didn’t sell any European bonds or assets, instead we bought quite a lot.”
Asian central banks holding some 60 percent of the world’s foreign-exchange reserves are turning away from the dollar. Concerned by weaker U.S. growth and the Treasury’s record borrowing, they are also switching toward euro assets to safeguard reserves, driving gains in the 16-nation currency. South Korea, Malaysia and India reduced their holdings of Treasury securities, U.S. government data show.
The paper said that the bank has concluded that its 34 percent share of BlackRock Inc isn't a core asset.
Agrium said Sunday that it had bid 1.238 billion Australian dollars, or $1.1 billion, for AWB, seeking to pre-empt the Australian wheat service company’s already-announced merger with GrainCorp.
Graham Summers: "Indeed, if the market DOES NOT bounce here, then we are in very serious trouble and the potential for a Crash hitting in the next week or so is quite high. A Crash is already quite possible given that my “Crash” indicator is on (and was confirmed by a Hindenburg Omen last week). However, for a Crash to hit NOW, we’d need to see some heavy selling, higher volume, and serious decline/ advance ratios begin. So far, we have not gotten those except for last Wednesday. Indeed, volume dropped on both Thursday and Friday."
Just 59% of men age 20 or over currently have a full-time job.
Independents who embraced President BarackObama's call for change in 2008 are ready for a shift again, and that's worrisome news for Democrats. Only 32 percent of those citing no allegiance to either major party say they want Democrats to keep control of Congress in this November's elections, according to combined results of recent Associated Press-GfK polls. That's way down from the 52 percent of independents who backed Obama over Republican Sen. John McCain two years ago, and the 49 percent to 41 percent edge by which they preferred Democratic candidates for the House in that election, according to exit polls of voters.
Home resales in the U.S. may have tumbled to a record low in July as the expiration of federal tax credits dragged down the housing market, according to Josh Levin, a Citigroup Inc. analyst who follows homebuilders.
Calculated Risk: "There is a general relationship between GDP and the unemployment rate (see Okun's Law), and since I expect a 2nd half slowdown (from a sluggish 1st half), I also expect few payroll jobs to be added in the 2nd half - and that suggests the unemployment rate will rise."
Agricultural Bank of China Ltd. boosted the size of its initial public offering to $22.1 billion after selling more stock in Shanghai, making it the world’s largest first-time share sale.
China’s biggest lender by customers sold a further 3.34 billion shares at the IPO price of 2.68 yuan apiece, it said in a stock exchange filing today. That increased the Shanghai portion of the lender’s IPO to 67.6 billion yuan ($9.9 billion).
Myron Ullman III, J.C. Penney's chairman and CEO, told analysts during a conference call Friday that while earlier in the year retailers recognized they wouldn't be able to rely on the "consumer economy" to drive business, now he says it could be a "drag" given the slowdown and Penney's will have to work even harder to woo shoppers to buy in the final months of 2010. Ullman said J.C. Penney's shoppers, who are primarily middle income, are bearing the biggest brunt of the economy's woes as they grapple with tight credit, job losses and a protracted housing slump."Our customer tends to be more urban, more ethnic and more impacted by the economy than many others in the overall retail landscape," Ullman said.
Japan's gross domestic product rose at an annualized pace of just 0.4% in real terms in the April-June quarter, government data showed Monday, much worse than the median forecast for 2.3% growth in Dow Jones Newswires' poll of economists. Growth slowed from a revised 4.4% increase in the January-March quarter, and was up only 0.1% from that period. Consumer spending, which accounts for almost 60% of GDP, was flat in the latest quarter, compared with revised growth of 0.5% in the previous quarter.
A senior government official said on Monday the risks posed by a strong yen to Japan's economic recovery are increasing, after data showed growth in gross domestic product slowed sharply in the April-June second quarter.
Keisuke Tsumura, a parliamentary secretary at the Cabinet Office, also told reporters that the government stands by its view that the economy is recovering slowly. Japanese stocks fell, sending benchmark indexes to November lows, after economic growth missed estimates and U.S. retail sales increased less than expected.
Bank of America Corp is weighing a possible reduction in its holdings of BlackRock Inc, the Wall Street Journal reported on Sunday, citing people familiar with the situation.
China, whose $2.45 trillion in foreign-exchange reserves are the world’s largest, is turning bullish on Europe and Japan at the expense of the U.S.
The nation has been buying “quite a lot” of Europe’s bonds, said Yu Yongding, a former adviser to the People’s Bank of China who was part of a foreign-policy advisory committee that visited France, Spain and Germany from June 20 to July 2. Japan’s Ministry of Finance said Aug. 9 that China bought 1.73 trillion yen ($20 billion) more Japanese debt than it sold in the first half of 2010, the fastest pace of purchases in at least five years.
“Diversification should be a basic principle,” Yu said in an interview, adding that a “top-level Chinese central banker” told him to convey to European policy makers China’s confidence in the region’s economy and currency. “We didn’t sell any European bonds or assets, instead we bought quite a lot.”
Asian central banks holding some 60 percent of the world’s foreign-exchange reserves are turning away from the dollar. Concerned by weaker U.S. growth and the Treasury’s record borrowing, they are also switching toward euro assets to safeguard reserves, driving gains in the 16-nation currency. South Korea, Malaysia and India reduced their holdings of Treasury securities, U.S. government data show.
The paper said that the bank has concluded that its 34 percent share of BlackRock Inc isn't a core asset.
Agrium said Sunday that it had bid 1.238 billion Australian dollars, or $1.1 billion, for AWB, seeking to pre-empt the Australian wheat service company’s already-announced merger with GrainCorp.
Graham Summers: "Indeed, if the market DOES NOT bounce here, then we are in very serious trouble and the potential for a Crash hitting in the next week or so is quite high. A Crash is already quite possible given that my “Crash” indicator is on (and was confirmed by a Hindenburg Omen last week). However, for a Crash to hit NOW, we’d need to see some heavy selling, higher volume, and serious decline/ advance ratios begin. So far, we have not gotten those except for last Wednesday. Indeed, volume dropped on both Thursday and Friday."
Subscribe to:
Posts (Atom)