9/11/10 Remember
In Remembrance: The rebirth of ground zero honors the victims.
Horizon Bank of Bradenton, Fla., became the 119th U.S. bank failure of 2010, according to the Federal Deposit Insurance Corp. on Friday. Bank of the Ozarks will assume Horizon's $164.6 million in deposits and purchase its $187.8 million in assets. The bank failure marks the 23rd in Florida this year. The cost to the Deposit Insurance Fund is $58.9 million, FDIC said.
Comstock Partners: "Consumers have only begun to cut back on their severe debt burdens, and the process will take a number of years. Household debt relative to GDP soared from a range of 43% to 49% in the 20-year period between 1965 and 1985 to a peak of 97.3% in 2009. As of March 31st (the latest data point) this dropped only slightly to 92.7%. To provide some more perspective, Ned Davis Research estimates the mean to be 54.2% over the past 58 years. The percentage climbed gradually to 65% in 1998, and then really accelerated to its recent peak.
To be conservative, let's assume that the household debt/GDP ratio falls back only to the 65% level of 1998 rather than to the lower level between 1965 and 1985 or to the long-term mean. Under that assumption household debt would have to be pared back by about $ 4 trillion (from the present total of $13.5 trillion), an amount that constitutes about 40% of current consumer expenditures....last week the ECRI Weekly Leading Indicator was down 4.11% from a year earlier. We searched the historical data to determine what happened to the economy at other times when the index was down 4.11% or more year-over-year. Over the last 42 years this has occurred seven times, and in all seven instances a recession started shortly before or shortly after the signal. We also note that all of these instances were accompanied by bear markets in stocks. Although no indicator is certain in economics or stock markets, seven for seven is nothing to sneeze at."
Home prices in Japan are down 35% from where they were 15 years ago, while its stock market is off 75% from where it was 20 years ago.
Hyman Minsky: “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”
Genzyme began to lay-off almost 10% of its work force.
Tropical Storm Igor, gathering strength over the eastern Atlantic, is likely to reach hurricane force by Sunday, weather forecasters said Friday. According to the National Hurricane Center, Igor is heading westward toward the Caribbean's Lesser Antilles Islands and will gradually veer to the west-northwest by mid-week. By then, it is likely to be a large hurricane with sustained winds topping 100 miles per hour, the NHC said. The offshore energy industry will be monitoring the storm closely to see whether it poses a threat to output from oil and gas fields in the Gulf of Mexico. Igor was already cited as a factor nudging October natural gas futures 3% higher Friday on the New York Mercantile Exchange.
China's August $20 billion trade surplus will fuel demands by Washington and others for Beijing to ease controls they say keep its yuan undervalued and give Chinese exporters an unfair price advantage. American lawmakers hold hearings this month and some are pushing for sanctions as they face pressure to create jobs ahead of November elections.
"There certainly will be pressure from the United States," said economist Lu Zhengwei at Industrial Bank in Shanghai. "Their appetite is very big."
August export growth fell to 34.4 percent over a year earlier from July's 38.1 percent, the Chinese customs agency reported. But import growth rebounded to 35.2 percent from the previous month's 22.7 percent.
Strong imports are a rare bright spot for global exporters that are looking to China to help drive demand for factory machinery, iron ore and other goods. They suggest China's slowdown was moderating after growth fell from 11.9 percent in the first quarter of the year to 10.3 percent.
Export growth fell short of forecasts, and Lu said it reflected unexpectedly weak orders by foreign retailers for the peak Christmas selling season.
"That means the outlook is very grim," he said.
The trade surplus narrowed from July's 18-month high of $28.7 billion but was up 28 percent from a year earlier. It was well below most private sector forecasts, which ranged as high as $30 billion.
On Thursday, the U.S. announced its trade deficit with China dropped slightly to $25.9 billion in July, but remained the highest for any country. Through the first seven months of this year, the U.S. trade deficit with China is running 17.7 percent above last year's pace, spurring increased calls in Congress for punitive action.
D. Sherman Okst: "The actual debt numbers are insane. Public Debt is over
$13,433,000,000,000.00 (13.4 trillion). Add the GSE (Freddie/Fannie)
debt to that and we are over 18 trillion. Pile on the unfunded
liabilities hidden on the government’s off balance sheet ledgers and you
will find these figures: Social Security (14.6 trillion), Prescription
Drugs (19.2 trillion), Medicare (76 trillion). You owe, your kids owe,
all of us owe about $400,000.00 a piece. Considering the median home
price on the east-coast is $205,000.00, you now owe for two homes, in
addition to anything that you may owe on your existing home. And oh, by
the way, it’s at a variable rate loan. In fact, principle and interest
are subject to change. This debt is just like some toxic negative
amortization pay-what-you-can-add-more-to-principle mortgage."
Business Week: "In July at least 280 million people logged on to social sites other than Facebook and Twitter, according to audience tracker comScore (SCOR). Andrew Lipsman, comScore director of industry analysis, estimates the real number could be as high as 700 million, since many people use more than one social site."
Banco Santander SA, Spain’s biggest bank, agreed to buy Allied Irish Banks Plc’s stake in Bank Zachodni WBK SA for 2.94 billion euros ($3.7 billion) to expand in Poland as growth in Western Europe stalls.
Santander will also buy the Irish lender’s stake in BZ WBK Asset Management for a further 150 million euros in cash, the Spanish bank said in a statement today.
Japan has been conditioning the US and Europe for Tokyo’s potential intervention against the rising yen, according to Naoto Kan, prime minister.
Some 73 percent of Americans who are in school or have school-aged children said their back-to-school budgets were either the same as last year’s or smaller, according to a Chase Slate — U.S. News Monitor survey in August. That pattern was reflected in the August sales results from several retailers, where there were only small sales increases at stores open more than a year despite heavy discounts.
More than 1,100 Illinois workers at about a dozen companies learned last month that they will lose their jobs in plant closings or mass layoffs, according to state records posted online earlier this week.
"This shows that the recession isn't over," said Jack Ablin, Harris Private Bank chief investment officer. "We're still grappling with a difficult economic environment."
The Illinois Department of Commerce and Economic Opportunity requires employers to provide 60 days' notice of plant closures or mass layoffs. The law applies to businesses with at least 75 full-time workers.
Nine Michigan private sector employers will shed a combined 863 jobs in the coming weeks, including 420 jobs at five employers in Southeast Michigan, according to new data for plant closings and layoff notices from the state Department of Energy, Labor and Economic Growth.
(Bloomberg) -- China’s industrial output rose at a faster pace than analysts estimated in August, signaling that the world’s third-biggest economy is maintaining momentum as growth moderates.
Production gained 13.9 percent from a year earlier, more than that 13 percent median estimate of 29 economists, a statistics bureau report showed in Beijing today. Consumer prices jumped 3.5 percent, the most in 22 months, as food costs climbed. Retail sales increased 18.4 percent.
Corn futures rose to 23-month high.
Doug Noland: "The markets now perceive (are convinced) that global central bankers are irreversibly committed to providing government debt markets a (an inexhaustible) “backstop bid.” This is fundamental to a Bubble’s “terminal phase” expansion and reminiscent of the fateful mortgage finance “backstop bid” provided by Fannie, Freddie, the FHLB, and the Federal Reserve.
Fixed income markets have enjoyed a historic rally. After touching 4.0% in April, 10-year Treasury yields ended August at 2.47%. Benchmark MBS yields sank from an April high of 4.67% down to a low of 3.29%. After slowing sharply during the Greek crisis period, corporate debt issuance bounced back strongly. Junk bond issuance already equals last year’s record for the entire year ($163bn)....I still believe the Greek debt crisis will be viewed as an important infection point with regard to market perceptions of structural debt issues. At the same time, it is also clear that the backdrop has been extraordinarily supportive of Bubble Dynamics.
Of course, skyrocketing bond prices have given rise to fundamental justification. Interminable deflation risk is at the top of the list of why bond returns will indefinitely outperform cash. I am reminded of how technology stocks and home prices were only to go higher. My analytical framework downplays deflation and focuses instead on a debt Bubble fueled by the Federal Reserve, The People’s Bank of China, the ECB, BOJ, and the approaching one Trillion y-t-d increase in global central bank reserves. Throw in hedge fund/speculator leveraging and the billions flowing weekly (in search of any yield) into global fixed income and one sees all the necessary financing for a historic Bubble.
Developments and dynamics over the past couple of months have provided important confirmation for the Global Government Finance Bubble thesis. At the same time, there are numerous fault lines. Stress has reemerged in European debt markets, with yields rising notably in Greece, Portugal and Ireland. Here at home, stress continues to build in municipal finance. To what extent – and for how long – Global Government Finance Bubble Dynamics and attendant liquidity/speculative excesses mitigate some of these crisis points is an open question."
(Bloomberg) -- New lending in China rebounded in August and expansion of the money supply unexpectedly accelerated, reflecting strong demand for credit in the world’s fastest-growing major economy.
Banks extended 545.2 billion yuan ($80 billion) of new local-currency loans last month compared with 532.8 billion yuan in July, the People’s Bank of China said on its website today. That was the first acceleration in four months and compared with the median forecast of 500 billion yuan in a Bloomberg News survey of 26 economists. M2, the broadest measure of money supply, grew 19.2 percent from a year earlier, the first pickup in nine months.
The figures “are much higher than forecast and this may reflect strong borrowing demand, especially from the business sector,” said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. “It may also reflect the fact that banks can’t move some of their lending off balance sheet due to the tightening in bank-trust products.”
The Automatic Earth: "Lowes has 500 more stores today than it had in 2005, $4 billion more sales, and $1 billion less profits. Target has 340 more stores today than it had in 2005, $12 billion more sales, and the same profit. Kohl’s has 240 more stores than it had in 2006, $1.6 billion more sales, and $100 million less profit. Only Wal-Mart has kept the profits flowing, mostly due to its international expansion. The tough times have only just begun for these retailers....
Facing a scary and uncertain financial future, Americans are watching their wallets:
41% are planning to cut back on their spending over the next 3–4 months, compared with 8% who plan to increase it.
35% say they will plan to cut back their online spending over the next to 3–4 months, compared with 12% who plan to increase it.
79% say they are planning to spend less money for Christmas this year.
87% say they do not plan to make a big-ticket purchase (such as a house or car) in the next 3–4 months.
49% have already delayed making a big-ticket purchase during the past few months.
26% of Americans don't expect their personal finances to fully recover from the downturn until after 2011, and just as many (26%) think their personal finances won't ever fully recover."
Daniel Aaronson: "Investors should question their long embedded confidence in the ability of central banks to support market prices. As Japan's experience has proven, and as the European situation may too, central banks are not bigger than markets, private capital flows or the economy."
My thoughts continue on the same path: remain short 2-year, 5-year, 10-year, and 30-year U.S. Treasury bonds and stay out of the equity market. If you want to play the bumps and grinds, stay in the bedroom.
Marguerite Yourcenar: "On the whole, however, it is only out of pride or gross ignorance, or cowardice, that we refuse to see in the present the lineaments of times to come."
Saturday, September 11, 2010
Friday, September 10, 2010
Back Taxes
9/10/10 Back Taxes
Chip makers National Semiconductor and Texas Instruments Inc on Thursday issued quarterly financial targets that stoked investors' worries about a sluggish economy.
Both companies cited weak demand for personal computers and other devices that use microchips and National Semiconductor said consumers were not spending as much as expected.
"We'd all like to believe that consumer spending is onward and upward but I don't think it is," National Semiconductor Chief Executive Donald Macleod told Reuters.
According to the Washington Post, federal employees across the nation owe fully $1 billion in back taxes to the Internal Revenue Service and 41 aides to Obama in the White House owe $831,000 in back taxes!
U.S. petroleum inventories climbed to the highest level since at least 1990. Stockpiles were 12 percent higher than the five-year average. OPEC said today in a monthly report that global consumption may weaken during the rest of this year because of “the severity of the economic crisis and its prolonged impact on the world economy.”
China’s National Bureau of Statistics said yesterday it will release August economic indicators, including consumer prices and industrial output, on Saturday, instead of the initial scheduled Monday. “The statistics bureau has almost never reported data on weekends before,” said Chen Jianbo, a fixed-income analyst at BOC International (China) Ltd., adding that the change prompted speculation that the central bank may raise the deposit rate to combat inflation before the markets open on Monday. Commodity futures in China tumbled yesterday after a report said regulators may be investigating large positions in Shanghai rubber futures. “There is no official comment from the regulator, so people kept on guessing what happened,” Ren said.
Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government. According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
Frederick Sheehan: "Harrisburg, Pennsylvania, is defaulting; Half Moon Bay, California, is disincorporating; and the City of Miami, Florida, declared a “state of fiscal urgency,” then broke contracts with workers. Yet, Pennsylvania, California, and Florida municipal bond funds managed by Blackrock are trading at or near 52-week highs."
Charles Hugh Smith: "President Obama's administration is utterly conventional, and therein lies its failure. But this failure falls not just on the political "leadership," but on the nation's Balkanized constituencies and fiefdoms which have gotten exactly what they wanted: a full-spectrum defense of the status quo."
Video game sales fall 10 percent in August.
Inventories at U.S. wholesalers rose 1.3% in July, the fastest pace since 1.5% in July of 2008, the Commerce Department reported Friday. Meanwhile, sales of wholesalers rose 0.6%, the biggest gain since 0.9% in April. Inventories of durable goods rose 1% in July, while inventories of nondurable goods rose 1.7%. Sales of durable goods rose 0.5%, and gained 0.6% for nondurables. Over the past year, inventories are up 2.5%, and sales are up 12.7%. In June, inventories rose 0.3%, while sales fell 0.5%.
Mort Zuckerman: "Spending on retirement benefits for California's state employees is growing at three times the rate of state revenues."
BAE Systems set to cut almost 1,000 jobs.
The Australian dollar climbed to a record high against the euro and a four-month peak against the U.S. dollar.
There is 6.4% less natural gas in storage than there was last year at this time.
The Dow Jones Industrial Average rose 47.53 points, or 0.5%, to end at 10,462.77. The S&P 500 index gained 5.37 points, or 0.5%, to 1,109.55. The Nasdaq Composite rose 6.28 points, or 0.3%, to 2,242.48. It was the second consecutive week of gains for the major average, with the Dow gaining 0.1%, the S&P adding 0.5%, and the Nasdaq rising 0.4%. NYSE advancing issues outpaced decliners seven to six.
Crude oil for October delivery finished 3% higher at $76.45 a barrel, putting its weekly advance at 2.5%.
Treasuries fell, sending 10-year yield to a one-month high.
A key oil pipeline supplying Canadian crude to the United States, Enbridge's 670,000-barrel-per-day Line 6A, remained shut Friday after the line leaked in Illinois Thursday.
For 25 years, legendary Wall Street strategist Byron Wien, now with The Blackstone Group, has held summer meetings with high net worth individuals to get their outlook on the global economy and investing. This year’s group, totaling fifty individuals and including more than 10 billionaires, was decidedly pessimistic on the U.S. economy, investment opportunities and the Obama administration.
“They saw the United States in a long-term slow growth environment with the near-term risk of recession quite real,” said Wien, in a commentary to Blackstone clients. “The Obama administration was viewed as hostile to business and that discouraged both hiring and investment. Companies and entrepreneurs were reluctant to add workers because they didn’t know what their healthcare costs or taxes were going to be.”
As of August, 20.80% of all hotel-backed loans is in some stage of delinquency (up from 18.64% in July).
Chip makers National Semiconductor and Texas Instruments Inc on Thursday issued quarterly financial targets that stoked investors' worries about a sluggish economy.
Both companies cited weak demand for personal computers and other devices that use microchips and National Semiconductor said consumers were not spending as much as expected.
"We'd all like to believe that consumer spending is onward and upward but I don't think it is," National Semiconductor Chief Executive Donald Macleod told Reuters.
According to the Washington Post, federal employees across the nation owe fully $1 billion in back taxes to the Internal Revenue Service and 41 aides to Obama in the White House owe $831,000 in back taxes!
U.S. petroleum inventories climbed to the highest level since at least 1990. Stockpiles were 12 percent higher than the five-year average. OPEC said today in a monthly report that global consumption may weaken during the rest of this year because of “the severity of the economic crisis and its prolonged impact on the world economy.”
China’s National Bureau of Statistics said yesterday it will release August economic indicators, including consumer prices and industrial output, on Saturday, instead of the initial scheduled Monday. “The statistics bureau has almost never reported data on weekends before,” said Chen Jianbo, a fixed-income analyst at BOC International (China) Ltd., adding that the change prompted speculation that the central bank may raise the deposit rate to combat inflation before the markets open on Monday. Commodity futures in China tumbled yesterday after a report said regulators may be investigating large positions in Shanghai rubber futures. “There is no official comment from the regulator, so people kept on guessing what happened,” Ren said.
Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government. According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
Frederick Sheehan: "Harrisburg, Pennsylvania, is defaulting; Half Moon Bay, California, is disincorporating; and the City of Miami, Florida, declared a “state of fiscal urgency,” then broke contracts with workers. Yet, Pennsylvania, California, and Florida municipal bond funds managed by Blackrock are trading at or near 52-week highs."
Charles Hugh Smith: "President Obama's administration is utterly conventional, and therein lies its failure. But this failure falls not just on the political "leadership," but on the nation's Balkanized constituencies and fiefdoms which have gotten exactly what they wanted: a full-spectrum defense of the status quo."
Video game sales fall 10 percent in August.
Inventories at U.S. wholesalers rose 1.3% in July, the fastest pace since 1.5% in July of 2008, the Commerce Department reported Friday. Meanwhile, sales of wholesalers rose 0.6%, the biggest gain since 0.9% in April. Inventories of durable goods rose 1% in July, while inventories of nondurable goods rose 1.7%. Sales of durable goods rose 0.5%, and gained 0.6% for nondurables. Over the past year, inventories are up 2.5%, and sales are up 12.7%. In June, inventories rose 0.3%, while sales fell 0.5%.
Mort Zuckerman: "Spending on retirement benefits for California's state employees is growing at three times the rate of state revenues."
BAE Systems set to cut almost 1,000 jobs.
The Australian dollar climbed to a record high against the euro and a four-month peak against the U.S. dollar.
There is 6.4% less natural gas in storage than there was last year at this time.
The Dow Jones Industrial Average rose 47.53 points, or 0.5%, to end at 10,462.77. The S&P 500 index gained 5.37 points, or 0.5%, to 1,109.55. The Nasdaq Composite rose 6.28 points, or 0.3%, to 2,242.48. It was the second consecutive week of gains for the major average, with the Dow gaining 0.1%, the S&P adding 0.5%, and the Nasdaq rising 0.4%. NYSE advancing issues outpaced decliners seven to six.
Crude oil for October delivery finished 3% higher at $76.45 a barrel, putting its weekly advance at 2.5%.
Treasuries fell, sending 10-year yield to a one-month high.
A key oil pipeline supplying Canadian crude to the United States, Enbridge's 670,000-barrel-per-day Line 6A, remained shut Friday after the line leaked in Illinois Thursday.
For 25 years, legendary Wall Street strategist Byron Wien, now with The Blackstone Group, has held summer meetings with high net worth individuals to get their outlook on the global economy and investing. This year’s group, totaling fifty individuals and including more than 10 billionaires, was decidedly pessimistic on the U.S. economy, investment opportunities and the Obama administration.
“They saw the United States in a long-term slow growth environment with the near-term risk of recession quite real,” said Wien, in a commentary to Blackstone clients. “The Obama administration was viewed as hostile to business and that discouraged both hiring and investment. Companies and entrepreneurs were reluctant to add workers because they didn’t know what their healthcare costs or taxes were going to be.”
As of August, 20.80% of all hotel-backed loans is in some stage of delinquency (up from 18.64% in July).
Thursday, September 09, 2010
Labor Department
9/9/10 Labor Department
Bloomberg: "For the latest reporting week, nine states didn’t file claims data to the Labor Department in Washington because of the Labor Day holiday earlier this week, a department official told reporters. California and Virginia estimated their figures and the U.S. government estimated the other seven."
The number of initial claims for regular state unemployment insurance benefits fell 27,000 to 451,000, seasonally adjusted, in the week ended Sept. 4, the Labor Department reported Thursday. Economists polled by MarketWatch had expected a level of 470,000. The four-week average of initial claims -- a more accurate gauge of employment trends -- fell 9,250 to 477,750. The number of workers who continued to receive state unemployment checks fell by 2,000 to 4.48 million in the week ended Aug. 28. The four-week average of these continuing claims fell 3,250 to 4.49 million, the lowest level since December of 2008. Altogether, about 9.67 million people were collecting some type of unemployment benefit in the week ended Aug. 21, compared with about 9.73 million in the prior week. The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 4.986 million. You can bet more people are being shifted over to extended benefits.
The trade deficit in the U.S. narrowed more than forecast in July as imports fell and exports climbed to the highest level in almost two years.
The gap shrank 14 percent, the most since February 2009, to $42.8 billion, Commerce Department figures showed today in Washington. Economists forecast a deficit of $47 billion, according to the median of 73 projections in a Bloomberg News survey. Imports fell 2.1 percent, while exports increased 1.8 percent to $153.3 billion, the highest since August 2008. July exports were $2.8 billion more than June exports of $150.6 billion. July imports were $4.2 billion less than June imports of $200.3 billion. In July, the goods deficit decreased $7.0 billion from June to $55.2 billion, and the services surplus was virtually unchanged at $12.5 billion.
Chris Martenson PhD on Wed, 8 Sep 2010
We have entered some truly treacherous investing waters, where we must question everything and accept nothing, even (and especially) the base assumption that any given currency, be that the US dollar or euro or Yen, will retain its value. Is a 'double-dip' recession coming? Nobody knows for certain, but all the warning signs are there. Our view is that it’s best to start thinking about preserving and protecting your wealth now, while you still have that opportunity. The bottom line here is that you should not be taking your cues from what your neighbors seem to be doing, but instead being sure that your own house is in order.
Global recovery looks to be slowing more than expected as growth weakens in rich economies, and stimulus should be extended or stepped up if the slowdown endures, the OECD said on Thursday.
Rigzone: "A report released by BP concludes that decisions made by "multiple companies and work teams" contributed to the accident which it says arose from "a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces."
The report - based on a four-month investigation led by Mark Bly, BP's Head of Safety and Operations and conducted independently by a team of over 50 technical and other specialists drawn from inside BP and externally - found that:
The cement and shoe track barriers - and in particular the cement slurry that was used - at the bottom of the Macondo well failed to contain hydrocarbons within the reservoir, as they were designed to do, and allowed gas and liquids to flow up the production casing;
The results of the negative pressure test were incorrectly accepted by BP and Transocean, although well integrity had not been established;
Over a 40-minute period, the Transocean rig crew failed to recognize and act on the influx of hydrocarbons into the well until the hydrocarbons were in the riser and rapidly flowing to the surface;
After the well-flow reached the rig it was routed to a mud-gas separator, causing gas to be vented directly on to the rig rather than being diverted overboard;
The flow of gas into the engine rooms through the ventilation system created a potential for ignition which the rig's fire and gas system did not prevent;
Even after explosion and fire had disabled its crew-operated controls, the rig's blow-out preventer on the sea-bed should have activated automatically to seal the well. But it failed to operate, probably because critical components were not working."
Mark Thoma: "Food Stamp Participation Climbs 10%: … [There are] 41 million Americans relying on the Department of Agriculture’s Supplemental Nutrition Assistance Program, known to many of us as “food stamps.”
The story is simple: in this serious recession, more and more people have turned to the social safety net for help in meeting the needs of daily life — 26 million in September 2007, 31 million by September 2008, and in June 2010, the most recent report, 41 million people in 19 million households. Thirteen percent of the population, or more than one in eight people.
That’s an increase of 10 percent from a year ago; participation increased every month this year. The costs of the benefits were $50 billion in the last fiscal year — about $130 per month per person. (How much did we spend on AIG?)" …
(Bloomberg) -- Japan’s government said it will seek discussions with China over the nation’s record purchases of Japanese bonds as an appreciating yen threatens to undermine an economic recovery.
ZeroHedge: "The Primary Dealers, aka Fed Lites, will be using tens of billions of brand new Fed printed money to chase the highest beta stocks they can find. And they will most certainly be using made up government data to facilitate this pursuit."
Mike Shedlock: "65% Fear Double-Dip, 71% Say US is Fundamentally Broken, Net 32% Expect to Reduce Spending"
Base metals overnight flash crash in China (Reuters)
ZeroHedge: "The population of the US has grown from 281 million in 2000 to approximately 308 million today. We’ve had a 10% population increase in 10 years. Consumer expenditures have grown from $6.7 trillion in 2000 to $10.3 trillion today. This is a 54% increase over the course of the decade. Amazingly, real average weekly earnings have only gone up by 6% in the last decade."
The cost of repairing the damage sustained during the 7.1-magnitude New Zealand earthquake will reach more than £1.8bn, it was estimated today.
The NZ $4bn bill was almost double initial figures which rose as the government agreed to pay a subsidy to businesses in order to continue paying wages despite being closed.
A total of 100,000 houses were damaged by the earthquake and more than 30 aftershocks, with 500 buildings condemned so far.
Analysts and traders surveyed by Dow Jones Newswires expect the U.S. Energy Information Administration to report that 58 billion cubic feet of gas were added to storage during the week ended Sept. 3. The storage estimate falls short of last year's 68-bcf build for the same week and the 61-bcf five-year average build for that week. If the storage estimate is correct, inventories as of Sept. 3 will total 3.164 trillion cubic feet, about 5.5% above the five-year average and 6.4% below last year's level for the same week.
Summary
Working gas in storage was 3,164 Bcf as of Friday, September 3, 2010, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week. Stocks were 218 Bcf less than last year at this time and 166 Bcf above the 5-year average of 2,998 Bcf. In the East Region, stocks were 5 Bcf above the 5-year average following net injections of 35 Bcf. Stocks in the Producing Region were 92 Bcf above the 5-year average of 882 Bcf after a net injection of 18 Bcf. Stocks in the West Region were 69 Bcf above the 5-year average after a net addition of 5 Bcf. At 3,164 Bcf, total working gas is within the 5-year historical range.
Mortgage rates rise for the first time since June 17 in Freddie Mac's survey, with average 30-year fixed-rate loans at 4.35% from a previous 4.32%. Fifteen-year rates held at a record low of 3.83%.
Crude oil inventories for the week ended Sept. 3 fell by 1.9 million barrels, less than a trade group estimated late Wednesday but more than the decline of 730,000 barrels expected by analysts polled by Platts. Late Wednesday, the American Petroleum Institute estimated crude oil stocks declined by 7.3 million barrels, a drop that provided some support to prices early Thursday. Gasoline stocks fell by about 200,000 barrels last week, but that was less than the estimated decline of 820,000 barrels. Inventories of distillates, which include heating oil, fell by about 400,000 barrels, compared with the expectation for a rise of 940,000 barrels. Oil recently traded up 79 cents, or 1.1%, at $75.46 a barrel.
The $9.5 billion outflow from stock funds in the latest week was the worst week since May 26 and "a clear acceleration versus more recent flow trends," said Ticonderoga Securities analyst Douglas Sipkin in a note Thursday. "This marks the 18th consecutive week of outflows. (And the equity markets do not decline! That takes manipulation to a new level)
Morgan Stanley: The most important take-away here is that the risk of France or Germany being pulled into the sovereign crisis is real, despite the fact that they these two nations are currently being discussed in terms of potential saviors for other nations, rather than nations in crisis themselves.
The Dow Jones Industrial Average finished up 28.23 points, or 0.3%, at 10,415.24. The S&P 500 index rose 5.31 points, or 0.5%, to 1,104.18. The Nasdaq Composite gained 7.33 points, or 0.3%, to end at 2,236.20.
Deutsche Bank AG has approached investment banks to mull a stock sale to raise as much as 9 billion euros, or about $11.3 billion, Bloomberg News reported Thursday, citing three unidentified sources close to the matter. Shares of Deutsche Bank dropped more than 2.5% on both the Frankfurt and New York stock exchanges. Proceeds from the sale may be used to increase the bank's stake in Deutsche Postbank AG and to meet capital requirements, Bloomberg reported.
With stimulus programs no longer boosting the economy, growth will come to a standstill for the remainder of 2010 and feel like a return to recession, economist Nouriel Roubini told CNBC.
The last major GE factory making ordinary incandescent light bulbs in the United States is closing this month.
Bloomberg: "For the latest reporting week, nine states didn’t file claims data to the Labor Department in Washington because of the Labor Day holiday earlier this week, a department official told reporters. California and Virginia estimated their figures and the U.S. government estimated the other seven."
The number of initial claims for regular state unemployment insurance benefits fell 27,000 to 451,000, seasonally adjusted, in the week ended Sept. 4, the Labor Department reported Thursday. Economists polled by MarketWatch had expected a level of 470,000. The four-week average of initial claims -- a more accurate gauge of employment trends -- fell 9,250 to 477,750. The number of workers who continued to receive state unemployment checks fell by 2,000 to 4.48 million in the week ended Aug. 28. The four-week average of these continuing claims fell 3,250 to 4.49 million, the lowest level since December of 2008. Altogether, about 9.67 million people were collecting some type of unemployment benefit in the week ended Aug. 21, compared with about 9.73 million in the prior week. The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 4.986 million. You can bet more people are being shifted over to extended benefits.
The trade deficit in the U.S. narrowed more than forecast in July as imports fell and exports climbed to the highest level in almost two years.
The gap shrank 14 percent, the most since February 2009, to $42.8 billion, Commerce Department figures showed today in Washington. Economists forecast a deficit of $47 billion, according to the median of 73 projections in a Bloomberg News survey. Imports fell 2.1 percent, while exports increased 1.8 percent to $153.3 billion, the highest since August 2008. July exports were $2.8 billion more than June exports of $150.6 billion. July imports were $4.2 billion less than June imports of $200.3 billion. In July, the goods deficit decreased $7.0 billion from June to $55.2 billion, and the services surplus was virtually unchanged at $12.5 billion.
Chris Martenson PhD on Wed, 8 Sep 2010
We have entered some truly treacherous investing waters, where we must question everything and accept nothing, even (and especially) the base assumption that any given currency, be that the US dollar or euro or Yen, will retain its value. Is a 'double-dip' recession coming? Nobody knows for certain, but all the warning signs are there. Our view is that it’s best to start thinking about preserving and protecting your wealth now, while you still have that opportunity. The bottom line here is that you should not be taking your cues from what your neighbors seem to be doing, but instead being sure that your own house is in order.
Global recovery looks to be slowing more than expected as growth weakens in rich economies, and stimulus should be extended or stepped up if the slowdown endures, the OECD said on Thursday.
Rigzone: "A report released by BP concludes that decisions made by "multiple companies and work teams" contributed to the accident which it says arose from "a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces."
The report - based on a four-month investigation led by Mark Bly, BP's Head of Safety and Operations and conducted independently by a team of over 50 technical and other specialists drawn from inside BP and externally - found that:
The cement and shoe track barriers - and in particular the cement slurry that was used - at the bottom of the Macondo well failed to contain hydrocarbons within the reservoir, as they were designed to do, and allowed gas and liquids to flow up the production casing;
The results of the negative pressure test were incorrectly accepted by BP and Transocean, although well integrity had not been established;
Over a 40-minute period, the Transocean rig crew failed to recognize and act on the influx of hydrocarbons into the well until the hydrocarbons were in the riser and rapidly flowing to the surface;
After the well-flow reached the rig it was routed to a mud-gas separator, causing gas to be vented directly on to the rig rather than being diverted overboard;
The flow of gas into the engine rooms through the ventilation system created a potential for ignition which the rig's fire and gas system did not prevent;
Even after explosion and fire had disabled its crew-operated controls, the rig's blow-out preventer on the sea-bed should have activated automatically to seal the well. But it failed to operate, probably because critical components were not working."
Mark Thoma: "Food Stamp Participation Climbs 10%: … [There are] 41 million Americans relying on the Department of Agriculture’s Supplemental Nutrition Assistance Program, known to many of us as “food stamps.”
The story is simple: in this serious recession, more and more people have turned to the social safety net for help in meeting the needs of daily life — 26 million in September 2007, 31 million by September 2008, and in June 2010, the most recent report, 41 million people in 19 million households. Thirteen percent of the population, or more than one in eight people.
That’s an increase of 10 percent from a year ago; participation increased every month this year. The costs of the benefits were $50 billion in the last fiscal year — about $130 per month per person. (How much did we spend on AIG?)" …
(Bloomberg) -- Japan’s government said it will seek discussions with China over the nation’s record purchases of Japanese bonds as an appreciating yen threatens to undermine an economic recovery.
ZeroHedge: "The Primary Dealers, aka Fed Lites, will be using tens of billions of brand new Fed printed money to chase the highest beta stocks they can find. And they will most certainly be using made up government data to facilitate this pursuit."
Mike Shedlock: "65% Fear Double-Dip, 71% Say US is Fundamentally Broken, Net 32% Expect to Reduce Spending"
Base metals overnight flash crash in China (Reuters)
ZeroHedge: "The population of the US has grown from 281 million in 2000 to approximately 308 million today. We’ve had a 10% population increase in 10 years. Consumer expenditures have grown from $6.7 trillion in 2000 to $10.3 trillion today. This is a 54% increase over the course of the decade. Amazingly, real average weekly earnings have only gone up by 6% in the last decade."
The cost of repairing the damage sustained during the 7.1-magnitude New Zealand earthquake will reach more than £1.8bn, it was estimated today.
The NZ $4bn bill was almost double initial figures which rose as the government agreed to pay a subsidy to businesses in order to continue paying wages despite being closed.
A total of 100,000 houses were damaged by the earthquake and more than 30 aftershocks, with 500 buildings condemned so far.
Analysts and traders surveyed by Dow Jones Newswires expect the U.S. Energy Information Administration to report that 58 billion cubic feet of gas were added to storage during the week ended Sept. 3. The storage estimate falls short of last year's 68-bcf build for the same week and the 61-bcf five-year average build for that week. If the storage estimate is correct, inventories as of Sept. 3 will total 3.164 trillion cubic feet, about 5.5% above the five-year average and 6.4% below last year's level for the same week.
Summary
Working gas in storage was 3,164 Bcf as of Friday, September 3, 2010, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week. Stocks were 218 Bcf less than last year at this time and 166 Bcf above the 5-year average of 2,998 Bcf. In the East Region, stocks were 5 Bcf above the 5-year average following net injections of 35 Bcf. Stocks in the Producing Region were 92 Bcf above the 5-year average of 882 Bcf after a net injection of 18 Bcf. Stocks in the West Region were 69 Bcf above the 5-year average after a net addition of 5 Bcf. At 3,164 Bcf, total working gas is within the 5-year historical range.
Mortgage rates rise for the first time since June 17 in Freddie Mac's survey, with average 30-year fixed-rate loans at 4.35% from a previous 4.32%. Fifteen-year rates held at a record low of 3.83%.
Crude oil inventories for the week ended Sept. 3 fell by 1.9 million barrels, less than a trade group estimated late Wednesday but more than the decline of 730,000 barrels expected by analysts polled by Platts. Late Wednesday, the American Petroleum Institute estimated crude oil stocks declined by 7.3 million barrels, a drop that provided some support to prices early Thursday. Gasoline stocks fell by about 200,000 barrels last week, but that was less than the estimated decline of 820,000 barrels. Inventories of distillates, which include heating oil, fell by about 400,000 barrels, compared with the expectation for a rise of 940,000 barrels. Oil recently traded up 79 cents, or 1.1%, at $75.46 a barrel.
The $9.5 billion outflow from stock funds in the latest week was the worst week since May 26 and "a clear acceleration versus more recent flow trends," said Ticonderoga Securities analyst Douglas Sipkin in a note Thursday. "This marks the 18th consecutive week of outflows. (And the equity markets do not decline! That takes manipulation to a new level)
Morgan Stanley: The most important take-away here is that the risk of France or Germany being pulled into the sovereign crisis is real, despite the fact that they these two nations are currently being discussed in terms of potential saviors for other nations, rather than nations in crisis themselves.
The Dow Jones Industrial Average finished up 28.23 points, or 0.3%, at 10,415.24. The S&P 500 index rose 5.31 points, or 0.5%, to 1,104.18. The Nasdaq Composite gained 7.33 points, or 0.3%, to end at 2,236.20.
Deutsche Bank AG has approached investment banks to mull a stock sale to raise as much as 9 billion euros, or about $11.3 billion, Bloomberg News reported Thursday, citing three unidentified sources close to the matter. Shares of Deutsche Bank dropped more than 2.5% on both the Frankfurt and New York stock exchanges. Proceeds from the sale may be used to increase the bank's stake in Deutsche Postbank AG and to meet capital requirements, Bloomberg reported.
With stimulus programs no longer boosting the economy, growth will come to a standstill for the remainder of 2010 and feel like a return to recession, economist Nouriel Roubini told CNBC.
The last major GE factory making ordinary incandescent light bulbs in the United States is closing this month.
Wednesday, September 08, 2010
Low Volume
9/8/10 Low Volume
President Obama is prepared to announce his opposition to extending tax cuts for the wealthy during an economic speech in Cleveland Wednesday.
Rob Hanna: "In a post two years ago I discussed how low volume on the Tuesday after Labor Day was often a bad sign. I looked at what happened when 1) volume came in lower than the Friday before Labor Day, and 2) when volume failed to hit the highest level in at least 5 days. Tuesday not only did volume fail to hit the highest level in 5 days, it actually came in at the lowest level of the last 5 days. Since 1970 this has only happened 7 other times. As you’ll see below, it hasn’t been a good sign going forward."
BP cites poor cement job, folllowed by poor judgements by BP and Transocean workers, for the Deepwater Horizon blast and the resulting Gulf spill.
House Republican Leader John Boehner onWednesday proposed a two-year freeze on all tax rates and a cut in government spending to the levels of 2008, before a deep recession took hold of the economy.
Most of the country will see a colder-than-usual winter while summer and spring will be relatively cool and dry, according to the time-honored, complex calculations of the "Old Farmer's Almanac."
$1,261 for gold and $20.12 for silver, the ratio more than 62 ounces to one. In my view, silver is undervalued in relation to gold.
In the Household BLS August report 800,000 Americans were added to the "Not in Labor Force" statistic.
Howard Davidowitz: ""The consumer is totally wrecked and that’s why there’s no way this economy’s coming back, because the consumer is 70 percent of the U.S. economy[..]
The consumer is out of money. They’re wrecked. They have no jobs. We’ve got 18-and-a-half percent unemployment and underemployment. The consumer’s debt is 120 percent of disposable income. [..] The consumer's wrecked."
By far, the worst is yet to come. The administration is dysfunctional, incompetent and on a lunatic fringe. Everything they're doing is wrong. It’s all going to be worse."
Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm. The reductions, about 10 percent of current levels, will come after 2010 compensation payments, Whitney, 40, said in a report dated Aug. 31 and obtained by Bloomberg News today.
Sixty-eight percent (68%) of U.S. voters prefer a smaller government with fewer services and lower taxes to a more active one that offers more services and higher taxes. That's the second highest finding in Rasmussen Reports surveying on the question since November 2006, exceeded only by a 70% finding in August of last year.
The global hedge fund industry shriveled a little more in July when investors pulled out nearly $3 billion after the loosely regulated portfolios posted losses in May and June, researchers reported on Tuesday. Assets stood at $1.53 trillion, their lowest level since November 2009, according to data released jointly by TrimTabs and BarclayHedge, firms that track performance and flow data.
China to Build $2 Billion Railway for Iran. China is poised to sign a $2bn (£1.3bn) deal to build a railway line in Iran in the first step of a wider plan to tie the Middle East and Central Asia to Beijing. "For China, it could cut the cost of transporting goods to Europe by 5pc or 6pc," said Professor Swanstrom.
Karl Smith: "
Rome is Burning
Tuesday ~ September 7th, 2010 in Economics | by Karl Smith
There is a critical point that I fear the commentariat is just not getting. In my darker moments I fear that some of my fellow economists aren’t getting it either but we aren’t going to go there.
Look at these two graphs because they tell you the fundamental problem in America today:
We have very low capacity utilization (75%) and very high unemployment (10%).
That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment.
There are machines waiting to be worked and people waiting to work them but they are not getting together. The labor market is failing to clear.
This is a fucking disaster." (courtesy Naked Capitalism)
Job openings at U.S. workplaces ticked higher in July to 3.04 million, compared with 2.86 million in June, the Labor Department reported Wednesday. Openings have increased about 30% in the past year, but remain less than the 4.4 million jobs open when the recession began in December 2007. There were about five unemployed people for every job opening in July. The number of separations, such as quits and layoffs, slightly declined to 4.4 million in July from 4.44 million in June. Meanwhile, the number of people hired fell to 4.23 million in July from 4.25 million in June. Private-sector hiring rose to 3.96 million from 3.95 million, while government hiring declined to 274,000 from 304,000.
The Bank of Canada said Wednesday that it raised its target overnight interest rate by a quarter-percentage point to 1% and expects strong growth in consumption and business investment -- a more positive outlook than after the last meeting in July. Officials also said they expect the economic recovery in Canada to be slightly more gradual than it had projected in its July, largely reflecting weaker U.S. activity. The quarter-point rate increase was mostly expected by currency markets. The Canadian dollar turned higher, with one U.S. dollar falling to C$1.0427, from C$1.0492 before the decision and compared to C$1.0474 late Tuesday.
Chain-store sales for the week ended Sept. 4 rose 1.8% from the year-earlier period, their slowest pace since May 22, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales dipped 0.4%. "Sales began the new fiscal month weak as the national weather remained unfavorable for fall merchandise demand," said Michael Niemira, ICSC's chief economist. He forecast September same-store sales to rise about 3%. Unseasonably hot weather lingered for its 15th straight week, Niemira cited Weather Trends International as saying.
Civil Defence has issued a warning saying an aftershock of up to magnitude 6.0 may happen over the course of the next few days and the State of Emergency will probably stay in place until at least later today. Although many residents have of course been deeply upset by the trauma of the last few days in Christchurch, one user has certainly kept her spirits up (excuse the pun), by declaring on Twitter, “just moved the booze to within reach of the doorframe. Priorities.” Another reported more damage from this latest aftershock than from the original earthquake.
Since the big quake on Saturday there have now been more than 300 aftershocks. For more on this go to nzherald.co.nz.
U.S. consumers shed their credit for a sixth straight month in July, with total credit falling 1.75% to $2.42 trillion, according to figures released by the Federal Reserve. Revolving credit decreased at an annual rate of 6.25%, while nonrevolving credit increased at an annual rate of 0.5%.
U.S. growth slowed over the summer but the economy was still expanding at a "moderate" pace, according to the Federal Reserve's latest report on the economy. The Fed survey, commonly known as the Beige Book, dovetails with a slew of data that shows the U.S. recovery has tapered off since the spring. Yet despite recent weakness, the report also indicates the economy is still growing. "Economic growth at a modest pace was the most common characterization of overall conditions," the Beige Book said. What's more, the report said the price of wages and goods and services remained "limited," indicating little inflationary pressure in the economy. The Federal Reserve said the U.S. economy maintained its expansion while showing “widespread signs of a deceleration” in mid-July through the end of August, according to a survey by 12 regional Fed banks.
The U.S. Housing and Urban Development Department on Wednesday allocated $1 billion in funding to U.S. states to help stabilize neighborhoods faced with many foreclosures. The sweeping bank reform bill, the Dodd-Frank Act, allocated the funds for the programs. "These grants will support local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods," said HUD Secretary Shaun Donovan. States can use the funds to acquire land and property; demolish or rehabilitate abandoned properties.
Google Instant searches "as you type, not after you type," Marissa Mayer, Google's vice president of user experience, said at a press event at San Francisco's Museum of Modern Art.
Crude-oil inventories fell last week an industry trade group said late Wednesday. Crude oil stocks declined by 7.3 million barrels, while total motor gasoline stockpiles rose 654,000 barrels and distillates inventories, which include heating oil added 1.28 million barrels. The American Petroleum Institute release comes ahead of the more closely watched inventories report from the Energy Information Administration Thursday. On Wednesday the EIA trimmed its forecast for global oil demand next year, citing lowered expectations for global economic growth.
7-Eleven Inc. has offered $40 a share to buy Casey's General Stores Inc. in a deal valued at about $2 billion, the Wall Street Journal reported on its website Wednesday, citing people familiar with the deal. 7-Eleven's offer exceeds the $38.50 a share offered by Alimentation Couche-Tard Inc. of Canada, which had made a hostile bid for Casey's, the Journal said. Casey's said on Tuesday that it received a proposal from a "strategic third party" to buy the company at $40 a share. The company believes that the offer isn't sufficient to finalize a deal but it is willing to begin talks to explore a potential sale, it said in a statement.
In the week ended September 1, domestic equity mutual funds saw a near record $9.5 billion in outflows!
The Dow closed up 46 points to 10,387. Today's rally regained more than 43% of Tuesday's 107-point loss. The Standard & Poor's 500 Index closed at 1,099, up 7 points. The Nasdaq Composite Index rose 20 points to 2,229.
Anglo Irish bank will be split into a funding bank and an asset recovery bank.
(Bloomberg) -- China may tomorrow say that its trade surplus topped $20 billion for a third month in August in a report that risks stoking American lawmakers’ calls for protection from Chinese imports.
Exports probably exceeded imports by $26.9 billion, compared with $15.7 billion in the same month a year earlier, according to the median of 34 forecasts in a Bloomberg News survey. Shipments abroad gained 35 percent and imports grew 27.5 percent, according to the survey.
President Obama is prepared to announce his opposition to extending tax cuts for the wealthy during an economic speech in Cleveland Wednesday.
Rob Hanna: "In a post two years ago I discussed how low volume on the Tuesday after Labor Day was often a bad sign. I looked at what happened when 1) volume came in lower than the Friday before Labor Day, and 2) when volume failed to hit the highest level in at least 5 days. Tuesday not only did volume fail to hit the highest level in 5 days, it actually came in at the lowest level of the last 5 days. Since 1970 this has only happened 7 other times. As you’ll see below, it hasn’t been a good sign going forward."
BP cites poor cement job, folllowed by poor judgements by BP and Transocean workers, for the Deepwater Horizon blast and the resulting Gulf spill.
House Republican Leader John Boehner onWednesday proposed a two-year freeze on all tax rates and a cut in government spending to the levels of 2008, before a deep recession took hold of the economy.
Most of the country will see a colder-than-usual winter while summer and spring will be relatively cool and dry, according to the time-honored, complex calculations of the "Old Farmer's Almanac."
$1,261 for gold and $20.12 for silver, the ratio more than 62 ounces to one. In my view, silver is undervalued in relation to gold.
In the Household BLS August report 800,000 Americans were added to the "Not in Labor Force" statistic.
Howard Davidowitz: ""The consumer is totally wrecked and that’s why there’s no way this economy’s coming back, because the consumer is 70 percent of the U.S. economy[..]
The consumer is out of money. They’re wrecked. They have no jobs. We’ve got 18-and-a-half percent unemployment and underemployment. The consumer’s debt is 120 percent of disposable income. [..] The consumer's wrecked."
By far, the worst is yet to come. The administration is dysfunctional, incompetent and on a lunatic fringe. Everything they're doing is wrong. It’s all going to be worse."
Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm. The reductions, about 10 percent of current levels, will come after 2010 compensation payments, Whitney, 40, said in a report dated Aug. 31 and obtained by Bloomberg News today.
Sixty-eight percent (68%) of U.S. voters prefer a smaller government with fewer services and lower taxes to a more active one that offers more services and higher taxes. That's the second highest finding in Rasmussen Reports surveying on the question since November 2006, exceeded only by a 70% finding in August of last year.
The global hedge fund industry shriveled a little more in July when investors pulled out nearly $3 billion after the loosely regulated portfolios posted losses in May and June, researchers reported on Tuesday. Assets stood at $1.53 trillion, their lowest level since November 2009, according to data released jointly by TrimTabs and BarclayHedge, firms that track performance and flow data.
China to Build $2 Billion Railway for Iran. China is poised to sign a $2bn (£1.3bn) deal to build a railway line in Iran in the first step of a wider plan to tie the Middle East and Central Asia to Beijing. "For China, it could cut the cost of transporting goods to Europe by 5pc or 6pc," said Professor Swanstrom.
Karl Smith: "
Rome is Burning
Tuesday ~ September 7th, 2010 in Economics | by Karl Smith
There is a critical point that I fear the commentariat is just not getting. In my darker moments I fear that some of my fellow economists aren’t getting it either but we aren’t going to go there.
Look at these two graphs because they tell you the fundamental problem in America today:
We have very low capacity utilization (75%) and very high unemployment (10%).
That is, we have factories sitting idle for lack of workers – low capacity utilization. At the same time we have workers sitting idle for lack of factories – high unemployment.
There are machines waiting to be worked and people waiting to work them but they are not getting together. The labor market is failing to clear.
This is a fucking disaster." (courtesy Naked Capitalism)
Job openings at U.S. workplaces ticked higher in July to 3.04 million, compared with 2.86 million in June, the Labor Department reported Wednesday. Openings have increased about 30% in the past year, but remain less than the 4.4 million jobs open when the recession began in December 2007. There were about five unemployed people for every job opening in July. The number of separations, such as quits and layoffs, slightly declined to 4.4 million in July from 4.44 million in June. Meanwhile, the number of people hired fell to 4.23 million in July from 4.25 million in June. Private-sector hiring rose to 3.96 million from 3.95 million, while government hiring declined to 274,000 from 304,000.
The Bank of Canada said Wednesday that it raised its target overnight interest rate by a quarter-percentage point to 1% and expects strong growth in consumption and business investment -- a more positive outlook than after the last meeting in July. Officials also said they expect the economic recovery in Canada to be slightly more gradual than it had projected in its July, largely reflecting weaker U.S. activity. The quarter-point rate increase was mostly expected by currency markets. The Canadian dollar turned higher, with one U.S. dollar falling to C$1.0427, from C$1.0492 before the decision and compared to C$1.0474 late Tuesday.
Chain-store sales for the week ended Sept. 4 rose 1.8% from the year-earlier period, their slowest pace since May 22, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales dipped 0.4%. "Sales began the new fiscal month weak as the national weather remained unfavorable for fall merchandise demand," said Michael Niemira, ICSC's chief economist. He forecast September same-store sales to rise about 3%. Unseasonably hot weather lingered for its 15th straight week, Niemira cited Weather Trends International as saying.
Civil Defence has issued a warning saying an aftershock of up to magnitude 6.0 may happen over the course of the next few days and the State of Emergency will probably stay in place until at least later today. Although many residents have of course been deeply upset by the trauma of the last few days in Christchurch, one user has certainly kept her spirits up (excuse the pun), by declaring on Twitter, “just moved the booze to within reach of the doorframe. Priorities.” Another reported more damage from this latest aftershock than from the original earthquake.
Since the big quake on Saturday there have now been more than 300 aftershocks. For more on this go to nzherald.co.nz.
U.S. consumers shed their credit for a sixth straight month in July, with total credit falling 1.75% to $2.42 trillion, according to figures released by the Federal Reserve. Revolving credit decreased at an annual rate of 6.25%, while nonrevolving credit increased at an annual rate of 0.5%.
U.S. growth slowed over the summer but the economy was still expanding at a "moderate" pace, according to the Federal Reserve's latest report on the economy. The Fed survey, commonly known as the Beige Book, dovetails with a slew of data that shows the U.S. recovery has tapered off since the spring. Yet despite recent weakness, the report also indicates the economy is still growing. "Economic growth at a modest pace was the most common characterization of overall conditions," the Beige Book said. What's more, the report said the price of wages and goods and services remained "limited," indicating little inflationary pressure in the economy. The Federal Reserve said the U.S. economy maintained its expansion while showing “widespread signs of a deceleration” in mid-July through the end of August, according to a survey by 12 regional Fed banks.
The U.S. Housing and Urban Development Department on Wednesday allocated $1 billion in funding to U.S. states to help stabilize neighborhoods faced with many foreclosures. The sweeping bank reform bill, the Dodd-Frank Act, allocated the funds for the programs. "These grants will support local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods," said HUD Secretary Shaun Donovan. States can use the funds to acquire land and property; demolish or rehabilitate abandoned properties.
Google Instant searches "as you type, not after you type," Marissa Mayer, Google's vice president of user experience, said at a press event at San Francisco's Museum of Modern Art.
Crude-oil inventories fell last week an industry trade group said late Wednesday. Crude oil stocks declined by 7.3 million barrels, while total motor gasoline stockpiles rose 654,000 barrels and distillates inventories, which include heating oil added 1.28 million barrels. The American Petroleum Institute release comes ahead of the more closely watched inventories report from the Energy Information Administration Thursday. On Wednesday the EIA trimmed its forecast for global oil demand next year, citing lowered expectations for global economic growth.
7-Eleven Inc. has offered $40 a share to buy Casey's General Stores Inc. in a deal valued at about $2 billion, the Wall Street Journal reported on its website Wednesday, citing people familiar with the deal. 7-Eleven's offer exceeds the $38.50 a share offered by Alimentation Couche-Tard Inc. of Canada, which had made a hostile bid for Casey's, the Journal said. Casey's said on Tuesday that it received a proposal from a "strategic third party" to buy the company at $40 a share. The company believes that the offer isn't sufficient to finalize a deal but it is willing to begin talks to explore a potential sale, it said in a statement.
In the week ended September 1, domestic equity mutual funds saw a near record $9.5 billion in outflows!
The Dow closed up 46 points to 10,387. Today's rally regained more than 43% of Tuesday's 107-point loss. The Standard & Poor's 500 Index closed at 1,099, up 7 points. The Nasdaq Composite Index rose 20 points to 2,229.
Anglo Irish bank will be split into a funding bank and an asset recovery bank.
(Bloomberg) -- China may tomorrow say that its trade surplus topped $20 billion for a third month in August in a report that risks stoking American lawmakers’ calls for protection from Chinese imports.
Exports probably exceeded imports by $26.9 billion, compared with $15.7 billion in the same month a year earlier, according to the median of 34 forecasts in a Bloomberg News survey. Shipments abroad gained 35 percent and imports grew 27.5 percent, according to the survey.
Housing
9/7/10 Housing
Sheree Curry: "Homeowners are slashing prices more drastically and more frequently, according to recently released data from ZipRealty. The average price reduction is now 7.1 percent of list price.
List prices dipped about $19,000 in August compared with July, across the 26 markets studied. On average, sellers made two price cuts during that time.
Seven cities saw price reductions on more than half of their inventory, with Jacksonville, Phoenix and Minneapolis on top with 55 percent, 54.4 percent and 52.4 percent, respectively.
"Earlier in the year we saw sellers being aggressive with their pricing, but not reducing as much," says Leslie Tyler, vice president of marketing for ZipRealty. "What we are seeing now is that the trends are reversing."
With the seeming desperation of home sellers, and the continued drop in mortgage rates, buyers are in a very good position. But the plunging rate at which buyers are applying for mortgages tells a different story, which might explain sellers' attitudes. Fewer homes are sold near the end of the year, and with the homebuyer tax credits now gone, people who have to move due to a job or a divorce will more quickly lower their asking price, she says. However, buyers are also being more patient. "Knowing prices are going down, buyers are more willing to wait for the right house."
ZeroHedge: "The New Deal cost America $50 billion in 1930s dollars. How the times have changed - today the White House will announce a new and improved New(er) Deal, which will invest $50 billion in a 3Rs sequel - road, rail and runway, infrastructure developments. It will have roughly one thousandth the impact of the Roosevelt plan, demonstrating once again that in 80 years the only thing that has actually worked in America is the ongoing devaluation of the dollar. But don't call it failed fiscal surplus infinity +1, that would certainly not help the Democrats' InTrade odds this November. But since ARRA has now failed and GDP is stalling, and the Fed is pretty much powerless to create anything except a huge spike in gold prices once it goes full retard on monetary policy, what does one expect the president to do (aside from the obvious which is whatever the teleprompter tells him)? At least Paul Krugman will be giddy: there go two more $25 billion bond auctions to spike the economy for one or two days, only to cause another output vacuum shortly thereafter. And since no Obama plan could be complete without the creation of a czar or a bank to act as chief administration of fund misappropriation and embezzlement, the plan will also see the creation of an "Infrastructure Bank" which Wall Street is already actively plotting how to frontrun and to vicious rob blind at the expense of future generations. So congratulations America: ten days of total tax revenue were just washed down the drain to keep a few road workers busy: we'll skip the obligatory "Change you can..." jokes at this point."
Air Products raises bid for Airgas to $65.50/share and said it will walk away unless shareholders of the target company support its proposals at a meeting next week.
Global banks will be required to hold Tier 1 capital of nine percent including a 3 percent so-called "conservation buffer," German weekly Die Zeit reported, quoting a draft proposal from the Basel Committee, the body tasked with drawing up global banking rules.
Die Zeit's online edition also said regulators can demand banks accumulate a so-called "anti-cyclical buffer" of 3 percent so that Tier 1 capital requirements can rise to 12 percent in boom times.
Mike Shedlock: "All totaled, 17.3 million citizens do not have a job today nor a job they can return to on Tuesday. Another 8.9 million will not work as many hours as they would like, this week, next week, or the week after that."
Previously regulators required a Tier 1 ratio of no less than 4 percent.
John Hussman: "Economic risks continue to be quite serious. Based on typical lags between deterioration in leading indicators and deterioration in "coincident" indicators of economic activity, investors may have abandoned the concern about further economic risks prematurely....Based on the ECRI and Philadelphia Fed data, however, the prospect of continuing strength in the PMI is not good."
Oracle Corp has hired Mark Hurd, the former chief executive of Hewlett-Packard Co who resigned amid a scandal, as president.
Hurd, a close friend of Oracle CEO Larry Ellison will replace Charles Phillips, who has resigned, Oracle said in a statement on Monday. Phillips was co-president alongside Safra Catz, who remains in her role.
Earthquakes have struck Wellington and Central Hawke's Bay today, but caused no damage.
A magnitude 4 quake - centred 20km west of Wellington and 20km underground - was recorded at 3.48pm, and was followed by a 3.8 quake half an hour later.
They followed a 5.2 earthquake near Waipukurau in Central Hawke's Bay at 10.48am.
The euro fell the most in a week against the dollar and the yen on concern European banks will struggle to raise funds, damping the region’s economic outlook. The 16-nation currency weakened against 15 of its 16 major counterparts after the Association of German Banks said the nation’s 10 largest lenders, including Deutsche Bank AG, may need about 105 billion euros ($134 billion) in fresh capital because of new regulations.
The U.S. dollar fell to a 15-year low versus the Japanese Yen.
Casey's General Stores Inc. shares rose 7.9% to $41.96 after the company's board recommended against Alimentation Couche-Tard Inc.'s revised tender offer to acquire Casey's for $38.50 a share. It also said it's gotten a preliminary proposal from a "strategic third party" regarding a consensual transaction at $40 a share. While the company said that it's worth more than that, it said it's authorized discussions with the third party to see if an agreement can be reached.
Google will launch its new service to bring the Web to TV screens in the United States this autumn and worldwide next year, its chief executive said, as it extends its reach from the desktop to the living room.
Eric Schmidt said the service, which would allow full Internet browsing via the television, would be free and that Google would work with a variety of programme makers and electronics manufacturers to bring it to consumers.
"We will work with content providers but it is very unlikely that we will get into actual content production," Schmidt told journalists after a keynote speech to the IFA consumer electronics trade fair in Berlin.
Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, said he is investing in farmable land, small technology companies and gold as he hunts original ideas and braces for a weaker dollar.
“I believe that agriculture land -- productive agricultural land with water on site -- will be very valuable in the future,” Burry, 39, said in a Bloomberg Television interview scheduled for broadcast this morning in New York. “I’ve put a good amount of money into that.”
Burry, as head of Scion Capital LLC, prodded Wall Street banks in early 2005 to create credit-default swaps to bet against bonds backed by the riskiest home loans. The strategy paid off as borrowers defaulted, letting his investors more than quintuple their money from 2000 to 2008, according to Michael Lewis’s book “The Big Short” (Norton/Allen Lane).
The most widely traded gold contract posted a new settlement high Tuesday, as investors ploughed into assets seen as safer during times of economic distress. Fueled by a report that the European bank stress tests masked some problems, gold for December delivery ended $8.20, or 0.7%, higher at $1259.30 an ounce. That topped the settlement high for a most-active gold contract hit in June, of $1258.30 an ounce.
Boeing Co.will consolidate its Boeing military aircraft business to four divisions from six. The consolidation is expected to result in work reductions, including about 10% cut in the unit's executive positions. "Additional reductions across all levels of the organization are anticipated in coming months," said Boeing in a statement. The changes are expected to take effect on Oct. 1.
China's state-owned chemicals group Sinochem Corp has approached Singapore state investor Temasek to join a consortium that may bid for Canada's Potash Corp , sources with knowledge of the deal said on Tuesday.
The move appeared to underpin Reuters reports that Chinese officials had ordered state companies to meet investment bankers to explore ways to block BHP Billiton's $39 billion bid for Potash Corp.
Bristol-Myers Squibb Co late Tuesday said it will buy ZymoGenetics Inc. for $9.75 a share in cash.
The Dow industrials dropped 107.24 points, or 1%, to end at 10,340.69. The S&P 500 index lost 12.68 points, or 1.2%, at 1,091.84, weighed down by a 2.4% drop in the financials sector. The Nasdaq Composite fell 24.86 points, or 1.1%, to 2,208.89.
Sheree Curry: "Homeowners are slashing prices more drastically and more frequently, according to recently released data from ZipRealty. The average price reduction is now 7.1 percent of list price.
List prices dipped about $19,000 in August compared with July, across the 26 markets studied. On average, sellers made two price cuts during that time.
Seven cities saw price reductions on more than half of their inventory, with Jacksonville, Phoenix and Minneapolis on top with 55 percent, 54.4 percent and 52.4 percent, respectively.
"Earlier in the year we saw sellers being aggressive with their pricing, but not reducing as much," says Leslie Tyler, vice president of marketing for ZipRealty. "What we are seeing now is that the trends are reversing."
With the seeming desperation of home sellers, and the continued drop in mortgage rates, buyers are in a very good position. But the plunging rate at which buyers are applying for mortgages tells a different story, which might explain sellers' attitudes. Fewer homes are sold near the end of the year, and with the homebuyer tax credits now gone, people who have to move due to a job or a divorce will more quickly lower their asking price, she says. However, buyers are also being more patient. "Knowing prices are going down, buyers are more willing to wait for the right house."
ZeroHedge: "The New Deal cost America $50 billion in 1930s dollars. How the times have changed - today the White House will announce a new and improved New(er) Deal, which will invest $50 billion in a 3Rs sequel - road, rail and runway, infrastructure developments. It will have roughly one thousandth the impact of the Roosevelt plan, demonstrating once again that in 80 years the only thing that has actually worked in America is the ongoing devaluation of the dollar. But don't call it failed fiscal surplus infinity +1, that would certainly not help the Democrats' InTrade odds this November. But since ARRA has now failed and GDP is stalling, and the Fed is pretty much powerless to create anything except a huge spike in gold prices once it goes full retard on monetary policy, what does one expect the president to do (aside from the obvious which is whatever the teleprompter tells him)? At least Paul Krugman will be giddy: there go two more $25 billion bond auctions to spike the economy for one or two days, only to cause another output vacuum shortly thereafter. And since no Obama plan could be complete without the creation of a czar or a bank to act as chief administration of fund misappropriation and embezzlement, the plan will also see the creation of an "Infrastructure Bank" which Wall Street is already actively plotting how to frontrun and to vicious rob blind at the expense of future generations. So congratulations America: ten days of total tax revenue were just washed down the drain to keep a few road workers busy: we'll skip the obligatory "Change you can..." jokes at this point."
Air Products raises bid for Airgas to $65.50/share and said it will walk away unless shareholders of the target company support its proposals at a meeting next week.
Global banks will be required to hold Tier 1 capital of nine percent including a 3 percent so-called "conservation buffer," German weekly Die Zeit reported, quoting a draft proposal from the Basel Committee, the body tasked with drawing up global banking rules.
Die Zeit's online edition also said regulators can demand banks accumulate a so-called "anti-cyclical buffer" of 3 percent so that Tier 1 capital requirements can rise to 12 percent in boom times.
Mike Shedlock: "All totaled, 17.3 million citizens do not have a job today nor a job they can return to on Tuesday. Another 8.9 million will not work as many hours as they would like, this week, next week, or the week after that."
Previously regulators required a Tier 1 ratio of no less than 4 percent.
John Hussman: "Economic risks continue to be quite serious. Based on typical lags between deterioration in leading indicators and deterioration in "coincident" indicators of economic activity, investors may have abandoned the concern about further economic risks prematurely....Based on the ECRI and Philadelphia Fed data, however, the prospect of continuing strength in the PMI is not good."
Oracle Corp has hired Mark Hurd, the former chief executive of Hewlett-Packard Co who resigned amid a scandal, as president.
Hurd, a close friend of Oracle CEO Larry Ellison will replace Charles Phillips, who has resigned, Oracle said in a statement on Monday. Phillips was co-president alongside Safra Catz, who remains in her role.
Earthquakes have struck Wellington and Central Hawke's Bay today, but caused no damage.
A magnitude 4 quake - centred 20km west of Wellington and 20km underground - was recorded at 3.48pm, and was followed by a 3.8 quake half an hour later.
They followed a 5.2 earthquake near Waipukurau in Central Hawke's Bay at 10.48am.
The euro fell the most in a week against the dollar and the yen on concern European banks will struggle to raise funds, damping the region’s economic outlook. The 16-nation currency weakened against 15 of its 16 major counterparts after the Association of German Banks said the nation’s 10 largest lenders, including Deutsche Bank AG, may need about 105 billion euros ($134 billion) in fresh capital because of new regulations.
The U.S. dollar fell to a 15-year low versus the Japanese Yen.
Casey's General Stores Inc. shares rose 7.9% to $41.96 after the company's board recommended against Alimentation Couche-Tard Inc.'s revised tender offer to acquire Casey's for $38.50 a share. It also said it's gotten a preliminary proposal from a "strategic third party" regarding a consensual transaction at $40 a share. While the company said that it's worth more than that, it said it's authorized discussions with the third party to see if an agreement can be reached.
Google will launch its new service to bring the Web to TV screens in the United States this autumn and worldwide next year, its chief executive said, as it extends its reach from the desktop to the living room.
Eric Schmidt said the service, which would allow full Internet browsing via the television, would be free and that Google would work with a variety of programme makers and electronics manufacturers to bring it to consumers.
"We will work with content providers but it is very unlikely that we will get into actual content production," Schmidt told journalists after a keynote speech to the IFA consumer electronics trade fair in Berlin.
Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, said he is investing in farmable land, small technology companies and gold as he hunts original ideas and braces for a weaker dollar.
“I believe that agriculture land -- productive agricultural land with water on site -- will be very valuable in the future,” Burry, 39, said in a Bloomberg Television interview scheduled for broadcast this morning in New York. “I’ve put a good amount of money into that.”
Burry, as head of Scion Capital LLC, prodded Wall Street banks in early 2005 to create credit-default swaps to bet against bonds backed by the riskiest home loans. The strategy paid off as borrowers defaulted, letting his investors more than quintuple their money from 2000 to 2008, according to Michael Lewis’s book “The Big Short” (Norton/Allen Lane).
The most widely traded gold contract posted a new settlement high Tuesday, as investors ploughed into assets seen as safer during times of economic distress. Fueled by a report that the European bank stress tests masked some problems, gold for December delivery ended $8.20, or 0.7%, higher at $1259.30 an ounce. That topped the settlement high for a most-active gold contract hit in June, of $1258.30 an ounce.
Boeing Co.will consolidate its Boeing military aircraft business to four divisions from six. The consolidation is expected to result in work reductions, including about 10% cut in the unit's executive positions. "Additional reductions across all levels of the organization are anticipated in coming months," said Boeing in a statement. The changes are expected to take effect on Oct. 1.
China's state-owned chemicals group Sinochem Corp has approached Singapore state investor Temasek to join a consortium that may bid for Canada's Potash Corp , sources with knowledge of the deal said on Tuesday.
The move appeared to underpin Reuters reports that Chinese officials had ordered state companies to meet investment bankers to explore ways to block BHP Billiton's $39 billion bid for Potash Corp.
Bristol-Myers Squibb Co late Tuesday said it will buy ZymoGenetics Inc. for $9.75 a share in cash.
The Dow industrials dropped 107.24 points, or 1%, to end at 10,340.69. The S&P 500 index lost 12.68 points, or 1.2%, at 1,091.84, weighed down by a 2.4% drop in the financials sector. The Nasdaq Composite fell 24.86 points, or 1.1%, to 2,208.89.
Sunday, September 05, 2010
Social Security
9/5/10 Social Security
Tim Wood: "In accordance with Dow theory, the bullish primary trend associated with the bear market rally that began at the March 2009 low still remains intact. No doubt, that rally has run into some obstacles. But once again, it all boils down to price. What is more significant to me is price itself and the underlying statistical implications. If the statistical DNA Markers that I have found to have occurred at every major market top since the inception of the averages in 1896 prove to fall into place, then that will mean more to me than anything else."
Mike Shedlock: "Yes, unemployment fell from 10.1% to 9.5% but all of that decrease, if not more than all of that decrease, was a result of a falling participation rate. The bottom line is neither the Fed increasing its balance sheet by $trillions nor a $1.4 trillion deficit did a thing to lower unemployment....The lesson of Japan is the same as the lesson of home tax credits in the US - Stimulus programs do not work period, regardless of size. In Japan, every program failed. Japan is now in debt to the tune of 200% of GDP.
Some suggest Japan is no worse off for it. Nothing could be further from the truth. Japan squandered massive savings in the stupidest manner possible, building bridges to nowhere, and now its citizens are aging, in need of drawing down their savings.
Unfortunately those savings were squandered.
Japan is poised to blow up, however, the timing is uncertain. Sadly, the US is on the same path and Krugman is hellbent to get us there faster."
Former Hewlett-Packard Co. Chief Executive Mark Hurd may join Oracle Corp.'s senior management, people familiar with the situation told The Wall Street Journal.
Mike Burk: "Volume represents interest and, although the major indices rallied 5+% during the last 4 days of last week, there was no interest....New lows disappeared last week. Most of the indicators are following a pattern similar to what they did off the early July low. It will be a week or so before we will know if the pattern has changed.
I expect the major averages to be higher on Friday September 10 than they were on Friday September 3."
The Saskatchewan government is concerned that either a BHP buyout or a Chinese takeover of Potash could affect jobs and government revenue, and has suggested it may consider changes to its potash royalty system to limit risks associated with any eventual deal.
Much of the recovery in the Standard & Poor's 500 Index is likely short covering, said Kass, founder and president of Seabreeze Partners on Friday's "Fast Money Halftime Report." "We're back to buying the dips and selling the rips. It's going to be a marvelous environment for trading. A less than marvelous environment to invest in."
Nicole Foss: "I mean essentially, what I think we're looking at, that really drives a lot of what we're seeing at the moment, is this enormous ponzi scheme. The credit expansion we've experienced, that absolutely is grounded in ponzi dynamics, which is why I wrote At the Top of the Great Pyramid. But I think what we've been looking at is the development of an enormous ponzi scheme, an enormous, you know, Enron times a million where you have a structure that looks huge and robust, but is actually hollowed out from the inside and devoid of structure. And it's very much prone to implosion.
And one of the things we've been trying to make clear at The Automatic Earth all the way through is that it's deflation that we are facing. And the reason for that is that that's how ponzi schemes always end. The excess claims to underlying real wealth are extinguished, and that is deflation by definition. Because deflation is the contraction of money and credit relative to available goods and services. And that's exactly what we're about to see. And I think, a lot of my view about how energy is going to play out, is really going to be quite colored by my view of what's happening with the financial system, and deflation, because the time frame for finance is much shorter than the time frame for changing any available energy supply. So while energy is a key driver on the way up, finance is the key driver on the way down because it plays out so quickly....I think we're going to see the same kind of thing, I think oil prices are going to fall a long way because we're going to see demand fall as we move into depression. But demand collapse is going to set up a supply collapse. While it buys you time initially, so that finance is the driver not so much energy supply, because you still have energy supply geared to a previous higher level of demand, so that really will drastically undercut price support. However moving forward, low prices are likely to mean no investment, no exploration, no drilling, no maintenance, and all of these things are going to set up a supply collapse a few years down the line.
So what financial crisis does, while it buys you time initially, it aggravates the situation with peak oil in the longer term. And by longer term I mean maybe only five years, I'm not talking a long way out here. But already we're seeing people cutting back on drilling, I think for instance natural gas [?] in Canada, people are cutting back on drilling because the prices are not high enough. And I think we're going to see a lot of that kind of dynamic."
Nouriel Roubini: "The US, Japan and large parts of Europe have exhausted their policy arsenal,
leaving them defenceless against a double-dip recession."
The percentage of the labor force receiving unemployment insurance today is almost 50% greater than it was at the peak of the 1982 recession.
The causes of aging and age-related diseases are believed to be attributed to glucosepane, a protein crosslink that reduces elasticity throughout the body.
ZeroHedge: "Goss said that as many as 67% of all illegals are working with either a phony SS card or one that was no longer valid. Take this information together with a Pew report that put the number of illegal workers today at 11.1mm. This implies that there are 7,400,000 illegal workers contributing to SS. Most of this income is regular weekly pay. The average number for this in the US is $30K. About $100 per day. That comes to a total payroll of $225 billion! The SS tax on this is 12.4%, or $27b in just 2010. This analysis is how Goss got to the $240b 2007 topside estimate. Add three years to that at $25b a year plus interest on the whole nut and you get ~$350b.
I won’t (now) go into the longer-term impacts to SS of having overstated its surplus by $350b. That number is 13.5% of the assets of the Fund. I will say that this is a sea change event for how we look at SS. All prior analysis and all future expectations must now be revisited. I assure you that the results after excluding the illegal taxes will be will prove to be a major blow to the solvency of the Fund. It will change the debate on SS. It is that significant....
(I) If SS eliminated the future liabilities associated with the estimated $320b of excess contributions and they were allowed to keep those tainted contributions SS would be transformed overnight to an overfunded position of significant proportions. It would be so significant that the Fund could reduce the current 12.4% PR tax by 20-30% for the next three to four years. That would have a meaningful impact on the economy.
(II) America would get paid $350b (P+I) for allowing a significant number of workers to become legal. Many would still gripe. But the tradeoff of a partial tax holiday for 150mm workers and their employers would shut down much of the opposition.
The Administration needs a win-win on the economy and immigration. Steve Goss at the Trust Fund may have given them the opportunity to do that. Stay tuned. It does not get much weirder than this."
Tim Wood: "In accordance with Dow theory, the bullish primary trend associated with the bear market rally that began at the March 2009 low still remains intact. No doubt, that rally has run into some obstacles. But once again, it all boils down to price. What is more significant to me is price itself and the underlying statistical implications. If the statistical DNA Markers that I have found to have occurred at every major market top since the inception of the averages in 1896 prove to fall into place, then that will mean more to me than anything else."
Mike Shedlock: "Yes, unemployment fell from 10.1% to 9.5% but all of that decrease, if not more than all of that decrease, was a result of a falling participation rate. The bottom line is neither the Fed increasing its balance sheet by $trillions nor a $1.4 trillion deficit did a thing to lower unemployment....The lesson of Japan is the same as the lesson of home tax credits in the US - Stimulus programs do not work period, regardless of size. In Japan, every program failed. Japan is now in debt to the tune of 200% of GDP.
Some suggest Japan is no worse off for it. Nothing could be further from the truth. Japan squandered massive savings in the stupidest manner possible, building bridges to nowhere, and now its citizens are aging, in need of drawing down their savings.
Unfortunately those savings were squandered.
Japan is poised to blow up, however, the timing is uncertain. Sadly, the US is on the same path and Krugman is hellbent to get us there faster."
Former Hewlett-Packard Co. Chief Executive Mark Hurd may join Oracle Corp.'s senior management, people familiar with the situation told The Wall Street Journal.
Mike Burk: "Volume represents interest and, although the major indices rallied 5+% during the last 4 days of last week, there was no interest....New lows disappeared last week. Most of the indicators are following a pattern similar to what they did off the early July low. It will be a week or so before we will know if the pattern has changed.
I expect the major averages to be higher on Friday September 10 than they were on Friday September 3."
The Saskatchewan government is concerned that either a BHP buyout or a Chinese takeover of Potash could affect jobs and government revenue, and has suggested it may consider changes to its potash royalty system to limit risks associated with any eventual deal.
Much of the recovery in the Standard & Poor's 500 Index is likely short covering, said Kass, founder and president of Seabreeze Partners on Friday's "Fast Money Halftime Report." "We're back to buying the dips and selling the rips. It's going to be a marvelous environment for trading. A less than marvelous environment to invest in."
Nicole Foss: "I mean essentially, what I think we're looking at, that really drives a lot of what we're seeing at the moment, is this enormous ponzi scheme. The credit expansion we've experienced, that absolutely is grounded in ponzi dynamics, which is why I wrote At the Top of the Great Pyramid. But I think what we've been looking at is the development of an enormous ponzi scheme, an enormous, you know, Enron times a million where you have a structure that looks huge and robust, but is actually hollowed out from the inside and devoid of structure. And it's very much prone to implosion.
And one of the things we've been trying to make clear at The Automatic Earth all the way through is that it's deflation that we are facing. And the reason for that is that that's how ponzi schemes always end. The excess claims to underlying real wealth are extinguished, and that is deflation by definition. Because deflation is the contraction of money and credit relative to available goods and services. And that's exactly what we're about to see. And I think, a lot of my view about how energy is going to play out, is really going to be quite colored by my view of what's happening with the financial system, and deflation, because the time frame for finance is much shorter than the time frame for changing any available energy supply. So while energy is a key driver on the way up, finance is the key driver on the way down because it plays out so quickly....I think we're going to see the same kind of thing, I think oil prices are going to fall a long way because we're going to see demand fall as we move into depression. But demand collapse is going to set up a supply collapse. While it buys you time initially, so that finance is the driver not so much energy supply, because you still have energy supply geared to a previous higher level of demand, so that really will drastically undercut price support. However moving forward, low prices are likely to mean no investment, no exploration, no drilling, no maintenance, and all of these things are going to set up a supply collapse a few years down the line.
So what financial crisis does, while it buys you time initially, it aggravates the situation with peak oil in the longer term. And by longer term I mean maybe only five years, I'm not talking a long way out here. But already we're seeing people cutting back on drilling, I think for instance natural gas [?] in Canada, people are cutting back on drilling because the prices are not high enough. And I think we're going to see a lot of that kind of dynamic."
Nouriel Roubini: "The US, Japan and large parts of Europe have exhausted their policy arsenal,
leaving them defenceless against a double-dip recession."
The percentage of the labor force receiving unemployment insurance today is almost 50% greater than it was at the peak of the 1982 recession.
The causes of aging and age-related diseases are believed to be attributed to glucosepane, a protein crosslink that reduces elasticity throughout the body.
ZeroHedge: "Goss said that as many as 67% of all illegals are working with either a phony SS card or one that was no longer valid. Take this information together with a Pew report that put the number of illegal workers today at 11.1mm. This implies that there are 7,400,000 illegal workers contributing to SS. Most of this income is regular weekly pay. The average number for this in the US is $30K. About $100 per day. That comes to a total payroll of $225 billion! The SS tax on this is 12.4%, or $27b in just 2010. This analysis is how Goss got to the $240b 2007 topside estimate. Add three years to that at $25b a year plus interest on the whole nut and you get ~$350b.
I won’t (now) go into the longer-term impacts to SS of having overstated its surplus by $350b. That number is 13.5% of the assets of the Fund. I will say that this is a sea change event for how we look at SS. All prior analysis and all future expectations must now be revisited. I assure you that the results after excluding the illegal taxes will be will prove to be a major blow to the solvency of the Fund. It will change the debate on SS. It is that significant....
(I) If SS eliminated the future liabilities associated with the estimated $320b of excess contributions and they were allowed to keep those tainted contributions SS would be transformed overnight to an overfunded position of significant proportions. It would be so significant that the Fund could reduce the current 12.4% PR tax by 20-30% for the next three to four years. That would have a meaningful impact on the economy.
(II) America would get paid $350b (P+I) for allowing a significant number of workers to become legal. Many would still gripe. But the tradeoff of a partial tax holiday for 150mm workers and their employers would shut down much of the opposition.
The Administration needs a win-win on the economy and immigration. Steve Goss at the Trust Fund may have given them the opportunity to do that. Stay tuned. It does not get much weirder than this."
Social Security
9/5/10 Social Security
Tim Wood: "In accordance with Dow theory, the bullish primary trend associated with the bear market rally that began at the March 2009 low still remains intact. No doubt, that rally has run into some obstacles. But once again, it all boils down to price. What is more significant to me is price itself and the underlying statistical implications. If the statistical DNA Markers that I have found to have occurred at every major market top since the inception of the averages in 1896 prove to fall into place, then that will mean more to me than anything else."
Mike Shedlock: "Yes, unemployment fell from 10.1% to 9.5% but all of that decrease, if not more than all of that decrease, was a result of a falling participation rate. The bottom line is neither the Fed increasing its balance sheet by $trillions nor a $1.4 trillion deficit did a thing to lower unemployment....The lesson of Japan is the same as the lesson of home tax credits in the US - Stimulus programs do not work period, regardless of size. In Japan, every program failed. Japan is now in debt to the tune of 200% of GDP.
Some suggest Japan is no worse off for it. Nothing could be further from the truth. Japan squandered massive savings in the stupidest manner possible, building bridges to nowhere, and now its citizens are aging, in need of drawing down their savings.
Unfortunately those savings were squandered.
Japan is poised to blow up, however, the timing is uncertain. Sadly, the US is on the same path and Krugman is hellbent to get us there faster."
Former Hewlett-Packard Co. Chief Executive Mark Hurd may join Oracle Corp.'s senior management, people familiar with the situation told The Wall Street Journal.
Mike Burk: "Volume represents interest and, although the major indices rallied 5+% during the last 4 days of last week, there was no interest....New lows disappeared last week. Most of the indicators are following a pattern similar to what they did off the early July low. It will be a week or so before we will know if the pattern has changed.
I expect the major averages to be higher on Friday September 10 than they were on Friday September 3."
The Saskatchewan government is concerned that either a BHP buyout or a Chinese takeover of Potash could affect jobs and government revenue, and has suggested it may consider changes to its potash royalty system to limit risks associated with any eventual deal.
Much of the recovery in the Standard & Poor's 500 Index is likely short covering, said Kass, founder and president of Seabreeze Partners on Friday's "Fast Money Halftime Report." "We're back to buying the dips and selling the rips. It's going to be a marvelous environment for trading. A less than marvelous environment to invest in."
Nicole Foss: "I mean essentially, what I think we're looking at, that really drives a lot of what we're seeing at the moment, is this enormous ponzi scheme. The credit expansion we've experienced, that absolutely is grounded in ponzi dynamics, which is why I wrote At the Top of the Great Pyramid. But I think what we've been looking at is the development of an enormous ponzi scheme, an enormous, you know, Enron times a million where you have a structure that looks huge and robust, but is actually hollowed out from the inside and devoid of structure. And it's very much prone to implosion.
And one of the things we've been trying to make clear at The Automatic Earth all the way through is that it's deflation that we are facing. And the reason for that is that that's how ponzi schemes always end. The excess claims to underlying real wealth are extinguished, and that is deflation by definition. Because deflation is the contraction of money and credit relative to available goods and services. And that's exactly what we're about to see. And I think, a lot of my view about how energy is going to play out, is really going to be quite colored by my view of what's happening with the financial system, and deflation, because the time frame for finance is much shorter than the time frame for changing any available energy supply. So while energy is a key driver on the way up, finance is the key driver on the way down because it plays out so quickly....I think we're going to see the same kind of thing, I think oil prices are going to fall a long way because we're going to see demand fall as we move into depression. But demand collapse is going to set up a supply collapse. While it buys you time initially, so that finance is the driver not so much energy supply, because you still have energy supply geared to a previous higher level of demand, so that really will drastically undercut price support. However moving forward, low prices are likely to mean no investment, no exploration, no drilling, no maintenance, and all of these things are going to set up a supply collapse a few years down the line.
So what financial crisis does, while it buys you time initially, it aggravates the situation with peak oil in the longer term. And by longer term I mean maybe only five years, I'm not talking a long way out here. But already we're seeing people cutting back on drilling, I think for instance natural gas [?] in Canada, people are cutting back on drilling because the prices are not high enough. And I think we're going to see a lot of that kind of dynamic."
Nouriel Roubini: "The US, Japan and large parts of Europe have exhausted their policy arsenal,
leaving them defenceless against a double-dip recession."
The percentage of the labor force receiving unemployment insurance today is almost 50% greater than it was at the peak of the 1982 recession.
The causes of aging and age-related diseases are believed to be attributed to glucosepane, a protein crosslink that reduces elasticity throughout the body.
ZeroHedge: "Goss said that as many as 67% of all illegals are working with either a phony SS card or one that was no longer valid. Take this information together with a Pew report that put the number of illegal workers today at 11.1mm. This implies that there are 7,400,000 illegal workers contributing to SS. Most of this income is regular weekly pay. The average number for this in the US is $30K. About $100 per day. That comes to a total payroll of $225 billion! The SS tax on this is 12.4%, or $27b in just 2010. This analysis is how Goss got to the $240b 2007 topside estimate. Add three years to that at $25b a year plus interest on the whole nut and you get ~$350b.
I won’t (now) go into the longer-term impacts to SS of having overstated its surplus by $350b. That number is 13.5% of the assets of the Fund. I will say that this is a sea change event for how we look at SS. All prior analysis and all future expectations must now be revisited. I assure you that the results after excluding the illegal taxes will be will prove to be a major blow to the solvency of the Fund. It will change the debate on SS. It is that significant....
(I) If SS eliminated the future liabilities associated with the estimated $320b of excess contributions and they were allowed to keep those tainted contributions SS would be transformed overnight to an overfunded position of significant proportions. It would be so significant that the Fund could reduce the current 12.4% PR tax by 20-30% for the next three to four years. That would have a meaningful impact on the economy.
(II) America would get paid $350b (P+I) for allowing a significant number of workers to become legal. Many would still gripe. But the tradeoff of a partial tax holiday for 150mm workers and their employers would shut down much of the opposition.
The Administration needs a win-win on the economy and immigration. Steve Goss at the Trust Fund may have given them the opportunity to do that. Stay tuned. It does not get much weirder than this."
Tim Wood: "In accordance with Dow theory, the bullish primary trend associated with the bear market rally that began at the March 2009 low still remains intact. No doubt, that rally has run into some obstacles. But once again, it all boils down to price. What is more significant to me is price itself and the underlying statistical implications. If the statistical DNA Markers that I have found to have occurred at every major market top since the inception of the averages in 1896 prove to fall into place, then that will mean more to me than anything else."
Mike Shedlock: "Yes, unemployment fell from 10.1% to 9.5% but all of that decrease, if not more than all of that decrease, was a result of a falling participation rate. The bottom line is neither the Fed increasing its balance sheet by $trillions nor a $1.4 trillion deficit did a thing to lower unemployment....The lesson of Japan is the same as the lesson of home tax credits in the US - Stimulus programs do not work period, regardless of size. In Japan, every program failed. Japan is now in debt to the tune of 200% of GDP.
Some suggest Japan is no worse off for it. Nothing could be further from the truth. Japan squandered massive savings in the stupidest manner possible, building bridges to nowhere, and now its citizens are aging, in need of drawing down their savings.
Unfortunately those savings were squandered.
Japan is poised to blow up, however, the timing is uncertain. Sadly, the US is on the same path and Krugman is hellbent to get us there faster."
Former Hewlett-Packard Co. Chief Executive Mark Hurd may join Oracle Corp.'s senior management, people familiar with the situation told The Wall Street Journal.
Mike Burk: "Volume represents interest and, although the major indices rallied 5+% during the last 4 days of last week, there was no interest....New lows disappeared last week. Most of the indicators are following a pattern similar to what they did off the early July low. It will be a week or so before we will know if the pattern has changed.
I expect the major averages to be higher on Friday September 10 than they were on Friday September 3."
The Saskatchewan government is concerned that either a BHP buyout or a Chinese takeover of Potash could affect jobs and government revenue, and has suggested it may consider changes to its potash royalty system to limit risks associated with any eventual deal.
Much of the recovery in the Standard & Poor's 500 Index is likely short covering, said Kass, founder and president of Seabreeze Partners on Friday's "Fast Money Halftime Report." "We're back to buying the dips and selling the rips. It's going to be a marvelous environment for trading. A less than marvelous environment to invest in."
Nicole Foss: "I mean essentially, what I think we're looking at, that really drives a lot of what we're seeing at the moment, is this enormous ponzi scheme. The credit expansion we've experienced, that absolutely is grounded in ponzi dynamics, which is why I wrote At the Top of the Great Pyramid. But I think what we've been looking at is the development of an enormous ponzi scheme, an enormous, you know, Enron times a million where you have a structure that looks huge and robust, but is actually hollowed out from the inside and devoid of structure. And it's very much prone to implosion.
And one of the things we've been trying to make clear at The Automatic Earth all the way through is that it's deflation that we are facing. And the reason for that is that that's how ponzi schemes always end. The excess claims to underlying real wealth are extinguished, and that is deflation by definition. Because deflation is the contraction of money and credit relative to available goods and services. And that's exactly what we're about to see. And I think, a lot of my view about how energy is going to play out, is really going to be quite colored by my view of what's happening with the financial system, and deflation, because the time frame for finance is much shorter than the time frame for changing any available energy supply. So while energy is a key driver on the way up, finance is the key driver on the way down because it plays out so quickly....I think we're going to see the same kind of thing, I think oil prices are going to fall a long way because we're going to see demand fall as we move into depression. But demand collapse is going to set up a supply collapse. While it buys you time initially, so that finance is the driver not so much energy supply, because you still have energy supply geared to a previous higher level of demand, so that really will drastically undercut price support. However moving forward, low prices are likely to mean no investment, no exploration, no drilling, no maintenance, and all of these things are going to set up a supply collapse a few years down the line.
So what financial crisis does, while it buys you time initially, it aggravates the situation with peak oil in the longer term. And by longer term I mean maybe only five years, I'm not talking a long way out here. But already we're seeing people cutting back on drilling, I think for instance natural gas [?] in Canada, people are cutting back on drilling because the prices are not high enough. And I think we're going to see a lot of that kind of dynamic."
Nouriel Roubini: "The US, Japan and large parts of Europe have exhausted their policy arsenal,
leaving them defenceless against a double-dip recession."
The percentage of the labor force receiving unemployment insurance today is almost 50% greater than it was at the peak of the 1982 recession.
The causes of aging and age-related diseases are believed to be attributed to glucosepane, a protein crosslink that reduces elasticity throughout the body.
ZeroHedge: "Goss said that as many as 67% of all illegals are working with either a phony SS card or one that was no longer valid. Take this information together with a Pew report that put the number of illegal workers today at 11.1mm. This implies that there are 7,400,000 illegal workers contributing to SS. Most of this income is regular weekly pay. The average number for this in the US is $30K. About $100 per day. That comes to a total payroll of $225 billion! The SS tax on this is 12.4%, or $27b in just 2010. This analysis is how Goss got to the $240b 2007 topside estimate. Add three years to that at $25b a year plus interest on the whole nut and you get ~$350b.
I won’t (now) go into the longer-term impacts to SS of having overstated its surplus by $350b. That number is 13.5% of the assets of the Fund. I will say that this is a sea change event for how we look at SS. All prior analysis and all future expectations must now be revisited. I assure you that the results after excluding the illegal taxes will be will prove to be a major blow to the solvency of the Fund. It will change the debate on SS. It is that significant....
(I) If SS eliminated the future liabilities associated with the estimated $320b of excess contributions and they were allowed to keep those tainted contributions SS would be transformed overnight to an overfunded position of significant proportions. It would be so significant that the Fund could reduce the current 12.4% PR tax by 20-30% for the next three to four years. That would have a meaningful impact on the economy.
(II) America would get paid $350b (P+I) for allowing a significant number of workers to become legal. Many would still gripe. But the tradeoff of a partial tax holiday for 150mm workers and their employers would shut down much of the opposition.
The Administration needs a win-win on the economy and immigration. Steve Goss at the Trust Fund may have given them the opportunity to do that. Stay tuned. It does not get much weirder than this."
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