11/22/06 Developments
U.S. Military Migrating to Stratos Optical Fiber Optic Connectors for Communications Applications. For those still not familiar with Stratos
International, I suggest it would be worth your while to peruse the situation.
Nasdaq Stock Market Inc. may consider raising its bid for the London Stock Exchange if the LSE recommends an offer at a higher price or a rival bid emerges, the president of Nasdaq International said on Tuesday.
Bad weather forced a loading halt at Alaska's main export terminal.
Indonesia's Finance Minister Sri Mulyani Indrawati has scrapped import taxes levied on capital goods used in the upstream oil and gas sector, according to a ministry statement.
Brett Steenbarger: "When volume is concentrated in winning stocks, profit taking seems to take hold over the next four days."
Martin Weiss: "The total inventory of new and used homes waiting for buyers is still the largest of all time. The number of investors and speculators dumping their properties on the market is just beginning to swell. But if you think the housing bust is severe nationally, look at what's happening in California: Housing permits were down by a whopping 47 percent in September, many times worse than the national average, according to the California Building Industry Association and the Construction Industry Research Board. For single-family homes statewide, it was even more severe: Down 57 percent from the same time last year. And in certain formerly hot areas -- like San Francisco, San Mateo and Marin counties -- new housing starts have dropped by an unbelievable 71 percent!"
Mike Shedlock:"While overall employment increased by less than 22 percent from the 1993 to 2006, employment in the construction of residential buildings increased by almost 70 percent. Employment in real estate agencies increased by almost 30 percent over this period. Employment in residential specialty trade contractors increased by almost 28 percent in just the years from 2001 to 2006. When the bubble deflates, employment levels in these sectors will fall back in line with their historic patterns, as construction and sales levels move to more normal levels. If employment in housing-related sectors were to fall back to levels consistent with their share of their labor force in the mid-1990s, it would lead a loss of close to 1 million jobs. If the construction sector temporarily falls below its normal level of activity as inventories of unsold homes adjust to normal levels, the job loss would be even greater."
Champion Enterprises Inc. said Tuesday it's terminated its previous agreement to sell the retail operations of its Advantage Homes unit as a result of the buyer's failure to secure financing to complete the purchase. "While the previously announced sale was an attractive financial opportunity for Champion at the time, the current slowdown in the California housing market has made completing the financing a challenge for our buyer," said William Griffiths, Champion CEO, in a statement.
The leaders of India and China set a goal Tuesday to double their bilateral trade in four years to 40 billion dollars, highlighting Chinese President Hu Jintao's visit to a country China once faced on the battlefield.
Federal spending in fiscal year 2006 increased by 9 percent, the largest increase since 1990. Discretionary federal spending has increased year after year, up more than 40 percent since President Bush took office. Instead of turkey, they should be serving pork at the White House on Thanksgiving.
Deere expects sales in the US and Canada to be flat next year, and will cut production of agricultural equipment by 4 per cent to trim excess supply. Global sales of agricultural equipment are expected to rise 4 per cent in fiscal 2007 after a 3 per cent increase this year, with demand in Europe countering the relative weakness in other markets.The company is projecting earnings at roughly $5.69 for 2007. In my view, that is on the low side.
The White House estimates that real GDP will grow by about 2.9% from the fourth quarter of 2006 until the fourth quarter of 2007, down from the 3.3% estimated by the Office of Management and Budget in June. The White House raised its forecast for inflation to 2.6% from 2.4%. The administration forecasts the unemployment rate to tick higher to 4.6% from 4.4% in October.
According to the United States Department of Agriculture, the
average American family of four spends at least $632 each month on
groceries.
The New York Employee Confidence Index increased 7.5 points to 60.4 in October as more workers reported
optimism in the economy and their personal employment prospects, according
to the Spherion(R) Employment Report, a monthly survey conducted by Harris
Interactive(R) on behalf of Spherion Corporation.
December gold climbed $6.60 to close at $628.70 an ounce, near the day's high of $629, while December silver added 34.5 cents to close at $13.085 an ounce.
January crude closed at $60.17 a barrel, up $1.37.
For the past several months I have been massively wrong about the VIX, which on Monday closed below 10 for the first time since 1994 and is at its
lowest levels in 13 years. On Tuesday the VIX again closed
below 10. However, with patience going into April and May, I
still believe the VIX will be at least double its current
price.
As part of the review of its overall downstream operations, Alcoa also
plans a targeted restructuring program in order to further increase
efficiency and profitability. The restructuring will encompass plant
closings and consolidations that will affect approximately 6,700
positions across the company's global businesses during the next year.
Ths program is expected to save approximately $125 million before taxes.
onan annualized basis.
It was a great day for Google and Apple- both trading at
all-time highs.
Tuesday, November 21, 2006
Monday, November 20, 2006
Forecasts
11/21/06 Forecasts
In the third quarter, Lowe's sales at stores open at least a year fell 4 percent, the first decline in this measure since the first quarter of 2001. Lowe's said same-store sales would fall 4 percent to 6 percent in the fourth quarter. Lowe's said declining U.S. home sales and construction, lower hurricane-related sales and higher materials costs hurt third-quarter results. Lowe's cut its full-year profit forecast to a range of $1.95 to $1.97 a share, and said it expects fourth-quarter profit of 36 cents to 38 cents a share. Lowe's said both the fourth quarter and full year would include one less week than the year earlier because of a calendar shift. In September, Lowe's had said annual earnings would be near the low end of a range of $2 to $2.07 a share.
The day after Thanksgiving did not even rank as one of the top five busiest holiday shopping days last year, according to a report released by MasterCard Worldwide.The Sunday following Thanksgiving has been the least busy day of the holiday shopping season for the past two years.
TD Bank Financial Group said Monday it will take TD Banknorth Inc. private in a transaction valued at about $3.2 billion, or $32.33 a share in cash.
The Nasdaq Stock Market said it's offered 2.7 billion pounds ($5.1 billion), or 1,243 pence a share, for the London Stock Exchange, and the offer was rejected.
According to a Mastercard survey, nearly three out of four people plan to shop online during the holidays, with 26 percent saying they will shop online more this year than they did last year. On average, these consumers will plan to
spend 41 percent of their total holiday expenditures online.
Consumers said they planned on spending an average of nearly $700 this
season with nearly $300 of that amount to be spent online for holiday
gifts. While consumers will spend the majority of their in-store holiday
budgets this year on clothing and related accessories, gift cards are
moving past many traditional items on shopping lists. For example,
nearly 60 percent of those surveyed anticipate buying gift cards or
gift certificates, while only 42 percent plan to purchase toys, games,
or sporting goods.
"The drop in the rate of consumers opening new accounts in 2006 may
give the appearance that they are being more conservative with regard to
using credit, however this may not be the case when combined with other
results from our study," said Ty Taylor, president of Experian Consumer
Direct. "Although our data shows a drop in the rate of consumers opening
bank credit card accounts, it also shows that their balances on other types
of loans, such as installment loans, are increasing."
The rate at which consumers were 90 days or more late in
payments increased 12.6 percent from 2001 (39.6 percent) to 2006 (44.6
percent).
Gary Lammert: "The 398th day for the Wilshire is 22 November 2006. The 16th day of the concurrent and final 8/20/16 day growth fractals for the ten year note,
30 year bond, and CRB is 22 Novembr 2006. The 58th day of the 29/73/58
day fractal for GM is 22 November 2006. 22 November 2006 is the ideal
final saturation day for the Wilshire secondary to its March 2000."
alltime high.
Oregon Steel is being acquired for $63.25 per share by Russian Evraz.
The Conference Board reported that the Composite Index of Leading Economic Indicators increased 0.2% in October, following a 0.4% increase in September and a 0.3% decrease in August. Says Ken Goldstein, Labor Economist at The Conference Board: "In sum, the impact of a slower housing market on consumers and slower profit growth on business isn't completely offset by lower gas prices and a rising stock
market. This suggests that the economy is unlikely either to reheat or to
get significantly cooler. Instead, the kind of slow growth now being
experienced could continue right through the winter and into the spring."
The Conference Board reported that the Coincident Index, a major
barometer of current economic activity, increased 0.1% in October,
following a 0.2% increase in September and August. The lagging index
increased 0.2% in October and September, following no change in August.
South Korea's currency won hit a new high against Japanese
yen on Monday at 792.38 won to 100 yen, the highest in 9 years.
The National Association of Realtors reported that sales dipped to a
seasonally adjusted annual rate of 6.27 million units nationwide, down
by 12.7 percent from the same period a year ago.
According to the NAR, home sales fell by 38 percent in Nevada, 36 percent in Arizona; 34.2 percent in Florida and 28.6 percent in California.
John Hussman: "In richly valued markets, the primary source of sustainable returns is good stock selection that is hedged against general market fluctuations, plus the implied interest earned on those hedges."
According to a report from the research firm Nielsen/NetRatings, Microsoft Corp.'s MSN unit was the only one of the top five search providers to see its traffic fall, dropping 8% from a year earlier. MSN's search market share in October was 8.8%, according the report released Monday.
Fresh Del Monte Produce Inc. is ceasing its Hawaii production, operations and shipments effective immediately, putting 700 employees out of work, far ahead of its original 2008 schedule, the company said.
Medtronic Inc. posted a drop in fiscal second-quarter profit due to higher costs. Net income fell 16.6% to $681 million, or59 cents a share, from $817 million, or 67 cents a share, in the same period last year. Revenue for the quarter jumped more than 11% to $3.08billion from $2.77 billion in 2005. A poll of analysts by Thomson First Call had been looking for the diversified medical device maker to postrevenue of $2.97 billion for the period ended Oct. 27. Sales of thecompany's cardiac rhythm management products, which includesimplantable heart defibrillators and pacemakers, rose 6% to $1.36 billion. Sales of its implantable defibrillators, which have seenslowed growth in recent quarters, rose 4% to $764 million.
BCA Research: "There was a record-breaking overshoot in residential construction andit will be a long time before the next rebound in activity and pricesdevelops. In the interim, affordability must improve considerably, viaa combination of lower borrowing rates and lower house prices."
In the third quarter, Lowe's sales at stores open at least a year fell 4 percent, the first decline in this measure since the first quarter of 2001. Lowe's said same-store sales would fall 4 percent to 6 percent in the fourth quarter. Lowe's said declining U.S. home sales and construction, lower hurricane-related sales and higher materials costs hurt third-quarter results. Lowe's cut its full-year profit forecast to a range of $1.95 to $1.97 a share, and said it expects fourth-quarter profit of 36 cents to 38 cents a share. Lowe's said both the fourth quarter and full year would include one less week than the year earlier because of a calendar shift. In September, Lowe's had said annual earnings would be near the low end of a range of $2 to $2.07 a share.
The day after Thanksgiving did not even rank as one of the top five busiest holiday shopping days last year, according to a report released by MasterCard Worldwide.The Sunday following Thanksgiving has been the least busy day of the holiday shopping season for the past two years.
TD Bank Financial Group said Monday it will take TD Banknorth Inc. private in a transaction valued at about $3.2 billion, or $32.33 a share in cash.
The Nasdaq Stock Market said it's offered 2.7 billion pounds ($5.1 billion), or 1,243 pence a share, for the London Stock Exchange, and the offer was rejected.
According to a Mastercard survey, nearly three out of four people plan to shop online during the holidays, with 26 percent saying they will shop online more this year than they did last year. On average, these consumers will plan to
spend 41 percent of their total holiday expenditures online.
Consumers said they planned on spending an average of nearly $700 this
season with nearly $300 of that amount to be spent online for holiday
gifts. While consumers will spend the majority of their in-store holiday
budgets this year on clothing and related accessories, gift cards are
moving past many traditional items on shopping lists. For example,
nearly 60 percent of those surveyed anticipate buying gift cards or
gift certificates, while only 42 percent plan to purchase toys, games,
or sporting goods.
"The drop in the rate of consumers opening new accounts in 2006 may
give the appearance that they are being more conservative with regard to
using credit, however this may not be the case when combined with other
results from our study," said Ty Taylor, president of Experian Consumer
Direct. "Although our data shows a drop in the rate of consumers opening
bank credit card accounts, it also shows that their balances on other types
of loans, such as installment loans, are increasing."
The rate at which consumers were 90 days or more late in
payments increased 12.6 percent from 2001 (39.6 percent) to 2006 (44.6
percent).
Gary Lammert: "The 398th day for the Wilshire is 22 November 2006. The 16th day of the concurrent and final 8/20/16 day growth fractals for the ten year note,
30 year bond, and CRB is 22 Novembr 2006. The 58th day of the 29/73/58
day fractal for GM is 22 November 2006. 22 November 2006 is the ideal
final saturation day for the Wilshire secondary to its March 2000."
alltime high.
Oregon Steel is being acquired for $63.25 per share by Russian Evraz.
The Conference Board reported that the Composite Index of Leading Economic Indicators increased 0.2% in October, following a 0.4% increase in September and a 0.3% decrease in August. Says Ken Goldstein, Labor Economist at The Conference Board: "In sum, the impact of a slower housing market on consumers and slower profit growth on business isn't completely offset by lower gas prices and a rising stock
market. This suggests that the economy is unlikely either to reheat or to
get significantly cooler. Instead, the kind of slow growth now being
experienced could continue right through the winter and into the spring."
The Conference Board reported that the Coincident Index, a major
barometer of current economic activity, increased 0.1% in October,
following a 0.2% increase in September and August. The lagging index
increased 0.2% in October and September, following no change in August.
South Korea's currency won hit a new high against Japanese
yen on Monday at 792.38 won to 100 yen, the highest in 9 years.
The National Association of Realtors reported that sales dipped to a
seasonally adjusted annual rate of 6.27 million units nationwide, down
by 12.7 percent from the same period a year ago.
According to the NAR, home sales fell by 38 percent in Nevada, 36 percent in Arizona; 34.2 percent in Florida and 28.6 percent in California.
John Hussman: "In richly valued markets, the primary source of sustainable returns is good stock selection that is hedged against general market fluctuations, plus the implied interest earned on those hedges."
According to a report from the research firm Nielsen/NetRatings, Microsoft Corp.'s MSN unit was the only one of the top five search providers to see its traffic fall, dropping 8% from a year earlier. MSN's search market share in October was 8.8%, according the report released Monday.
Fresh Del Monte Produce Inc. is ceasing its Hawaii production, operations and shipments effective immediately, putting 700 employees out of work, far ahead of its original 2008 schedule, the company said.
Medtronic Inc. posted a drop in fiscal second-quarter profit due to higher costs. Net income fell 16.6% to $681 million, or59 cents a share, from $817 million, or 67 cents a share, in the same period last year. Revenue for the quarter jumped more than 11% to $3.08billion from $2.77 billion in 2005. A poll of analysts by Thomson First Call had been looking for the diversified medical device maker to postrevenue of $2.97 billion for the period ended Oct. 27. Sales of thecompany's cardiac rhythm management products, which includesimplantable heart defibrillators and pacemakers, rose 6% to $1.36 billion. Sales of its implantable defibrillators, which have seenslowed growth in recent quarters, rose 4% to $764 million.
BCA Research: "There was a record-breaking overshoot in residential construction andit will be a long time before the next rebound in activity and pricesdevelops. In the interim, affordability must improve considerably, viaa combination of lower borrowing rates and lower house prices."
Sunday, November 19, 2006
Tidbits
11/120/06 Tidbits
"If you mean by clear military victory an Iraqi government that can be established and whose writ runs across the whole country, that gets the civil war under control and sectarian violence under control . . . I don't believe that is possible," Mr Kissinger told BBC television.
eBay's Meg Whitman: "Skype today is adding in excess of 300,000 new users a day."
China is now our country's 4th largest export market behind Canada, Mexico, and Japan. It should not take very more years untilit reaches first place. Between 2000 and 2005 our exports to China grew 157 percent.
Algeria's energy minister said OPEC may call for deeper production cuts at a December meeting in Nigeria, according to published reports.
"We may decide on a new reduction during our meeting in Abuja Dec. 15, to further ensure oil price stability," AFP reported Energy Minister Chakib Khelil said on Algerian public radio Sunday.
Qatar's energy minister also indicated OPEC could increase oil output cuts beyond the 1.2 million barrels a day agreed upon at an October meeting in Doha.
Medtronic and Lowe's will report quarterly results on Monday.
A senior U.S. official tells Newsweek that some inside the administration believe it may be too late to stop Tehran from continuing its nuclear program. Should diplomacy fail, Washington might have to accept Iran as a "virtual nuclear-weapons state" if President Bush gets help on Iraq and other issues, this official says. That means Tehran might be permitted to develop the technology for making nuclear fuel -- and potentially a bomb -- as long as it holds to its pledge to limit its program to peaceful purposes. But this is still seen as a remote fallback position. In Newsweek's November 27 issue (on newsstands Monday, November 20), Senior Editor Michael Hirsh and National Security Correspondent John Barry report on new, public signals that Washington is edging closer to Tehran's terms for talks.
Bush addressing China's Hu: "I strongly support your vision, Mr. President, of encouraging your country to become a nation of consumers and not savers, which will inure to the benefit of our manufacturers, both large and small, and our farmers, as well."
Freeport-McMoRan said it will pay a total of $126.46 per Phelps Dodge share, a premium of 33 percent to Phelps Dodge's closing price on November 17 of $95.02. Each Phelps Dodge shareholder would receive $88 per share in cash plus 0.67 of a common share of Freeport-McMoRan. The cash portion of $18 billion represents 70 percent of the deal. Freeport-McMoRan said the combined company will be the largest North American-based mining firm.
Private equity firm Blackstone Group is set to announce a takeover plan for Equity Office Properties Trust , The Wall Street Journal reported on Sunday.
Citing people familiar with the matter, the newspaper said Blackstone is expected to pay about $48.50 for each share of Equity Office, the largest publicly traded office building owner in the United States.
The auction of Boston-based money manager Putnam Investments will move into its latter stages this week with final offers due from three bidders before the Thanksgiving holiday in the United States, The Wall Street Journal reported on its Web site on Sunday.
Democratic Representative Charles Rangel said he will again introduce legislation to revive a US military draft when his party takes control of Congress in January.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
"If you mean by clear military victory an Iraqi government that can be established and whose writ runs across the whole country, that gets the civil war under control and sectarian violence under control . . . I don't believe that is possible," Mr Kissinger told BBC television.
eBay's Meg Whitman: "Skype today is adding in excess of 300,000 new users a day."
China is now our country's 4th largest export market behind Canada, Mexico, and Japan. It should not take very more years untilit reaches first place. Between 2000 and 2005 our exports to China grew 157 percent.
Algeria's energy minister said OPEC may call for deeper production cuts at a December meeting in Nigeria, according to published reports.
"We may decide on a new reduction during our meeting in Abuja Dec. 15, to further ensure oil price stability," AFP reported Energy Minister Chakib Khelil said on Algerian public radio Sunday.
Qatar's energy minister also indicated OPEC could increase oil output cuts beyond the 1.2 million barrels a day agreed upon at an October meeting in Doha.
Medtronic and Lowe's will report quarterly results on Monday.
A senior U.S. official tells Newsweek that some inside the administration believe it may be too late to stop Tehran from continuing its nuclear program. Should diplomacy fail, Washington might have to accept Iran as a "virtual nuclear-weapons state" if President Bush gets help on Iraq and other issues, this official says. That means Tehran might be permitted to develop the technology for making nuclear fuel -- and potentially a bomb -- as long as it holds to its pledge to limit its program to peaceful purposes. But this is still seen as a remote fallback position. In Newsweek's November 27 issue (on newsstands Monday, November 20), Senior Editor Michael Hirsh and National Security Correspondent John Barry report on new, public signals that Washington is edging closer to Tehran's terms for talks.
Bush addressing China's Hu: "I strongly support your vision, Mr. President, of encouraging your country to become a nation of consumers and not savers, which will inure to the benefit of our manufacturers, both large and small, and our farmers, as well."
Freeport-McMoRan said it will pay a total of $126.46 per Phelps Dodge share, a premium of 33 percent to Phelps Dodge's closing price on November 17 of $95.02. Each Phelps Dodge shareholder would receive $88 per share in cash plus 0.67 of a common share of Freeport-McMoRan. The cash portion of $18 billion represents 70 percent of the deal. Freeport-McMoRan said the combined company will be the largest North American-based mining firm.
Private equity firm Blackstone Group is set to announce a takeover plan for Equity Office Properties Trust , The Wall Street Journal reported on Sunday.
Citing people familiar with the matter, the newspaper said Blackstone is expected to pay about $48.50 for each share of Equity Office, the largest publicly traded office building owner in the United States.
The auction of Boston-based money manager Putnam Investments will move into its latter stages this week with final offers due from three bidders before the Thanksgiving holiday in the United States, The Wall Street Journal reported on its Web site on Sunday.
Democratic Representative Charles Rangel said he will again introduce legislation to revive a US military draft when his party takes control of Congress in January.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Observations
11/19/06 Observations
Gary Shilling: "I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it's the key to the global economic outlook...The 25% or greater decline in house prices we foresee will sire considerable consumer spending retrenchment that almost guarantee a major recession. Note the close link between the Homebuilders' Sentiment Index, which has collapsed, and real consumer spending."
In analyzing California's state finances, Elizabeth Hill observed that, based on past housing cycles, it is expected that prices will drop for several years, but it is unclear how deep the slump will be.
The total commercial paper market is approaching $2 trillion!
Doug Noland: "Today, the unfolding Derivatives "Insurance" Bubble is creating one additional troubling facet to what has developed into a full-fledged global Credit Bubble comprising U.S. household, government and corporate finance, along with Credit systems and asset markets around the world. Global imbalances and associated liquidity excess are unprecedented, and the dollar vulnerable. Despite the recent energy price decline, the domestic and global backdrop remains inflationary as opposed to dis-inflationary. Here at home, productivity is waning and wage pressures are rising... unlimited Credit/"finance" and unchecked leveraged speculation are the bane of free market Capitalism. Yet it's amazing how recent Monetary Disorder (inflating stock markets) has the "free market" bullish crowd filling the airwaves with flawed analysis and wishful thinking."
RealtyTrac(R) (http://www.realtytrac.com), the leading online marketplace for foreclosure properties, released its October 2006 U.S. Foreclosure Market Report, which shows that 115,568 properties nationwide entered some stage of foreclosure during the month, the most reported in any month so far this year and an increase of 42 percent from October 2005. The report also shows a national foreclosure rate of one new foreclosure filing for every 1,001 U.S. households, the highest monthly foreclosure rate reported so far this year.
Dubai launched the Gulf region's first fuel oil futures contracts last month that could mark the beginning of the emirate's transformation into a new energy derivatives trading centre.
The year-old Dubai Gold and Commodities Exchange began trading the Fujairah 380 CST high sulphur fuel oil futures contracts on October 29 to add to its other products - gold, silver and currency futures.
Imports from China to the dozen euro nations rose to 88.3bn euros in the first eight months of the year, up 21% from the year-earlier period. That put China ahead of the US, with 84.3bn euros of imports into the euro area, and behind only the UK, with 109.7bn euros in the latest period.
The US trade deficits with Canada and Mexico, America's top two trading partners, have grown from US$52 billion and $41 billion in 2003 to an estimated $85 billion and $60 billion in 2006, respectively. The US trade deficit with the European Union has increased from $97 billion in 2003 to an estimated $135 billion in 2006. Finally, the US trade deficits with China and Japan have soared from $124 billion and $66 billion in 2003 to an estimated $250 billion and $90 billion in 2006, respectively.
Mike Burk: "Over the past 50 years the annualized return of the SPX, excluding dividends has been about 7%. From its low in October 2002 the annualized return of the SPX excluding dividends has been about 15%. The chart below shows the SPX from its October 2002 low to the present...From its low last June the annualized return of the SPX excluding dividends has been 36%...The rise in the SPX from its June lows has been at a rate equivalent to the best Presidential Year 3 rate and a little over twice the average return for the period."
Harlow Shapley:"Theories crumble, but good observations never fade."
Gary Shilling: "I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it's the key to the global economic outlook...The 25% or greater decline in house prices we foresee will sire considerable consumer spending retrenchment that almost guarantee a major recession. Note the close link between the Homebuilders' Sentiment Index, which has collapsed, and real consumer spending."
In analyzing California's state finances, Elizabeth Hill observed that, based on past housing cycles, it is expected that prices will drop for several years, but it is unclear how deep the slump will be.
The total commercial paper market is approaching $2 trillion!
Doug Noland: "Today, the unfolding Derivatives "Insurance" Bubble is creating one additional troubling facet to what has developed into a full-fledged global Credit Bubble comprising U.S. household, government and corporate finance, along with Credit systems and asset markets around the world. Global imbalances and associated liquidity excess are unprecedented, and the dollar vulnerable. Despite the recent energy price decline, the domestic and global backdrop remains inflationary as opposed to dis-inflationary. Here at home, productivity is waning and wage pressures are rising... unlimited Credit/"finance" and unchecked leveraged speculation are the bane of free market Capitalism. Yet it's amazing how recent Monetary Disorder (inflating stock markets) has the "free market" bullish crowd filling the airwaves with flawed analysis and wishful thinking."
RealtyTrac(R) (http://www.realtytrac.com), the leading online marketplace for foreclosure properties, released its October 2006 U.S. Foreclosure Market Report, which shows that 115,568 properties nationwide entered some stage of foreclosure during the month, the most reported in any month so far this year and an increase of 42 percent from October 2005. The report also shows a national foreclosure rate of one new foreclosure filing for every 1,001 U.S. households, the highest monthly foreclosure rate reported so far this year.
Dubai launched the Gulf region's first fuel oil futures contracts last month that could mark the beginning of the emirate's transformation into a new energy derivatives trading centre.
The year-old Dubai Gold and Commodities Exchange began trading the Fujairah 380 CST high sulphur fuel oil futures contracts on October 29 to add to its other products - gold, silver and currency futures.
Imports from China to the dozen euro nations rose to 88.3bn euros in the first eight months of the year, up 21% from the year-earlier period. That put China ahead of the US, with 84.3bn euros of imports into the euro area, and behind only the UK, with 109.7bn euros in the latest period.
The US trade deficits with Canada and Mexico, America's top two trading partners, have grown from US$52 billion and $41 billion in 2003 to an estimated $85 billion and $60 billion in 2006, respectively. The US trade deficit with the European Union has increased from $97 billion in 2003 to an estimated $135 billion in 2006. Finally, the US trade deficits with China and Japan have soared from $124 billion and $66 billion in 2003 to an estimated $250 billion and $90 billion in 2006, respectively.
Mike Burk: "Over the past 50 years the annualized return of the SPX, excluding dividends has been about 7%. From its low in October 2002 the annualized return of the SPX excluding dividends has been about 15%. The chart below shows the SPX from its October 2002 low to the present...From its low last June the annualized return of the SPX excluding dividends has been 36%...The rise in the SPX from its June lows has been at a rate equivalent to the best Presidential Year 3 rate and a little over twice the average return for the period."
Harlow Shapley:"Theories crumble, but good observations never fade."
Saturday, November 18, 2006
A Closer Look
11/18/06 A Closer Look
The National Association of Home Builders continues to state that the housing industry slump is bottoming out. A closer look at the numbers reveals a different
picture. A Commerce Department report showed starts of new U.S. homes plunged 14.6% in October to a seasonally adjusted annual rate of 1.486 million, the lowest level in more than six years. In addition, the largest percentage decline in permits took place in seven years. Building permits are down 28% year-on-year.
You believe inflation is under control? Consider this. UPS said its rates for 2007 would increase by an average 4.9% for ground shipments, air express and international parcels from the U.S. The company said the increase for air express and international shipments is based on a 6.9% rise in the base rate, less a 2% reduction in the current fuel surcharge.
The headlines about crude oil are that prices hit a 17-month low of $55-56 a barrel. Statistically that is correct. However, that price goes off the board tonight.
The new contract, January 2007, begins Saturday and that price is $58-59 a barrel. In reality, the range of $57 to $63 is still in play.
December crude closed at a 17-month low of $55.81 a barrel Friday, down 45 cents for the session and down 6.3% for the week. December natural gas climbed 42.4 cents, or 5.5%, to close at $8.179 per million British thermal units. The contract was up 38.5 cents for the week.
According to the latest survey by Bank for International Settlements, at the end of June 2006, the total notional value of all outstanding derivatives contracts in the over-the-counter (OTC) market was about $370,000bn – some 24 per cent, or almost $70,000bn, higher than in the previous six months. Compare that with the total value of ll securities traded in the global marketplace. You will come to the conclusion that the derivatives market is no longer a bubble waiting to burst, but rather so large that a mushroom cloud is forming and totally out of control.
Ashraf Laidi: "A more dollar-friendly version of the FX diversification story suggests that central banks will acquire more non-US dollar assets in their new accumulation, rather than carry out outright selling of their existing dollar reserves, which would be detrimental to the currency value of these holdings. This means that the future action of these central banks would entail purchasing assets denominated in yen, sterling and even gold. This notion is especially after a Chinese central bank official was quoted today as saying the bank has been buying yen for its $1 trillion in FX reserves, rather than selling their existing dollar reserves."
Nymex Holdings closed at $132.99 a share after being sold at a higher than expected $59 late Thursday. Do you think there is any froth to equities? When was the last time we had even a 5% correction in the Dow-- never mind 10%?
Brett Steenbarger: "if you just look for selling after an up day session and buying after a down day session, you would have had an edge--despite the fact that the market has been in an overall uptrend since 2004.
The trend is not necessarily your friend if you're buying highs in a rising market."
The National Association of Home Builders continues to state that the housing industry slump is bottoming out. A closer look at the numbers reveals a different
picture. A Commerce Department report showed starts of new U.S. homes plunged 14.6% in October to a seasonally adjusted annual rate of 1.486 million, the lowest level in more than six years. In addition, the largest percentage decline in permits took place in seven years. Building permits are down 28% year-on-year.
You believe inflation is under control? Consider this. UPS said its rates for 2007 would increase by an average 4.9% for ground shipments, air express and international parcels from the U.S. The company said the increase for air express and international shipments is based on a 6.9% rise in the base rate, less a 2% reduction in the current fuel surcharge.
The headlines about crude oil are that prices hit a 17-month low of $55-56 a barrel. Statistically that is correct. However, that price goes off the board tonight.
The new contract, January 2007, begins Saturday and that price is $58-59 a barrel. In reality, the range of $57 to $63 is still in play.
December crude closed at a 17-month low of $55.81 a barrel Friday, down 45 cents for the session and down 6.3% for the week. December natural gas climbed 42.4 cents, or 5.5%, to close at $8.179 per million British thermal units. The contract was up 38.5 cents for the week.
According to the latest survey by Bank for International Settlements, at the end of June 2006, the total notional value of all outstanding derivatives contracts in the over-the-counter (OTC) market was about $370,000bn – some 24 per cent, or almost $70,000bn, higher than in the previous six months. Compare that with the total value of ll securities traded in the global marketplace. You will come to the conclusion that the derivatives market is no longer a bubble waiting to burst, but rather so large that a mushroom cloud is forming and totally out of control.
Ashraf Laidi: "A more dollar-friendly version of the FX diversification story suggests that central banks will acquire more non-US dollar assets in their new accumulation, rather than carry out outright selling of their existing dollar reserves, which would be detrimental to the currency value of these holdings. This means that the future action of these central banks would entail purchasing assets denominated in yen, sterling and even gold. This notion is especially after a Chinese central bank official was quoted today as saying the bank has been buying yen for its $1 trillion in FX reserves, rather than selling their existing dollar reserves."
Nymex Holdings closed at $132.99 a share after being sold at a higher than expected $59 late Thursday. Do you think there is any froth to equities? When was the last time we had even a 5% correction in the Dow-- never mind 10%?
Brett Steenbarger: "if you just look for selling after an up day session and buying after a down day session, you would have had an edge--despite the fact that the market has been in an overall uptrend since 2004.
The trend is not necessarily your friend if you're buying highs in a rising market."
Thursday, November 16, 2006
HP
11/17/06 HP
Helmerich and Payne President and C.E.O., Hans Helmerich commented, "The Company posted another record year in 2006. Our earnings for the current year more than doubled our previous all-time high of one year ago. We are also pleased to announce seven additional FlexRig orders, bringing our newbuild book to 73. Significantly, these orders were secured during a time of market uncertainty and natural gas price volatility. We believe it is an indication of the customers' strong preference for the FlexRig as a solution over conventional rigs even if overall rig availability becomes less of an issue. Our contention is that customer demand for drilling rigs that provide improved efficiencies, safety, and reliability will continue to push opportunities for the Company and provide us with attractive growth prospects."
HP is a contract drilling company that owns 117 U.S. land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27 international rigs, for a total of 155 rigs. Included in the total fleet of 155 rigs are 78 H&P-designed and operated FlexRigs. The Company has reached contractual agreements with customers that will result in the construction of 45 additional FlexRigs.
I have written about Helmerich and Payne on several occasions. If an investor is looking for quality management, a conservative balance sheet, growth and a low p/e, one would be hard pressed to find a better investment than Helmerich and Payne.
The median consumer price index increased 0.3% in October, the Cleveland Fed said Thursday. The median CPI is an alternative method of computing underlying inflation trends that does not automatically exclude food and energy prices, as the core CPI computed by the Labor Department does. The median CPI is now up 3.6% over the past year, the fastest inflation in more than four years.
Marsoft: "The dry bulk market experienced one of its strongest third quarters in history during 2006. In contrast to the usual seasonal pattern, where freight rates usually either stall or fall in the third quarter, this year they posted impressive gains, with the Baltic Dry Index soaring from just under 3,000 at the start of July to nearly 4,300 by mid-September, before dipping below 4,000 by the end of September. Dry bulk freight rates generally held firm in October.
Three-quarters of the recent increase in dry bulk trade came from the global iron ore trade, which jumped by more than 8% in just the past three months, leaving it up by a remarkable 17% compared to a year ago. This dramatic increase was consistent with a boom in steel production, as global output soared by 12% in the third quarter compared to last year. Iron ore imports into China and Europe were especially high in the third quarter, with long-haul shipments from Brazil to Asia also up sharply.
The sharp jump in global steel output was accompanied by an increase in steel products trade as well. Boosted by rising Chinese exports, this trade rose by 9% relative to the year-earlier level.
Besides the boom in the steel-related trades, the global steam coal trade was also quite strong in the third quarter, up 5% from the second quarter level and 5.5% higher than the year-earlier level. Sharply higher Chinese and North American imports were primarily responsible for the gain, along with modestly higher European imports."
Starbucks Corp. expects gross margins for fiscal 2007 to be about flat. On a conference call with analysts discussing their quarterly results, the company also said it expected earnings comparisons in the first half of the year to be more challenging than in the second half. The company expects total net revenue growth of about 20%, same-store sales growth in the range of 3% to 7% and earnings per share in the range of 87 cents a share to 89 cents a share for the fiscal year.
Crude for December delivery gave up $2.70 to close at $56.26 a barrel. The contract expires Friday. Natural gas declined 4.9% to $7.72 per million British thermal units.
The Philly Fed index rose to 5.1 from negative 0.7 in October and negative 0.4 in October. The new orders index fell to negative 3.7 from 13.4. The prices paid index fell to 26.7 from 32.0.
Elk Corp. will evaluate Building Materials Corp. of America's acquisition offer of $35 a share.
Johnson & Johnson will acquire Conor Medsystems Inc. for $1.4 billion, or $33.50 per Conor share,
Reckson Associates Realty Corp. confirmed it has received a $49 per share acquisition proposal from a partnership formed by entities associated with Harry Macklowe and Carl Icahn. Reckson said its board has determined to engage in discussions with Macklowe and Icahn. Reckson added that its shareholder meeting is scheduled for Wednesday, and the Reckson board has reaffirmed its recommendation of the company's $6 billion pending merger with SL Green.
Nymex Holdings Inc.'s IPO of 6.5 million shares was priced at $59 each late Thursday, raising more than $380 million.
Michael Pento: "As I have indicated in previous commentaries, home price to income ratios are at a record of 5.3:1, the inventory of existing homes are at a 10-year high of 7.3 months and new home construction rates continue to be above intrinsic population increases, all of which forebode a protracted and painful correction in real estate prices. These conditions have been slow to retard consumer spending but should continue to manifest themselves in pernicious fashion throughout 2007."
Helmerich and Payne President and C.E.O., Hans Helmerich commented, "The Company posted another record year in 2006. Our earnings for the current year more than doubled our previous all-time high of one year ago. We are also pleased to announce seven additional FlexRig orders, bringing our newbuild book to 73. Significantly, these orders were secured during a time of market uncertainty and natural gas price volatility. We believe it is an indication of the customers' strong preference for the FlexRig as a solution over conventional rigs even if overall rig availability becomes less of an issue. Our contention is that customer demand for drilling rigs that provide improved efficiencies, safety, and reliability will continue to push opportunities for the Company and provide us with attractive growth prospects."
HP is a contract drilling company that owns 117 U.S. land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27 international rigs, for a total of 155 rigs. Included in the total fleet of 155 rigs are 78 H&P-designed and operated FlexRigs. The Company has reached contractual agreements with customers that will result in the construction of 45 additional FlexRigs.
I have written about Helmerich and Payne on several occasions. If an investor is looking for quality management, a conservative balance sheet, growth and a low p/e, one would be hard pressed to find a better investment than Helmerich and Payne.
The median consumer price index increased 0.3% in October, the Cleveland Fed said Thursday. The median CPI is an alternative method of computing underlying inflation trends that does not automatically exclude food and energy prices, as the core CPI computed by the Labor Department does. The median CPI is now up 3.6% over the past year, the fastest inflation in more than four years.
Marsoft: "The dry bulk market experienced one of its strongest third quarters in history during 2006. In contrast to the usual seasonal pattern, where freight rates usually either stall or fall in the third quarter, this year they posted impressive gains, with the Baltic Dry Index soaring from just under 3,000 at the start of July to nearly 4,300 by mid-September, before dipping below 4,000 by the end of September. Dry bulk freight rates generally held firm in October.
Three-quarters of the recent increase in dry bulk trade came from the global iron ore trade, which jumped by more than 8% in just the past three months, leaving it up by a remarkable 17% compared to a year ago. This dramatic increase was consistent with a boom in steel production, as global output soared by 12% in the third quarter compared to last year. Iron ore imports into China and Europe were especially high in the third quarter, with long-haul shipments from Brazil to Asia also up sharply.
The sharp jump in global steel output was accompanied by an increase in steel products trade as well. Boosted by rising Chinese exports, this trade rose by 9% relative to the year-earlier level.
Besides the boom in the steel-related trades, the global steam coal trade was also quite strong in the third quarter, up 5% from the second quarter level and 5.5% higher than the year-earlier level. Sharply higher Chinese and North American imports were primarily responsible for the gain, along with modestly higher European imports."
Starbucks Corp. expects gross margins for fiscal 2007 to be about flat. On a conference call with analysts discussing their quarterly results, the company also said it expected earnings comparisons in the first half of the year to be more challenging than in the second half. The company expects total net revenue growth of about 20%, same-store sales growth in the range of 3% to 7% and earnings per share in the range of 87 cents a share to 89 cents a share for the fiscal year.
Crude for December delivery gave up $2.70 to close at $56.26 a barrel. The contract expires Friday. Natural gas declined 4.9% to $7.72 per million British thermal units.
The Philly Fed index rose to 5.1 from negative 0.7 in October and negative 0.4 in October. The new orders index fell to negative 3.7 from 13.4. The prices paid index fell to 26.7 from 32.0.
Elk Corp. will evaluate Building Materials Corp. of America's acquisition offer of $35 a share.
Johnson & Johnson will acquire Conor Medsystems Inc. for $1.4 billion, or $33.50 per Conor share,
Reckson Associates Realty Corp. confirmed it has received a $49 per share acquisition proposal from a partnership formed by entities associated with Harry Macklowe and Carl Icahn. Reckson said its board has determined to engage in discussions with Macklowe and Icahn. Reckson added that its shareholder meeting is scheduled for Wednesday, and the Reckson board has reaffirmed its recommendation of the company's $6 billion pending merger with SL Green.
Nymex Holdings Inc.'s IPO of 6.5 million shares was priced at $59 each late Thursday, raising more than $380 million.
Michael Pento: "As I have indicated in previous commentaries, home price to income ratios are at a record of 5.3:1, the inventory of existing homes are at a 10-year high of 7.3 months and new home construction rates continue to be above intrinsic population increases, all of which forebode a protracted and painful correction in real estate prices. These conditions have been slow to retard consumer spending but should continue to manifest themselves in pernicious fashion throughout 2007."
Wednesday, November 15, 2006
Signposts
11/16/06 Signposts
Nouriel Roubini: "New home prices are now falling at a 10% annualized rates; and these figures do not even include the massive seller-side subsidies (such as a $40K free swimming pool for a $400k home) that are becoming a norm in a desperate housing market.
- The sellers of homes are becoming so desperate that they are now relying on Divine Providence to help them sell their homes: as reported in dozens of recent press items, sales of statues of St. Joseph are skyrocketing; it is has been a long-time popular belief that burying a statue of St. Joseph in the basement of your home helps you sell your home when housing is in trouble. Those statues sales skyrocketed in the housing bust of the early 1990s and they are going through the roof again today."
The American Petroleum Institute said crude supplies rose 6.7 million barrels for the week ended Nov. 10. The Energy Department had reported a rise of 1.3 million. Motor gasoline supplies were down 1.4 million barrels, the API said, vs. the 3.7 million-barrel fall reported by the government. Distillate stocks declined by 2.3 million barrels, the API said. The Energy Department had reported a fall of 3.6 million barrels.
Doug Parker, chief executive of US Airways Group, said Wednesday he's confident the carrier's $8 billion cash-and-stock bid for bankrupt Delta Air Lines Inc.would pass merger review. "We've done a good bit of work on this with antitrust counsel and feel very strongly there are no issues that can't be resolved," Parker said in a conference call with analysts.
RailAmerica Inc signed a definitive agreement to be acquired by an affiliate of Fortress Investment Group LLC for $16.35 a share cash. The total value is $1.1 billion, including refinancing of debt.
Business conditions for manufacturers in the New York region improved in November, with the Empire State index rising by about four points to a a five-month high of 26.7, the New York Federal Reserve Bank reported Wednesday. The indexes for new orders, shipments, unfilled orders and employees all improved in November. The long-term outlook also improved in November.
McDonald's Corp. expects to return at least $10 billion to shareholders from 2006 through 2008, the company's chief financial officer said on Wednesday.
The Fed says their major concern is fighting inflation. If that is the case, then they should begin by tackling the excess liquidity sloshing through the economy, and in particular, focus on derivatives and their role in increasing speculative liquidity.
December natural gas climbed 14.3 cents, or 1.8%, to close at $8.12 per million British thermal units, its highest closing level since Oct. 25. December crude rose 48 cents to close at $58.76 a barrel.
Richard Daughty: "And if you don’t think that prices are rising, then let’s stroll on over to the latest Economist magazine and take look for ourselves. Hmmm! The Dollar Index for all items is up 37.5% from a year ago. Sounds like higher prices to me! Food is up 20.1% from a year ago, and that sounds like higher prices to me, too! All Industrials is up 56%, which I am SURE is higher prices, and Metals is up 80.4%, which I am absolutely positive is higher prices! The only thing that is NOT up in this table is Non-food Agriculturals which is still up 2.8% from a year ago, a level of inflation that used to be thought of as alarmingly high, back before Americans lost their minds 50 years or so ago."
Nouriel Roubini: "New home prices are now falling at a 10% annualized rates; and these figures do not even include the massive seller-side subsidies (such as a $40K free swimming pool for a $400k home) that are becoming a norm in a desperate housing market.
- The sellers of homes are becoming so desperate that they are now relying on Divine Providence to help them sell their homes: as reported in dozens of recent press items, sales of statues of St. Joseph are skyrocketing; it is has been a long-time popular belief that burying a statue of St. Joseph in the basement of your home helps you sell your home when housing is in trouble. Those statues sales skyrocketed in the housing bust of the early 1990s and they are going through the roof again today."
The American Petroleum Institute said crude supplies rose 6.7 million barrels for the week ended Nov. 10. The Energy Department had reported a rise of 1.3 million. Motor gasoline supplies were down 1.4 million barrels, the API said, vs. the 3.7 million-barrel fall reported by the government. Distillate stocks declined by 2.3 million barrels, the API said. The Energy Department had reported a fall of 3.6 million barrels.
Doug Parker, chief executive of US Airways Group, said Wednesday he's confident the carrier's $8 billion cash-and-stock bid for bankrupt Delta Air Lines Inc.would pass merger review. "We've done a good bit of work on this with antitrust counsel and feel very strongly there are no issues that can't be resolved," Parker said in a conference call with analysts.
RailAmerica Inc signed a definitive agreement to be acquired by an affiliate of Fortress Investment Group LLC for $16.35 a share cash. The total value is $1.1 billion, including refinancing of debt.
Business conditions for manufacturers in the New York region improved in November, with the Empire State index rising by about four points to a a five-month high of 26.7, the New York Federal Reserve Bank reported Wednesday. The indexes for new orders, shipments, unfilled orders and employees all improved in November. The long-term outlook also improved in November.
McDonald's Corp. expects to return at least $10 billion to shareholders from 2006 through 2008, the company's chief financial officer said on Wednesday.
The Fed says their major concern is fighting inflation. If that is the case, then they should begin by tackling the excess liquidity sloshing through the economy, and in particular, focus on derivatives and their role in increasing speculative liquidity.
December natural gas climbed 14.3 cents, or 1.8%, to close at $8.12 per million British thermal units, its highest closing level since Oct. 25. December crude rose 48 cents to close at $58.76 a barrel.
Richard Daughty: "And if you don’t think that prices are rising, then let’s stroll on over to the latest Economist magazine and take look for ourselves. Hmmm! The Dollar Index for all items is up 37.5% from a year ago. Sounds like higher prices to me! Food is up 20.1% from a year ago, and that sounds like higher prices to me, too! All Industrials is up 56%, which I am SURE is higher prices, and Metals is up 80.4%, which I am absolutely positive is higher prices! The only thing that is NOT up in this table is Non-food Agriculturals which is still up 2.8% from a year ago, a level of inflation that used to be thought of as alarmingly high, back before Americans lost their minds 50 years or so ago."
Tuesday, November 14, 2006
The Consumer
11/15/06 The Consumer
U.S. consumers have a positive view for the first time since early 2002, according to the weekly index published Tuesday by ABC News and the Washington Post. The consumer comfort index rose to 1 from negative 3 last week and negative 19 in August before gas prices began falling. In the latest survey, 65% of consumers say their own finances are in good shape, up 10 percentage points in the past six weeks. Forty-six percent say the economy is in good shape, up 13 points since August to a 5-year high. Forty percent say it's a good time to buy things, up eight points since August.
Same-store sales at the New Albany, Ohio-base company's Abercrombie & Fitch stores were up 1%; they rose 8% at its Hollister Co. stores and 20% at its Ruehl stores. Abercrombie said it still sees net earnings of $3.25 to $3.30 a share, including a 2-cent per-share charge for options expensing, in the second half of 2006. The low end of that forecast reflects flat same-store sales in the fourth quarter of 2006. Based upon this outlook, the company expects full-year earnings of $4.59 to $4.64 a share, including 10 cent a share for options expensing. In my view, A&F is fully priced.
Crude for December delivery dropped 21 cents to $58.37 a barrel. Natural gas prices rose 1.2% to $7.99 per million British thermal units.
The Dow closed at an all-time high and the S&P 500 at a 6-year high. Gold and silver were pretty flat on the day.
Norfolk Southern Corp. foresees "mixed business conditions" in 2006 and 2007. The company said it expects its revenue increases to moderate, with less robust economic expansion than in the first half of 2006. Norfolk Southern also said it expects lower production of autos and home appliances in the fourth quarter.
The 0.9% decline in core producer prices (excluding food and energy) in October was entirely due to falling vehicle prices, a spokesman at the Bureau of Labor Statistics said Tuesday. Excluding cars and trucks, the core producer price index rose 0.1% in October.
Home Depot Inc.sees pressure on the housing industry continuing into the fourth quarter and through 2007. "I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in '07," Home Depot Chairman and Chief Executive Bob Nardelli said on the earnings conference call. The company reported a decline in quarterly profit, and said the slowing housing market was the biggest contributor to the falloff.
U.S. retail sales fell in October for the second month in a row, pushed lower by falling gasoline prices, the Commerce Department reported Tuesday.
Timberland Co. is exploring a plan to sell itself, The Wall Street Journal reported Tuesday, citing people familiar with the matter. The company has hired Goldman Sachs to explore potential buyers for the company, the report said. The Swartz family has about 70% of the voting power of Timberland, the report added.
The average daily volume for Stratos International is 32,000 shares. Yesterday the volume was 817,000 shares and traded up 4.2%. I continue to believe this is an excellent risk/reward, and the company is exploring alternatives that I feel will lead to a buyout.
Barry Ritholtz: "I've checked the grapevine, and have it on fairly good authority: Today's explosion was caused by a covering (or unwinding of) a 122k emini SPX contracts.That's a notational value of $4B."
Mark Twain: "There are two times in a man's life when he should not speculate: when he can't afford it and when he can."
U.S. consumers have a positive view for the first time since early 2002, according to the weekly index published Tuesday by ABC News and the Washington Post. The consumer comfort index rose to 1 from negative 3 last week and negative 19 in August before gas prices began falling. In the latest survey, 65% of consumers say their own finances are in good shape, up 10 percentage points in the past six weeks. Forty-six percent say the economy is in good shape, up 13 points since August to a 5-year high. Forty percent say it's a good time to buy things, up eight points since August.
Same-store sales at the New Albany, Ohio-base company's Abercrombie & Fitch stores were up 1%; they rose 8% at its Hollister Co. stores and 20% at its Ruehl stores. Abercrombie said it still sees net earnings of $3.25 to $3.30 a share, including a 2-cent per-share charge for options expensing, in the second half of 2006. The low end of that forecast reflects flat same-store sales in the fourth quarter of 2006. Based upon this outlook, the company expects full-year earnings of $4.59 to $4.64 a share, including 10 cent a share for options expensing. In my view, A&F is fully priced.
Crude for December delivery dropped 21 cents to $58.37 a barrel. Natural gas prices rose 1.2% to $7.99 per million British thermal units.
The Dow closed at an all-time high and the S&P 500 at a 6-year high. Gold and silver were pretty flat on the day.
Norfolk Southern Corp. foresees "mixed business conditions" in 2006 and 2007. The company said it expects its revenue increases to moderate, with less robust economic expansion than in the first half of 2006. Norfolk Southern also said it expects lower production of autos and home appliances in the fourth quarter.
The 0.9% decline in core producer prices (excluding food and energy) in October was entirely due to falling vehicle prices, a spokesman at the Bureau of Labor Statistics said Tuesday. Excluding cars and trucks, the core producer price index rose 0.1% in October.
Home Depot Inc.sees pressure on the housing industry continuing into the fourth quarter and through 2007. "I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in '07," Home Depot Chairman and Chief Executive Bob Nardelli said on the earnings conference call. The company reported a decline in quarterly profit, and said the slowing housing market was the biggest contributor to the falloff.
U.S. retail sales fell in October for the second month in a row, pushed lower by falling gasoline prices, the Commerce Department reported Tuesday.
Timberland Co. is exploring a plan to sell itself, The Wall Street Journal reported Tuesday, citing people familiar with the matter. The company has hired Goldman Sachs to explore potential buyers for the company, the report said. The Swartz family has about 70% of the voting power of Timberland, the report added.
The average daily volume for Stratos International is 32,000 shares. Yesterday the volume was 817,000 shares and traded up 4.2%. I continue to believe this is an excellent risk/reward, and the company is exploring alternatives that I feel will lead to a buyout.
Barry Ritholtz: "I've checked the grapevine, and have it on fairly good authority: Today's explosion was caused by a covering (or unwinding of) a 122k emini SPX contracts.That's a notational value of $4B."
Mark Twain: "There are two times in a man's life when he should not speculate: when he can't afford it and when he can."
Monday, November 13, 2006
More Interest In Communication Companies
11/14/06 More Interest In Communication Companies
Bids are due on Monday for Clear Channel Communications Inc. , the largest U.S. radio company, and two private equity groupings are expected to make offers for the $17 billion firm, sources familiar with the situation said. That would equate to at least $35 a share.
Additional interest in being expressed in the Tribune Company, owner of the LA Times and the Chicago Cubs.
John Hussman: "Beyond the comments on the “Fed Model” I've made in recent weeks, it also bears repeating that when the overall level of yields has been low, a “buy signal” on the Fed Model (meaning that 10-year Treasury yields are lower than the forward operating earnings yield on the S&P 500) has not been a reliable buy signal for stocks at all, but has often been a great sell signal on bonds.
As for the universally-known fact that slower economic growth means slower inflation, I would submit that it's not a fact at all."
Two private equity firms have agreed to buy apparel retailer Eddie Bauer Holdings Inc. for $286 million in cash, the clothing chain said Monday. Under terms of the deal, a holding company owned by affiliates of Sun Capital Partners Inc. and Golden Gate Capital will pay $9.25 per share in cash and assume $328 million in debt.
Dallas Federal Reserve President Richard Fisher Bank characterized the economy as "growing forcefully." He must be in another country.
Claus Vogt: "If the Fed was the responsible for the booms, it follows that it's also responsible for the negative consequences of any subsequent busts. Moreover, it implies that more of the same -- still another round of easy money from the Fed -- is tantamount to treating an alcoholic with alcohol. It will neither prevent the fallout of the bursting bubbles nor cure the economic imbalances they harbor. My view: The Fed is not part of the solution; it's part of the problem. And whatever the Fed decides to do will be too little, too late to prevent at least a cyclical recession in the U.S. ... and too much, too soon for any investor who's not prepared for inflation and surging commodity prices. So be sure to be ready for both: Recession AND inflation."
Wynn Resorts Ltd will pay shareholders a special cash dividend of $6 a share following its sale of certain Macau casino rights for $900 million. The distribution will be payable on Dec. 4 to stockholders of record on Nov. 23 and may be subject to tax as ordinary dividend income. The shares rose 6.3 percent to a record high.
December gold fell $4.30 to close at $625.80 an ounce Monday.
December crude fell $1.01 to close at $58.58 a barrel. December unleaded gasoline fell 2.77 cents to end at $1.535 a gallon and December heating oil closed at $1.66 a gallon, down 3.66 cents. December natural gas added 10 cents to finish at $7.894.
Health care costs could rise more than 10 percent in 2007, unless companies change their plans, according to a report by PricewaterhouseCoopers.
Rep. Ron Paul: "Are ever growing entitlement and military expenditures really consistent with a free country? Do these expenditures, and the resulting deficits, make us more free or less free? Should the government or the marketplace provide medical care? Should younger taxpayers be expected to provide retirement security and health care even for affluent retirees? Should the U.S. military be used to remake whole nations? Are the programs, agencies, and departments funded by Congress each year constitutional? Are they effective? Could they operate with a smaller budget? Would the public even notice if certain programs were eliminated altogether? These are the kinds of questions the American people must ask, even though Congress lacks the courage to do so.
If we hope to avoid a calamitous financial future for our nation, we must address the hardest question of all: What is the proper role for government in our society? The answer to this question will determine how prosperous and free we remain in the decades to come."
According to Bloomberg, computer-related stocks in the Standard & Poor's 500 Index have gained 23 percent since July 21, when their industry-group index set this year's low. The advance is the biggest among the 10 groups in the S&P 500. Before then, they ranked last for the year with a 13 percent loss.
It is more than likely that the foreign exchange reserves will continue to grow in China, India, and Russia. Each country is in the process of diversifying those reserves away from dollars. In the case of China that country has no more than 1% of its reserves in gold. In sum, gold is significantly under-owned by China. I would anticipate that China will become a "floor" under the price of gold over a long stretch of time. As India becomes more prosperous as a nation, that country's demand for gold jewelery will increase, and that nation too will be buying more gold. In the case of Russia, with increasing cash flow from oil and natural gas, I would expect that nation to place more of its reserves in gold. Essentially, demand for gold no longer is dependent on the "terror card." There are greater economic reasons behind demand, and they will be present on a daily basis.
Ludwig von Mises: "Foreign-exchange control is today primarily a device for the virtual expropriation of foreign investments. It has destroyed the international capital and money market."
Bids are due on Monday for Clear Channel Communications Inc. , the largest U.S. radio company, and two private equity groupings are expected to make offers for the $17 billion firm, sources familiar with the situation said. That would equate to at least $35 a share.
Additional interest in being expressed in the Tribune Company, owner of the LA Times and the Chicago Cubs.
John Hussman: "Beyond the comments on the “Fed Model” I've made in recent weeks, it also bears repeating that when the overall level of yields has been low, a “buy signal” on the Fed Model (meaning that 10-year Treasury yields are lower than the forward operating earnings yield on the S&P 500) has not been a reliable buy signal for stocks at all, but has often been a great sell signal on bonds.
As for the universally-known fact that slower economic growth means slower inflation, I would submit that it's not a fact at all."
Two private equity firms have agreed to buy apparel retailer Eddie Bauer Holdings Inc. for $286 million in cash, the clothing chain said Monday. Under terms of the deal, a holding company owned by affiliates of Sun Capital Partners Inc. and Golden Gate Capital will pay $9.25 per share in cash and assume $328 million in debt.
Dallas Federal Reserve President Richard Fisher Bank characterized the economy as "growing forcefully." He must be in another country.
Claus Vogt: "If the Fed was the responsible for the booms, it follows that it's also responsible for the negative consequences of any subsequent busts. Moreover, it implies that more of the same -- still another round of easy money from the Fed -- is tantamount to treating an alcoholic with alcohol. It will neither prevent the fallout of the bursting bubbles nor cure the economic imbalances they harbor. My view: The Fed is not part of the solution; it's part of the problem. And whatever the Fed decides to do will be too little, too late to prevent at least a cyclical recession in the U.S. ... and too much, too soon for any investor who's not prepared for inflation and surging commodity prices. So be sure to be ready for both: Recession AND inflation."
Wynn Resorts Ltd will pay shareholders a special cash dividend of $6 a share following its sale of certain Macau casino rights for $900 million. The distribution will be payable on Dec. 4 to stockholders of record on Nov. 23 and may be subject to tax as ordinary dividend income. The shares rose 6.3 percent to a record high.
December gold fell $4.30 to close at $625.80 an ounce Monday.
December crude fell $1.01 to close at $58.58 a barrel. December unleaded gasoline fell 2.77 cents to end at $1.535 a gallon and December heating oil closed at $1.66 a gallon, down 3.66 cents. December natural gas added 10 cents to finish at $7.894.
Health care costs could rise more than 10 percent in 2007, unless companies change their plans, according to a report by PricewaterhouseCoopers.
Rep. Ron Paul: "Are ever growing entitlement and military expenditures really consistent with a free country? Do these expenditures, and the resulting deficits, make us more free or less free? Should the government or the marketplace provide medical care? Should younger taxpayers be expected to provide retirement security and health care even for affluent retirees? Should the U.S. military be used to remake whole nations? Are the programs, agencies, and departments funded by Congress each year constitutional? Are they effective? Could they operate with a smaller budget? Would the public even notice if certain programs were eliminated altogether? These are the kinds of questions the American people must ask, even though Congress lacks the courage to do so.
If we hope to avoid a calamitous financial future for our nation, we must address the hardest question of all: What is the proper role for government in our society? The answer to this question will determine how prosperous and free we remain in the decades to come."
According to Bloomberg, computer-related stocks in the Standard & Poor's 500 Index have gained 23 percent since July 21, when their industry-group index set this year's low. The advance is the biggest among the 10 groups in the S&P 500. Before then, they ranked last for the year with a 13 percent loss.
It is more than likely that the foreign exchange reserves will continue to grow in China, India, and Russia. Each country is in the process of diversifying those reserves away from dollars. In the case of China that country has no more than 1% of its reserves in gold. In sum, gold is significantly under-owned by China. I would anticipate that China will become a "floor" under the price of gold over a long stretch of time. As India becomes more prosperous as a nation, that country's demand for gold jewelery will increase, and that nation too will be buying more gold. In the case of Russia, with increasing cash flow from oil and natural gas, I would expect that nation to place more of its reserves in gold. Essentially, demand for gold no longer is dependent on the "terror card." There are greater economic reasons behind demand, and they will be present on a daily basis.
Ludwig von Mises: "Foreign-exchange control is today primarily a device for the virtual expropriation of foreign investments. It has destroyed the international capital and money market."
Sunday, November 12, 2006
Strategic Oil Reserves And The Dollar And Gold
11/13/06 Strategic Oil Reserves And The Dollar And Gold
China's new strategic oil reserves should only be used in the case of real supply disruptions and not for commercial purposes, the International Energy Agency said last week. China, which now imports nearly half its crude, pumped the first drops into the storage tanks at Zhenhai in August to protect itself against supply disruptions. About 3 million barrels of Russian crude have been placed there, which are enough to meet about 11 days of its imports. Another two facilities are planned for completion before mid-2007 as Beijing aims for more than 100 million barrels in reserve by 2008.
Robert McHugh: "The U.S. Dollar has formed a Head and Shoulder Top over the past few months... All this is the start of a protracted move into the 60's, one that will be stair-step rather than freefall as Central Banks around the world work in orderly fashion to devalue the Dollar. There was just simply too much M-3 created over the past several years."
Mike Burk: "Short term indicators show breadth deteriorated during last weeks rally. I expect the major indices to be lower on Friday November 17 than they were on Friday November 10."
Mike Hewitt: "I would like to take a quote from another Reserve Bank publication, this time from page 8 of Philadelphia's The National Debt, "The Federal Government, with the cooperation of the Federal Reserve, has the inherent power to create money - almost any amount of it. This power makes technical bankruptcy out of the question." So not only are the banks committing fraudulent activity in the sense that they claiming asset value from their debt and secondly loaning out more than they have borrowed, they are protected from any risk of bankruptcy courtesy of the public! You and I would pay more for prices of goods and services should the Fed have to dilute the money supply further by printing sufficient money to prevent bankruptcy of a bank! This is nothing short of outrageous."
Doug Casey: "The world's total market valuation of publicly traded gold equities adds up to only about $150 billion, or just .0033 of the $45 trillion combined value of the world's equities."
According to the Financial Times, Larry Yung, the third richest man in China has bought an $800m stake in resources group Anglo American held by the Oppenheimer dynasty, a landmark deal in China’s aggressive acquisition of African resources.
Two-thirds of Americans-66 percent- believe that President Bush will be unable to get much done for the remainder of his second term, according to the November 9-10, 2006 Newsweek Poll. Only 30 percent say he can be effective. Bush's approval rating has dropped to an historic low in the Newsweek Poll of 31 percent-four points below the rating recorded the week before the midterm elections in the November 2-3 poll. Only 29 percent of Americans say they are satisfied withthe way things are going in the United States; 63 percent say they are dissatisfied.
China's new strategic oil reserves should only be used in the case of real supply disruptions and not for commercial purposes, the International Energy Agency said last week. China, which now imports nearly half its crude, pumped the first drops into the storage tanks at Zhenhai in August to protect itself against supply disruptions. About 3 million barrels of Russian crude have been placed there, which are enough to meet about 11 days of its imports. Another two facilities are planned for completion before mid-2007 as Beijing aims for more than 100 million barrels in reserve by 2008.
Robert McHugh: "The U.S. Dollar has formed a Head and Shoulder Top over the past few months... All this is the start of a protracted move into the 60's, one that will be stair-step rather than freefall as Central Banks around the world work in orderly fashion to devalue the Dollar. There was just simply too much M-3 created over the past several years."
Mike Burk: "Short term indicators show breadth deteriorated during last weeks rally. I expect the major indices to be lower on Friday November 17 than they were on Friday November 10."
Mike Hewitt: "I would like to take a quote from another Reserve Bank publication, this time from page 8 of Philadelphia's The National Debt, "The Federal Government, with the cooperation of the Federal Reserve, has the inherent power to create money - almost any amount of it. This power makes technical bankruptcy out of the question." So not only are the banks committing fraudulent activity in the sense that they claiming asset value from their debt and secondly loaning out more than they have borrowed, they are protected from any risk of bankruptcy courtesy of the public! You and I would pay more for prices of goods and services should the Fed have to dilute the money supply further by printing sufficient money to prevent bankruptcy of a bank! This is nothing short of outrageous."
Doug Casey: "The world's total market valuation of publicly traded gold equities adds up to only about $150 billion, or just .0033 of the $45 trillion combined value of the world's equities."
According to the Financial Times, Larry Yung, the third richest man in China has bought an $800m stake in resources group Anglo American held by the Oppenheimer dynasty, a landmark deal in China’s aggressive acquisition of African resources.
Two-thirds of Americans-66 percent- believe that President Bush will be unable to get much done for the remainder of his second term, according to the November 9-10, 2006 Newsweek Poll. Only 30 percent say he can be effective. Bush's approval rating has dropped to an historic low in the Newsweek Poll of 31 percent-four points below the rating recorded the week before the midterm elections in the November 2-3 poll. Only 29 percent of Americans say they are satisfied withthe way things are going in the United States; 63 percent say they are dissatisfied.
Looking Forward
11/12/06 Looking Forward
Bloomberg reported "natural gas demand in China, the world's biggest energy user after the U.S., may increase by more than 15 percent annually for the next 20 years, a government official said."
Freddie Mac U.S. Economic Outlook: "Given the past increases in mortgage rates, refinance activity continues to be strong due to continued incentives to cash-out home equity and refinance ARMs scheduled to have a payment reset in the next several months. The refinance share of loan applications for the next two quarters is projected to average 44%. Mortgage debt will grow by a rate of 9.1% in the last quarter of this year and drop to 5.8% in early 2007.'"
Doug Noland: "A major problem with the current monetary boom - the "Moneyness of Credit Bubble" - is the enormous and widening gulf between the markets perception of safety and liquidity and the acute vulnerability of the actual underlying Credits. Runaway booms invariably destroy the "money" - in whatever form it takes - whose inflationary expansion was responsible for fueling the Bubble. This lesson should have been learned from the late-twenties experience, or various other fiascos as far back as John Law. When current perceptions change - when trillions of instruments are reclassified and revalued as risky instruments as opposed to today's coveted "money" - Dr. Bernanke will learn why a central bank's monetary focus must be in restraining "money" and Credit excesses during the boom. And the longer this destabilizing period of transforming risky Credits into perceived "money" is allowed to run unchecked, the more impotent his little "mop-up" operations will appear in the face of widespread financial and economic dislocation - on a global scale."
I would like to take a moment to discuss the selling of naked puts. Frequently, I will note my best idea of the day. Recently, for example, it was selling the Whole Foods Jan. 2007 puts with a strike price of $37.50 for 45 cents. At the time the shares were selling for $46+. I only suggest a strategy that I do for myself.
I believe selling these puts was highly conservative. If someone elected to sell their shares to me at $37.50 less the 45 cents, I would be buying Whole Foods at an excellent long term value. If the shares do not retreat to $37.50 by the third Friday in January, then I pocket the 45 cents a share. To me, it's heads I win and tails I win. Is this a strategy for you? That's for you to decide.
John Mauldin: "Gary Gordon, an executive vice president at mortgage investment firm Annaly Capital and a former chief US equity strategist at UBS, expects construction to fall to 4% of gross domestic product from 6% today - itself not enough to push the economy (now growing at 2.6%annual rate) into recession. "The big risk is the ripple effect." New home buyers typically buy new furniture as well. "Housing turnover is a leading indicator of furniture sales, which is why analysts keep trimming earnings estimates for home furnishing retailers."Not to mention the problems if falling values make it more difficult for homeowners to borrow against their equity. Gordon estimates that if cash-out refinancing falls to 2001 levels, it would drain $300 billion from the economy, or roughly the same impact as another $60 increase in the price of a barrel of oil. And did I mention the increase in interest expenses for adjustable-rate mortgages?"
Here's a little something to ponder. In sum, if you wish to watch your weight, consider gold as an alternative to dollars.
How Many Wheelbarrows are You Worth?
by Adrian Burridg
Some fun statistics.
According to the US Bureau of Engraving and Printing each bill in circulation weighs 1 gram. http://www.moneyfactory.gov/document.cfm/18/106
Every ounce contains 31.1 grams.
Every pound contains 12 troy ounces.
So if you are worth US$1 million dollars and you requested the currency in $1 dollar bills you would have 32,154 ounces or 2679 pounds of physical currency in your possession.
According to this wheel barrow for sale at Canadian Tire - it can hold 210 pounds. http://www.canadiantire.ca/
This means that US$1 million dollars would weigh approximately 13 wheel barrows if you had to transport it via $1 dollar bills. The largest currency in circulation in the US is the $100 dollar bill.
Conversely if you held $1 million dollars in gold you would have 1592 ounces of gold (1,000,000 divided by $628.20) or approximately 133 pounds of gold which would be a little more than one half of one wheel barrow.
Now the US has M3 currency in circulation of approximately US$11 trillion dollars. If we use the same $1 dollar bill calculation we would find that we have just over 100 million wheel barrels of US dollar bills - if the entire money supply was $1 dollar bills which obviously it is not. This is also one wheel barrow of US dollar bills for every 3 men, women and children in the United States.
Again it would be 1 million wheel barrows of M3 money supply if we use the $100 dollar bill as the bill in the calculation.
Here is the math.
11,000,000,000,000 (11 trillion)
Divided by 100 (for the $100 dollar bill) = 110,000,000,000 grams.
Divided by 31.1 to get the number of ounces = 3,536,977,491.96 ounces.
Divided by 12 to get the number of pounds = 294,748,124.3 pounds
Divided by 210 pounds to get the number of wheelbarrows = 1,403,562.50
Multiplied by 100 to get the number of wheelbarrows if we use the $1 bill instead of the $100 dollar bill.
Buy all the gold you can carry.
How many wheel barrows are you worth?
Bloomberg reported "natural gas demand in China, the world's biggest energy user after the U.S., may increase by more than 15 percent annually for the next 20 years, a government official said."
Freddie Mac U.S. Economic Outlook: "Given the past increases in mortgage rates, refinance activity continues to be strong due to continued incentives to cash-out home equity and refinance ARMs scheduled to have a payment reset in the next several months. The refinance share of loan applications for the next two quarters is projected to average 44%. Mortgage debt will grow by a rate of 9.1% in the last quarter of this year and drop to 5.8% in early 2007.'"
Doug Noland: "A major problem with the current monetary boom - the "Moneyness of Credit Bubble" - is the enormous and widening gulf between the markets perception of safety and liquidity and the acute vulnerability of the actual underlying Credits. Runaway booms invariably destroy the "money" - in whatever form it takes - whose inflationary expansion was responsible for fueling the Bubble. This lesson should have been learned from the late-twenties experience, or various other fiascos as far back as John Law. When current perceptions change - when trillions of instruments are reclassified and revalued as risky instruments as opposed to today's coveted "money" - Dr. Bernanke will learn why a central bank's monetary focus must be in restraining "money" and Credit excesses during the boom. And the longer this destabilizing period of transforming risky Credits into perceived "money" is allowed to run unchecked, the more impotent his little "mop-up" operations will appear in the face of widespread financial and economic dislocation - on a global scale."
I would like to take a moment to discuss the selling of naked puts. Frequently, I will note my best idea of the day. Recently, for example, it was selling the Whole Foods Jan. 2007 puts with a strike price of $37.50 for 45 cents. At the time the shares were selling for $46+. I only suggest a strategy that I do for myself.
I believe selling these puts was highly conservative. If someone elected to sell their shares to me at $37.50 less the 45 cents, I would be buying Whole Foods at an excellent long term value. If the shares do not retreat to $37.50 by the third Friday in January, then I pocket the 45 cents a share. To me, it's heads I win and tails I win. Is this a strategy for you? That's for you to decide.
John Mauldin: "Gary Gordon, an executive vice president at mortgage investment firm Annaly Capital and a former chief US equity strategist at UBS, expects construction to fall to 4% of gross domestic product from 6% today - itself not enough to push the economy (now growing at 2.6%annual rate) into recession. "The big risk is the ripple effect." New home buyers typically buy new furniture as well. "Housing turnover is a leading indicator of furniture sales, which is why analysts keep trimming earnings estimates for home furnishing retailers."Not to mention the problems if falling values make it more difficult for homeowners to borrow against their equity. Gordon estimates that if cash-out refinancing falls to 2001 levels, it would drain $300 billion from the economy, or roughly the same impact as another $60 increase in the price of a barrel of oil. And did I mention the increase in interest expenses for adjustable-rate mortgages?"
Here's a little something to ponder. In sum, if you wish to watch your weight, consider gold as an alternative to dollars.
How Many Wheelbarrows are You Worth?
by Adrian Burridg
Some fun statistics.
According to the US Bureau of Engraving and Printing each bill in circulation weighs 1 gram. http://www.moneyfactory.gov/document.cfm/18/106
Every ounce contains 31.1 grams.
Every pound contains 12 troy ounces.
So if you are worth US$1 million dollars and you requested the currency in $1 dollar bills you would have 32,154 ounces or 2679 pounds of physical currency in your possession.
According to this wheel barrow for sale at Canadian Tire - it can hold 210 pounds. http://www.canadiantire.ca/
This means that US$1 million dollars would weigh approximately 13 wheel barrows if you had to transport it via $1 dollar bills. The largest currency in circulation in the US is the $100 dollar bill.
Conversely if you held $1 million dollars in gold you would have 1592 ounces of gold (1,000,000 divided by $628.20) or approximately 133 pounds of gold which would be a little more than one half of one wheel barrow.
Now the US has M3 currency in circulation of approximately US$11 trillion dollars. If we use the same $1 dollar bill calculation we would find that we have just over 100 million wheel barrels of US dollar bills - if the entire money supply was $1 dollar bills which obviously it is not. This is also one wheel barrow of US dollar bills for every 3 men, women and children in the United States.
Again it would be 1 million wheel barrows of M3 money supply if we use the $100 dollar bill as the bill in the calculation.
Here is the math.
11,000,000,000,000 (11 trillion)
Divided by 100 (for the $100 dollar bill) = 110,000,000,000 grams.
Divided by 31.1 to get the number of ounces = 3,536,977,491.96 ounces.
Divided by 12 to get the number of pounds = 294,748,124.3 pounds
Divided by 210 pounds to get the number of wheelbarrows = 1,403,562.50
Multiplied by 100 to get the number of wheelbarrows if we use the $1 bill instead of the $100 dollar bill.
Buy all the gold you can carry.
How many wheel barrows are you worth?
Saturday, November 11, 2006
Veteran's Day
11/11/06 Veteran's Day
Mark Twain: "In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot."
India's industrial production rose 11.4 percent in September, boosting growth for the first half of the fiscal year to 10.9 percent, the government said Friday in a report that indicated momentum is building in the economy.
China's Commerce Ministry said exports this year are expected to total $960 billion this year, with imports rising to $810 billion, the official Xinhua News Agency said. It is easy to see how the size of this trade surplus can lead to A $1 trillion foreign exchange surplus.
I urge all of you to read the article in The Journal Record on Helmerich and Payne
http://www.kfor.com/Global/story.asp?S=5...
Richard Benson: "Back in 2000, when homes were worth $11.4 trillion, there were only $4.8 trillion in mortgages against them. In the second quarter of 2006, that mortgage debt increased to a whopping $9.3 trillion. Increases in consumer borrowing pushes up economic spending and corporate profits and is far more powerful than wage or salary increases. To put it simply, when a dollar is borrowed, the full amount can be spent; when a dollar is earned, taxes need to be paid so depending on your tax rate, you’re left with about $.60 - $.80 cents. Surprisingly, even with the increases in housing prices over the last few years, the percentage of equity in homes has actually fallen from 58 percent in 2000, to 54 percent today."
The new standard deduction for married couples filing a joint income tax return will rise $400 to $10,700 next year after inflation adjustments that the Internal Revenue Service announced Thursday.The IRS said the deduction for singles and married individuals filing separately will go up $200 to $5,350 and for heads of household up $300 to $7,850. The changes will affect 2007 returns, filed by most taxpayers in 2008. Among other inflation adjustments, the value of each personal and dependency exemption, available to most taxpayers, will increase $100 from the 2006 level of $3,300.
Bill Gates warned against the rush to new Web-based software services, likening the frenzy to the days of the 1990s Internet bubble. Asked to name the next YouTube, the free video exchange Web site that is being acquired by Google for $1.65 billion, Gates said that he was cautious. "There are a hundred YouTube sites out there," Gates said during an interview with a group of journalists in Brussels before a speech to European lawmakers. "You never know. It's very complicated in terms of what are the business models for these sites."
Strengthening expectations of more eurozone interest rate increases helped send yields on 10-year eurozone government bonds briefly below yields on two-year paper on Thursday for the first time in more than six years.
From Eathfiles.com:“If no action is taken to reduce emissions, the concentration of greenhouse gases in the atmosphere could reach double its pre-industrial level as early as 2035."
- Sir Nicholas Stern, British Economist, November 10, 2006,
Report to British Prime Minister and Chancellor of Exchequer
According to the WSJ, Some Democrats are signaling a willingness to conduct tough oversight of Bush policies and to reopen lingering controversies -- particularly over pre-Iraq intelligence -- the Republican-led Congress largely ignored.
Surging demand and lower OPEC production may start to deflate world fuel stockpiles that have been filling at the fastest rate in 15 years, the International Energy Agency said on Friday.
Sudden revaluation of the Chinese yuan or renminbi could lead to massive bankruptcies and layoffs in the manufacturing sector, Chinese central banker Zhou Xiaochuan said Friday.
December crude closed at $59.59 a barrel, down $1.57, or 2.6%, for Friday's session, but up 45 cents, or 0.8%, for the week. December natural gas lost 16.1 cents, or 2%, to close at $7.794 per million British thermal units Friday. The contract was down 9 cents for the week.
December gold closed at $630.10 an ounce Friday, down $6.70, or 1.1%, for the session, but up 90 cents, or 0.1%, for the week. December silver added 6.5 cents to close at $13.115 an ounce, and gained 3.8% for the week. December copper dropped 22.05 cents, or 6.7%, to end at $3.0885 a pound for the day, down 7% from last Friday's close.
The National Association of Realtors said Friday in their 2007 outlook that existing-home sales will probably fall 0.6% to 6.43 million next year after sinking 8.6% this year, said David Lereah, chief economist for the industry group. New-home sales will probably fall 8.7% next year to 975,000 after plunging about 17% this year. Housing starts will probably fall about 12% next year to 1.63 million next year after falling 11% this year, he said.
John Stuart Mill: ""War is an ugly thing, but not the ugliest of things. The decayed and degraded state of moral and patriotic feeling, which thinks that nothing is worth war, is much worse. The person who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself."
Mark Twain: "In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot."
India's industrial production rose 11.4 percent in September, boosting growth for the first half of the fiscal year to 10.9 percent, the government said Friday in a report that indicated momentum is building in the economy.
China's Commerce Ministry said exports this year are expected to total $960 billion this year, with imports rising to $810 billion, the official Xinhua News Agency said. It is easy to see how the size of this trade surplus can lead to A $1 trillion foreign exchange surplus.
I urge all of you to read the article in The Journal Record on Helmerich and Payne
http://www.kfor.com/Global/story.asp?S=5...
Richard Benson: "Back in 2000, when homes were worth $11.4 trillion, there were only $4.8 trillion in mortgages against them. In the second quarter of 2006, that mortgage debt increased to a whopping $9.3 trillion. Increases in consumer borrowing pushes up economic spending and corporate profits and is far more powerful than wage or salary increases. To put it simply, when a dollar is borrowed, the full amount can be spent; when a dollar is earned, taxes need to be paid so depending on your tax rate, you’re left with about $.60 - $.80 cents. Surprisingly, even with the increases in housing prices over the last few years, the percentage of equity in homes has actually fallen from 58 percent in 2000, to 54 percent today."
The new standard deduction for married couples filing a joint income tax return will rise $400 to $10,700 next year after inflation adjustments that the Internal Revenue Service announced Thursday.The IRS said the deduction for singles and married individuals filing separately will go up $200 to $5,350 and for heads of household up $300 to $7,850. The changes will affect 2007 returns, filed by most taxpayers in 2008. Among other inflation adjustments, the value of each personal and dependency exemption, available to most taxpayers, will increase $100 from the 2006 level of $3,300.
Bill Gates warned against the rush to new Web-based software services, likening the frenzy to the days of the 1990s Internet bubble. Asked to name the next YouTube, the free video exchange Web site that is being acquired by Google for $1.65 billion, Gates said that he was cautious. "There are a hundred YouTube sites out there," Gates said during an interview with a group of journalists in Brussels before a speech to European lawmakers. "You never know. It's very complicated in terms of what are the business models for these sites."
Strengthening expectations of more eurozone interest rate increases helped send yields on 10-year eurozone government bonds briefly below yields on two-year paper on Thursday for the first time in more than six years.
From Eathfiles.com:“If no action is taken to reduce emissions, the concentration of greenhouse gases in the atmosphere could reach double its pre-industrial level as early as 2035."
- Sir Nicholas Stern, British Economist, November 10, 2006,
Report to British Prime Minister and Chancellor of Exchequer
According to the WSJ, Some Democrats are signaling a willingness to conduct tough oversight of Bush policies and to reopen lingering controversies -- particularly over pre-Iraq intelligence -- the Republican-led Congress largely ignored.
Surging demand and lower OPEC production may start to deflate world fuel stockpiles that have been filling at the fastest rate in 15 years, the International Energy Agency said on Friday.
Sudden revaluation of the Chinese yuan or renminbi could lead to massive bankruptcies and layoffs in the manufacturing sector, Chinese central banker Zhou Xiaochuan said Friday.
December crude closed at $59.59 a barrel, down $1.57, or 2.6%, for Friday's session, but up 45 cents, or 0.8%, for the week. December natural gas lost 16.1 cents, or 2%, to close at $7.794 per million British thermal units Friday. The contract was down 9 cents for the week.
December gold closed at $630.10 an ounce Friday, down $6.70, or 1.1%, for the session, but up 90 cents, or 0.1%, for the week. December silver added 6.5 cents to close at $13.115 an ounce, and gained 3.8% for the week. December copper dropped 22.05 cents, or 6.7%, to end at $3.0885 a pound for the day, down 7% from last Friday's close.
The National Association of Realtors said Friday in their 2007 outlook that existing-home sales will probably fall 0.6% to 6.43 million next year after sinking 8.6% this year, said David Lereah, chief economist for the industry group. New-home sales will probably fall 8.7% next year to 975,000 after plunging about 17% this year. Housing starts will probably fall about 12% next year to 1.63 million next year after falling 11% this year, he said.
John Stuart Mill: ""War is an ugly thing, but not the ugliest of things. The decayed and degraded state of moral and patriotic feeling, which thinks that nothing is worth war, is much worse. The person who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself."
Thursday, November 09, 2006
Further Developments
11/10/06 Further Developments
Dana Corp. will close eight plants in North America -- in addition to eight plants it already plans to close. It plans to modify or reject certain labor contracts in bankruptcy court. It plans to “eliminate any company obligation to provide post-retirement health care benefits for all current and future Dana retirees.
The Energy Department said natural-gas inventories fell 7 billion cubic feet for the week ended Nov. 3, marking the second-weekly decline of the heating season.
December crude climbed $1.33, or 2.2%, to close at a two-week high of $61.16 a barrel Thursday. "Surplus stocks narrowed for the third-straight week to stand 12.5 [million barrels] above year-ago levels, which means the supply cushion is slowly eroding," said Michael Fitzpatrick, an analyst at Fimat USA December natural gas climbed 13.2 cents, or 1.7%, to end at $7.955 per million British thermal units, its highest price since late October.
U.S. Nov. UMich consumer sentiment 92.3 vs. 93.6 in Oct.
Inventories at U.S. wholesalers rose to their highest level in relation to sales in more than a year in September, the Commerce Department reported Wednesday. Sales at wholesalers fell 1.2% in September, the first decline since last December and biggest drop in three years, while inventories increased 0.8%. The inventory-to-sales ratio rose to 1.18 in September, the highest since August 2005.
The Labor Department reported a 2% decline in import prices for October, the largest decline in three years. Import prices excluding petroleum fell 0.6% in October. Import prices excluding all fuels fell 0.1% in October, the first monthly decline since November 2005.
The Commerce Department reported the lowest trade gap since April for the month of September. The deficit narrowed by 6.8% in September to $64.3 billion-- the decline due mostly to lower oil prices. The trade gap is still astounding from a size standpoint.
Margaret Mead: "Having two bathrooms ruined the capacity to cooperate."
Delta Air Lines Inc. on Thursday said it plans to recall an additional 1,000 flight attendants in 2007.
Poe Fratt, a drilling-services analyst with A.G. Edwards & Sons in St. Louis:
"A drilling rig can have a life of 20 to 25 years, But right now it costs $12 million to refurbish a new rig and $15 million or more to build a new one, and the build time is up to nine months and lead times are getting longer and longer. So it's hard to see how we're ever going to get back to 4,530 rigs." I have suggested the purchase of Helmerich and Payne several times. Yes the stock has risen 3 points to $25; however, this is a quality company with highly experienced and competent management. In my view, the shares are selling at a ridiculously low valuation based on cash flow projections for their current fiscal year.
The price indexes for imports from Japan and China also decreased in
October, declining 0.3 percent and 0.1 percent, respectively. The October drop
in import prices from Japan was the third decline in the past four months and
the index decreased 1.7 percent for the year ended in October. The fall in
prices from China followed a 0.2 percent decline in September and the index
was down 1.3 percent over the past 12 months.
In contrast, prices for imports from the European Union increased 0.2
percent in October as a 0.4 percent advance in manufactured articles prices
more than offset a 5.5 percent decline in prices for nonmanufactured articles.
Import prices from the European Union rose 4.7 percent for the October 2005-
2006 period.
Meritage Homes Corp. CEO Steven Hilton said the company could see between $15 million and $30 million of charges in its fiscal fourth quarter related to land options and real-estate write-downs, based on recent analysis. The CEO said the home builder has taken about $16 million in charges the last two quarters. "Clearly it's a much different [housing] market than a year ago," Hilton said. He said demand has softened, home inventories are rising and taking longer to sell, incentives are up and profit margins are down.
Toll Brothers Inc.CEO Robert Toll said Thursday the company is seeing record cancellations now in part because its backlog stretched out beyond 12 months during the boom years when the company was selling a high volume of homes. As a result, speculative buyers are now walking away and giving up their deposit as the home comes to completion.
Bayer AG division Bayer HealthCare said Thursday it will realign its global pharmaceutical research and development organization, cutting up to 800 U.S jobs in the process. The actions follow Germany-based Bayer's acquisition of Schering AG in June. Bayer said it expects to lay off 600 workers, mainly research positions, as well as an additional 200 employees within the overall organization. Under the realignment, research programs and activities will be consolidated into three major sites: Berlin and Wuppertal, Germany, and Berkeley, Calif. Research sites in West Haven, Conn., and Richmond, Calif., will close.
December gold climbed $18.50, or 3%, to end at $636.80 an ounce Thursday, the contract's highest closing level since early September. December silver rose 50 cents to end at $13.05 an ounce, also a two-month high. Within the last 30 days Goldcorp has rallied 40% and Eldorado Gold close to 30%.
Zhou Xiaochuan, governor of the People's Bank of China, said at a conference in Frankfurt that China has concrete plans to diversify its reserves and is considering lots of instruments, said Ashraf Laidi of CMC Markets in New York.
Forbes on Microsoft's Zune: "All considered, we could be looking at the biggest consumer electronics flop in recent history here. This is like "Microsoft Bob," only more embarrassing."
Dwight D. Eisenhower: "Only strength can cooperate. Weakness can only beg."
Dana Corp. will close eight plants in North America -- in addition to eight plants it already plans to close. It plans to modify or reject certain labor contracts in bankruptcy court. It plans to “eliminate any company obligation to provide post-retirement health care benefits for all current and future Dana retirees.
The Energy Department said natural-gas inventories fell 7 billion cubic feet for the week ended Nov. 3, marking the second-weekly decline of the heating season.
December crude climbed $1.33, or 2.2%, to close at a two-week high of $61.16 a barrel Thursday. "Surplus stocks narrowed for the third-straight week to stand 12.5 [million barrels] above year-ago levels, which means the supply cushion is slowly eroding," said Michael Fitzpatrick, an analyst at Fimat USA December natural gas climbed 13.2 cents, or 1.7%, to end at $7.955 per million British thermal units, its highest price since late October.
U.S. Nov. UMich consumer sentiment 92.3 vs. 93.6 in Oct.
Inventories at U.S. wholesalers rose to their highest level in relation to sales in more than a year in September, the Commerce Department reported Wednesday. Sales at wholesalers fell 1.2% in September, the first decline since last December and biggest drop in three years, while inventories increased 0.8%. The inventory-to-sales ratio rose to 1.18 in September, the highest since August 2005.
The Labor Department reported a 2% decline in import prices for October, the largest decline in three years. Import prices excluding petroleum fell 0.6% in October. Import prices excluding all fuels fell 0.1% in October, the first monthly decline since November 2005.
The Commerce Department reported the lowest trade gap since April for the month of September. The deficit narrowed by 6.8% in September to $64.3 billion-- the decline due mostly to lower oil prices. The trade gap is still astounding from a size standpoint.
Margaret Mead: "Having two bathrooms ruined the capacity to cooperate."
Delta Air Lines Inc. on Thursday said it plans to recall an additional 1,000 flight attendants in 2007.
Poe Fratt, a drilling-services analyst with A.G. Edwards & Sons in St. Louis:
"A drilling rig can have a life of 20 to 25 years, But right now it costs $12 million to refurbish a new rig and $15 million or more to build a new one, and the build time is up to nine months and lead times are getting longer and longer. So it's hard to see how we're ever going to get back to 4,530 rigs." I have suggested the purchase of Helmerich and Payne several times. Yes the stock has risen 3 points to $25; however, this is a quality company with highly experienced and competent management. In my view, the shares are selling at a ridiculously low valuation based on cash flow projections for their current fiscal year.
The price indexes for imports from Japan and China also decreased in
October, declining 0.3 percent and 0.1 percent, respectively. The October drop
in import prices from Japan was the third decline in the past four months and
the index decreased 1.7 percent for the year ended in October. The fall in
prices from China followed a 0.2 percent decline in September and the index
was down 1.3 percent over the past 12 months.
In contrast, prices for imports from the European Union increased 0.2
percent in October as a 0.4 percent advance in manufactured articles prices
more than offset a 5.5 percent decline in prices for nonmanufactured articles.
Import prices from the European Union rose 4.7 percent for the October 2005-
2006 period.
Meritage Homes Corp. CEO Steven Hilton said the company could see between $15 million and $30 million of charges in its fiscal fourth quarter related to land options and real-estate write-downs, based on recent analysis. The CEO said the home builder has taken about $16 million in charges the last two quarters. "Clearly it's a much different [housing] market than a year ago," Hilton said. He said demand has softened, home inventories are rising and taking longer to sell, incentives are up and profit margins are down.
Toll Brothers Inc.CEO Robert Toll said Thursday the company is seeing record cancellations now in part because its backlog stretched out beyond 12 months during the boom years when the company was selling a high volume of homes. As a result, speculative buyers are now walking away and giving up their deposit as the home comes to completion.
Bayer AG division Bayer HealthCare said Thursday it will realign its global pharmaceutical research and development organization, cutting up to 800 U.S jobs in the process. The actions follow Germany-based Bayer's acquisition of Schering AG in June. Bayer said it expects to lay off 600 workers, mainly research positions, as well as an additional 200 employees within the overall organization. Under the realignment, research programs and activities will be consolidated into three major sites: Berlin and Wuppertal, Germany, and Berkeley, Calif. Research sites in West Haven, Conn., and Richmond, Calif., will close.
December gold climbed $18.50, or 3%, to end at $636.80 an ounce Thursday, the contract's highest closing level since early September. December silver rose 50 cents to end at $13.05 an ounce, also a two-month high. Within the last 30 days Goldcorp has rallied 40% and Eldorado Gold close to 30%.
Zhou Xiaochuan, governor of the People's Bank of China, said at a conference in Frankfurt that China has concrete plans to diversify its reserves and is considering lots of instruments, said Ashraf Laidi of CMC Markets in New York.
Forbes on Microsoft's Zune: "All considered, we could be looking at the biggest consumer electronics flop in recent history here. This is like "Microsoft Bob," only more embarrassing."
Dwight D. Eisenhower: "Only strength can cooperate. Weakness can only beg."
Wednesday, November 08, 2006
The Election
11/9/06 The Election
Barry Ritholtz: "Now we'll find out if some of the more experienced than I market watchers (Jeff Saut, Bill King, John Succo, J) have been right about who/what's been driving the stock market futures for political purposes. Indeed, its now in their interest to let markets slide as a rebuke to the Dems. Negative futures and market dips have been bought in the past; I suspect that pattern may not continue."
The American Petroleum Institute said crude supplies fell 866,000 barrels for the week ended Nov. 3. The Energy Department had reported a rise of 400,000 barrels. Motor gasoline supplies were up 1.3 million barrels, the API said -- contrary to the 600,000-barrel fall reported by the government. Distillate stocks declined by 2.1 million barrels, the API said. The Energy Department had reported a fall of 2.7 million barrels.
Centex Corp. CEO Tim Eller stated it normally takes about two and a half years from the peak to the trough. "So we still have further to go" since most experts place the top of the housing boom in July 2005, the CEO said. "In hindsight, we didn't take our foot off the gas pedal soon enough," he added.
I keep asking myself who is in charge of the executive branch of our government. Is it Bush 41 or Bush 43? A Bush 41 pick, Rumsfeld, has been replaced with another Bush 41 pick-- former CIA head Gates. It will be interesting to see whether Cheney, a Bush 41 choice, steps down for health reasons and Jim Baker, a Bush 41 confidant, takes his place. That only would leave Bush 43 to be replaced.
JFK: "The margin is narrow, but the responsibility is clear."
Vista will be "widely available" on Jan. 30, 2007. Microsoft's Office 2007 suite of software products will be available later this month. How many bugs will be in both of those products when finally released?
December gold fell $9.40 to end at $618.30 an ounce. December copper dropped 12.1 cents, or 3.6%, to close at $3.2445 a pound and December silver lost 12.5 cents to end at $12.55 an ounce.
Billionaires Eli Broad and Ronald Burkle have submitted a bid to acquire Tribune Co., according to a media reports Wednesday. Financial terms of the offer weren't available, the Associated Press reported, citing sources. Chicago-based Tribune publishes the Los Angeles Times, the Chicago Tribune, Newsday in New York and owns the WGN television station in Chicago, among other holdings.
Fortress Investment Group LLC filed plans with the Securities and Exchange Commission late Wednesday for what would be the first initial public offering of shares by a hedge fund firm in the U.S. Fortress, which oversees $26 billion in private-equity, hedge funds and other alternative investment vehicles, said a share sale will help it retain talent, access capital more efficiently to expand its busienss and give it a currency for future acquisitions.
The Dow Jones Industrial Average set a new record high close on Wednesday.
December crude rose 90 cents to end at $59.83. December natural gas closed up 6.8 cents at $7.823 per million British thermal units.
Franklin P. Adams: "Elections are won by men and women chiefly because most people vote against somebody rather than for somebody."
Barry Ritholtz: "Now we'll find out if some of the more experienced than I market watchers (Jeff Saut, Bill King, John Succo, J) have been right about who/what's been driving the stock market futures for political purposes. Indeed, its now in their interest to let markets slide as a rebuke to the Dems. Negative futures and market dips have been bought in the past; I suspect that pattern may not continue."
The American Petroleum Institute said crude supplies fell 866,000 barrels for the week ended Nov. 3. The Energy Department had reported a rise of 400,000 barrels. Motor gasoline supplies were up 1.3 million barrels, the API said -- contrary to the 600,000-barrel fall reported by the government. Distillate stocks declined by 2.1 million barrels, the API said. The Energy Department had reported a fall of 2.7 million barrels.
Centex Corp. CEO Tim Eller stated it normally takes about two and a half years from the peak to the trough. "So we still have further to go" since most experts place the top of the housing boom in July 2005, the CEO said. "In hindsight, we didn't take our foot off the gas pedal soon enough," he added.
I keep asking myself who is in charge of the executive branch of our government. Is it Bush 41 or Bush 43? A Bush 41 pick, Rumsfeld, has been replaced with another Bush 41 pick-- former CIA head Gates. It will be interesting to see whether Cheney, a Bush 41 choice, steps down for health reasons and Jim Baker, a Bush 41 confidant, takes his place. That only would leave Bush 43 to be replaced.
JFK: "The margin is narrow, but the responsibility is clear."
Vista will be "widely available" on Jan. 30, 2007. Microsoft's Office 2007 suite of software products will be available later this month. How many bugs will be in both of those products when finally released?
December gold fell $9.40 to end at $618.30 an ounce. December copper dropped 12.1 cents, or 3.6%, to close at $3.2445 a pound and December silver lost 12.5 cents to end at $12.55 an ounce.
Billionaires Eli Broad and Ronald Burkle have submitted a bid to acquire Tribune Co., according to a media reports Wednesday. Financial terms of the offer weren't available, the Associated Press reported, citing sources. Chicago-based Tribune publishes the Los Angeles Times, the Chicago Tribune, Newsday in New York and owns the WGN television station in Chicago, among other holdings.
Fortress Investment Group LLC filed plans with the Securities and Exchange Commission late Wednesday for what would be the first initial public offering of shares by a hedge fund firm in the U.S. Fortress, which oversees $26 billion in private-equity, hedge funds and other alternative investment vehicles, said a share sale will help it retain talent, access capital more efficiently to expand its busienss and give it a currency for future acquisitions.
The Dow Jones Industrial Average set a new record high close on Wednesday.
December crude rose 90 cents to end at $59.83. December natural gas closed up 6.8 cents at $7.823 per million British thermal units.
Franklin P. Adams: "Elections are won by men and women chiefly because most people vote against somebody rather than for somebody."
Monday, November 06, 2006
Disconnects
11/7/06 Disconnects
John Hussman: "Analysts may turn out to be correct in forecasting continued earnings growth. It's just that the people running those companies seem to disagree."
The U.S. economy should bounce back from the weak third quarter and average "somewhat below" a 3% real GDP rate over the next year, said Michael Moscow, the president of the Chicago Federal Reserve Bank on Monday.
OSI Restaurant Partners Inc., operator of Outback Steakhouse, Carrabba's Italian Grill and Bonefish Grill, on Monday said it agreed to be acquired by an investor group comprised of Bain Capital Partners, Catterton Partners and company founders Chris Sullivan, Robert Basham and J. Timothy Gannon for $40 a share in cash.
Swift Transportation said it has received a buoyout offer from its largest shareholder Jerry Moyes, offering $29 a share for all outstanding shares.
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today positive results from two Phase 2B trials evaluating bremelanotide for the treatment of male erectile dysfunction (ED). The two Phase 2B clinical trials were double-blind, placebo-controlled, parallel dose trials that included a one month run-in period and a three-month treatment period.
Dr. King Jolly, Executive Vice President of Research & Development for King, stated, "Together with our colleagues at Palatin, we are pleased with the data from these two trials, which demonstrate the potential effectiveness of bremelanotide as a treatment option for patients with ED. Accordingly, we look forward to further assessing the data from these two trials and our other Phase 2 investigations as we move forward with our development plan."
"The trial met its objectives and I feel confident we can develop a scientifically rigorous Phase 3 clinical program incorporating doses that have both adequate efficacy and acceptable tolerability to discuss with the FDA at an upcoming end-of-Phase 2 meeting," said Dr. Trevor Hallam, Executive Vice President, Research and Development of Palatin.
I do not know what investors expected but the stock traded down from $2.75 to $1.85, and then back to $2.29. Some were concerned with certain side effects; however, attention should be centered on the size of the dosage. There is a definite disconnect between the drop in the stock price and the presentation of the facts of the trials filed with the SEC.
George Ure: "The President of the United States recently went on TV and told the American people that the Federal budget deficit, last year, was about $249 billion. What he said was… er… misleading.
The fact is that, last year, the Federal Government had to borrow, not $249 billion to make ends meet, but $620 billion. THAT is the difference between the National Debt, as it stood at the beginning of the year, and the National Debt, as it stood at the end of that same year.
The reason the President could get away with his "misleading assertion" is that the other $380 billion was "off-budget". Yes, the money was spent, but no budget documents recorded it. So the BUDGET deficit was $249 billion, but the ACTUAL deficit was ore than twice as big."
Joseph Stalin: “The people who cast the votes don't decide an election, the people who count the votes do.”
According to the Financial Times, "Investment banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of reported “panic selling” in the US and European credit derivatives market last week.
This heavy selling has driven the cost of insuring debt against default in the market for credit default swaps to record low levels – signalling either that investors are extraordinarily optimistic about the outlook for corporate debt, or that prices are so distorted that they are no longer being paid for the risks they are taking on."
Four Seasons Hotels Inc. said on Monday it had received a management-led buyout offer valued at $3.7 billion or $82 a share in cash.
The offer is led by a group which includes Four Seasons controlling shareholder Isadore Sharp and Triples Holdings Limited, Kingdom Hotels International, a company owned by a trust created by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, and Bill Gates' Cascade Investment LLC.
Abbott Laboratories Inc. said on Monday it will acquire Kos Pharmaceuticals Inc. for $3.7 billion to boost its presence in the lucrative cholesterol-treatment market.
The agreement provides for Abbott to acquire Kos for $78 per share in cash.
December gold fell $1.30 to close at $627.90 an ounce. December silver closed 12.5 cents higher at $12.76 and December copper finished at $3.337 a pound, up 1.45 cents.
Kinross Gold Corp. has agreed to acquire Bema Gold Corp. in a $3.1 billion deal, the companies said Monday. Under the terms of the deal, each Bema common share will be exchanged for 0.441 of a Kinross common share. After the deal closes, 61% of the combined company will be owned by existing Kinross shareholders and 39% by existing Bema shareholders.
China says its foreign exchange reserves have reached $1 trillion. The reserves have been growing at the rate of $18 billion per month.
December crude rose 88 cents to close at $60.02 a barrel. December natural gas dropped 39.4 cents, or 5%, to end at $7.49 per million British thermal units.
I have been asked frequently about the disconnect between the most BLS numbers on nonfarm payrolls, the increasing number of self-employed people, and the rising amount of employment taxes collected by the government. First, if someone works part-time for himself/herself, and also has a full-time job, there would be double counting to consider the self-employment. Secondly, more taxes are being received as higher income levels place folks under the AMT umbrella. (The Congress has not ko'd the AMT. That is criminal in my view.) Thirdly, fewer people are able to take advantage of itemized deductions, and this can lead to paying higher taxes. No one knows for certain how many real self-emplyed people there are- those working full-time. Many accept cash as payment and don't report. Lastly, rather than being concerned with the number, just know predicting employment with constant monthly revisions is simply a futile exercise.
JFK: "Don't buy a single vote more than necessary."
John Hussman: "Analysts may turn out to be correct in forecasting continued earnings growth. It's just that the people running those companies seem to disagree."
The U.S. economy should bounce back from the weak third quarter and average "somewhat below" a 3% real GDP rate over the next year, said Michael Moscow, the president of the Chicago Federal Reserve Bank on Monday.
OSI Restaurant Partners Inc., operator of Outback Steakhouse, Carrabba's Italian Grill and Bonefish Grill, on Monday said it agreed to be acquired by an investor group comprised of Bain Capital Partners, Catterton Partners and company founders Chris Sullivan, Robert Basham and J. Timothy Gannon for $40 a share in cash.
Swift Transportation said it has received a buoyout offer from its largest shareholder Jerry Moyes, offering $29 a share for all outstanding shares.
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today positive results from two Phase 2B trials evaluating bremelanotide for the treatment of male erectile dysfunction (ED). The two Phase 2B clinical trials were double-blind, placebo-controlled, parallel dose trials that included a one month run-in period and a three-month treatment period.
Dr. King Jolly, Executive Vice President of Research & Development for King, stated, "Together with our colleagues at Palatin, we are pleased with the data from these two trials, which demonstrate the potential effectiveness of bremelanotide as a treatment option for patients with ED. Accordingly, we look forward to further assessing the data from these two trials and our other Phase 2 investigations as we move forward with our development plan."
"The trial met its objectives and I feel confident we can develop a scientifically rigorous Phase 3 clinical program incorporating doses that have both adequate efficacy and acceptable tolerability to discuss with the FDA at an upcoming end-of-Phase 2 meeting," said Dr. Trevor Hallam, Executive Vice President, Research and Development of Palatin.
I do not know what investors expected but the stock traded down from $2.75 to $1.85, and then back to $2.29. Some were concerned with certain side effects; however, attention should be centered on the size of the dosage. There is a definite disconnect between the drop in the stock price and the presentation of the facts of the trials filed with the SEC.
George Ure: "The President of the United States recently went on TV and told the American people that the Federal budget deficit, last year, was about $249 billion. What he said was… er… misleading.
The fact is that, last year, the Federal Government had to borrow, not $249 billion to make ends meet, but $620 billion. THAT is the difference between the National Debt, as it stood at the beginning of the year, and the National Debt, as it stood at the end of that same year.
The reason the President could get away with his "misleading assertion" is that the other $380 billion was "off-budget". Yes, the money was spent, but no budget documents recorded it. So the BUDGET deficit was $249 billion, but the ACTUAL deficit was ore than twice as big."
Joseph Stalin: “The people who cast the votes don't decide an election, the people who count the votes do.”
According to the Financial Times, "Investment banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of reported “panic selling” in the US and European credit derivatives market last week.
This heavy selling has driven the cost of insuring debt against default in the market for credit default swaps to record low levels – signalling either that investors are extraordinarily optimistic about the outlook for corporate debt, or that prices are so distorted that they are no longer being paid for the risks they are taking on."
Four Seasons Hotels Inc. said on Monday it had received a management-led buyout offer valued at $3.7 billion or $82 a share in cash.
The offer is led by a group which includes Four Seasons controlling shareholder Isadore Sharp and Triples Holdings Limited, Kingdom Hotels International, a company owned by a trust created by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, and Bill Gates' Cascade Investment LLC.
Abbott Laboratories Inc. said on Monday it will acquire Kos Pharmaceuticals Inc. for $3.7 billion to boost its presence in the lucrative cholesterol-treatment market.
The agreement provides for Abbott to acquire Kos for $78 per share in cash.
December gold fell $1.30 to close at $627.90 an ounce. December silver closed 12.5 cents higher at $12.76 and December copper finished at $3.337 a pound, up 1.45 cents.
Kinross Gold Corp. has agreed to acquire Bema Gold Corp. in a $3.1 billion deal, the companies said Monday. Under the terms of the deal, each Bema common share will be exchanged for 0.441 of a Kinross common share. After the deal closes, 61% of the combined company will be owned by existing Kinross shareholders and 39% by existing Bema shareholders.
China says its foreign exchange reserves have reached $1 trillion. The reserves have been growing at the rate of $18 billion per month.
December crude rose 88 cents to close at $60.02 a barrel. December natural gas dropped 39.4 cents, or 5%, to end at $7.49 per million British thermal units.
I have been asked frequently about the disconnect between the most BLS numbers on nonfarm payrolls, the increasing number of self-employed people, and the rising amount of employment taxes collected by the government. First, if someone works part-time for himself/herself, and also has a full-time job, there would be double counting to consider the self-employment. Secondly, more taxes are being received as higher income levels place folks under the AMT umbrella. (The Congress has not ko'd the AMT. That is criminal in my view.) Thirdly, fewer people are able to take advantage of itemized deductions, and this can lead to paying higher taxes. No one knows for certain how many real self-emplyed people there are- those working full-time. Many accept cash as payment and don't report. Lastly, rather than being concerned with the number, just know predicting employment with constant monthly revisions is simply a futile exercise.
JFK: "Don't buy a single vote more than necessary."
Sunday, November 05, 2006
More Opinions
11/6/06 More Opinions
Mike Burk: "Last week the rally of the past few months ended going into what seasonally has been the strongest week of the year. I think it is likely that weakness will continue for another week or two. I expect the major indices to be lower on Friday November 10 than they were on Friday November 3."
Brett Steenbarger: "Interestingly, margin debt is below the levels recorded in May, despite the market's recent rise. Year over year, we're up about 9% in margin debt, down from the 2006 peak of over 24%. It is hard to believe this bull swing will have legs if it continues to fail to attract speculative interest. If history is a guide, it will take a significant year-over-year drop in margin debt to usher in a cyclical market bottom."
Doug Noland: "Unlike the 30% to 40% annual earnings growth that many companies were enjoying during the previous tech-centric debt Bubble, today's much more dispersed Credit boom fosters near double-digit revenue growth and greater earnings inflation virtually throughout the entire business sector. There is today little angst related to equities gross overvaluation that we saw in 1999/2000. In fact, the general nature of today's profits inflation is taken as confirmation of the soundness of the underlying U.S. economy, while increasingly confident bullish analysts trumpet today's undervalued equities market."
The world economies, such as China, continue to devour the supplies of nickel, zinc, and copper. As their astounding foreign exchange balances mushroom, attention is turned to other commodities --- gold, silver, and oil. Make no mistake. The long term trend is to purchase more commodities to offset the growing soft currency holdings.
John Mauldin: " The housing price futures market, based upon the Case-Shiller Housing Price Index, suggests a decline of 7.6% from June 2006 to August 2007. As the inventory of homes for sale grows, and as prices drop, watch that number go lower."
Brett Steenbarger: "You may find that just one or two patterns in one or two markets at one or two time frames account for a large part of your success. Don't try to tweak what isn't working: figure out ways to capitalize on your core success in related markets, with steadily increased size. Build upon what you do well; don't try to remake yourself based on preconceived notions."
Three days before midterm elections, the numbers haven't changed much according to the November 2-3, 2006Newsweek Poll. If the election were held today, 54 percent of likely voterswould vote for the Democratic candidate in their district, versus 38percent who would vote for the Republican. Ninety percent of Republicanlikely voters say they would support the Republican candidate; 95 percentof Democrats would support the Democratic candidate. But amongindependents, 51 percent would vote for the Democrat, compared to 26percent who would vote for the Republican. A majority of Americans, 53 percent, say that they would most like tosee the Democrats win enough seats on Tuesday to take over Congress,according to the latest Newsweek Poll; 32 percent would most like to seethe Republicans keep control.IMS Health reported that $23 billion worth of drugs willgo "off patent" this year based on the annual sales of the products.Another $16 billion worth move out of the patented category next year.
Energy analysts around the globe provide the view that oil prices are now hostage to whether there is any chaos in the world. It is a huge mistake to overlook supply and demand. Politics play a part in the trend, but it does not alter long-term supply concerns and the increasing cost to develop reserves.
The Energy Information Administration (EIA) recently predicted that world consumption of natural gas alone will rise by 91% to 182 trillion cubic feet in less than twenty-five years."
Comstock Partners: "After all, when, in its lengthy history, has the Fed ever successfully engineered a soft landing except for 1995? In our view the next few months should clearly indicate that we are headed for a hard landing, resulting in a severe setback for a stock market that is discounting a benign soft landing."
Bill Gross: "On average, total assets in the US have grown by only 1.4% over nominal GDP for the past 37 years... And note that the 1.4% average is mostly the last 25 years, which was a period of disinflation. We are at an end of that period. We should expect lower than 1.4% in the coming years."
I am far from a pundit when it comes to politics. I do believe Democrats will gain control of the House and become the majority for Governors. I believe they will have a net gain of 3 Senate seats and be three short of gaining a majority.
On Sunday Mr Cheney also said that he would "probably not" agree to appear before Congress to be questioned on the conduct of the Iraq war even if a Democratic-controlled house issued subpoenas requiring him and Mr Bush to do so. When you cast your vote on Tuesday, I suggest you vote against anyone running on the party line that is above the law!
Mike Burk: "Last week the rally of the past few months ended going into what seasonally has been the strongest week of the year. I think it is likely that weakness will continue for another week or two. I expect the major indices to be lower on Friday November 10 than they were on Friday November 3."
Brett Steenbarger: "Interestingly, margin debt is below the levels recorded in May, despite the market's recent rise. Year over year, we're up about 9% in margin debt, down from the 2006 peak of over 24%. It is hard to believe this bull swing will have legs if it continues to fail to attract speculative interest. If history is a guide, it will take a significant year-over-year drop in margin debt to usher in a cyclical market bottom."
Doug Noland: "Unlike the 30% to 40% annual earnings growth that many companies were enjoying during the previous tech-centric debt Bubble, today's much more dispersed Credit boom fosters near double-digit revenue growth and greater earnings inflation virtually throughout the entire business sector. There is today little angst related to equities gross overvaluation that we saw in 1999/2000. In fact, the general nature of today's profits inflation is taken as confirmation of the soundness of the underlying U.S. economy, while increasingly confident bullish analysts trumpet today's undervalued equities market."
The world economies, such as China, continue to devour the supplies of nickel, zinc, and copper. As their astounding foreign exchange balances mushroom, attention is turned to other commodities --- gold, silver, and oil. Make no mistake. The long term trend is to purchase more commodities to offset the growing soft currency holdings.
John Mauldin: " The housing price futures market, based upon the Case-Shiller Housing Price Index, suggests a decline of 7.6% from June 2006 to August 2007. As the inventory of homes for sale grows, and as prices drop, watch that number go lower."
Brett Steenbarger: "You may find that just one or two patterns in one or two markets at one or two time frames account for a large part of your success. Don't try to tweak what isn't working: figure out ways to capitalize on your core success in related markets, with steadily increased size. Build upon what you do well; don't try to remake yourself based on preconceived notions."
Three days before midterm elections, the numbers haven't changed much according to the November 2-3, 2006Newsweek Poll. If the election were held today, 54 percent of likely voterswould vote for the Democratic candidate in their district, versus 38percent who would vote for the Republican. Ninety percent of Republicanlikely voters say they would support the Republican candidate; 95 percentof Democrats would support the Democratic candidate. But amongindependents, 51 percent would vote for the Democrat, compared to 26percent who would vote for the Republican. A majority of Americans, 53 percent, say that they would most like tosee the Democrats win enough seats on Tuesday to take over Congress,according to the latest Newsweek Poll; 32 percent would most like to seethe Republicans keep control.IMS Health reported that $23 billion worth of drugs willgo "off patent" this year based on the annual sales of the products.Another $16 billion worth move out of the patented category next year.
Energy analysts around the globe provide the view that oil prices are now hostage to whether there is any chaos in the world. It is a huge mistake to overlook supply and demand. Politics play a part in the trend, but it does not alter long-term supply concerns and the increasing cost to develop reserves.
The Energy Information Administration (EIA) recently predicted that world consumption of natural gas alone will rise by 91% to 182 trillion cubic feet in less than twenty-five years."
Comstock Partners: "After all, when, in its lengthy history, has the Fed ever successfully engineered a soft landing except for 1995? In our view the next few months should clearly indicate that we are headed for a hard landing, resulting in a severe setback for a stock market that is discounting a benign soft landing."
Bill Gross: "On average, total assets in the US have grown by only 1.4% over nominal GDP for the past 37 years... And note that the 1.4% average is mostly the last 25 years, which was a period of disinflation. We are at an end of that period. We should expect lower than 1.4% in the coming years."
I am far from a pundit when it comes to politics. I do believe Democrats will gain control of the House and become the majority for Governors. I believe they will have a net gain of 3 Senate seats and be three short of gaining a majority.
On Sunday Mr Cheney also said that he would "probably not" agree to appear before Congress to be questioned on the conduct of the Iraq war even if a Democratic-controlled house issued subpoenas requiring him and Mr Bush to do so. When you cast your vote on Tuesday, I suggest you vote against anyone running on the party line that is above the law!
Saturday, November 04, 2006
Opinions Galore
11/5/06 Opinions Galore
Nouriel Roubini: "Since last July I have been predicting that the US will enter into a recession in 2007. By now it is clear that several sectors of the economy are already in a recession, that Q4 growth will be lower than Q3 growth and that a formal recession (two or more consecutive quarters of negative growth) will very likely start by Q1 or at the latest Q2 of 2007."
Bill Bonner: "It now takes about 20 ounces of gold to buy the Dow. In 1980, it only took one ounce. And now the total value of U.S. financial assets is 33 times the value of the entire world’s gold above ground. In 1980, U.S. financial assets were only a bit more than three times the value of the world’s gold."
Americans are expected to spend about $38.4 billion this year on their pets, up 35 percent from 2001, according to the American Pet Products Manufacturers Association.
Bill Bonner: "We are still not sure that the great bull market in U.S. residential real estate has come to an end. What we are sure of, on the other hand, is that it isn’t at the beginning. The great housing bubble may be dead, but it already has a certain corpse-like stink to it. The relatives are gathered in the parlor. The silver has already been packed up. The local priest is already on the scene, administering last rites. True, we still don’t know exactly how the story will turn out. But it is time to begin preparing the obituary."
There are 20 stocks in the Dow Jones Transportation Index. All 20 closed lower this past week. Yet, that's only part of the story. Please notice the closing Tick for each day last week. The Tick is the closing sale, for example, on the NYSE and represents the net difference between the last sale on all companies traded on the exchange- subtracting the minus ticks from the plus ticks, and they were plus 600 on several days last week. There remains plenty of optimism around.
India’s Sensex equities index gained 1.7% to a new record high, increasing 2006 gains to 39.7%. China’s Shanghai Composite index surged 3.3%, increasing y-t-d gains to 60.7%.
Bloomberg reported “The United Arab Emirates, the second largest Arab economy, may reduce its holdings of dollars by almost half in an effort to reduce its dependence on the weakening U.S. currency, the country’s central bank governor said.” The UAE has been adding to its gold holdings.
Doug Noland points out that, in the third quarter of 2006, 89% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan balances, Freddie Mac said… That’s up from 88% in the second quarter, and is the highest share since the second quarter of 1990.
Doug Noland: "Following by a few days Otmar Issing’s warning about global liquidity excess, come pointed comments from the Bank of China: ‘Global economic imbalances are a concern for every country in the world because it leads to worldwide excessive liquidity, low long-term interest rates as well as price hikes in resources and other assets… Adjustments to world economic imbalances (particularly disorderly adjustments) may increase the fluctuation in the world’s major currencies, which will cause a slowdown in US economic growth and price adjustment of US assets, and this in turn may impact China’s export and economic growth.’"
With polls showing evangelical voters deserting the GOP and indicating a sizable defeat for the Republican
Party in the November 7 elections, Richard Viguerie, Chairman of
ConservativeHQ.com, stated that the GOP has alienated its base.
"It appears that very few Republican seats in Congress are safe. That's
what happens when the Party abandons conservative principles," Viguerie
said.
He said that the Bush Administration and GOP members in Congress have
instituted a massive expansion of government, including a pork barrel
spending spree, that far exceeds anything the Democrats ever did. Viguerie
added that President Bush's embrace of amnesty for illegal aliens, nation
building abroad, and mere lip service on social issues have disturbed much
of the Republican Party's base.
"How could these guys think they could trash conservative principles
and still maintain the allegiance of the grassroots,"
Viguerie asked.
Cheney's Speech in Colorado on Saturday. Notice the fear
tactics: "If the Democrats take control of the House, Charlie
Rangel will be chairman of the Ways and Means Committee. He would be in a
position to block any legislation coming out of the committee. And if
there's no tax legislation renewing the cuts, every tax rate will go back
up to its old level, the marriage penalty will return, and the death tax
will come back to life. The child credit, also, will drop back down from
$1,000 per child to $500 per child. In other words, take the number of
dependent children you receive the tax credit for; multiply it by $500 --
and that's the additional amount you'll be sending to Washington if we get
a Congress that lets the Bush tax cuts expire." The Dems
have no intention to bring back the marriage penalty, for
example.
Nouriel Roubini: "Since last July I have been predicting that the US will enter into a recession in 2007. By now it is clear that several sectors of the economy are already in a recession, that Q4 growth will be lower than Q3 growth and that a formal recession (two or more consecutive quarters of negative growth) will very likely start by Q1 or at the latest Q2 of 2007."
Bill Bonner: "It now takes about 20 ounces of gold to buy the Dow. In 1980, it only took one ounce. And now the total value of U.S. financial assets is 33 times the value of the entire world’s gold above ground. In 1980, U.S. financial assets were only a bit more than three times the value of the world’s gold."
Americans are expected to spend about $38.4 billion this year on their pets, up 35 percent from 2001, according to the American Pet Products Manufacturers Association.
Bill Bonner: "We are still not sure that the great bull market in U.S. residential real estate has come to an end. What we are sure of, on the other hand, is that it isn’t at the beginning. The great housing bubble may be dead, but it already has a certain corpse-like stink to it. The relatives are gathered in the parlor. The silver has already been packed up. The local priest is already on the scene, administering last rites. True, we still don’t know exactly how the story will turn out. But it is time to begin preparing the obituary."
There are 20 stocks in the Dow Jones Transportation Index. All 20 closed lower this past week. Yet, that's only part of the story. Please notice the closing Tick for each day last week. The Tick is the closing sale, for example, on the NYSE and represents the net difference between the last sale on all companies traded on the exchange- subtracting the minus ticks from the plus ticks, and they were plus 600 on several days last week. There remains plenty of optimism around.
India’s Sensex equities index gained 1.7% to a new record high, increasing 2006 gains to 39.7%. China’s Shanghai Composite index surged 3.3%, increasing y-t-d gains to 60.7%.
Bloomberg reported “The United Arab Emirates, the second largest Arab economy, may reduce its holdings of dollars by almost half in an effort to reduce its dependence on the weakening U.S. currency, the country’s central bank governor said.” The UAE has been adding to its gold holdings.
Doug Noland points out that, in the third quarter of 2006, 89% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan balances, Freddie Mac said… That’s up from 88% in the second quarter, and is the highest share since the second quarter of 1990.
Doug Noland: "Following by a few days Otmar Issing’s warning about global liquidity excess, come pointed comments from the Bank of China: ‘Global economic imbalances are a concern for every country in the world because it leads to worldwide excessive liquidity, low long-term interest rates as well as price hikes in resources and other assets… Adjustments to world economic imbalances (particularly disorderly adjustments) may increase the fluctuation in the world’s major currencies, which will cause a slowdown in US economic growth and price adjustment of US assets, and this in turn may impact China’s export and economic growth.’"
With polls showing evangelical voters deserting the GOP and indicating a sizable defeat for the Republican
Party in the November 7 elections, Richard Viguerie, Chairman of
ConservativeHQ.com, stated that the GOP has alienated its base.
"It appears that very few Republican seats in Congress are safe. That's
what happens when the Party abandons conservative principles," Viguerie
said.
He said that the Bush Administration and GOP members in Congress have
instituted a massive expansion of government, including a pork barrel
spending spree, that far exceeds anything the Democrats ever did. Viguerie
added that President Bush's embrace of amnesty for illegal aliens, nation
building abroad, and mere lip service on social issues have disturbed much
of the Republican Party's base.
"How could these guys think they could trash conservative principles
and still maintain the allegiance of the grassroots,"
Viguerie asked.
Cheney's Speech in Colorado on Saturday. Notice the fear
tactics: "If the Democrats take control of the House, Charlie
Rangel will be chairman of the Ways and Means Committee. He would be in a
position to block any legislation coming out of the committee. And if
there's no tax legislation renewing the cuts, every tax rate will go back
up to its old level, the marriage penalty will return, and the death tax
will come back to life. The child credit, also, will drop back down from
$1,000 per child to $500 per child. In other words, take the number of
dependent children you receive the tax credit for; multiply it by $500 --
and that's the additional amount you'll be sending to Washington if we get
a Congress that lets the Bush tax cuts expire." The Dems
have no intention to bring back the marriage penalty, for
example.
Friday, November 03, 2006
The Real Skinny
11/4/06 The Real Skinny
While all the news focused on the nonfarm payrolls and the revisions for August and September, the real story was unfolding. ExxonMobil and Chevron traded at 52-week highs. That's right, and that's despite crude having declined $10 a barrel, gasoline prices having dropped by about 65 cents a gallon, and the U.S. Oil Fund cascading down $20 a share from its $72 peak and being only 1 1/2 points from a 52-week low made earlier in the week. Your homework for the weekend is to explain this dichotomy. I realize you may watch the Breeders' Cup races today, and that leaves Sunday for the homework. You'll be doing yourself a favor by figuring out the answer.
As for the nonfarm payrolls, I stopped projecting the monthly figures about one year ago. It was quite obvious they had become nothing more than a government plaything. Each month was revised a couple of times and that made the original announcement completely meaningless -- except to traders who decided to transform themselves into the wazoo bird, which goes in ever decreasing circles until he goes up his own ---hole.
January platinum closed at $1,209.40 an ounce Friday, up $45.20 for the session, and up 12% for the week. December gold rose $1.40 to close at $629.20 an ounce, up 4.7% for the week. December silver closed at $12.635 an ounce, down 1.5 cents for the day, but up 4.6% for the week.
The U.S. Embassy in Nigeria has warned that within days, a militant group may atack up to 20 oil facilities, Dow Jones said.
Average hourly earnings in October increased 6 cents, or 0.4% to $16.91. Earnings are up 3.9% in the past year. The average workweek rose by six minutes to 33.9 hours.
The ISM nonmanufacturing index rose to 57.1% from 52.9% in September. New orders slipped to 56.5% from 57.2%. The employment index inched lower to 51.0% from 53.6%. The price index slipped to 51.9% from 56.7% in the previous month.
Caterpillar estimated 2006 earnings at $5.05-$5.30 a share and 2007 earnings at $5.18-$5.70 a share. The First Call estimates are for $5.21 a share and $5.63 a share for 2006 and 2007, respectively.
Gottschalks Inc. said a board panel will review strategic alternatives for the the Fresno, Calif., retailer, including, among others, a share buyback, a joint venture, or a sale of the company. Gottschalk's operates 61 department stores and five specialty apparel stores in California, Washington, Alaska, Oregon, Idaho and Nevada.
Whole Foods forecast that same-store sales will grow 6 to 8 percent in fiscal 2007, which began in late September. The company blamed the slower growth ahead on competitive pressures, saying it had reached an inevitable period of slowdown after recent robust growth. The stock declined 14+ points to a new 52-week low. My best idea today is to sell the January 2007 puts with a strike price of $37.50 for 45 cents.
I have been waiting for over two years for the stock to have a break like it had on Friday.
The yield on the benchmark 10-year note rose about 12 basis points, or 0.12 percentage point, to 4.72 percent It's the biggest jump in yield since July 1, 2005.
China's central bank ordered lenders to set aside more money as reserves for the third time this year to curtail a credit-fueled investment boom that spurred economic growth by 10.4 percent in the third quarter. Banks must set aside 9 percent of deposits as reserves starting Nov. 15, up from 8.5 percent.
Chinese stocks rose to a five-year high on Friday. In currency trading, the yuan hit a fresh high against the U.S. dollar, trading at 7.8708.
The market for offshore rigs is "going to be particularly strong past ... 2011," Transocean Inc. chief executive Bob Long said.
December crude closed at $59.14 a barrel, up $1.26 for the session but finished the week with a loss of 2.7%. December natural gas gained 7 cents to close at $7.884 per million British thermal units Friday, up 0.7% for the week.
Mark Twain: "Whenever you find that you are on the side of the majority, it is time to reform."
While all the news focused on the nonfarm payrolls and the revisions for August and September, the real story was unfolding. ExxonMobil and Chevron traded at 52-week highs. That's right, and that's despite crude having declined $10 a barrel, gasoline prices having dropped by about 65 cents a gallon, and the U.S. Oil Fund cascading down $20 a share from its $72 peak and being only 1 1/2 points from a 52-week low made earlier in the week. Your homework for the weekend is to explain this dichotomy. I realize you may watch the Breeders' Cup races today, and that leaves Sunday for the homework. You'll be doing yourself a favor by figuring out the answer.
As for the nonfarm payrolls, I stopped projecting the monthly figures about one year ago. It was quite obvious they had become nothing more than a government plaything. Each month was revised a couple of times and that made the original announcement completely meaningless -- except to traders who decided to transform themselves into the wazoo bird, which goes in ever decreasing circles until he goes up his own ---hole.
January platinum closed at $1,209.40 an ounce Friday, up $45.20 for the session, and up 12% for the week. December gold rose $1.40 to close at $629.20 an ounce, up 4.7% for the week. December silver closed at $12.635 an ounce, down 1.5 cents for the day, but up 4.6% for the week.
The U.S. Embassy in Nigeria has warned that within days, a militant group may atack up to 20 oil facilities, Dow Jones said.
Average hourly earnings in October increased 6 cents, or 0.4% to $16.91. Earnings are up 3.9% in the past year. The average workweek rose by six minutes to 33.9 hours.
The ISM nonmanufacturing index rose to 57.1% from 52.9% in September. New orders slipped to 56.5% from 57.2%. The employment index inched lower to 51.0% from 53.6%. The price index slipped to 51.9% from 56.7% in the previous month.
Caterpillar estimated 2006 earnings at $5.05-$5.30 a share and 2007 earnings at $5.18-$5.70 a share. The First Call estimates are for $5.21 a share and $5.63 a share for 2006 and 2007, respectively.
Gottschalks Inc. said a board panel will review strategic alternatives for the the Fresno, Calif., retailer, including, among others, a share buyback, a joint venture, or a sale of the company. Gottschalk's operates 61 department stores and five specialty apparel stores in California, Washington, Alaska, Oregon, Idaho and Nevada.
Whole Foods forecast that same-store sales will grow 6 to 8 percent in fiscal 2007, which began in late September. The company blamed the slower growth ahead on competitive pressures, saying it had reached an inevitable period of slowdown after recent robust growth. The stock declined 14+ points to a new 52-week low. My best idea today is to sell the January 2007 puts with a strike price of $37.50 for 45 cents.
I have been waiting for over two years for the stock to have a break like it had on Friday.
The yield on the benchmark 10-year note rose about 12 basis points, or 0.12 percentage point, to 4.72 percent It's the biggest jump in yield since July 1, 2005.
China's central bank ordered lenders to set aside more money as reserves for the third time this year to curtail a credit-fueled investment boom that spurred economic growth by 10.4 percent in the third quarter. Banks must set aside 9 percent of deposits as reserves starting Nov. 15, up from 8.5 percent.
Chinese stocks rose to a five-year high on Friday. In currency trading, the yuan hit a fresh high against the U.S. dollar, trading at 7.8708.
The market for offshore rigs is "going to be particularly strong past ... 2011," Transocean Inc. chief executive Bob Long said.
December crude closed at $59.14 a barrel, up $1.26 for the session but finished the week with a loss of 2.7%. December natural gas gained 7 cents to close at $7.884 per million British thermal units Friday, up 0.7% for the week.
Mark Twain: "Whenever you find that you are on the side of the majority, it is time to reform."
Thursday, November 02, 2006
Dicey
11/3/06 Getting Dicey
Labor costs in the third quarter increased 3.8%; productivity was flat, and that contrast will keep inflation watchers up late at night. Over the past year, productivity increased 1.3%, the slowest growth since 1997. Unit labor costs are up 5.3% in the past year, the fastest increase in 16 years. Real hourly compensation rose 0.7% in the third quarter, and is up 3.2% in the past year.
Wal-Mart expects their November same-store sales to be flat, and that is a big surprise considering Target is projecting a 4 to 7 percent gain in the same period.
European Central Bank President Jean-Claude Trichet hinted at a December rate hike.
Tribune told prospective suitors it is ready to weigh offers to sell off parts of itself after receiving lower-than-expected bids for the whole firm.
The Financial Times reported between 2000 and 2005, the US economy grew by 12 per cent in real terms. Millions of middle-class Americans, however, are seeing their pay stagnate. We have been discussing this very point for the past several years. It was only a matter of time until productivity took it on the chin, and moving forward, margins will come under pressure.
Taking out transportation orders, factory orders fell by 2.4% in September. Nondurable goods orders, however, rose by 4.6% in September.
The Energy Department said natural-gas inventories fell 9 billion cubic feet for the week ended Oct. 27, marking the first decline of the heating season.
Dave Anderson: "We believe that it requires long-term natural gas prices in excess of $7.00 per mcf in order to generate meaningful returns on most drilling programs in the U.S. This is based on finding and development costs, operating costs, etc., that we won't get into right now. That is later. For now, just be wary of anyone who relies on storage numbers to predict the future."
Doug Wakefield: "In January of 1959, the first date in this data series, the money supply stood at $292 billion. By February of 2006, it had grown 3,419 percent to $10,276 billion. Since 2000 the money supply has grown 55 percent and it has grown by $764 billion in the last twelve months."
Richard Daughty: "The banks are so massively over-leveraged that they have a measly $40 billion lousy bucks as reserves against $5.5 trillion in savings...And with a gigantic $6 trillion dollars in the loans and leases portfolio of the banks, these "assets" only have to decline by a trifling a 1% in price to wipe out their entire reserves! Hahaha! This is the level of absolute, ruinous insanity that reigns in the banks!"
Nouriel Roubini: "The probability of a recession next year is now as high as I expected it to be before - i.e. at least 70% and possibly higher - and Q4 growth is now strongly likely to be sharply lower than Q3. The soft-landing scenario and optimism is now melting by the day being squashed by a mounting range of evidence and indicators all signaling further economic weakness. The hard landing scenario with a 2007 recession is now becoming more and more likely and, increasingly, being accepted by a larger number of analysts and commentators on Wall Street. So, as predicted by me as early as last July, we are on our way to a sharp and ugly recession in 2007. The burden of proving the growing unlikely soft landing scenario is now in the camp of the perma bulls."
Mutual funds invested primarily in U.S. stocks posted net outflows of $2.58 billion for the week ended Nov. 1, swinging to negative flows after they gathered $599 million the previous week, according to TrimTabs Investment Research.
December natural gas rose 10.2 cents to end at $7.814 per million British thermal units. December crude fell 83 cents to close at $57.88 a barrel.
December gold climbed $8.50 to close at $627.80. December silver added 17.5 cents to end at $12.65 an ounce. December copper closed at $3.2915 a pound, up 5.05 cents after losing 3% on Wednesday.
Corn prices soared to a 10-year high in Chicago. This follows wheat rising to record levels. Food prices are on the rise. Make no mistake about it.
In 1994, fewer than 5 percent of mortgage originations were in the subprime market. But by 2005, about 20 percent of new mortgage loans were subprime, Bernanke said.
The Monster index was unchanged at 172 in October. The index peaked at 173 in August. It was at 143 a year ago.
"Our view over the next 12 months is you could see a downside for gold of $20-$35, but on the upside you could very well see $700 gold in 12 months," Newmont Mining Corp. President Pierre Lassonde said.
Oliver Wendell Holmes: "The mind, once expanded to the dimensions of larger ideas, never returns to its original size."
Labor costs in the third quarter increased 3.8%; productivity was flat, and that contrast will keep inflation watchers up late at night. Over the past year, productivity increased 1.3%, the slowest growth since 1997. Unit labor costs are up 5.3% in the past year, the fastest increase in 16 years. Real hourly compensation rose 0.7% in the third quarter, and is up 3.2% in the past year.
Wal-Mart expects their November same-store sales to be flat, and that is a big surprise considering Target is projecting a 4 to 7 percent gain in the same period.
European Central Bank President Jean-Claude Trichet hinted at a December rate hike.
Tribune told prospective suitors it is ready to weigh offers to sell off parts of itself after receiving lower-than-expected bids for the whole firm.
The Financial Times reported between 2000 and 2005, the US economy grew by 12 per cent in real terms. Millions of middle-class Americans, however, are seeing their pay stagnate. We have been discussing this very point for the past several years. It was only a matter of time until productivity took it on the chin, and moving forward, margins will come under pressure.
Taking out transportation orders, factory orders fell by 2.4% in September. Nondurable goods orders, however, rose by 4.6% in September.
The Energy Department said natural-gas inventories fell 9 billion cubic feet for the week ended Oct. 27, marking the first decline of the heating season.
Dave Anderson: "We believe that it requires long-term natural gas prices in excess of $7.00 per mcf in order to generate meaningful returns on most drilling programs in the U.S. This is based on finding and development costs, operating costs, etc., that we won't get into right now. That is later. For now, just be wary of anyone who relies on storage numbers to predict the future."
Doug Wakefield: "In January of 1959, the first date in this data series, the money supply stood at $292 billion. By February of 2006, it had grown 3,419 percent to $10,276 billion. Since 2000 the money supply has grown 55 percent and it has grown by $764 billion in the last twelve months."
Richard Daughty: "The banks are so massively over-leveraged that they have a measly $40 billion lousy bucks as reserves against $5.5 trillion in savings...And with a gigantic $6 trillion dollars in the loans and leases portfolio of the banks, these "assets" only have to decline by a trifling a 1% in price to wipe out their entire reserves! Hahaha! This is the level of absolute, ruinous insanity that reigns in the banks!"
Nouriel Roubini: "The probability of a recession next year is now as high as I expected it to be before - i.e. at least 70% and possibly higher - and Q4 growth is now strongly likely to be sharply lower than Q3. The soft-landing scenario and optimism is now melting by the day being squashed by a mounting range of evidence and indicators all signaling further economic weakness. The hard landing scenario with a 2007 recession is now becoming more and more likely and, increasingly, being accepted by a larger number of analysts and commentators on Wall Street. So, as predicted by me as early as last July, we are on our way to a sharp and ugly recession in 2007. The burden of proving the growing unlikely soft landing scenario is now in the camp of the perma bulls."
Mutual funds invested primarily in U.S. stocks posted net outflows of $2.58 billion for the week ended Nov. 1, swinging to negative flows after they gathered $599 million the previous week, according to TrimTabs Investment Research.
December natural gas rose 10.2 cents to end at $7.814 per million British thermal units. December crude fell 83 cents to close at $57.88 a barrel.
December gold climbed $8.50 to close at $627.80. December silver added 17.5 cents to end at $12.65 an ounce. December copper closed at $3.2915 a pound, up 5.05 cents after losing 3% on Wednesday.
Corn prices soared to a 10-year high in Chicago. This follows wheat rising to record levels. Food prices are on the rise. Make no mistake about it.
In 1994, fewer than 5 percent of mortgage originations were in the subprime market. But by 2005, about 20 percent of new mortgage loans were subprime, Bernanke said.
The Monster index was unchanged at 172 in October. The index peaked at 173 in August. It was at 143 a year ago.
"Our view over the next 12 months is you could see a downside for gold of $20-$35, but on the upside you could very well see $700 gold in 12 months," Newmont Mining Corp. President Pierre Lassonde said.
Oliver Wendell Holmes: "The mind, once expanded to the dimensions of larger ideas, never returns to its original size."
Several Thoughts
11/2/06 Several Thoughts
Mike Shedlock: "I notice that almost no one is talking about the yield curve, the one set of numbers that someone can and should believe. The yield curve is what it is, and it is quite inverted, signaling a recession. Forget Goldilocks. The next recession will be an extremely hard affair, led by a falloff in consumer spending, rising unemployment, and a continued slowdown in housing."
John Hussman: "Investors are eager to overlook the fact that stocks have lagged risk-free Treasury bill returns over the past 8 years, and are instead focused on the gains achieved during the current bull market. Yet even over the most recent 2.8 years since early 2004, the major indices have outperformed Treasury bills by only about 5% annually. Now, 5% annually, retained over the full market cycle, is a respectable margin over risk-free rates. But here the 5% margin has applied to a bull-market-only portion of this cycle, where bull-market-only gains have historically outpaced T-bill yields by upward of 20% annualized, on average. Worse, with stocks strenuously overbought and trading at rich multiples on record profit margins, there's a very slim potential for investors to retain that 5% margin they've earned above T-bill yields during the past few years."
The Institute for Supply Management said its ISM index fell to 51.2% in October from 52.9% in September. This is the lowest level since June 2003. The consensus forecast was for the index to rise to 53.2%. The employment index rose to 50.8% from 49.4%. The price index fell sharply to 47.0% from 61.0%.
Outlays on U.S. construction projects fell 0.3% in September, led by drops in spending on private residential construction and federal building projects, the government said Wednesday. Private residential construction spending fell 1.1% in September after declining by 1.6% in August, according to the Commerce Department. Spending on federal construction projects dropped by 1.5% in September. Total construction spending was revised to neither rise nor fall in August.
The pending home sales index fell 1.1% in September after a 4.7% increase in August. The index is down 13.6% in the past year, in line with declines in sales. "The present level of home sales is relatively high in historic terms, and we can expect generally minor movements around this level," said David Lereah, chief economist for the realtors' group. "We don't expect to see any changes of note until early next year when we're likely to see a modest lift to home sales."
The Energy Department said crude supplies rose 2 million barrels to 334.3 million for the week ended Oct. 27. Motor gasoline supplies fell 2.8 million barrels to 204.6 million. Distillate inventories stocks fell for a fourth-straight week, down 2.7 million barrels to total 141.3 million barrels.
Nouriel Roubini: "The reality is that the corporate emperor has no clothes or it is at least half naked: earnings growth is rapidly slowing down and it will fall further in Q4 and 2007 as the economy spins into a hard and ugly recession. And, as I have analyzed before, in an a typical recession the S&P500 falls by an average of 28%. So, the end of the sucker rally is getting closer. The recent bombardment of bad macro news on Q4 in the last two weeks has definitely broken the momentum of US equities in the last week; the myth of a Q4 growth rebound - after a dismal Q3 -is now rapidly fizzling away. Wait for a few more indicators and the sucker rally will melt faster than you can watch it."
Panda Ethanol Inc. announced thatit intends to build a 100 million gallon-per-year ethanol plant near thecity of Muleshoe in Bailey County, Texas. When finished, the facility willannually refine approximately 38 million bushels of corn into aclean-burning, renewable fuel for the nation's transportation needs. Theethanol produced by the plant will displace approximately 2.6 millionbarrels of imported oil a year.The Muleshoe facility will generate the steam used in the ethanolmanufacturing process by gasifying more than 1 billion pounds of cattlemanure a year. Once complete, it will be one of the most fuel efficientethanol refineries in the nation and equal in size to Panda's Herefordfacility, currently under construction, which will be the largestbiomass-fueled ethanol plant in the United
States.The Muleshoe facility is the sixth 100 million gallon ethanol projectannounced by Panda, and the fourth to be powered by cattle manure. Thecompany has received air permits for three of its six announced ethanolprojects.
CVS Corp. on Wednesday agreed to acquire pharmacy benefits manager Caremark Rx Inc. for $20.8 billion to expand its prescription benefits and mail-order business.CVS will exchange 1.67 of its shares for each Caremark share. The 10-year Treasury note rose 10/32 to 102-14/32 with a yield of 4.563%, its weakest closing level in five weeks and down from 4.608% at Tuesday's close. December natural gas climbed 17.8 cents to close at $7.712 per million BTUs.December unleaded gasoline climbed 3.57 cents, or 2.5%, to end at
$1.463 a gallon. December crude finished little changed, down 2 cents at $58.71 a barrel.
December gold climbed $12.50 to close at $619.30 an ounce in New York. December silver added 20.5 cents, or 1.7%, to end at $12.475 an ounce, but December copper lost 10.45 cents, or 3.1%, to finish the day at $3.241 a pound.
Mike Shedlock: "I notice that almost no one is talking about the yield curve, the one set of numbers that someone can and should believe. The yield curve is what it is, and it is quite inverted, signaling a recession. Forget Goldilocks. The next recession will be an extremely hard affair, led by a falloff in consumer spending, rising unemployment, and a continued slowdown in housing."
John Hussman: "Investors are eager to overlook the fact that stocks have lagged risk-free Treasury bill returns over the past 8 years, and are instead focused on the gains achieved during the current bull market. Yet even over the most recent 2.8 years since early 2004, the major indices have outperformed Treasury bills by only about 5% annually. Now, 5% annually, retained over the full market cycle, is a respectable margin over risk-free rates. But here the 5% margin has applied to a bull-market-only portion of this cycle, where bull-market-only gains have historically outpaced T-bill yields by upward of 20% annualized, on average. Worse, with stocks strenuously overbought and trading at rich multiples on record profit margins, there's a very slim potential for investors to retain that 5% margin they've earned above T-bill yields during the past few years."
The Institute for Supply Management said its ISM index fell to 51.2% in October from 52.9% in September. This is the lowest level since June 2003. The consensus forecast was for the index to rise to 53.2%. The employment index rose to 50.8% from 49.4%. The price index fell sharply to 47.0% from 61.0%.
Outlays on U.S. construction projects fell 0.3% in September, led by drops in spending on private residential construction and federal building projects, the government said Wednesday. Private residential construction spending fell 1.1% in September after declining by 1.6% in August, according to the Commerce Department. Spending on federal construction projects dropped by 1.5% in September. Total construction spending was revised to neither rise nor fall in August.
The pending home sales index fell 1.1% in September after a 4.7% increase in August. The index is down 13.6% in the past year, in line with declines in sales. "The present level of home sales is relatively high in historic terms, and we can expect generally minor movements around this level," said David Lereah, chief economist for the realtors' group. "We don't expect to see any changes of note until early next year when we're likely to see a modest lift to home sales."
The Energy Department said crude supplies rose 2 million barrels to 334.3 million for the week ended Oct. 27. Motor gasoline supplies fell 2.8 million barrels to 204.6 million. Distillate inventories stocks fell for a fourth-straight week, down 2.7 million barrels to total 141.3 million barrels.
Nouriel Roubini: "The reality is that the corporate emperor has no clothes or it is at least half naked: earnings growth is rapidly slowing down and it will fall further in Q4 and 2007 as the economy spins into a hard and ugly recession. And, as I have analyzed before, in an a typical recession the S&P500 falls by an average of 28%. So, the end of the sucker rally is getting closer. The recent bombardment of bad macro news on Q4 in the last two weeks has definitely broken the momentum of US equities in the last week; the myth of a Q4 growth rebound - after a dismal Q3 -is now rapidly fizzling away. Wait for a few more indicators and the sucker rally will melt faster than you can watch it."
Panda Ethanol Inc. announced thatit intends to build a 100 million gallon-per-year ethanol plant near thecity of Muleshoe in Bailey County, Texas. When finished, the facility willannually refine approximately 38 million bushels of corn into aclean-burning, renewable fuel for the nation's transportation needs. Theethanol produced by the plant will displace approximately 2.6 millionbarrels of imported oil a year.The Muleshoe facility will generate the steam used in the ethanolmanufacturing process by gasifying more than 1 billion pounds of cattlemanure a year. Once complete, it will be one of the most fuel efficientethanol refineries in the nation and equal in size to Panda's Herefordfacility, currently under construction, which will be the largestbiomass-fueled ethanol plant in the United
States.The Muleshoe facility is the sixth 100 million gallon ethanol projectannounced by Panda, and the fourth to be powered by cattle manure. Thecompany has received air permits for three of its six announced ethanolprojects.
CVS Corp. on Wednesday agreed to acquire pharmacy benefits manager Caremark Rx Inc. for $20.8 billion to expand its prescription benefits and mail-order business.CVS will exchange 1.67 of its shares for each Caremark share. The 10-year Treasury note rose 10/32 to 102-14/32 with a yield of 4.563%, its weakest closing level in five weeks and down from 4.608% at Tuesday's close. December natural gas climbed 17.8 cents to close at $7.712 per million BTUs.December unleaded gasoline climbed 3.57 cents, or 2.5%, to end at
$1.463 a gallon. December crude finished little changed, down 2 cents at $58.71 a barrel.
December gold climbed $12.50 to close at $619.30 an ounce in New York. December silver added 20.5 cents, or 1.7%, to end at $12.475 an ounce, but December copper lost 10.45 cents, or 3.1%, to finish the day at $3.241 a pound.
Monday, October 30, 2006
Orderly Adjustment
10/31/06 Orderly Adjustment
Pilgrim's Pride said it will reduce weekly chicken processing by 5%
year over year, or approximately 1.3 million head per week, by January 2007
as part of its continuing effort to better balance supply and demand amid
declining chicken prices and sharply higher costs for corn.
The reduction will begin with eggs set as of October 30, 2006, and will
take effect with weekly processing beginning January 1, 2007. The Company
said it intends that the reduction will remain in effect until average
industry margins return to more normalized levels.
"The U.S. chicken industry is subject to volatility and there are a
number of factors impacting near-term market conditions. Although industry
dynamics improved in the spring and early summer of 2006, market conditions
have weakened over the past few months, as evidenced by a decrease in
prices for boneless breast meat and leg quarters, as well as a sharp
increase over the past two months in the price of corn," said O.B. Goolsby
Jr., Pilgrim's Pride president and chief executive officer.
What implications might this have for the company's efforts to acquire Gold Kist?
Over one hundred of our fighting men and women have been killed in Iraq this month.
Bush says "we are winning the war." The voters will have their say on November 7.
The year-on-year rate of non food and energy inflation registered a strong 2.4 percent increase in September. What would the real inflation rate be with food and energy? Clearly the rate would exceed your monthly income gains. Maybe that's why Lacker of the Richmond Fed finds inflation "discomforting."
Goodyear Tire & Rubber Co. said on Monday that it plans to close a plant in Tyler, Texas, three weeks after workers at the factory and 15 other facilities went on strike in part because of the tire maker's plan to shut down the plant. The move will eliminate about 1,100 jobs and is part of Goodyear's strategy to end some of its private label tire business.
Real disposable incomes - after taxes and after adjusting for inflation - rose 0.8%, the most since last September. Consumer spending increased 0.1% in nominal terms, but rose 0.4% when adjusted for falling prices.
Rep. Ron Paul: “Once we accept that the federal government needs $2.7 trillion from us - and more each year - the only question left is from whom it will be collected.”
Gazprom delayed the start of production at its giant Shtokman offshore natural gas field in the Arctic by two years, to 2013, Interfax said Sunday.
The company had planned to produce its first liquefied natural gas, or LNG, at the field in July 2011, deputy CEO Alexander Ananenkov said in Ufa on Sunday, Interfax reported.
Richard Daughty relates "last night, Japanese Finance Minister Omi said that Japan would ‘welcome Russia’s decision to raise yen exposure in their currency reserves’”...Australia’s “Treasurer Peter Costello has called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments and ensure an orderly adjustment.”
Nouriel Roubini: "The first estimate of US Q3 GDP growth came out at a dismal 1.6% but, as reported by Bloomberg, the actual correct figure would have been 0.9% if the production of motor vehicles in Q3 had been measured correctly."
December gold climbed $6.40, or 1.1%, to close at $607.40 an ounce, the contract's loftiest closing level since Sept. 28. Meanwhile, crude closed down 4% at $58.36. December natural gas closed at a more than two-week low of $7.416 per million British thermal units, down 41.1 cents, or 5.3%.
An survey of homeowners conducted for Wells Fargo & Co., the San Francisco-based bank, found that about one in seven respondents had an adjustable-rate mortgage, or ARM. The study found that nearly 80 percent of homeowners with ARMs said they were "somewhat" concerned, "very" concerned or "extremely" concerned about rate increases.
Paul McCulley: "The FOMC's revealed bias is to nurture an increase in the unemployment rate with sustained below-trend growth, so as to pull inflation back down towards target."
Ford plans to cut North American output by up to 12% in the first half of 2007.
Pilgrim's Pride said it will reduce weekly chicken processing by 5%
year over year, or approximately 1.3 million head per week, by January 2007
as part of its continuing effort to better balance supply and demand amid
declining chicken prices and sharply higher costs for corn.
The reduction will begin with eggs set as of October 30, 2006, and will
take effect with weekly processing beginning January 1, 2007. The Company
said it intends that the reduction will remain in effect until average
industry margins return to more normalized levels.
"The U.S. chicken industry is subject to volatility and there are a
number of factors impacting near-term market conditions. Although industry
dynamics improved in the spring and early summer of 2006, market conditions
have weakened over the past few months, as evidenced by a decrease in
prices for boneless breast meat and leg quarters, as well as a sharp
increase over the past two months in the price of corn," said O.B. Goolsby
Jr., Pilgrim's Pride president and chief executive officer.
What implications might this have for the company's efforts to acquire Gold Kist?
Over one hundred of our fighting men and women have been killed in Iraq this month.
Bush says "we are winning the war." The voters will have their say on November 7.
The year-on-year rate of non food and energy inflation registered a strong 2.4 percent increase in September. What would the real inflation rate be with food and energy? Clearly the rate would exceed your monthly income gains. Maybe that's why Lacker of the Richmond Fed finds inflation "discomforting."
Goodyear Tire & Rubber Co. said on Monday that it plans to close a plant in Tyler, Texas, three weeks after workers at the factory and 15 other facilities went on strike in part because of the tire maker's plan to shut down the plant. The move will eliminate about 1,100 jobs and is part of Goodyear's strategy to end some of its private label tire business.
Real disposable incomes - after taxes and after adjusting for inflation - rose 0.8%, the most since last September. Consumer spending increased 0.1% in nominal terms, but rose 0.4% when adjusted for falling prices.
Rep. Ron Paul: “Once we accept that the federal government needs $2.7 trillion from us - and more each year - the only question left is from whom it will be collected.”
Gazprom delayed the start of production at its giant Shtokman offshore natural gas field in the Arctic by two years, to 2013, Interfax said Sunday.
The company had planned to produce its first liquefied natural gas, or LNG, at the field in July 2011, deputy CEO Alexander Ananenkov said in Ufa on Sunday, Interfax reported.
Richard Daughty relates "last night, Japanese Finance Minister Omi said that Japan would ‘welcome Russia’s decision to raise yen exposure in their currency reserves’”...Australia’s “Treasurer Peter Costello has called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments and ensure an orderly adjustment.”
Nouriel Roubini: "The first estimate of US Q3 GDP growth came out at a dismal 1.6% but, as reported by Bloomberg, the actual correct figure would have been 0.9% if the production of motor vehicles in Q3 had been measured correctly."
December gold climbed $6.40, or 1.1%, to close at $607.40 an ounce, the contract's loftiest closing level since Sept. 28. Meanwhile, crude closed down 4% at $58.36. December natural gas closed at a more than two-week low of $7.416 per million British thermal units, down 41.1 cents, or 5.3%.
An survey of homeowners conducted for Wells Fargo & Co., the San Francisco-based bank, found that about one in seven respondents had an adjustable-rate mortgage, or ARM. The study found that nearly 80 percent of homeowners with ARMs said they were "somewhat" concerned, "very" concerned or "extremely" concerned about rate increases.
Paul McCulley: "The FOMC's revealed bias is to nurture an increase in the unemployment rate with sustained below-trend growth, so as to pull inflation back down towards target."
Ford plans to cut North American output by up to 12% in the first half of 2007.
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