5/10/07 Data Points
Toyota warned that profits in the current year would be flat as it reported record annual sales and profits, helped by strong overseas sales, cost cutting and a favorable exchange rate. This provides another indication of the difficult environment facing even the best-run companies.
In Iraq’s relatively peaceful Kurdistan, a truck bomb killed 12 people and wounded 40 in the northern city of Arbil, a Kurdish official said. It was one of the few bombings in the Kurdish region since the U.S.-led invasion of Iraq in 2003. This is one more sign of the raging civil war in Iraq.
AK Steel CEO James Wainscott said the company isn’t “actively seeking a buyer."
All Nigerian oil production could come to a standstill at the end of the month, as industry-wide militant attacks are planned to coincide with the handover of power from President Matthew Olusegun Aremu Obasanjo to his successor on May 29, sources in the energy industry said Wednesday.
Global Industries, Ltd. confirmed that one of its construction vessels, the DLB Cheyenne operating offshore Nigeria, was forcibly boarded last night by currently unidentified armed militants. Four of the Company's employees were abducted. One Nigerian crew member and three Nigerian naval personnel sustained non-life threatening injuries and were treated on-site by Global's medical personnel.
ONGC Videsh Ltd. and a group of other Indian state-run companies have discovered oil and gas in Iran. The Farsi field may have as much as 10 trillion cubic feet of natural gas and 1 billion barrels of oil.
Toll Brothers said its preliminary second-quarter sales fell from the same quarter last year, due to continued weakness in the U.S. housing sector, and the company also said it will not meet its previous sales and earnings guidance.
At least three groups of private-equity buyers have formed to pursue a potential purchase of wireless carrier Alltel, according to media reports. According to the reports, Providence Equity Partners and the Blackstone Group are teaming up in a bid for the U.S. rural wireless telecommunication services provider. Both the Wall Street Journal and Reuters were reporting the news, citing unnamed sources familiar with the matter. The deal could be worth as much as $30 billion, the reports said. The Wall Street Journal also reported that TPG Capital and the private-equity arm of Goldman Sachs Group are also involved in discussions as is the team of Carlyle and Kohlberg Kravis Roberts.
Dendreon Corp. said U.S. regulators want more data on its prostate cancer medicine, delaying approval of the company's first product. The stock lost more than half its value. The Food and Drug Administration asked for information supporting the efficacy claim for the experimental medicine, the company said. Dendreon said it is seeking clarification on the request.
Mitchell H. Gold, M.D., president and chief executive officer of Dendreon: "Given our strong belief in the survival benefit and safety profile of PROVENGE, coupled with the positive outcome of the Advisory Committee meeting, we are disappointed that this decision will cause a delay in the availability of PROVENGE for patients who suffer from advanced prostate cancer. We are committed to working closely with the FDA to resolve these questions in a timely and efficient manner to bring PROVENGE to patients with advanced prostate cancer who currently have few appealing treatment options."
Shares of Rio Tinto Group, the world's third-largest mining company, rose to a record on speculation it may get a bid from BHP Billiton Ltd., its largest rival.
The number of homes listed for sale in 18 major metropolitan areas at the end of April was up 7% from March, according to data compiled by ZipRealty Inc.
Alcoa was split into Alcan & Alcoa in the 1920's due to antitrust issues. Maybe the landscape has changed a good deal since the 1920's, but the price for this combination goes a long ways to offsetting the advantages of Alcan's cheap hydroelectric power. I can see why Alcoa wants Alcan, but the reverse arrives at a different conclusion.
CareerBuilder.com said Microsoft Corp. purchased a minority stake in the online job site. The companies have also extended their strategic content alliance through 2013. Other owners of CareerBuilder.com include Gannett, Tribune and The McClatchy Co.
Talisman Energy's management is shooting for full-year cash flow of about C$5 billion. The company increased its semi-annual dividend 17% to 8.75 Canadian cents (7.91 cents) a share. The dividend is payable on June 29 to shareholders of record as of June 4,
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced plans to present the results from two bremelanotide Phase 2b studies of men with erectile dysfunction (ED). The presenters are Jed Kaminetsky, MD, Clinical Assistant Professor, Department of Urology, NYU School of Medicine; Stanley E. Althof, PhD, Professor of Psychology, Case Western Reserve School of Medicine and Christopher Steidle, MD, Clinical Associate Professor of Urology, Indiana University School of Medicine.The companies plan to present the results at the American Urological Association (AUA) Annual Meeting in Anaheim, CA, which takes place May 19-24, 2007. The Phase 2b studies were designed to evaluate the safety and efficacy of bremelanotide for the treatment of male ED using a range of intranasally administered doses in an at-home environment. A total of 726 and 294 patients were enrolled in a non-diabetic ED patient study and a diabetic ED patient study, respectively. Palatin and King announced initial positive results from the Phase 2b trial evaluating bremelanotide for the treatment of male non- diabetic ED patients in November 2006. Dr. Kaminetsky's presentation, titled "Phase 2b Study of Bremelanotide in the Treatment of ED in Non-Diabetic Males," and Dr. Althof's presentation, titled "Improvement in Sexual Relationship Satisfaction, Confidence, and Self- Esteem in ED Patients Treated with Bremelanotide," will be presented at a podium session titled "Sexual Function/Dysfunction/Andrology: Evaluation (II)" on Monday, May 21st at 1:00 PM PDT. Dr. Steidle's poster, titled "Phase 2b Study of Bremelanotide in the Treatment of ED in Diabetic Males," will be presented at a poster session titled "Sexual Function/Dysfunction/Andrology: Surgical, Medical and Non-surgical Therapy (II)" from 3:30 PM - 5:30 PM PDT on Monday, May 21st.
The American Petroleum Institute reported a climb of 971,000 barrels in crude supplies for the week ended May 4. The group also downwardly revised the previous week's total to 343.8 million from 344.8. The Energy Department had reported an increase of 5.6 million barrels for the latest week. Motor gasoline supplies were up 937,000 barrels, the API said. The government reported a rise of 400,000 barrels. Distillate supplies were down 626,000 barrels, the API said, though the government said supplies were up 1.7 million barrels for the week.
Marc Faber: "What irritates everyone around the world is the constant lecturing by American policymakers about human rights and democracy, and the blatant dual and hypocritical standards the US applies to foreign governments and cultures...The other thing that gets on people's nerves is the constant boasting by America's policymakers and leaders about the supposed superiority of the United States. Now, this may have to do with Americans' ideas about best marketing practice, but it annoys people to constantly read and hear about "the world's best team", "the world's best product," "the world's greatest economy," and "the world's best city" in reference to New York...Perhaps what is more relevant is which cities offer the highest quality of life for residents and expatriates. In those terms, according to Mercer Consulting, Zurich ranks first, followed by Geneva, Vancouver, Vienna, Auckland, Düsseldorf, Frankfurt, Munich, Bern, Sydney, and Copenhagen. The best American cities, as far as quality of life is concerned, are Honolulu (ranked 27th in the world), San Francisco (28th), and Boston (36th), while New York is ranked 46th behind Washington DC, Chicago, and Portland...Given my recent rather negative comments about the financial sector it would surprise me if the metropolises where brokers and asset managers congregate didn't endure some hardship in the next few years...in future, cities that were built as, and thrived as, commercial or financial centres may become less important from a business point of view. The future role of cities may therefore be driven more by conventions, leisure and cultural activities, nightlife, entertainment venues, and tourism...I suggest that there is a possibility that following a 200-year lasting decline in commodity prices in real terms, commodities - including farm products - will appreciate in real terms for many more years. If this were indeed to be the case, it is conceivable that, as on past occasions, some countries, regions, and cities could reach a higher per capita income than the US or Western European countries."
McDonald's says it now sells more chicken than Kentucky Fried Chicken.
Orders from Cisco's biggest U.S. buyers are ``relatively sluggish,'' Chief Executive Officer John Chambers said.
Nabors Industries said the SEC is ending a probe of the company's stock-option practices without recommending any enforcement action against the oil driller.
Gold for June delivery fell $4.90 at $682.50 an ounce on the New York Mercantile Exchange. July silver fell 13.0 cents, or 1%, to $13.470 an ounce, July platinum fell $3.70 to $1,339.50 an ounce, and June palladium fell $5.55 to $370.40 an ounce. July copper ended down 4.35 cents, or 1.2%, at $3.6790 a pound.
The Oil Drum: "US Air Force Major Patrick Sullivan leverages the US government’s Open Source Center to scour Chinese-language press releases, revealing an otherwise under-reported $2.6 billion dollar deal between CNOOC and the Nigerian government to develop a new deepwater block—particularly significant because the 1800 meter depth, and lack of other foreign partners in the deal, suggests that CNOOC’s deepwater technical capabilities may be much more advanced than commonly assumed in the West."
In the face of Peak Oil, Sullivan concludes that 'China’s perceived quest to ‘lock up’ supplies creates a potential that they may run afoul of U.S. efforts to sustain its supplies of the hydrocarbon pie.'
The Federal Reserve kept the benchmark U.S. interest rate at 5.25 percent and said inflation remains the ``predominant'' risk for the economy.``The committee's predominant policy concern remains the risk that inflation will fail to moderate as expected,'' the Federal Open Market Committee said in a statement today after meeting in Washington. ``Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth... the economy ``seems likely to continue to expand at a moderate pace over coming quarters.'' In language that was little changed from March, they added that core inflation remains ``somewhat elevated.''
Whole Foods Markets Inc. said its net income fell to $46 million, or 32 cents a share, in its second fiscal quarter, from $51.8 million, or 36 a share in the year-ago quarter. Revenue rose to $1.46 billion from $1.31 billion.
Crude oil for June delivery fell 71 cents, or 1.1%, at $61.55 a barrel on the New York Mercantile Exchange. June reformulated gasoline rose 2.64 cents to $2.2309 a gallon. June natural gas rose 8.3 cents to $7.720 per million British thermal units. June heating oil fell 1.41 cents to $1.8158 a gallon.
Wednesday, May 09, 2007
Tuesday, May 08, 2007
Results
5/9/07 Results
Thomson would pay 352.52 pence a share in cash and swap 0.16 share of Thomson shares for each share of Reuters. Based on Monday's close, the deal values Reuters at 697 pence a share ($14), about a 13% premium from Reuters' closing price. The offer is about 42% higher than where Reuters' shares were trading on May 3, before the company confirmed it received a preliminary bid.
Bronco Drilling's revenues for the first quarter of 2007 were $78.9 million compared to $82.5 million for the fourth quarter of 2006 and $56.4 million for the first quarter of 2006. Average operating rigs for the first quarter of 2007 grew to 51 from 50 for the previous quarter. The growth in rigs is due to the continued refurbishment and deployment of rigs from the Company's inventory. Revenue days for the quarter decreased to 3,631 from 4,176 for the previous quarter and increased from 3,354 for the first quarter of 2006. Utilization for the first quarter of 2007 was 79% compared to 91% for the previous quarter and 96% for the first quarter of 2006. Average daily cash margins for the quarter ended March 31, 2007, were $9,282 compared to $10,142 for the previous quarter and $8,465 for the first quarter of 2006. Net income for the first quarter of 2007 was $11.4 million compared to $16.4 million for the previous quarter and $11.3 million for the first quarter of 2006. The Company generated EBITDA of $31.0 million for the first quarter of 2007 compared to $38.5 million for the previous quarter and $24.3 million for the first quarter of 2006. The Company's fully diluted earnings per share for the quarter ended March 31, 2007, was $0.44 based on 25.9 million shares.
CSX Corp. said Tuesday its board approved an additional $1 billion in stock buybacks and an increase in the company's dividend by 25%, beginning in September. The Jacksonville, Fla.-company forecast "record levels" of operating income and per-share earnings in 2007. CSX's dividend will be 15 cents, payable September 14 to shareholders of record on August 31.
McDonald's Corp. said its global comparable sales rose 4.8% in April. Systemwide sales for its namesake restaurants increased 9.6% for the month. The Dow component said comparable sales swelled 3.5% in the U.S. in April due to demand for its breakfast menu, Happy Meals and Snack Wrap products. Comparable sales also rose 3.5% for the month in Europe while the company's the Asia/Pacific, Middle East and Africa business posted growth of 10.3% for the period.
WCI Communities Inc. said it swung to a first-quarter net loss of $15.8 million, or 38 cents a share, from net income of $40.2 million, or 89 cents a share in the year-ago quarter. The company said net unit orders for the quarter fell 41% from a year earlier to 237. In a statement, Chief Executive Jerry Starkey said the "peak selling season in Florida this year was a disappointment." “Taking into consideration our recent tower closing experience and the individual locations and mix of sold units, we estimate that our tower defaults during 2007 will range from 8% to 10% in aggregate. As we close towers and collect the receivables, we expect to reduce our debt significantly, and ultimately lower our net debt to capital by year-end 2007 to about 50% from our year-end 2006 level of 66%.”
MemberHealth Inc., a Medicare sponsor, said it agreed to be acquired by Universal American Financial in a deal valued at $630 million. The purchase price consists of 55% cash and 45% Universal American stock valued at $20 a share.
Arcelor Mittal is planning to bid around $4.5 billion, or $40 a share, for AK Steel, according to a report on the Financial Times' Alphaville Web site. However, the WSJ reported a person close to fast-expanding Mittal Steel Co. said it is unlikely that the company is bidding on AK Steel Holding Corp. The person agreed that such a deal would have serious U.S. antitrust concerns related to steel produced for the auto industry and possibly other markets.
The National Federation of Independent Business said its index of small business optimism fell for the third straight month, dropping 0.5 point to 96.8 last month. "Overall, expectations for the economy are soft," William Dunkelberg, NFIB's chief economist, said in a statement. "Real growth will continue, but closer to 2% than to 3%."
Nucor's CEO DiMicco:“To participate in the acquisition activity just to be one of the boys is a bad business decision."
Alcoa may face competition for its $26.9 billion bid for rival Alcan from mining companies including BHP Billiton and Rio Tinto Group, said Credit Suisse Group.
The N.Y. Times reported News Corp.’s Fox Interactive Media is close to acquiring Photobucket, an Internet service that allows users to store photos and videos, for as much as $300 million. Photobucket has 41 million users, up from 14 million a year ago. Sixty percent of Photobucket’s Web traffic came from users of News Corp.’s MySpace during the week ending last Saturday.
The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Foreclosures.com, which gathers data from county courthouses nationwide. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.
President Hugo Chavez said Sunday that Venezuela hopes to gradually sell off its refineries in the United States and build a new network of refineries in Latin America.
24/7's Todd Sullivan: "Starbucks, who uses an estimated 93 million gallons of milk a year is looking at a $279 million dollar milk bill in 2007. While it may not seem a lot to a billion dollar company, it does equate to 36 cents a share, an increase of about 9 cents or about 10.3% of profits over 2006. This does not include the price increase to be incurred from changing the percentage of hormone free milk from 27% to 37%. They do charge 50 cents more at some locations for this milk so it must cost considerably more…. no? When you are predicting 83 to 87 cents a share and 18% growth, the 10% of that in milk costs is huge.".....
"REX & Co, backed by a subsidiary of AIG, has a new product that lets homeowners tap the value of their homes without taking out a loan. The novel product gives homeowners cash for their equity in return for a portion of the proceeds from the eventual sale of the home."
The price of Washington's King County houses has risen for the fourth month in a row, reaching a median $465,000 in April.
"I know from almost two years of private discussions with Alcan that they also see the strategic logic behind this combination," said Alain Belda, Alcoa's chairman and CEO. "I'm disappointed that we were not able to come to a negotiated transaction. And while I'm taking this offer to shareholders, I hope that this combination can move forward with the support of Alcan management and board," Belda said.
In Nigeria, there are fears of supply disruptions following the bombing of three major oil pipelines by the main militant group in southern Nigeria.
"Fighters of the Movement for the Emancipation of the Niger Delta attacked and destroyed three major pipelines ... We will continue indefinitely with attacks on all pipelines, platforms and support vessels," the group said in an e-mail.
Chief Joshua Benemesia, the head of a government-backed anti-piracy force, said he had confirmed the attack with members of the Bayelsa State volunteers who were stationed in the two areas attacked, Brass and Akassa.
Barry Ritholtz: "Whenever we see a massive spasm of acquisitions, it makes me wonder what is it really that is driving the deals -- especially considering that these purchases could have been made for pennies on the dollar a mere three years ago. Back then rates were even lower, China was still growing at 10% year-over-year, taxes were low."
Clear Channel Communications Inc. said on Monday it was delaying a shareholder vote on a buyout proposed by two private equity firms, as it considers a higher, revised $19.6 billion offer by the bidders. The company said it was in talks with the bidders, Bain Capital Partners and Thomas H. Lee Partners , about a possible change in the structure of the deal to value Clear Channel at $39.20 a share, rather than $39 a share, and give shareholders the option to take an ongoing stake in the company following the deal's closing. The radio station operator also said it was delaying Tuesday's vote on the $39 offer to May 22 -- the third time the vote has been delayed.
"The world isn't pricing risk appropriately. Investors are simply not being paid for the risks they're taking," adds Steve Rattner of the Quadrangle Group.
The National Association of Realtors provided its monthly forecast update. "If it weren't for a favorable economic backdrop, housing would probably have a hard landing," said Lawrence Yun, senior economist for the NAR. "As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later." Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.
The volume of Motorola June 17 puts was quite astounding in the first 1 3/4 hours of trading on Tuesday with over 15,000 contracts changing hands versus an open interest of 998.
Fortress Investment Group LLC agreed to buy real estate developer and railroad operator Florida East Coast Industries Inc. for $3.5 billion. The $84-a-share offer represents a 13 percent premium over yesterday's $74.13 closing price for Jacksonville, Florida-based Florida East Coast, the company said today. Shareholders will get a special cash dividend of $21.50 for each share from Florida East Coast, and $62.50 in cash from Fortress.
"I don't think there is any question if you are missing trucks, Humvees and helicopters that the response is going to be slower," Kansas Governor Sebelius said. "The real victims here will be the residents of Greensburg, because the recovery will be at a slower pace."
Seven storms may strike the U.S. coastline this hurricane season, and some may cut across Florida before moving into the Gulf of Mexico, according to an outlook from AccuWeather.com. At least three weather systems in the Atlantic Basin will strengthen to major hurricanes with winds above 111 miles per hour (179 kilometers per hour), said Joe Bastardi, chief hurricane forecaster for State College, Pennsylvania-based AccuWeather. As many as 14 tropical storms may form during the June-through-November season, he said at a hurricane conference in Houston.
Inventories at US wholesalers rose 0.3% in March after rising 0.4% in February and 0.6% in January. Sales surged 1.8% in March after rising 1.0% in the prior month. Sales had declined 0.9% in January. The March gain is the largest rise since September 2005.The inventory-to-sales ratio fell to 1.14 from 1.15 in the prior month, leaving it at the lowest level since December. One should ask whether there will be inventory re-building in the months ahead, and, if so, what impact will that have on better GDP numbers, the dollar, and interest rates.
European officials voiced fresh concerns Tuesday about World Bank President Paul Wolfowitz's leadership, increasing pressure for his resignation amid revelations that he broke bank rules in arranging a pay package for his girlfriend.
Gold for June delivery closed down $3.0 at $687.40 an ounce on the New York Mercantile Exchange. July silver fell 4.0 cents to close at $13.60 an ounce, July platinum closed down $7.70 at $1,343.20 an ounce and June palladium fell $3.25 to $375.95 an ounce. July copper added 0.7 cent to $3.7225 a pound.
Gates, Microsoft's founder, has said that he will only remain full time with the company until mid-2008. In his remaining months, Gates said his efforts will be mainly directed toward "search, [advertising] buyers and sellers... that will be my biggest thing."
Shareholder JANA Partners called on Alcoa Board to drop Alcan bid. "Given Alcoa's long history of failing to generate shareholder value through acquisition, we believe that its greatest value can be realized through a sale or break-up of the company," JANA managing partner Barry Rosenstein said in a letter to Alcoa Chairman and Chief Executive Alain Belda.
Crude oil for June delivery closed up 79 cents at $62.26 a barrel on the New York Mercantile Exchange. Reformulated gasoline for June delivery rose 1.49 cents to $2.2045 a gallon. June heating oil rose 2.7 cents to $1.8299 a gallon. June natural gas fell 14.2 cents to $7.637 per million British thermal units.
The U.S. Energy Department Tuesday raised its outlook for the summer's average pump price by 14 cents to $2.95 a gallon, and said it projects prices, which are now above $3 a gallon, to rise above the $3 mark again in August. The report also predicted that continued growth in global oil demand would keep the oil markets tight.
In the quarter ended April 28, Cisco would have earned $2.1 billion, or 34 cents a share, on a non-GAAP basis. The company's adjusted profit slightly exceeded Wall Street's forecast.
Patrick Leahy, chairman of the committee: "The Department of Justice must not be reduced to another political arm of the White House . . . Today it is experiencing a crisis of leadership perhaps unrivalled in its 137-year history."
Abbas Araghchi, the Iranian deputy foreign minister who attended last week's conference on Iraq's future at Sharm el Sheikh, Egypt, has offered Tehran's co-operation to the US in developing an "exit strategy" from Iraq. "Their invasion was a disaster – let there not be a disastrous withdrawal," he said in an interview. "Yes, immediate withdrawal could lead to chaos, civil war. No one is asking for immediate withdrawal of foreign forces. But there should be a plan."
Walt Disney Co. on Tuesday posted a net profit ahead of Wall Street targets thanks to strong performances from ESPN and movies like "Wild Hogs," but revenue lagged estimates and its shares fell 2 percent.
Thomson would pay 352.52 pence a share in cash and swap 0.16 share of Thomson shares for each share of Reuters. Based on Monday's close, the deal values Reuters at 697 pence a share ($14), about a 13% premium from Reuters' closing price. The offer is about 42% higher than where Reuters' shares were trading on May 3, before the company confirmed it received a preliminary bid.
Bronco Drilling's revenues for the first quarter of 2007 were $78.9 million compared to $82.5 million for the fourth quarter of 2006 and $56.4 million for the first quarter of 2006. Average operating rigs for the first quarter of 2007 grew to 51 from 50 for the previous quarter. The growth in rigs is due to the continued refurbishment and deployment of rigs from the Company's inventory. Revenue days for the quarter decreased to 3,631 from 4,176 for the previous quarter and increased from 3,354 for the first quarter of 2006. Utilization for the first quarter of 2007 was 79% compared to 91% for the previous quarter and 96% for the first quarter of 2006. Average daily cash margins for the quarter ended March 31, 2007, were $9,282 compared to $10,142 for the previous quarter and $8,465 for the first quarter of 2006. Net income for the first quarter of 2007 was $11.4 million compared to $16.4 million for the previous quarter and $11.3 million for the first quarter of 2006. The Company generated EBITDA of $31.0 million for the first quarter of 2007 compared to $38.5 million for the previous quarter and $24.3 million for the first quarter of 2006. The Company's fully diluted earnings per share for the quarter ended March 31, 2007, was $0.44 based on 25.9 million shares.
CSX Corp. said Tuesday its board approved an additional $1 billion in stock buybacks and an increase in the company's dividend by 25%, beginning in September. The Jacksonville, Fla.-company forecast "record levels" of operating income and per-share earnings in 2007. CSX's dividend will be 15 cents, payable September 14 to shareholders of record on August 31.
McDonald's Corp. said its global comparable sales rose 4.8% in April. Systemwide sales for its namesake restaurants increased 9.6% for the month. The Dow component said comparable sales swelled 3.5% in the U.S. in April due to demand for its breakfast menu, Happy Meals and Snack Wrap products. Comparable sales also rose 3.5% for the month in Europe while the company's the Asia/Pacific, Middle East and Africa business posted growth of 10.3% for the period.
WCI Communities Inc. said it swung to a first-quarter net loss of $15.8 million, or 38 cents a share, from net income of $40.2 million, or 89 cents a share in the year-ago quarter. The company said net unit orders for the quarter fell 41% from a year earlier to 237. In a statement, Chief Executive Jerry Starkey said the "peak selling season in Florida this year was a disappointment." “Taking into consideration our recent tower closing experience and the individual locations and mix of sold units, we estimate that our tower defaults during 2007 will range from 8% to 10% in aggregate. As we close towers and collect the receivables, we expect to reduce our debt significantly, and ultimately lower our net debt to capital by year-end 2007 to about 50% from our year-end 2006 level of 66%.”
MemberHealth Inc., a Medicare sponsor, said it agreed to be acquired by Universal American Financial in a deal valued at $630 million. The purchase price consists of 55% cash and 45% Universal American stock valued at $20 a share.
Arcelor Mittal is planning to bid around $4.5 billion, or $40 a share, for AK Steel, according to a report on the Financial Times' Alphaville Web site. However, the WSJ reported a person close to fast-expanding Mittal Steel Co. said it is unlikely that the company is bidding on AK Steel Holding Corp. The person agreed that such a deal would have serious U.S. antitrust concerns related to steel produced for the auto industry and possibly other markets.
The National Federation of Independent Business said its index of small business optimism fell for the third straight month, dropping 0.5 point to 96.8 last month. "Overall, expectations for the economy are soft," William Dunkelberg, NFIB's chief economist, said in a statement. "Real growth will continue, but closer to 2% than to 3%."
Nucor's CEO DiMicco:“To participate in the acquisition activity just to be one of the boys is a bad business decision."
Alcoa may face competition for its $26.9 billion bid for rival Alcan from mining companies including BHP Billiton and Rio Tinto Group, said Credit Suisse Group.
The N.Y. Times reported News Corp.’s Fox Interactive Media is close to acquiring Photobucket, an Internet service that allows users to store photos and videos, for as much as $300 million. Photobucket has 41 million users, up from 14 million a year ago. Sixty percent of Photobucket’s Web traffic came from users of News Corp.’s MySpace during the week ending last Saturday.
The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Foreclosures.com, which gathers data from county courthouses nationwide. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.
President Hugo Chavez said Sunday that Venezuela hopes to gradually sell off its refineries in the United States and build a new network of refineries in Latin America.
24/7's Todd Sullivan: "Starbucks, who uses an estimated 93 million gallons of milk a year is looking at a $279 million dollar milk bill in 2007. While it may not seem a lot to a billion dollar company, it does equate to 36 cents a share, an increase of about 9 cents or about 10.3% of profits over 2006. This does not include the price increase to be incurred from changing the percentage of hormone free milk from 27% to 37%. They do charge 50 cents more at some locations for this milk so it must cost considerably more…. no? When you are predicting 83 to 87 cents a share and 18% growth, the 10% of that in milk costs is huge.".....
"REX & Co, backed by a subsidiary of AIG, has a new product that lets homeowners tap the value of their homes without taking out a loan. The novel product gives homeowners cash for their equity in return for a portion of the proceeds from the eventual sale of the home."
The price of Washington's King County houses has risen for the fourth month in a row, reaching a median $465,000 in April.
"I know from almost two years of private discussions with Alcan that they also see the strategic logic behind this combination," said Alain Belda, Alcoa's chairman and CEO. "I'm disappointed that we were not able to come to a negotiated transaction. And while I'm taking this offer to shareholders, I hope that this combination can move forward with the support of Alcan management and board," Belda said.
In Nigeria, there are fears of supply disruptions following the bombing of three major oil pipelines by the main militant group in southern Nigeria.
"Fighters of the Movement for the Emancipation of the Niger Delta attacked and destroyed three major pipelines ... We will continue indefinitely with attacks on all pipelines, platforms and support vessels," the group said in an e-mail.
Chief Joshua Benemesia, the head of a government-backed anti-piracy force, said he had confirmed the attack with members of the Bayelsa State volunteers who were stationed in the two areas attacked, Brass and Akassa.
Barry Ritholtz: "Whenever we see a massive spasm of acquisitions, it makes me wonder what is it really that is driving the deals -- especially considering that these purchases could have been made for pennies on the dollar a mere three years ago. Back then rates were even lower, China was still growing at 10% year-over-year, taxes were low."
Clear Channel Communications Inc. said on Monday it was delaying a shareholder vote on a buyout proposed by two private equity firms, as it considers a higher, revised $19.6 billion offer by the bidders. The company said it was in talks with the bidders, Bain Capital Partners and Thomas H. Lee Partners , about a possible change in the structure of the deal to value Clear Channel at $39.20 a share, rather than $39 a share, and give shareholders the option to take an ongoing stake in the company following the deal's closing. The radio station operator also said it was delaying Tuesday's vote on the $39 offer to May 22 -- the third time the vote has been delayed.
"The world isn't pricing risk appropriately. Investors are simply not being paid for the risks they're taking," adds Steve Rattner of the Quadrangle Group.
The National Association of Realtors provided its monthly forecast update. "If it weren't for a favorable economic backdrop, housing would probably have a hard landing," said Lawrence Yun, senior economist for the NAR. "As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later." Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.
The volume of Motorola June 17 puts was quite astounding in the first 1 3/4 hours of trading on Tuesday with over 15,000 contracts changing hands versus an open interest of 998.
Fortress Investment Group LLC agreed to buy real estate developer and railroad operator Florida East Coast Industries Inc. for $3.5 billion. The $84-a-share offer represents a 13 percent premium over yesterday's $74.13 closing price for Jacksonville, Florida-based Florida East Coast, the company said today. Shareholders will get a special cash dividend of $21.50 for each share from Florida East Coast, and $62.50 in cash from Fortress.
"I don't think there is any question if you are missing trucks, Humvees and helicopters that the response is going to be slower," Kansas Governor Sebelius said. "The real victims here will be the residents of Greensburg, because the recovery will be at a slower pace."
Seven storms may strike the U.S. coastline this hurricane season, and some may cut across Florida before moving into the Gulf of Mexico, according to an outlook from AccuWeather.com. At least three weather systems in the Atlantic Basin will strengthen to major hurricanes with winds above 111 miles per hour (179 kilometers per hour), said Joe Bastardi, chief hurricane forecaster for State College, Pennsylvania-based AccuWeather. As many as 14 tropical storms may form during the June-through-November season, he said at a hurricane conference in Houston.
Inventories at US wholesalers rose 0.3% in March after rising 0.4% in February and 0.6% in January. Sales surged 1.8% in March after rising 1.0% in the prior month. Sales had declined 0.9% in January. The March gain is the largest rise since September 2005.The inventory-to-sales ratio fell to 1.14 from 1.15 in the prior month, leaving it at the lowest level since December. One should ask whether there will be inventory re-building in the months ahead, and, if so, what impact will that have on better GDP numbers, the dollar, and interest rates.
European officials voiced fresh concerns Tuesday about World Bank President Paul Wolfowitz's leadership, increasing pressure for his resignation amid revelations that he broke bank rules in arranging a pay package for his girlfriend.
Gold for June delivery closed down $3.0 at $687.40 an ounce on the New York Mercantile Exchange. July silver fell 4.0 cents to close at $13.60 an ounce, July platinum closed down $7.70 at $1,343.20 an ounce and June palladium fell $3.25 to $375.95 an ounce. July copper added 0.7 cent to $3.7225 a pound.
Gates, Microsoft's founder, has said that he will only remain full time with the company until mid-2008. In his remaining months, Gates said his efforts will be mainly directed toward "search, [advertising] buyers and sellers... that will be my biggest thing."
Shareholder JANA Partners called on Alcoa Board to drop Alcan bid. "Given Alcoa's long history of failing to generate shareholder value through acquisition, we believe that its greatest value can be realized through a sale or break-up of the company," JANA managing partner Barry Rosenstein said in a letter to Alcoa Chairman and Chief Executive Alain Belda.
Crude oil for June delivery closed up 79 cents at $62.26 a barrel on the New York Mercantile Exchange. Reformulated gasoline for June delivery rose 1.49 cents to $2.2045 a gallon. June heating oil rose 2.7 cents to $1.8299 a gallon. June natural gas fell 14.2 cents to $7.637 per million British thermal units.
The U.S. Energy Department Tuesday raised its outlook for the summer's average pump price by 14 cents to $2.95 a gallon, and said it projects prices, which are now above $3 a gallon, to rise above the $3 mark again in August. The report also predicted that continued growth in global oil demand would keep the oil markets tight.
In the quarter ended April 28, Cisco would have earned $2.1 billion, or 34 cents a share, on a non-GAAP basis. The company's adjusted profit slightly exceeded Wall Street's forecast.
Patrick Leahy, chairman of the committee: "The Department of Justice must not be reduced to another political arm of the White House . . . Today it is experiencing a crisis of leadership perhaps unrivalled in its 137-year history."
Abbas Araghchi, the Iranian deputy foreign minister who attended last week's conference on Iraq's future at Sharm el Sheikh, Egypt, has offered Tehran's co-operation to the US in developing an "exit strategy" from Iraq. "Their invasion was a disaster – let there not be a disastrous withdrawal," he said in an interview. "Yes, immediate withdrawal could lead to chaos, civil war. No one is asking for immediate withdrawal of foreign forces. But there should be a plan."
Walt Disney Co. on Tuesday posted a net profit ahead of Wall Street targets thanks to strong performances from ESPN and movies like "Wild Hogs," but revenue lagged estimates and its shares fell 2 percent.
Monday, May 07, 2007
Another Big Deal In The Works
5/8/07 Another Big Deal In The Works
Alcoa said it would make a hostile bid for Canada's Alcan Inc., estimated at $27 billion, after talks between the rivals failed to lead to a deal. If successful, the bid of $73.25 per share in cash and stock would create the world's largest producer of the metal that is used for products ranging from beverage cans to airplanes, cars and heavy machinery parts. Russian rival RUSAL is the current volume leader. The bid of $58.60 in cash and 0.4108 per share of Pittsburgh-based Alcoa common stock would represent a 32 percent premium to Alcan's average closing price on the New York Stock Exchange over the last 30 trading days. Alcoa said its move comes after nearly two years of merger discussions between the companies that failed to a yield an agreement. It put the enterprise value of the deal at $33 billion, including $6 billion in debt. The offer and withdrawal rights are scheduled to expire at 5:00 p.m., Eastern Daylight Saving Time on July 10, 2007, subject to extension. Alcoa has received a commitment letter from Citi, Goldman Sachs Credit Partners L.P. and Goldman Sachs Canada Credit Partners Co. to fully finance the proposed transaction. Skadden, Arps, Slate, Meagher & Flom LLP, Stikeman Elliott LLP, and Cleary Gottlieb Steen and Hamilton LLP are acting as legal counsel to Alcoa. Citi, Goldman, Sachs & Co., BMO Capital Markets, and Lehman Brothers are acting as financial advisors.
"Without a meaningful equity offering or asset divestiture program that reduces debt on the balance sheet, it is highly unlikely the combined corporate credit rating will retain an investment-grade rating, which would represent at least a three-notch downgrade for Alcoa's and Alcan's existing corporate ratings," Standard and Poor's said in a press release.
Henry DeMarest Lloyd: “Monopoly is business at the end of its journey.”
Warren Buffett said he could envision his Berkshire Hathaway Inc. insurance and investment company pursuing a $40 billion to $60 billion acquisition, according to a Bloomberg News report. "We have plenty of things to sell if we needed to, but the cash is coming in faster than the ideas."
Armor Holdings Inc. said Monday it would be acquired by BAE Systems Inc, a unit of the U.K.'s BAE Systems Plc, for $88 a share, or $4.1 billion.
Dutch Bank ABN Amro said Monday it has rejected a $24.5 billion bid for its U.S. subsidiary LaSalle Bank from a consortium of banks led by Royal Bank of Scotland Group PLC and which indludes Spain's Santander and Fortis due to the conditions attached to the bid.
The Fed's U.S. Trade Weighted Real Broad Dollar index, a monthly inflation-adjusted gauge of the dollar, has fallen 16 percent since 2002 to 94.27, near the lowest in 10 years.
Goldman Sachs Group Inc. chief investment strategist Abby Joseph Cohen increased her forecasts for the Standard & Poor's 500 Index and Dow Jones Industrial Average to 1600 and 14,000, respectively, by the end of the year. The S&P 500 closed on May 4 at 1505.62, the highest since September 2000. Cohen's new estimate implies a 6.3 percent advance from the current level. The Dow, which finished at a record 13,264.62 last week, would have to rally 5.5 percent to meet Cohen's projection.
Gasoline prices have surged to a record nationwide average of $3.07 per gallon, nearly 20 cents higher than two weeks earlier, oil industry analyst Trilby Lundberg said Sunday.
Johnson & Johnson's Conor Medsystems LLC said the CoStar II trial for its CoStar paclitaxel-eluting coronary stent failed to meet its primary endpoint, dealing another blow to the company's drug-coated stent business.
John Hussman: "Lately, the bullish arguments are running so fast and loose that it is apparently no longer a requirement that they have any relationship to fact...The S&P 500 is currently at about 18.5 times record top-of-channel earnings on record margins. At normalized profit margins, the P/E would be over 25. At every horizon, including monthly, weekly and daily frequencies, the market is either at or through its upper Bollinger bands."
Barry Ritholtz: "Against the Japanese yen, S&P500 is up 18 percent during this decade. But in British pounds, its down 22%. Even worse, in Euros, the SPX lost a third of its value. The impact of inflation on commodity prices is even more stark: Compare what a unit of S&P500 bought at the end of 1999 versus today. The S&P500 index buys only 58% as much corn, only 57% as much house (based on the Case-Shiller index) as it used to, only 40% as much Oil, and only 32% as much gold as it did in 1999."
Bank of America Corp. is doing away with the collection of borrower, lender and third-party fees that typically add a few thousand dollars to the price of buying a home.
Bill Fleckenstein: "I did find an amazing similarity between the last month or so of the rise in Japan that ended on Dec. 29, 1989, and the current advance in the Dow Jones Industrial Average ($INDU) (through April 27): Specifically, the last 32 out of 38 trading days in Tokyo were on the upside, with an initial run with a higher close on 19 out of 21 days, followed by seven out of 11, followed by six for six before about a 40% drop in the course of nine months took place. Recently, from the lows of March 5, the Dow closed higher in four out of six sessions, followed by seven out of 11, followed by 20 out of 22 -- for a grand total of 31 out of 39 days. Now, I am not a big believer in analogs, but if the mind-set in Tokyo back in those days was similar to the mind-set that we're witnessing here today, which, by my reckoning, it is, I guess it's not impossible for that similarity to have some predictive power."
Liberty Mutual Group said it was buying Ohio Casualty Corp. for $2.7 billion, or $44 a share in cash.
The American Urological Association meets May 19-24th. On May 21st the afternoon session is on ED. Bremelanotide will have a major piece of the program. They will be presenting on studies #16 and #17. This presentation could have a major impact on Palatin as it moves towards phase III trials.
WWD reported that Gottschalks, a regional department store chain, is said to be on the auction block, and that Dubai-based Istithmar, which already owns Loehmann's and is reportedly eyeing Barneys, is supposedly taking a look.
Ford Motor Co. said Monday it will close its casting plant in Brook Park, Ohio, outside of Cleveland, in 2009. The plant employs 1,218 hourly and salaried workers. The company also will shutter Cleveland Engine Plant 1 in Brook Park for at least a year starting in two weeks. It employs 577 workers.
Gary Tanashian: "The Yen is at major support. The whole world is on the other side of the boat. You do the math and please do not say you were not warned. Being long over-pumped equity markets, China stories and commodity assets would not be the place to be if the Yen makes a major move and all that funny munny stops dead in its tracks... Right now I would rather be long caution than long CNBC."
EGL Inc. said its special committee determined that an $2 billion buyout offer from Apollo Management LP affiliate CEVA Group PLC is superior to a $1.77 billion offer from the company's chief executive. EGL is currently in an agreement to be acquired for $38 a share by a group led by EGL Chief Executive James Crane and backed by private-equity firms Centerbridge Partners ...
Steven Vita: "The American Association of Individual Investors poll, on the other hand, dipped below 35% bulls last week, a level breached only nine times in the past 15 years -- and only once after the market posted a gain in the prior month. Clearly, the broad populace is fighting the market trend."
"In the next 90 days we're going to see increased American casualties because we're taking the fight to the enemy," Maj. Gen. Rick Lynch, commander of U.S. troops south of Baghdad, told reporters.
Warren Buffett: “I don’t look at the stock market at all as ridiculously overpriced,” Buffett said. “If you told me I had to buy a 20-year bond or make a 20-year investment in the stock market, I’d rather buy the stock market. It’s not cheap, but it’s not ridiculous."
Gasoline supplies rose 50,000 barrels last week, the first increase in 13 weeks, according to the median of 12 responses in a Bloomberg News survey. Refineries probably operated at 89.3 percent of capacity, up 1 percentage point from the week before, the survey showed.
The German Weather Service said that April broke records kept since 1901 as the hottest and driest month. Italian officials say this winter was the warmest on record in 200 years.
Just how many layoffs are planned by IBM?
June gold climbed 70 cents to close at $690.40 an ounce Monday. July silver gained 11 cents to close at $13.64 an ounce. July copper was down 4.3 cents to close at $3.7155 a pound
An interesting item: The accepted by Sam Zell is $34 for the Tribune Co. Yet, on Monday, 1,400 June call contracts with a strike price of $35 traded at 15 cents. There were only 1,000 outstanding contracts prior to Monday's trading.
Outstanding U.S. consumer credit climbed by $13.5 billion in March, or at a 6.7% annual rate, the Federal Reserve reported Monday. It was the largest increase since November. Nonrevolving credit, which includes automobile loans, rose by 5.2% annualized, or $6.7 billion. Revolving credit like credit cards climbed by $6.8 billion, a 9.2% annualized increase. The overall increase was much larger than expected and this, despite $3 a gallon gas.
Crude slipped to $61.47 and natural gas to $7.78.
Teva Pharma is bidding more than $6.1 billion to acquire Merck KGaA’s generic-drug unit.
Robert McChesney: "When the government allocates monopoly rights to frequency, and there are only a handful in each community, it's picking the winners in the competition. "
Alcoa said it would make a hostile bid for Canada's Alcan Inc., estimated at $27 billion, after talks between the rivals failed to lead to a deal. If successful, the bid of $73.25 per share in cash and stock would create the world's largest producer of the metal that is used for products ranging from beverage cans to airplanes, cars and heavy machinery parts. Russian rival RUSAL is the current volume leader. The bid of $58.60 in cash and 0.4108 per share of Pittsburgh-based Alcoa common stock would represent a 32 percent premium to Alcan's average closing price on the New York Stock Exchange over the last 30 trading days. Alcoa said its move comes after nearly two years of merger discussions between the companies that failed to a yield an agreement. It put the enterprise value of the deal at $33 billion, including $6 billion in debt. The offer and withdrawal rights are scheduled to expire at 5:00 p.m., Eastern Daylight Saving Time on July 10, 2007, subject to extension. Alcoa has received a commitment letter from Citi, Goldman Sachs Credit Partners L.P. and Goldman Sachs Canada Credit Partners Co. to fully finance the proposed transaction. Skadden, Arps, Slate, Meagher & Flom LLP, Stikeman Elliott LLP, and Cleary Gottlieb Steen and Hamilton LLP are acting as legal counsel to Alcoa. Citi, Goldman, Sachs & Co., BMO Capital Markets, and Lehman Brothers are acting as financial advisors.
"Without a meaningful equity offering or asset divestiture program that reduces debt on the balance sheet, it is highly unlikely the combined corporate credit rating will retain an investment-grade rating, which would represent at least a three-notch downgrade for Alcoa's and Alcan's existing corporate ratings," Standard and Poor's said in a press release.
Henry DeMarest Lloyd: “Monopoly is business at the end of its journey.”
Warren Buffett said he could envision his Berkshire Hathaway Inc. insurance and investment company pursuing a $40 billion to $60 billion acquisition, according to a Bloomberg News report. "We have plenty of things to sell if we needed to, but the cash is coming in faster than the ideas."
Armor Holdings Inc. said Monday it would be acquired by BAE Systems Inc, a unit of the U.K.'s BAE Systems Plc, for $88 a share, or $4.1 billion.
Dutch Bank ABN Amro said Monday it has rejected a $24.5 billion bid for its U.S. subsidiary LaSalle Bank from a consortium of banks led by Royal Bank of Scotland Group PLC and which indludes Spain's Santander and Fortis due to the conditions attached to the bid.
The Fed's U.S. Trade Weighted Real Broad Dollar index, a monthly inflation-adjusted gauge of the dollar, has fallen 16 percent since 2002 to 94.27, near the lowest in 10 years.
Goldman Sachs Group Inc. chief investment strategist Abby Joseph Cohen increased her forecasts for the Standard & Poor's 500 Index and Dow Jones Industrial Average to 1600 and 14,000, respectively, by the end of the year. The S&P 500 closed on May 4 at 1505.62, the highest since September 2000. Cohen's new estimate implies a 6.3 percent advance from the current level. The Dow, which finished at a record 13,264.62 last week, would have to rally 5.5 percent to meet Cohen's projection.
Gasoline prices have surged to a record nationwide average of $3.07 per gallon, nearly 20 cents higher than two weeks earlier, oil industry analyst Trilby Lundberg said Sunday.
Johnson & Johnson's Conor Medsystems LLC said the CoStar II trial for its CoStar paclitaxel-eluting coronary stent failed to meet its primary endpoint, dealing another blow to the company's drug-coated stent business.
John Hussman: "Lately, the bullish arguments are running so fast and loose that it is apparently no longer a requirement that they have any relationship to fact...The S&P 500 is currently at about 18.5 times record top-of-channel earnings on record margins. At normalized profit margins, the P/E would be over 25. At every horizon, including monthly, weekly and daily frequencies, the market is either at or through its upper Bollinger bands."
Barry Ritholtz: "Against the Japanese yen, S&P500 is up 18 percent during this decade. But in British pounds, its down 22%. Even worse, in Euros, the SPX lost a third of its value. The impact of inflation on commodity prices is even more stark: Compare what a unit of S&P500 bought at the end of 1999 versus today. The S&P500 index buys only 58% as much corn, only 57% as much house (based on the Case-Shiller index) as it used to, only 40% as much Oil, and only 32% as much gold as it did in 1999."
Bank of America Corp. is doing away with the collection of borrower, lender and third-party fees that typically add a few thousand dollars to the price of buying a home.
Bill Fleckenstein: "I did find an amazing similarity between the last month or so of the rise in Japan that ended on Dec. 29, 1989, and the current advance in the Dow Jones Industrial Average ($INDU) (through April 27): Specifically, the last 32 out of 38 trading days in Tokyo were on the upside, with an initial run with a higher close on 19 out of 21 days, followed by seven out of 11, followed by six for six before about a 40% drop in the course of nine months took place. Recently, from the lows of March 5, the Dow closed higher in four out of six sessions, followed by seven out of 11, followed by 20 out of 22 -- for a grand total of 31 out of 39 days. Now, I am not a big believer in analogs, but if the mind-set in Tokyo back in those days was similar to the mind-set that we're witnessing here today, which, by my reckoning, it is, I guess it's not impossible for that similarity to have some predictive power."
Liberty Mutual Group said it was buying Ohio Casualty Corp. for $2.7 billion, or $44 a share in cash.
The American Urological Association meets May 19-24th. On May 21st the afternoon session is on ED. Bremelanotide will have a major piece of the program. They will be presenting on studies #16 and #17. This presentation could have a major impact on Palatin as it moves towards phase III trials.
WWD reported that Gottschalks, a regional department store chain, is said to be on the auction block, and that Dubai-based Istithmar, which already owns Loehmann's and is reportedly eyeing Barneys, is supposedly taking a look.
Ford Motor Co. said Monday it will close its casting plant in Brook Park, Ohio, outside of Cleveland, in 2009. The plant employs 1,218 hourly and salaried workers. The company also will shutter Cleveland Engine Plant 1 in Brook Park for at least a year starting in two weeks. It employs 577 workers.
Gary Tanashian: "The Yen is at major support. The whole world is on the other side of the boat. You do the math and please do not say you were not warned. Being long over-pumped equity markets, China stories and commodity assets would not be the place to be if the Yen makes a major move and all that funny munny stops dead in its tracks... Right now I would rather be long caution than long CNBC."
EGL Inc. said its special committee determined that an $2 billion buyout offer from Apollo Management LP affiliate CEVA Group PLC is superior to a $1.77 billion offer from the company's chief executive. EGL is currently in an agreement to be acquired for $38 a share by a group led by EGL Chief Executive James Crane and backed by private-equity firms Centerbridge Partners ...
Steven Vita: "The American Association of Individual Investors poll, on the other hand, dipped below 35% bulls last week, a level breached only nine times in the past 15 years -- and only once after the market posted a gain in the prior month. Clearly, the broad populace is fighting the market trend."
"In the next 90 days we're going to see increased American casualties because we're taking the fight to the enemy," Maj. Gen. Rick Lynch, commander of U.S. troops south of Baghdad, told reporters.
Warren Buffett: “I don’t look at the stock market at all as ridiculously overpriced,” Buffett said. “If you told me I had to buy a 20-year bond or make a 20-year investment in the stock market, I’d rather buy the stock market. It’s not cheap, but it’s not ridiculous."
Gasoline supplies rose 50,000 barrels last week, the first increase in 13 weeks, according to the median of 12 responses in a Bloomberg News survey. Refineries probably operated at 89.3 percent of capacity, up 1 percentage point from the week before, the survey showed.
The German Weather Service said that April broke records kept since 1901 as the hottest and driest month. Italian officials say this winter was the warmest on record in 200 years.
Just how many layoffs are planned by IBM?
June gold climbed 70 cents to close at $690.40 an ounce Monday. July silver gained 11 cents to close at $13.64 an ounce. July copper was down 4.3 cents to close at $3.7155 a pound
An interesting item: The accepted by Sam Zell is $34 for the Tribune Co. Yet, on Monday, 1,400 June call contracts with a strike price of $35 traded at 15 cents. There were only 1,000 outstanding contracts prior to Monday's trading.
Outstanding U.S. consumer credit climbed by $13.5 billion in March, or at a 6.7% annual rate, the Federal Reserve reported Monday. It was the largest increase since November. Nonrevolving credit, which includes automobile loans, rose by 5.2% annualized, or $6.7 billion. Revolving credit like credit cards climbed by $6.8 billion, a 9.2% annualized increase. The overall increase was much larger than expected and this, despite $3 a gallon gas.
Crude slipped to $61.47 and natural gas to $7.78.
Teva Pharma is bidding more than $6.1 billion to acquire Merck KGaA’s generic-drug unit.
Robert McChesney: "When the government allocates monopoly rights to frequency, and there are only a handful in each community, it's picking the winners in the competition. "
Sunday, May 06, 2007
Buffett
5/7/07 Buffett
Berkshire Hathaway plans to increase its profile as a buyer of businesses outside the U.S. in coming months, Chairman Warren Buffett said during the company's annual meeting on Saturday. Buffett said the U.S. housing downturn was hurting results at Berkshire's residential construction businesses. "My guess is that perhaps continues, perhaps for quite a while," he said. Warren Buffett said on Saturday he might hire up to four people to succeed him as chief investment officer of Berkshire Hathaway Inc. , and cautioned that recent strong results from the company's insurance operations were unsustainable. “Corporate America is living in the best of all worlds, and history has shown that those conditions don’t persist indefinitely,” he said. In addition, Buffett repeated recent warnings about the widespread use of leverage and derivatives and criticized the “electronic herd” of hedge fund managers, saying their fast trades in and out of assets are a “fool’s game”. However, he said the crisis in the US sub-prime market, which he called “dumb lending and dumb borrowing”, was unlikely to spread to the rest of the economy.
Berkshire Hathaway has cut its exposure to hurricane losses by roughly half this year because catastrophe reinsurance prices have fallen.
The bad news is my horse was last in the Kentucky Derby. The good news is the horse is ok and still running. He just doesn't realize all the other horses finished the race.
John Williams: "Something like 80% of economists get their annual forecasts wrong," said he. "So to be right more often, all you have to do is go against what most economists are saying."
Royal Bank of Scotland and its partners have made an indicative offer worth $24.5 billion for ABN AMRO's U.S. bank arm LaSalle, conditional on them also buying the rest of ABN, sources familiar with the matter said. The group will also propose an offer of about 39 euros per share, including a 60 euro cent dividend, for all of ABN, the sources told Reuters, which would value the Dutch bank at about 72 billion euros.
The Oil Drum: "In Saudi Arabia gasoline costs about 45 cents a gallon. In Iran it's 33 cents. Venezuelans pay less than a quarter.These absurdly low prices are a direct result of massive government subsidies....But it's straining government budgets. More importantly, it's not allowing the free market to do its job. Higher prices on the open market are not leading to a drop in demand, which is keeping the cost of oil high for everyone else. "Roughly two-thirds of new oil demand is coming from countries that have subsidized oil markets," said Christopher Ruppel, a senior geopolitical analyst with the consulting firm John S. Herold. "So demand is not going to be affected if oil goes from $60 a barrel to $80."
People's Bank of China Governor Zhou Xiaochuan said there's room to raise commercial banks' reserve requirements further after seven increases in 11 months failed to slow lending and inflation.
Bush's approval rating fell to 28 percent this week, the lowest since a similar score by President Jimmy Carter in 1979, the year of the Iran hostage crisis. The poll also found that 71 percent of Americans are dissatisfied with the way things are going in the U.S.
Almost two-thirds of those polled, 62 percent, said that Bush's actions in Iraq showed he was ``stubborn and unwilling to admit his mistakes,'' the survey said. The poll also showed that all three leading Democratic contenders beat their Republican counterparts in head-to-head competition among registered voters.
More than 23,000 military service members have been wounded in Iraq. Federal agencies must give hiring preference to military veterans.
Brad Setser: "Brazil’s reserves: up $12.3b in April. Bacen also did a $3b reverse currency swap – its largest ever – last week. It isn’t just intervening in the spot market. Russia’s reserves: up an incredible $30.3b in April. Maybe $4b of that comes from “valuation gains”; it is mostly real. India’s reserves: up $5b or so in April, with a bit over $2b of that from “valuation gains.” And India has scaled back its intervention, big time, after the huge blow-out in its reserves in February. The rupee is up sharply. We won’t know much about China’s April reserve growth for a long time, but Jon Anderson of UBS notes that the pace of sterilization suggests that the strong pace of reserve growth in the first quarter continued. Remember, the first quarter was really big – over $40b a month on average. The second division of reserve accumulation held their own as well. Korea’s reserves were up $3.35b in April. Some of its “investment profits” may stem from the currency market – the BoK is high on my watch list for central banks that may be diversifying. Saudi Arabia won’t report its April reserves for a while. But Saudi's March reserve growth was strong, as oil prices rebounded." This is the stuff that makes for real liquidity and global economic growth.
David Walker, the nation's comptroller general:"The United States can be likened to Rome before the fall of the empire. Its financial condition is 'worse than advertised,' [Walker] says. "It has a 'broken business model'. It faces deficits in its budgets, its balance of payments, its savings - and its leadership."
Mike Burk: "The market is and has been overbought for a month or more and it keeps going up. The blue chips have been outperforming the secondaries which is usually a negative. May, after the first few days, has historically been good for the secondaries, but not the blue chips. The market has been doing a good job of following the typical seasonal pattern recently and, if that continues, there will be a shift to strength to the secondaries in the next few weeks...For the past 10 years or more the Federal Reserve Bank has had a history of inflating the money supply in response to national or international economic problems. The result has been a series of asset bubbles, first the stock market, then the housing market and now the stock market again. Money supply growth has been well above trend for the past 6 months and is currently running at nearly 11%. Under these conditions an "irrationally exuberant" stock market is not surprising, but it does make analysis difficult. I expect the major indices to be lower on Friday May 11 than they were on Friday May 4."
Consider what the odds would be for the Dow to rise in 23 of the last 26 trading sessions. I couldn't even imagine this taking place in a rational world.
Roadside bombs killed eight American soldiers in separate attacks Sunday in Diyala province and Baghdad. Two other American soldiers died Sunday in separate bombings in Baghdad. The military Sunday also reported three other deaths — two Marines in a blast Saturday in Anbar province and a soldier who died Sunday in a non-combat incident in northern Iraq. Those deaths raised to at least 3,373 the number of U.S. military members who have died since the Iraq war started in March 2003, according to an Associated Press count. The dying continues and the bullshit continues in the White House and the Congress. Next time consider your vote with greater care. It could save lives.
According to the WSJ, House Democrats are drafting a new Iraq war spending bill that fences off more than half the military funds until a second vote by Congress in July, when lawmakers will assess progress made by the Baghdad government.
Jim Ottaway Jr., a former Dow Jones board member, said in a statement posted on the Journal's Web site that a Murdoch takeover would lead to the "loss of the independence and integrity of a leading national editorial voice." "Rupert Murdoch comes from a very different tradition of Australian-British media ownership and editorial practice in which he has for a long time expressed his personal, political, and business biases through his newspapers and television channels," Ottaway said. "The Bancroft family has treated Dow Jones as a public trust, not for personal or political interests, or maximum enhancement of family wealth by sale to a high bidder."
George Tenet, reported the WSJ, said intelligence analysts weren't asked to predict the consequences of the decisions to purge members of Saddam Hussein's Baath Party from positions of authority in Iraq, and to demobilize the Iraqi army. Those decisions, he said in an interview, weren't contemplated.
Between The Hedges: "Even most bulls seem to want the market to decline to redeploy cash they raised in anticipation of a meaningful correction. I still sense very few investors believe the market has meaningful upside from current levels and are positioned accordingly.
As well, there are many other indicators registering high levels of investor anxiety. The ISE Sentiment Index hit a depressed 94.0 on Tuesday. Moreover, the 10-week moving average of the ISE Sentiment Index is hovering just off a record low at 111.2. The CBOE total put/call ratio 10-week moving average is currently 1.0. It has been higher during only two other periods in the last 12 years. Moreover, NYSE short interest has soared 14.6% the last two months, the largest two-month jump on record, to a new all-time high. Nasdaq short interest has surged 13.8% over the last two months, also the largest two-month jump on record, and also to a new record high. Furthermore, public short interest continues to soar to record levels, and U.S. stock mutual funds have seen outflows for most of the last year, according to AMG Data Services. The percentage of U.S. mutual fund assets in domestic stocks is still the lowest since at least 1984, when record-keeping began."
Berkshire Hathaway plans to increase its profile as a buyer of businesses outside the U.S. in coming months, Chairman Warren Buffett said during the company's annual meeting on Saturday. Buffett said the U.S. housing downturn was hurting results at Berkshire's residential construction businesses. "My guess is that perhaps continues, perhaps for quite a while," he said. Warren Buffett said on Saturday he might hire up to four people to succeed him as chief investment officer of Berkshire Hathaway Inc. , and cautioned that recent strong results from the company's insurance operations were unsustainable. “Corporate America is living in the best of all worlds, and history has shown that those conditions don’t persist indefinitely,” he said. In addition, Buffett repeated recent warnings about the widespread use of leverage and derivatives and criticized the “electronic herd” of hedge fund managers, saying their fast trades in and out of assets are a “fool’s game”. However, he said the crisis in the US sub-prime market, which he called “dumb lending and dumb borrowing”, was unlikely to spread to the rest of the economy.
Berkshire Hathaway has cut its exposure to hurricane losses by roughly half this year because catastrophe reinsurance prices have fallen.
The bad news is my horse was last in the Kentucky Derby. The good news is the horse is ok and still running. He just doesn't realize all the other horses finished the race.
John Williams: "Something like 80% of economists get their annual forecasts wrong," said he. "So to be right more often, all you have to do is go against what most economists are saying."
Royal Bank of Scotland and its partners have made an indicative offer worth $24.5 billion for ABN AMRO's U.S. bank arm LaSalle, conditional on them also buying the rest of ABN, sources familiar with the matter said. The group will also propose an offer of about 39 euros per share, including a 60 euro cent dividend, for all of ABN, the sources told Reuters, which would value the Dutch bank at about 72 billion euros.
The Oil Drum: "In Saudi Arabia gasoline costs about 45 cents a gallon. In Iran it's 33 cents. Venezuelans pay less than a quarter.These absurdly low prices are a direct result of massive government subsidies....But it's straining government budgets. More importantly, it's not allowing the free market to do its job. Higher prices on the open market are not leading to a drop in demand, which is keeping the cost of oil high for everyone else. "Roughly two-thirds of new oil demand is coming from countries that have subsidized oil markets," said Christopher Ruppel, a senior geopolitical analyst with the consulting firm John S. Herold. "So demand is not going to be affected if oil goes from $60 a barrel to $80."
People's Bank of China Governor Zhou Xiaochuan said there's room to raise commercial banks' reserve requirements further after seven increases in 11 months failed to slow lending and inflation.
Bush's approval rating fell to 28 percent this week, the lowest since a similar score by President Jimmy Carter in 1979, the year of the Iran hostage crisis. The poll also found that 71 percent of Americans are dissatisfied with the way things are going in the U.S.
Almost two-thirds of those polled, 62 percent, said that Bush's actions in Iraq showed he was ``stubborn and unwilling to admit his mistakes,'' the survey said. The poll also showed that all three leading Democratic contenders beat their Republican counterparts in head-to-head competition among registered voters.
More than 23,000 military service members have been wounded in Iraq. Federal agencies must give hiring preference to military veterans.
Brad Setser: "Brazil’s reserves: up $12.3b in April. Bacen also did a $3b reverse currency swap – its largest ever – last week. It isn’t just intervening in the spot market. Russia’s reserves: up an incredible $30.3b in April. Maybe $4b of that comes from “valuation gains”; it is mostly real. India’s reserves: up $5b or so in April, with a bit over $2b of that from “valuation gains.” And India has scaled back its intervention, big time, after the huge blow-out in its reserves in February. The rupee is up sharply. We won’t know much about China’s April reserve growth for a long time, but Jon Anderson of UBS notes that the pace of sterilization suggests that the strong pace of reserve growth in the first quarter continued. Remember, the first quarter was really big – over $40b a month on average. The second division of reserve accumulation held their own as well. Korea’s reserves were up $3.35b in April. Some of its “investment profits” may stem from the currency market – the BoK is high on my watch list for central banks that may be diversifying. Saudi Arabia won’t report its April reserves for a while. But Saudi's March reserve growth was strong, as oil prices rebounded." This is the stuff that makes for real liquidity and global economic growth.
David Walker, the nation's comptroller general:"The United States can be likened to Rome before the fall of the empire. Its financial condition is 'worse than advertised,' [Walker] says. "It has a 'broken business model'. It faces deficits in its budgets, its balance of payments, its savings - and its leadership."
Mike Burk: "The market is and has been overbought for a month or more and it keeps going up. The blue chips have been outperforming the secondaries which is usually a negative. May, after the first few days, has historically been good for the secondaries, but not the blue chips. The market has been doing a good job of following the typical seasonal pattern recently and, if that continues, there will be a shift to strength to the secondaries in the next few weeks...For the past 10 years or more the Federal Reserve Bank has had a history of inflating the money supply in response to national or international economic problems. The result has been a series of asset bubbles, first the stock market, then the housing market and now the stock market again. Money supply growth has been well above trend for the past 6 months and is currently running at nearly 11%. Under these conditions an "irrationally exuberant" stock market is not surprising, but it does make analysis difficult. I expect the major indices to be lower on Friday May 11 than they were on Friday May 4."
Consider what the odds would be for the Dow to rise in 23 of the last 26 trading sessions. I couldn't even imagine this taking place in a rational world.
Roadside bombs killed eight American soldiers in separate attacks Sunday in Diyala province and Baghdad. Two other American soldiers died Sunday in separate bombings in Baghdad. The military Sunday also reported three other deaths — two Marines in a blast Saturday in Anbar province and a soldier who died Sunday in a non-combat incident in northern Iraq. Those deaths raised to at least 3,373 the number of U.S. military members who have died since the Iraq war started in March 2003, according to an Associated Press count. The dying continues and the bullshit continues in the White House and the Congress. Next time consider your vote with greater care. It could save lives.
According to the WSJ, House Democrats are drafting a new Iraq war spending bill that fences off more than half the military funds until a second vote by Congress in July, when lawmakers will assess progress made by the Baghdad government.
Jim Ottaway Jr., a former Dow Jones board member, said in a statement posted on the Journal's Web site that a Murdoch takeover would lead to the "loss of the independence and integrity of a leading national editorial voice." "Rupert Murdoch comes from a very different tradition of Australian-British media ownership and editorial practice in which he has for a long time expressed his personal, political, and business biases through his newspapers and television channels," Ottaway said. "The Bancroft family has treated Dow Jones as a public trust, not for personal or political interests, or maximum enhancement of family wealth by sale to a high bidder."
George Tenet, reported the WSJ, said intelligence analysts weren't asked to predict the consequences of the decisions to purge members of Saddam Hussein's Baath Party from positions of authority in Iraq, and to demobilize the Iraqi army. Those decisions, he said in an interview, weren't contemplated.
Between The Hedges: "Even most bulls seem to want the market to decline to redeploy cash they raised in anticipation of a meaningful correction. I still sense very few investors believe the market has meaningful upside from current levels and are positioned accordingly.
As well, there are many other indicators registering high levels of investor anxiety. The ISE Sentiment Index hit a depressed 94.0 on Tuesday. Moreover, the 10-week moving average of the ISE Sentiment Index is hovering just off a record low at 111.2. The CBOE total put/call ratio 10-week moving average is currently 1.0. It has been higher during only two other periods in the last 12 years. Moreover, NYSE short interest has soared 14.6% the last two months, the largest two-month jump on record, to a new all-time high. Nasdaq short interest has surged 13.8% over the last two months, also the largest two-month jump on record, and also to a new record high. Furthermore, public short interest continues to soar to record levels, and U.S. stock mutual funds have seen outflows for most of the last year, according to AMG Data Services. The percentage of U.S. mutual fund assets in domestic stocks is still the lowest since at least 1984, when record-keeping began."
Saturday, May 05, 2007
Berkshire Hathaway Annual Meeting Day
5/6/07 Berkshire Hathaway Annual Meeting Day
Warren Buffett's Berkshire Hathaway Inc. said on Friday first-quarter profit rose 12 percent as earnings from insurance underwriting soared. Profit from insurance underwriting rose 82 percent to $601 million. Investment income from insurance rose 6 percent to $748 million, while profit in non-insurance businesses rose 16 percent to $894 million. Insurance premiums more than doubled to $13.51 billion, including about $7.1 billion from the Equitas reinsurance agreement that took effect on March 30.
As many as 20 million chickens currently on U.S. farms in several states may have been fed contaminated feed, the U.S. Agriculture Department said on Friday.
In the March 12 issue of Archives of Internal Medicine and carried out by researchers at the University of California, San Francisco, and the San Francisco Veterans Affairs Medical Center, 31 percent of more than 100,000 veterans studied were diagnosed with mental or psychological problems. Post-traumatic stress disorder was the most common condition reported, affecting 13 percent of all Iraq or Afghanistan veterans who sought VA services, according to the study.
Pelosi questioned whether it was ethical to send troops into war "under a false pretense without a strategy for success," without proper equipment and training and without "demanding accountability from the Iraqi government while we dishonored our commitment to our veterans here at home."
"In the elections, when the American people were calling for a new direction, the one place where they called for it in the clearest possible way was in the war in Iraq," Pelosi (D-Calif.) told an audience estimated at about 2,000 people.
"They wanted the war to wind down," Pelosi said. "Instead, the president has escalated it. He has a tin ear in terms of listening to the people and a blind eye as to what is going on in Iraq."
General Pace and other senior officers acknowledge that the deployment schedule is putting a strain on U.S. troops, particularly combat soldiers and marines. Last month, the Defense Department announced it would lengthen the tours of duty for soldiers serving in Iraq and Afghanistan from 12 months to 15 months, with 12 months of vacation and training between deployments. The marines spend seven months at a time in combat, with six months at home.
Former Clinton Administration defense department official Michelle Flournoy says the operational tempo has already left U.S. ground forces in a precarious position.
"We're already at the point today where we do not have a reserve of ground forces that is adequate to respond to the full range of contingencies that we might face elsewhere in the world," she said.
Flournoy, who is now an analyst at the Center for a New American Security, also worries that during their time at home, troops are only training to return to Iraq or Afghanistan and fight an insurgency, sacrificing training on other basic and potentially essential military skills.
"The training is so focused on the tasks that are being conducted in Iraq that a lot of the other war-fighting tasks may be neglected. And I'll give you an example. You can find members of artillery units in both the army and the Marine Corps who've never fired artillery because every tour they've gone on since their enlistments has been in Iraq and they've been focused on counterinsurgency," she said.
John Mauldin: "Dennis Gartman called my attention to an IMF report showing the growth of foreign exchange reserves held by the various nations reporting to the IMF. They have grown from a "mere" $2 trillion in 2000 until they are now over $5 trillion and rising. The report suggests that this does not include 40% of the "reserves" which are not accounted for, so the number is much higher.This is going to unleash a large amount of capital back into the markets. Countries, in one sense, are just like families. They hopefully save money. The first savings are generally in very liquid investments in case there is an emergency. But over time, as savings grow, they start to invest in less liquid investments and soon in long-term investments."
Adam Hamilton: "The HUI/Gold Ratio is as simple as it sounds, it is calculated by merely dividing the daily close of the HUI unhedged gold-stock index by the daily close in the price of gold. When this resulting ratio is graphed over time, it vividly illustrates the ever-shifting relative strength of the gold stocks versus gold. As their bulls mature, one is stronger and then the other, back and forth. They are engaging in a great secular tug-o-war...The bottom line is the HUI/Gold Ratio is approaching its long-term support. In this bull to date, each time this has happened the HUI has soared heavenwards soon after in a mighty new upleg. With gold's fundamentals still awesome, and gold driving this gold-stock bull, the odds favor the HUI soon outperforming gold again and surging higher to drive up the HGR as it has done in the past. The HGR drift of the past year has been a trying one psychologically, but it has built the perfect foundation for a new upleg to launch. Not only is HUI sentiment still pretty pessimistic today, the contrarian time to buy, but it has built a new higher technical base from which to launch its assault on new highs. On top of all this it is technically due to start outperforming gold again in a cycle sense."
The Hamas leader, Khaled Mashaal, said Israel is planning a military operation against the Palestinians. ''We in Hamas are also preparing ourselves for battle, and we expect hot months,'' he said. He urged all Palestinian groups to ''seriously prepare themselves for battle.''
Brett Steenbarger: "My doubts about the lasting power of the recent rally are growing. Friday saw new bull highs in the Dow and S&P 500 averages, but only 49 S&P 500 stocks made 52-week highs on Friday, down from over 80 on 4/25. We had 45 new highs among the S&P 600 stocks, down from over 70 on 4/25. Amazingly, only 8 NASDAQ 100 issues made new highs on Friday, and only 6 of the Dow 30 issues. The 347 new highs among NYSE issues were also down from almost 450 on 4/25. The rally is narrowing, which suggests to me that we might enter a consolidation mode in the very near future."
Paccar agreed to buy Truck Center Hauser, an independent truck rental and leasing company in Germany.Terms of the deal, expected to close late this month, were not disclosed. Truck Center Hauser, headquartered near Frankfurt, has a fleet of 1,200 trucks and 1,800 trailers and about 3,000 customers throughout Germany, Paccar said in a statement.
Doug Noland: " From Bank of International Settlement data, we know that the total notional value of global derivative positions ended 1998 at $80.3 TN – comprised of $18.0 TN Foreign Exchange; $50.0 TN Interest Rate; $1.5 TN Equity-Linked; $415bn Commodities; and $10.4 TN “Other”. Credit derivatives didn’t even have their own category. By the end of 2006, Total derivative positions had ballooned to $370 TN, with $38 TN Foreign Exchange; $262 TN Interest Rate; $6.8 TN Equity-Linked; $6.4 TN Commodities; $36 TN “Unallocated”; and $20.4 TN Credit Default Swaps (up more than 3-fold in 2 yrs)...I’ll venture a prediction that hedge fund de-leveraging will pale in comparison to the widespread tumult that will likely engulf currency, securitization, and derivatives markets – in risk intermediation generally. The derivatives markets are poised to falter into absolute liquidity nightmares, and this will not be a hedge fund-like de-leveraging issue easily resolved with aggressive rate cuts. And the longer current destabilizing flows are allowed to run roughshod – distorting prices, risk perceptions, and economic structures in the process - the more arduous the unavoidable adjustment period. That’s just the way it works."
In March, 54 percent of U.S. Internet searches were performed with Google. Microsoft and Yahoo! had a combined 32 percent. Some analysts suggest
the Internet-advertising pie will hit $31.4 billion globally this year, up 28 percent.
According to Bloomberg, “India will become the world’s fifth-biggest consumer market by 2025, surpassing Germany, as incomes almost triple and assuming the South Asian nation’s economic growth rate ‘holds steady,’ McKinsey & Co. said.”
The Financial Times reported Brazil on Friday overrode the patent on a pivotal HIV medicine, becoming the second emerging economy aggressively to challenge the pharmaceutical industry in seeking a sharp reduction in drug costs. President Luiz Inácio Lula da Silva on Friday signed a “compulsory licence” for Efavirenz, Merck’s HIV drug, allowing the government to purchase from rival generic suppliers under provisions permitted by World Trade Organisation rules.
Sears Holdings Corp. Chairman Edward S. Lampert sounded a cautious note for U.S. retailers a day after the company warned of unexpected weakness during the first quarter.
I haven't a clue as to the possible winner in the Kentucky Derby. It appears wide open to me. As such, I'll go with a long shot, Cowtown Cat. Maybe I'll get lucky.
Warren Buffett's Berkshire Hathaway Inc. said on Friday first-quarter profit rose 12 percent as earnings from insurance underwriting soared. Profit from insurance underwriting rose 82 percent to $601 million. Investment income from insurance rose 6 percent to $748 million, while profit in non-insurance businesses rose 16 percent to $894 million. Insurance premiums more than doubled to $13.51 billion, including about $7.1 billion from the Equitas reinsurance agreement that took effect on March 30.
As many as 20 million chickens currently on U.S. farms in several states may have been fed contaminated feed, the U.S. Agriculture Department said on Friday.
In the March 12 issue of Archives of Internal Medicine and carried out by researchers at the University of California, San Francisco, and the San Francisco Veterans Affairs Medical Center, 31 percent of more than 100,000 veterans studied were diagnosed with mental or psychological problems. Post-traumatic stress disorder was the most common condition reported, affecting 13 percent of all Iraq or Afghanistan veterans who sought VA services, according to the study.
Pelosi questioned whether it was ethical to send troops into war "under a false pretense without a strategy for success," without proper equipment and training and without "demanding accountability from the Iraqi government while we dishonored our commitment to our veterans here at home."
"In the elections, when the American people were calling for a new direction, the one place where they called for it in the clearest possible way was in the war in Iraq," Pelosi (D-Calif.) told an audience estimated at about 2,000 people.
"They wanted the war to wind down," Pelosi said. "Instead, the president has escalated it. He has a tin ear in terms of listening to the people and a blind eye as to what is going on in Iraq."
General Pace and other senior officers acknowledge that the deployment schedule is putting a strain on U.S. troops, particularly combat soldiers and marines. Last month, the Defense Department announced it would lengthen the tours of duty for soldiers serving in Iraq and Afghanistan from 12 months to 15 months, with 12 months of vacation and training between deployments. The marines spend seven months at a time in combat, with six months at home.
Former Clinton Administration defense department official Michelle Flournoy says the operational tempo has already left U.S. ground forces in a precarious position.
"We're already at the point today where we do not have a reserve of ground forces that is adequate to respond to the full range of contingencies that we might face elsewhere in the world," she said.
Flournoy, who is now an analyst at the Center for a New American Security, also worries that during their time at home, troops are only training to return to Iraq or Afghanistan and fight an insurgency, sacrificing training on other basic and potentially essential military skills.
"The training is so focused on the tasks that are being conducted in Iraq that a lot of the other war-fighting tasks may be neglected. And I'll give you an example. You can find members of artillery units in both the army and the Marine Corps who've never fired artillery because every tour they've gone on since their enlistments has been in Iraq and they've been focused on counterinsurgency," she said.
John Mauldin: "Dennis Gartman called my attention to an IMF report showing the growth of foreign exchange reserves held by the various nations reporting to the IMF. They have grown from a "mere" $2 trillion in 2000 until they are now over $5 trillion and rising. The report suggests that this does not include 40% of the "reserves" which are not accounted for, so the number is much higher.This is going to unleash a large amount of capital back into the markets. Countries, in one sense, are just like families. They hopefully save money. The first savings are generally in very liquid investments in case there is an emergency. But over time, as savings grow, they start to invest in less liquid investments and soon in long-term investments."
Adam Hamilton: "The HUI/Gold Ratio is as simple as it sounds, it is calculated by merely dividing the daily close of the HUI unhedged gold-stock index by the daily close in the price of gold. When this resulting ratio is graphed over time, it vividly illustrates the ever-shifting relative strength of the gold stocks versus gold. As their bulls mature, one is stronger and then the other, back and forth. They are engaging in a great secular tug-o-war...The bottom line is the HUI/Gold Ratio is approaching its long-term support. In this bull to date, each time this has happened the HUI has soared heavenwards soon after in a mighty new upleg. With gold's fundamentals still awesome, and gold driving this gold-stock bull, the odds favor the HUI soon outperforming gold again and surging higher to drive up the HGR as it has done in the past. The HGR drift of the past year has been a trying one psychologically, but it has built the perfect foundation for a new upleg to launch. Not only is HUI sentiment still pretty pessimistic today, the contrarian time to buy, but it has built a new higher technical base from which to launch its assault on new highs. On top of all this it is technically due to start outperforming gold again in a cycle sense."
The Hamas leader, Khaled Mashaal, said Israel is planning a military operation against the Palestinians. ''We in Hamas are also preparing ourselves for battle, and we expect hot months,'' he said. He urged all Palestinian groups to ''seriously prepare themselves for battle.''
Brett Steenbarger: "My doubts about the lasting power of the recent rally are growing. Friday saw new bull highs in the Dow and S&P 500 averages, but only 49 S&P 500 stocks made 52-week highs on Friday, down from over 80 on 4/25. We had 45 new highs among the S&P 600 stocks, down from over 70 on 4/25. Amazingly, only 8 NASDAQ 100 issues made new highs on Friday, and only 6 of the Dow 30 issues. The 347 new highs among NYSE issues were also down from almost 450 on 4/25. The rally is narrowing, which suggests to me that we might enter a consolidation mode in the very near future."
Paccar agreed to buy Truck Center Hauser, an independent truck rental and leasing company in Germany.Terms of the deal, expected to close late this month, were not disclosed. Truck Center Hauser, headquartered near Frankfurt, has a fleet of 1,200 trucks and 1,800 trailers and about 3,000 customers throughout Germany, Paccar said in a statement.
Doug Noland: " From Bank of International Settlement data, we know that the total notional value of global derivative positions ended 1998 at $80.3 TN – comprised of $18.0 TN Foreign Exchange; $50.0 TN Interest Rate; $1.5 TN Equity-Linked; $415bn Commodities; and $10.4 TN “Other”. Credit derivatives didn’t even have their own category. By the end of 2006, Total derivative positions had ballooned to $370 TN, with $38 TN Foreign Exchange; $262 TN Interest Rate; $6.8 TN Equity-Linked; $6.4 TN Commodities; $36 TN “Unallocated”; and $20.4 TN Credit Default Swaps (up more than 3-fold in 2 yrs)...I’ll venture a prediction that hedge fund de-leveraging will pale in comparison to the widespread tumult that will likely engulf currency, securitization, and derivatives markets – in risk intermediation generally. The derivatives markets are poised to falter into absolute liquidity nightmares, and this will not be a hedge fund-like de-leveraging issue easily resolved with aggressive rate cuts. And the longer current destabilizing flows are allowed to run roughshod – distorting prices, risk perceptions, and economic structures in the process - the more arduous the unavoidable adjustment period. That’s just the way it works."
In March, 54 percent of U.S. Internet searches were performed with Google. Microsoft and Yahoo! had a combined 32 percent. Some analysts suggest
the Internet-advertising pie will hit $31.4 billion globally this year, up 28 percent.
According to Bloomberg, “India will become the world’s fifth-biggest consumer market by 2025, surpassing Germany, as incomes almost triple and assuming the South Asian nation’s economic growth rate ‘holds steady,’ McKinsey & Co. said.”
The Financial Times reported Brazil on Friday overrode the patent on a pivotal HIV medicine, becoming the second emerging economy aggressively to challenge the pharmaceutical industry in seeking a sharp reduction in drug costs. President Luiz Inácio Lula da Silva on Friday signed a “compulsory licence” for Efavirenz, Merck’s HIV drug, allowing the government to purchase from rival generic suppliers under provisions permitted by World Trade Organisation rules.
Sears Holdings Corp. Chairman Edward S. Lampert sounded a cautious note for U.S. retailers a day after the company warned of unexpected weakness during the first quarter.
I haven't a clue as to the possible winner in the Kentucky Derby. It appears wide open to me. As such, I'll go with a long shot, Cowtown Cat. Maybe I'll get lucky.
Friday, May 04, 2007
The Mating Game
5/5/07 The Mating Game
The New York Post reported Friday morning that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday. A deal between Microsoft and Yahoo would up the combined companies' share of the search advertising market to 27% against Google's 65%, the Post reported.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of match up and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere. It's important to remember the rumors of a deal took place on Friday, the favorite rumor mill day.
It was late in the afternoon that the WSJ reported talks between Microsoft Corp. and Yahoo Inc. over a possible combination are no longer active. The Wall Street Journal reported on its Web site that in recent months the two companies discussed a possible merger, but that the discussions are no longer active. The two companies may still explore other ways of cooperating, the Journal reported.
The damage already had occurred. A total of 245 million shares traded in Yahoo at $33 for most of the day or $8 billion worth of shares. In after hours the stock closed below $31. In my view, a company would have to be crazy to pay $50 billion of shareholder money for Yahoo.
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."
The U.S. Labor Department said non-farm payrolls grew by 88,000 in April, while the unemployment rate ticked up to 4.5% from 4.4%. Average hourly earnings increased 4 cents, or 0.2% to $17.25. Earnings are up 3.7% in the past year. The average workweek fell to 33.8 hours from 33.9 in March.
The retail price for a gallon of regular unleaded climbed to $3.012 Friday, edging closer to the record $3.057 seen on Sept. 5, 2005, according AAA's Daily Fuel Gauge Report.
Henry Ford: "Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services."
Iran's Foreign Minister Manouchehr Mottaki blamed the American presence in Iraq for sectarian violence there, the BBC reported Friday.
John Moody: "The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor."
Wells Fargo & Company said Friday it would pay $1.5 billion in stock to buy 1,800-employee Greater Bay Bancorp. Assuming a Wells Fargo measurement price between $32.175 and $39.325, the total value of the transaction would be approximately $1.5 billion, based on Greater Bay Bancorp's shares on a fully diluted basis.
The Reserve Bank of Australia Friday forecast declining inflation over the short term, but warned consumer prices will likely nudge in into the higher end of its target range in 2008 as the economy continues to run near full capacity. Core inflation will ease to 2.5% "or lower" by the end of the year, the central bank said in its quarterly statement released Friday. The inflation forecast falls short of the RBA's previous forecast of 2.75% for the year. The RBA said the reasons for the revision were sharper-than-expected declines in food and fuel prices. The RBA also said core inflation peaked at 3% in mid-2006 and has since been on a slow decline. The RBA forecast underlying inflation will rebound to 2.75% in 2008 and 2009.
News and financial data provider Reuters said it had received a takeover approach from an unidentified bidder, sending its shares up almost a third, with Canadian publisher Thomson widely touted as the suitor. Canada's Globe and Mail newspaper reported on its website on Friday that Thomson was in talks to buy London-based Reuters, citing sources close to both companies.
Clear Channel Communications, the largest U.S. radio station operator, said on Thursday it received a new merger proposal from a private equity group, but its board voted against it.
A group led by Royal Bank of Scotland Group Plc and ABN Amro Holding NV are increasing talks about a possible takeover of the largest Dutch bank, as obstacles mount to Barclays Plc's $90 billion offer.
According to WTRG, the U.S. rotary rig count was down 22 rigs to 1,747 for the week of April 27, 2007 and is 8.6 percent higher than last year.The number of rotary rigs drilling for oil is down 9 at 283. The number of rigs targeting oil is 29 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.2% percent of total drilling activity. Rigs directed toward natural gas were down 13 at 1,460. The number of rigs currently drilling for gas is 107 greater than last year's level of 1,353. Year-over-year oil exploration in the US is up 11.4 percent. Gas exploration is up 7.9 percent. The weekly average of crude oil spot prices is 8.3% percent lower than last year and natural gas spot prices are 4.5 percent higher.
We have been having a spectacular rally in equities, and one I did not believe was possible. In the meantime, David Tice predicts the Dow will fall "at least 50%" from these levels, and he says the market is only months away from beginning a sharp decline. "I think this is a topping pattern," he says. "We think it's probably three to six months away from a significant decline." He calls the latest rally "a crack-up boom. At the tail end of credit excess it just gets crazier and crazier. It sucks people in, and it's an extremely dangerous scenario." Anything is possible. Just look at the Warriors knocking off the Mavs.
Brookfield Homes said that market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. However, the company said its housing margins remain above industry average, and it hasn't had significant inventory impairments to date as it builds homes on land it entitled and developed.
Zman: "While current Lower 48 production is up only slightly relative to 2006’s storm impacted volumes Canadian exports to the U.S. are more than likely to decline more than LNG imports will increase. For this and many more little things like: spiralling service costs, increased demand for natural gas from the fertilizer and ethanol industries, low snowpack which reduce hydro electricity generation and thus increases demand for gas for power etc,) I don’t see natural gas trading on average much above or below current levels of $7.50 to $8 this summer. Put a hurricane aimed at the Gulf in the picture and we see $9 within a day, then things get down to storm path and production impact."
Time Warner Inc. Chairman and Chief Executive Richard Parsons said several private equity firms have approached him about selling AOL although the company remains focused on its new strategy.
From the Financial Times: "When an adviser presented Sheikh Mohammed bin Rashid al-Maktoum three years ago with a scheme to build one of the world’s biggest towers, Dubai’s ruler demanded to know what else was being planned around the world. The adviser returned with a list of the tallest buildings, with Taiwan’s Taipei 101 reaching higher than the proposed Dubai tower.“The sheikh asked me: ‘Why is it taller – are people there smarter than you?’” says Mohammed Alabbar, the official and head of property giant Emaar. “That’s why I made sure our project was the tallest by far.”
I'm quite sure most of you will have a busy weekend. Some will watch the Kentucky Derby and some might have other items of interest. When you have a free moment, how about pondering on the following: why do we have a the least inverted yield curve since September of last year? Coming to the right conclusion could prove very profitable for your portfolio for the next few months.
Favored Rags to Riches won the 133rd running of the Kentucky Oaks Friday, besting 13 other three-year-olds in the $500,000-added Grade 1 race that is the filly counterpart to Saturday's Kentucky Derby.
Peter Schiff: "Measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum...In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose. If the actual productive economies decide to decouple the dead weight, the train would actually move much faster."
June gold closed at $689.70 an ounce. July silver rose 2 cents to close at $13.53 an ounce. July copper closed at a contract high of $3.7585 a pound, up 3.2 cents for the day, and up 6.5% for the week as traders continued to worry about a mining labor strike in Peru.
U.K. media group Pearson said after the London market closed Friday that it has agreed to buy Reed Elsevier's Harcourt Assessment and Harcourt Education divisions for $950 million in cash.
Daily Reckoning: "The Dow goes up, up, up - it's been up in 20 of the last 22 sessions, something that hasn't happened since just before the Great Crash of '29. But the gains in the Dow are peanuts compared to what you could get overseas."
Marc Faber: "However, illiquidity among the US household sector, along with the reluctance of the Fed to cut rates right away, combined with the requirements for enormous capital investments for infrastructure in emerging and developed economies, could lead to some tightening of liquidity around the world. Therefore, I expect a more meaningful setback in asset prices and would certainly defer the purchase of financial assets. In particular, I am concerned by the inability of financial stocks to rally convincingly from their March 2007 lows, since financials are usually leading the market up and down.
In my opinion, there is an ongoing deterioration in the US stock market. In the summer of 2005, the homebuilders peaked out. Last year, it was the turn of the sub-prime lenders to top out. And early this year, financial shares, including brokers, made their highs. The economy is likely to follow this slow stock market erosion and gradually deteriorate, with disappointing corporate profits to follow... However, it should be clear that in the long run the purchasing power of the US dollar will continue to decline against sound currencies such as precious metals. Therefore, I continue recommending the accumulation of gold and silver."
Corporate tax payments are up about 15%, slower growth than in the previous three years. Individual income taxes are up 17.5%, while payroll taxes are up 5.5%. Non-withheld individual taxes are up about 14%, CBO said.
Crude closed down $1.26 at $61.93 and natural gas dropped a penny to $7.94.
The New York Post reported Friday morning that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday. A deal between Microsoft and Yahoo would up the combined companies' share of the search advertising market to 27% against Google's 65%, the Post reported.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of match up and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere. It's important to remember the rumors of a deal took place on Friday, the favorite rumor mill day.
It was late in the afternoon that the WSJ reported talks between Microsoft Corp. and Yahoo Inc. over a possible combination are no longer active. The Wall Street Journal reported on its Web site that in recent months the two companies discussed a possible merger, but that the discussions are no longer active. The two companies may still explore other ways of cooperating, the Journal reported.
The damage already had occurred. A total of 245 million shares traded in Yahoo at $33 for most of the day or $8 billion worth of shares. In after hours the stock closed below $31. In my view, a company would have to be crazy to pay $50 billion of shareholder money for Yahoo.
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."
The U.S. Labor Department said non-farm payrolls grew by 88,000 in April, while the unemployment rate ticked up to 4.5% from 4.4%. Average hourly earnings increased 4 cents, or 0.2% to $17.25. Earnings are up 3.7% in the past year. The average workweek fell to 33.8 hours from 33.9 in March.
The retail price for a gallon of regular unleaded climbed to $3.012 Friday, edging closer to the record $3.057 seen on Sept. 5, 2005, according AAA's Daily Fuel Gauge Report.
Henry Ford: "Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services."
Iran's Foreign Minister Manouchehr Mottaki blamed the American presence in Iraq for sectarian violence there, the BBC reported Friday.
John Moody: "The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor."
Wells Fargo & Company said Friday it would pay $1.5 billion in stock to buy 1,800-employee Greater Bay Bancorp. Assuming a Wells Fargo measurement price between $32.175 and $39.325, the total value of the transaction would be approximately $1.5 billion, based on Greater Bay Bancorp's shares on a fully diluted basis.
The Reserve Bank of Australia Friday forecast declining inflation over the short term, but warned consumer prices will likely nudge in into the higher end of its target range in 2008 as the economy continues to run near full capacity. Core inflation will ease to 2.5% "or lower" by the end of the year, the central bank said in its quarterly statement released Friday. The inflation forecast falls short of the RBA's previous forecast of 2.75% for the year. The RBA said the reasons for the revision were sharper-than-expected declines in food and fuel prices. The RBA also said core inflation peaked at 3% in mid-2006 and has since been on a slow decline. The RBA forecast underlying inflation will rebound to 2.75% in 2008 and 2009.
News and financial data provider Reuters said it had received a takeover approach from an unidentified bidder, sending its shares up almost a third, with Canadian publisher Thomson widely touted as the suitor. Canada's Globe and Mail newspaper reported on its website on Friday that Thomson was in talks to buy London-based Reuters, citing sources close to both companies.
Clear Channel Communications, the largest U.S. radio station operator, said on Thursday it received a new merger proposal from a private equity group, but its board voted against it.
A group led by Royal Bank of Scotland Group Plc and ABN Amro Holding NV are increasing talks about a possible takeover of the largest Dutch bank, as obstacles mount to Barclays Plc's $90 billion offer.
According to WTRG, the U.S. rotary rig count was down 22 rigs to 1,747 for the week of April 27, 2007 and is 8.6 percent higher than last year.The number of rotary rigs drilling for oil is down 9 at 283. The number of rigs targeting oil is 29 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.2% percent of total drilling activity. Rigs directed toward natural gas were down 13 at 1,460. The number of rigs currently drilling for gas is 107 greater than last year's level of 1,353. Year-over-year oil exploration in the US is up 11.4 percent. Gas exploration is up 7.9 percent. The weekly average of crude oil spot prices is 8.3% percent lower than last year and natural gas spot prices are 4.5 percent higher.
We have been having a spectacular rally in equities, and one I did not believe was possible. In the meantime, David Tice predicts the Dow will fall "at least 50%" from these levels, and he says the market is only months away from beginning a sharp decline. "I think this is a topping pattern," he says. "We think it's probably three to six months away from a significant decline." He calls the latest rally "a crack-up boom. At the tail end of credit excess it just gets crazier and crazier. It sucks people in, and it's an extremely dangerous scenario." Anything is possible. Just look at the Warriors knocking off the Mavs.
Brookfield Homes said that market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. However, the company said its housing margins remain above industry average, and it hasn't had significant inventory impairments to date as it builds homes on land it entitled and developed.
Zman: "While current Lower 48 production is up only slightly relative to 2006’s storm impacted volumes Canadian exports to the U.S. are more than likely to decline more than LNG imports will increase. For this and many more little things like: spiralling service costs, increased demand for natural gas from the fertilizer and ethanol industries, low snowpack which reduce hydro electricity generation and thus increases demand for gas for power etc,) I don’t see natural gas trading on average much above or below current levels of $7.50 to $8 this summer. Put a hurricane aimed at the Gulf in the picture and we see $9 within a day, then things get down to storm path and production impact."
Time Warner Inc. Chairman and Chief Executive Richard Parsons said several private equity firms have approached him about selling AOL although the company remains focused on its new strategy.
From the Financial Times: "When an adviser presented Sheikh Mohammed bin Rashid al-Maktoum three years ago with a scheme to build one of the world’s biggest towers, Dubai’s ruler demanded to know what else was being planned around the world. The adviser returned with a list of the tallest buildings, with Taiwan’s Taipei 101 reaching higher than the proposed Dubai tower.“The sheikh asked me: ‘Why is it taller – are people there smarter than you?’” says Mohammed Alabbar, the official and head of property giant Emaar. “That’s why I made sure our project was the tallest by far.”
I'm quite sure most of you will have a busy weekend. Some will watch the Kentucky Derby and some might have other items of interest. When you have a free moment, how about pondering on the following: why do we have a the least inverted yield curve since September of last year? Coming to the right conclusion could prove very profitable for your portfolio for the next few months.
Favored Rags to Riches won the 133rd running of the Kentucky Oaks Friday, besting 13 other three-year-olds in the $500,000-added Grade 1 race that is the filly counterpart to Saturday's Kentucky Derby.
Peter Schiff: "Measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum...In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose. If the actual productive economies decide to decouple the dead weight, the train would actually move much faster."
June gold closed at $689.70 an ounce. July silver rose 2 cents to close at $13.53 an ounce. July copper closed at a contract high of $3.7585 a pound, up 3.2 cents for the day, and up 6.5% for the week as traders continued to worry about a mining labor strike in Peru.
U.K. media group Pearson said after the London market closed Friday that it has agreed to buy Reed Elsevier's Harcourt Assessment and Harcourt Education divisions for $950 million in cash.
Daily Reckoning: "The Dow goes up, up, up - it's been up in 20 of the last 22 sessions, something that hasn't happened since just before the Great Crash of '29. But the gains in the Dow are peanuts compared to what you could get overseas."
Marc Faber: "However, illiquidity among the US household sector, along with the reluctance of the Fed to cut rates right away, combined with the requirements for enormous capital investments for infrastructure in emerging and developed economies, could lead to some tightening of liquidity around the world. Therefore, I expect a more meaningful setback in asset prices and would certainly defer the purchase of financial assets. In particular, I am concerned by the inability of financial stocks to rally convincingly from their March 2007 lows, since financials are usually leading the market up and down.
In my opinion, there is an ongoing deterioration in the US stock market. In the summer of 2005, the homebuilders peaked out. Last year, it was the turn of the sub-prime lenders to top out. And early this year, financial shares, including brokers, made their highs. The economy is likely to follow this slow stock market erosion and gradually deteriorate, with disappointing corporate profits to follow... However, it should be clear that in the long run the purchasing power of the US dollar will continue to decline against sound currencies such as precious metals. Therefore, I continue recommending the accumulation of gold and silver."
Corporate tax payments are up about 15%, slower growth than in the previous three years. Individual income taxes are up 17.5%, while payroll taxes are up 5.5%. Non-withheld individual taxes are up about 14%, CBO said.
Crude closed down $1.26 at $61.93 and natural gas dropped a penny to $7.94.
Thursday, May 03, 2007
More Government Numbers
5/4/07 More Government Numbers
First-time claims for state unemployment benefits fell to their lowest level since early January, the Labor Department reported Thursday. The number of initial claims in the week ending April 28 fell 21,000 to 305,000. The four-week average of initial claims fell 4,500 to 328,750. Meanwhile, the number of Americans receiving state jobless benefits fell 93,000 to 2.50 million in the week ending April 21. The four-week moving average of continuing claims rose 1,500 to 2.53 million.
Productivity of the U.S. non-farm business sector rose at a 1.7% annual rate in the first quarter, the Labor Department estimated Thursday. Unit labor costs rose at an annual rate of 0.6% in the first quarter. Real hourly compensation fell 1.5% in the first quarter. Compared with the same quarter a year ago, productivity was up 1.1%, compared with a 1.6% gain in the fourth quarter. Unit labor costs rose 1.3% over the past year, down from a 3.4% rate in the fourth quarter.
Talbots Inc. said it expects to post a profit in a range of 7 cents to 11 cents a share, down from its prior forecast of 36 cents to 43 cents a share. The company said it was cautious for the future, given its April sales trends.
Coeur d'Alene Mines Corp. agreed to merge with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. in a deal valued at roughly $1.1 billion. The transaction calls for Coeur to acquire all the shares of Bolnisi as well as all of the shares of Palmarejo not already owned by Bolnisi in what is largely a stock swap. Coeur d'Alene said it expects to issue a total of 271.3 million new shares in the deal. It will also make nominal cash payments of below a penny per share to holders of Bolnisi and Palmarejo stock.
General Motors Corp. reported first-quarter earnings of $62 million, or 11 cents a share, down from a year-ago profit of $602 million, or $1.06 a share. The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding items, the Dow component posted adjusted earnings of $94 million, or 17 cents a share, in the latest quarter. Revenue slid in the latest three months to $43.91 billion from $52.38 billion in the same period a year earlier. Housing finance related losses at GMAC more than offset a gain in its automotive operations.
Noble Energy Inc. said its first-quarter net profit fell to $211.8 million, or $1.22 a share, from $226.1 million, or $1.26 a share. Revenue edged up to $667 million from $646.3 million. Excluding the effects of deferred compensation, adjusted net income was $1.28 a share.
Drilling company Patterson-UTI Energy Inc. said its first-quarter net profit fell to $116 million, or 73 cents a share, from $159 million, or 91 cents a share. Revenue for the quarter fell to $547 million from $598 million. The company said customers had reduced their drilling activity in the quarter after warm winter weather led to high levels of natural gas in storage and lower prices. The company said it's recently seen a modest increase in its rig count in the U.S. and continues to believe that increased drilling activity will be required to avoid a shortfall of natural gas.
The board of directors of Dow Jones Co. decided to take no action on a $5 billion unsolicited takeover bid from News Corp. In a statement issued late Wednesday, the company said owners of shares constituting 52% of its outstanding voting power have indicated they are opposed to the bid from media mogul Rupert Murdoch.
The yen declined to a record low against the euro.
China’s property developers invested 22% more in projects last year, citing the Chinese Academy of Social Sciences.
There are concerns escalating violence in Nigeria could disrupt supplies from the world's eighth largest oil exporter.
The Baltic Dry Index has risen 41% this year.
Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It's the first time since September that layoffs rose on a year-over-year comparison.
Seeking Alpha: "As the dollar weakens on the development of emerging markets, a trend that should continue, American firms selling products overseas benefit by gaining market share as their products become cheaper to foreigners. That market share gain is an economic value add and should not be discounted as a fluctuating inconsequential circumstance."
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first- quarter profit on a surge in revenue from refining crude and making chemicals.
Zman: "Gasoline stocks now stand at 4.7% below year ago levels. Taken together with demand that year to date has run 1.9% higher than last year, the days supply metric has fallen to 20.8 (or just above where it was at the end of last summer)."
Reuters reports that Microsoft has purchased mobile ad company ScreenTonic to increase its footprint in the business of marketing to handsets.
Russian metals giant Norilsk Nickel said on Thursday it was launching an all-cash C$5.3bn ($4.8bn) bid for Canada’s LionOre, trumping an offer from London-listed Xstrata.
Norilsk, which produces one-fifth of the world’s nickel output, said it was offering to purchase all of LionOre’s shares at a price of C$21.50, a premium of 22.9 per cent over LionOre’s March 23 closing price.
Some trades for your consideration. They involve selling Jan 08 puts in three stocks each for 40 cents a put. The strike price on Vulcan Materials is $70 (price now $116), the strike price on Cummins is $52.50 (price now $91), and the strike price on Sallie Mae is $35 (price now $54).
Celgene said quarterly earnings more than tripled but sales of its most important product, cancer drug Revlimid, were smaller than expected.
OfficeMax reported earnings that fell well short of Wall Street's expectations.
The year's second $1 billion IPO awaits Friday from Interactive Brokers Group Inc. (IBKR). The deal was priced at $30.01.
Natural-gas inventories rose by 87 billion cubic feet for the week ended April 27, the Energy Department said Thursday. Total stocks now stand at 1.651 trillion cubic feet, down 245 billion cubic feet from the year-ago level, but 266 billion cubic feet above the five-year average, the government data said.
The ISM non-manufacturing index rose to 56% in April from 52.4% in March. Economists were expecting the index to rise to 53.3%. The prices-paid index rose to 63.5% in April from 63.3% in March.
Statoil ASA and Norsk Hydro have received clearance from the European Commission for the planned merger of their oil and gas activities.
In Thursday morning trading, stocks moved higher sending the S&P 500 across the 1500 mark for the first time since September 2000.
A Dutch judge halted the sale of LaSalle National Bank to Bank of America. The court said that ABN Amro was not allowed to sell any of its subsidiaries without consulting shareholders first.
Intel's CEO said profit growth will outpace revenue growth in 2007 and 2008.
The Andersons expects 2007 earnings of $2.35 to $2.60 a share. Analysts are looking for a per-share profit of $2.71.
Gold for June delivery closed up $9.30 at $684.40 an ounce on the New York Mercantile Exchange. July silver closed up 17.5 cents at $13.51 an ounce, July platinum gained $11.70 at $1,310.80 an ounce and June palladium rose $1.55 at $376.50 an ounce. July copper gained 8.2 cents at $3.7265 a pound.
he U.S. government said it would suspend oil purchases for the strategic Strategic Petroleum Reserve and Belgian oil workers tentatively agreed on a new contract, likely avoiding a strike.
Venezuela is not considering a cash payment to compensate foreign oil companies for their nationalized assets, the oil minister said early Thursday.
Sears Holdings Corp. expects first-quarter earnings of $1.30 to $1.53 a share, and net income of between $200 million and $235 million. Analysts polled by Thomson Financial are currently forecasting first-quarter earnings of $1.46 a share. The Hoffman Estates, Ill.-based retailer also said that Kmart same-store sales were down 4.7% for the first 12 weeks of the 13-week first quarter, primarily due to lower transaction volumes across most businesses. Sears domestic comparable-store sales declined by 2.4%, primarily reflecting a reduction in home appliances sales.
Chesapeake Energy Corp.'s first-quarter net income fell to $232 million, or 50 cents a share, from $604 million, or $1.44, a year ago. Revenue for the three months ended March 31 fell to $1.58 billion from $1.94 billion. The quarterly results included an unrealized mark-to-market loss of $193 million from the company's oil, gas and interest rate hedging program. Excluding the hedging loss, income from ongoing operations was $425 million, or 87 cents a share.
Nabors Industries posted a profit of $262.2 million, or 92 cents a share, up from $256.8 million, or 79 cents a share, a year ago. Sales came in at $1.30 billion, up from $1.18 billion last year. Analysts polled by Thomson Financial had expected a profit of 84 cents a share on sales of $1.25 billion. Earnings benefited from a share-count reduction as well as a lower tax rate, the oil equipment maker said. Chairman and CEO Gene Isenberg said he is looking for a "lower but strong level of income" in the second quarter.
Callaway Golf said it now expects 2007 pro forma per-share earnings of 72 cents to 82 cents on revenue of $1.045 billion to $1.065 billion. The company had previously estimated pro forma per-share earnings of 66 cents to 76 cents on revenue of $1.035 billion to $1.055 billion.
Starbucks backed its its full-year 2007 per-share profit forcast of 87 cents to 89 cents.
June crude fell 49 cents to close at $63.19 a barrel Thursday. June natural gas climbed 21.7 cents, or 2.8%, to close at $7.947 per million British thermal units after touching $8 during the session.
First-time claims for state unemployment benefits fell to their lowest level since early January, the Labor Department reported Thursday. The number of initial claims in the week ending April 28 fell 21,000 to 305,000. The four-week average of initial claims fell 4,500 to 328,750. Meanwhile, the number of Americans receiving state jobless benefits fell 93,000 to 2.50 million in the week ending April 21. The four-week moving average of continuing claims rose 1,500 to 2.53 million.
Productivity of the U.S. non-farm business sector rose at a 1.7% annual rate in the first quarter, the Labor Department estimated Thursday. Unit labor costs rose at an annual rate of 0.6% in the first quarter. Real hourly compensation fell 1.5% in the first quarter. Compared with the same quarter a year ago, productivity was up 1.1%, compared with a 1.6% gain in the fourth quarter. Unit labor costs rose 1.3% over the past year, down from a 3.4% rate in the fourth quarter.
Talbots Inc. said it expects to post a profit in a range of 7 cents to 11 cents a share, down from its prior forecast of 36 cents to 43 cents a share. The company said it was cautious for the future, given its April sales trends.
Coeur d'Alene Mines Corp. agreed to merge with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. in a deal valued at roughly $1.1 billion. The transaction calls for Coeur to acquire all the shares of Bolnisi as well as all of the shares of Palmarejo not already owned by Bolnisi in what is largely a stock swap. Coeur d'Alene said it expects to issue a total of 271.3 million new shares in the deal. It will also make nominal cash payments of below a penny per share to holders of Bolnisi and Palmarejo stock.
General Motors Corp. reported first-quarter earnings of $62 million, or 11 cents a share, down from a year-ago profit of $602 million, or $1.06 a share. The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding items, the Dow component posted adjusted earnings of $94 million, or 17 cents a share, in the latest quarter. Revenue slid in the latest three months to $43.91 billion from $52.38 billion in the same period a year earlier. Housing finance related losses at GMAC more than offset a gain in its automotive operations.
Noble Energy Inc. said its first-quarter net profit fell to $211.8 million, or $1.22 a share, from $226.1 million, or $1.26 a share. Revenue edged up to $667 million from $646.3 million. Excluding the effects of deferred compensation, adjusted net income was $1.28 a share.
Drilling company Patterson-UTI Energy Inc. said its first-quarter net profit fell to $116 million, or 73 cents a share, from $159 million, or 91 cents a share. Revenue for the quarter fell to $547 million from $598 million. The company said customers had reduced their drilling activity in the quarter after warm winter weather led to high levels of natural gas in storage and lower prices. The company said it's recently seen a modest increase in its rig count in the U.S. and continues to believe that increased drilling activity will be required to avoid a shortfall of natural gas.
The board of directors of Dow Jones Co. decided to take no action on a $5 billion unsolicited takeover bid from News Corp. In a statement issued late Wednesday, the company said owners of shares constituting 52% of its outstanding voting power have indicated they are opposed to the bid from media mogul Rupert Murdoch.
The yen declined to a record low against the euro.
China’s property developers invested 22% more in projects last year, citing the Chinese Academy of Social Sciences.
There are concerns escalating violence in Nigeria could disrupt supplies from the world's eighth largest oil exporter.
The Baltic Dry Index has risen 41% this year.
Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It's the first time since September that layoffs rose on a year-over-year comparison.
Seeking Alpha: "As the dollar weakens on the development of emerging markets, a trend that should continue, American firms selling products overseas benefit by gaining market share as their products become cheaper to foreigners. That market share gain is an economic value add and should not be discounted as a fluctuating inconsequential circumstance."
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first- quarter profit on a surge in revenue from refining crude and making chemicals.
Zman: "Gasoline stocks now stand at 4.7% below year ago levels. Taken together with demand that year to date has run 1.9% higher than last year, the days supply metric has fallen to 20.8 (or just above where it was at the end of last summer)."
Reuters reports that Microsoft has purchased mobile ad company ScreenTonic to increase its footprint in the business of marketing to handsets.
Russian metals giant Norilsk Nickel said on Thursday it was launching an all-cash C$5.3bn ($4.8bn) bid for Canada’s LionOre, trumping an offer from London-listed Xstrata.
Norilsk, which produces one-fifth of the world’s nickel output, said it was offering to purchase all of LionOre’s shares at a price of C$21.50, a premium of 22.9 per cent over LionOre’s March 23 closing price.
Some trades for your consideration. They involve selling Jan 08 puts in three stocks each for 40 cents a put. The strike price on Vulcan Materials is $70 (price now $116), the strike price on Cummins is $52.50 (price now $91), and the strike price on Sallie Mae is $35 (price now $54).
Celgene said quarterly earnings more than tripled but sales of its most important product, cancer drug Revlimid, were smaller than expected.
OfficeMax reported earnings that fell well short of Wall Street's expectations.
The year's second $1 billion IPO awaits Friday from Interactive Brokers Group Inc. (IBKR). The deal was priced at $30.01.
Natural-gas inventories rose by 87 billion cubic feet for the week ended April 27, the Energy Department said Thursday. Total stocks now stand at 1.651 trillion cubic feet, down 245 billion cubic feet from the year-ago level, but 266 billion cubic feet above the five-year average, the government data said.
The ISM non-manufacturing index rose to 56% in April from 52.4% in March. Economists were expecting the index to rise to 53.3%. The prices-paid index rose to 63.5% in April from 63.3% in March.
Statoil ASA and Norsk Hydro have received clearance from the European Commission for the planned merger of their oil and gas activities.
In Thursday morning trading, stocks moved higher sending the S&P 500 across the 1500 mark for the first time since September 2000.
A Dutch judge halted the sale of LaSalle National Bank to Bank of America. The court said that ABN Amro was not allowed to sell any of its subsidiaries without consulting shareholders first.
Intel's CEO said profit growth will outpace revenue growth in 2007 and 2008.
The Andersons expects 2007 earnings of $2.35 to $2.60 a share. Analysts are looking for a per-share profit of $2.71.
Gold for June delivery closed up $9.30 at $684.40 an ounce on the New York Mercantile Exchange. July silver closed up 17.5 cents at $13.51 an ounce, July platinum gained $11.70 at $1,310.80 an ounce and June palladium rose $1.55 at $376.50 an ounce. July copper gained 8.2 cents at $3.7265 a pound.
he U.S. government said it would suspend oil purchases for the strategic Strategic Petroleum Reserve and Belgian oil workers tentatively agreed on a new contract, likely avoiding a strike.
Venezuela is not considering a cash payment to compensate foreign oil companies for their nationalized assets, the oil minister said early Thursday.
Sears Holdings Corp. expects first-quarter earnings of $1.30 to $1.53 a share, and net income of between $200 million and $235 million. Analysts polled by Thomson Financial are currently forecasting first-quarter earnings of $1.46 a share. The Hoffman Estates, Ill.-based retailer also said that Kmart same-store sales were down 4.7% for the first 12 weeks of the 13-week first quarter, primarily due to lower transaction volumes across most businesses. Sears domestic comparable-store sales declined by 2.4%, primarily reflecting a reduction in home appliances sales.
Chesapeake Energy Corp.'s first-quarter net income fell to $232 million, or 50 cents a share, from $604 million, or $1.44, a year ago. Revenue for the three months ended March 31 fell to $1.58 billion from $1.94 billion. The quarterly results included an unrealized mark-to-market loss of $193 million from the company's oil, gas and interest rate hedging program. Excluding the hedging loss, income from ongoing operations was $425 million, or 87 cents a share.
Nabors Industries posted a profit of $262.2 million, or 92 cents a share, up from $256.8 million, or 79 cents a share, a year ago. Sales came in at $1.30 billion, up from $1.18 billion last year. Analysts polled by Thomson Financial had expected a profit of 84 cents a share on sales of $1.25 billion. Earnings benefited from a share-count reduction as well as a lower tax rate, the oil equipment maker said. Chairman and CEO Gene Isenberg said he is looking for a "lower but strong level of income" in the second quarter.
Callaway Golf said it now expects 2007 pro forma per-share earnings of 72 cents to 82 cents on revenue of $1.045 billion to $1.065 billion. The company had previously estimated pro forma per-share earnings of 66 cents to 76 cents on revenue of $1.035 billion to $1.055 billion.
Starbucks backed its its full-year 2007 per-share profit forcast of 87 cents to 89 cents.
June crude fell 49 cents to close at $63.19 a barrel Thursday. June natural gas climbed 21.7 cents, or 2.8%, to close at $7.947 per million British thermal units after touching $8 during the session.
Wednesday, May 02, 2007
The Beat Goes On
5/3/07 The Beat Goes On
The American Petroleum Institute reported a climb of 5.4 million barrels in crude supplies for the week ended April 27. The Energy Department had reported an increase of 1.1 million barrels. Motor gasoline supplies were down 212,000 barrels, the API said. The government reported a drop of 1.1 million barrels. Distillate supplies were up 2.9 million barrels, the API said, though the government said supplies were down 200,000 barrels for the week.
Orders for U.S.-made factory goods rose 3.1% in March, the biggest gain in a year, the Commerce Department reported Wednesday. The gains in March, led by a 38% increase in orders for civilian aircraft and an 11% increase in petroleum, were strong across the board. Orders for core capital equipment rose 4.8%, the fastest pace in nearly three years. Orders for durable goods were revised higher to 3.7%. Shipments of factory goods increased 1.5%, the highest in 10 months. Unfilled orders grew 1.8%, the fastest pace this year.
Genesis Healthcare Corp amended its merger deal with affiliates of Formation Capital LLC and JER Partners to lift the consideration payable to Genesis stockholders to $65.25 per share from $64.25 per share.
Cablevision Systems Corp said it agreed to a buyout by members of the Dolan Family Group, valuing the cable operator at about $22 billion, or $36.26 a share. The deal is conditioned on a "majority of the minority" voting provision, which requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers.
Helmerich & Payne, Inc. reported net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 for its second fiscal quarter ended March 31, 2007, compared with net income of $64,573,000 ($0.61 per diluted share) from operating revenues of $290,830,000 during last year's second fiscal quarter ended March 31, 2006. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. Comparable after-tax gains from the sale of assets totaled $0.02 per share net income for the second quarter of 2006. Company President and C.E.O., Hans Helmerich commented, "We have long believed that the technological advances introduced with the Company's FlexRig(R)* technology would help differentiate the Company from the rest of the field. As many of our competitors report significant numbers of rigs currently stacked, our land rig utilization in the U.S. remains high at 97%. Dayrates continue to experience some softening in the face of uncertain natural gas pricing and new capacity displacing less capable rigs. During increased market volatility, the overall rig count has held up nicely and is slightly above year-ago levels, suggesting resiliency to the energy cycle. "With the sale of two of our offshore platform rigs, the remaining nine platform rigs represent only 5% of our entire fleet and less than 2% of total Company segment operating income. We expect that segment's operating income during the next two to three quarters to be slightly improved over that reported in this year's second quarter."
Valero Energy Corp.agreed to sell its 165,000 barrel-per-day refinery in Lima, Ohio, to Husky Energy Inc. for $1.9 billion, plus net working capital estimated at $200 million.
Citigroup Inc.will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. said Wednesday they have agreed to acquire it U.S. Foodservice from Royal Ahold N.V. in a deal valued at $7.1 billion.
Gold for June delivery closed down $2.20 at $675.10 an ounce on the New York Mercantile Exchange. July silver ended down 3.5 cents at $13.335 an ounce, July platinum fell $1.80 at $1,299.10 an ounce, while June palladium closed up 80 cents at $374.95 an ounce. July copper closed up 1 cent at $3.6445 a pound.
Crude closed down 72 cents at $63.68 per barrel while natural gas rose 1 cent to $7.73.
The American Petroleum Institute reported a climb of 5.4 million barrels in crude supplies for the week ended April 27. The Energy Department had reported an increase of 1.1 million barrels. Motor gasoline supplies were down 212,000 barrels, the API said. The government reported a drop of 1.1 million barrels. Distillate supplies were up 2.9 million barrels, the API said, though the government said supplies were down 200,000 barrels for the week.
Orders for U.S.-made factory goods rose 3.1% in March, the biggest gain in a year, the Commerce Department reported Wednesday. The gains in March, led by a 38% increase in orders for civilian aircraft and an 11% increase in petroleum, were strong across the board. Orders for core capital equipment rose 4.8%, the fastest pace in nearly three years. Orders for durable goods were revised higher to 3.7%. Shipments of factory goods increased 1.5%, the highest in 10 months. Unfilled orders grew 1.8%, the fastest pace this year.
Genesis Healthcare Corp amended its merger deal with affiliates of Formation Capital LLC and JER Partners to lift the consideration payable to Genesis stockholders to $65.25 per share from $64.25 per share.
Cablevision Systems Corp said it agreed to a buyout by members of the Dolan Family Group, valuing the cable operator at about $22 billion, or $36.26 a share. The deal is conditioned on a "majority of the minority" voting provision, which requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers.
Helmerich & Payne, Inc. reported net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 for its second fiscal quarter ended March 31, 2007, compared with net income of $64,573,000 ($0.61 per diluted share) from operating revenues of $290,830,000 during last year's second fiscal quarter ended March 31, 2006. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. Comparable after-tax gains from the sale of assets totaled $0.02 per share net income for the second quarter of 2006. Company President and C.E.O., Hans Helmerich commented, "We have long believed that the technological advances introduced with the Company's FlexRig(R)* technology would help differentiate the Company from the rest of the field. As many of our competitors report significant numbers of rigs currently stacked, our land rig utilization in the U.S. remains high at 97%. Dayrates continue to experience some softening in the face of uncertain natural gas pricing and new capacity displacing less capable rigs. During increased market volatility, the overall rig count has held up nicely and is slightly above year-ago levels, suggesting resiliency to the energy cycle. "With the sale of two of our offshore platform rigs, the remaining nine platform rigs represent only 5% of our entire fleet and less than 2% of total Company segment operating income. We expect that segment's operating income during the next two to three quarters to be slightly improved over that reported in this year's second quarter."
Valero Energy Corp.agreed to sell its 165,000 barrel-per-day refinery in Lima, Ohio, to Husky Energy Inc. for $1.9 billion, plus net working capital estimated at $200 million.
Citigroup Inc.will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. said Wednesday they have agreed to acquire it U.S. Foodservice from Royal Ahold N.V. in a deal valued at $7.1 billion.
Gold for June delivery closed down $2.20 at $675.10 an ounce on the New York Mercantile Exchange. July silver ended down 3.5 cents at $13.335 an ounce, July platinum fell $1.80 at $1,299.10 an ounce, while June palladium closed up 80 cents at $374.95 an ounce. July copper closed up 1 cent at $3.6445 a pound.
Crude closed down 72 cents at $63.68 per barrel while natural gas rose 1 cent to $7.73.
Tuesday, May 01, 2007
Outlook
5/2/07 Outlook
Centex reported financial results for its fiscal fourth quarter and fiscal year ended March 31, 2007.
Highlights of the quarter ended March 31, 2007 (compared to last year's fourth quarter):
* Total revenues decreased 11% to $3.67 billion
* Home closings decreased 14% to 10,582
* Loss from continuing operations was $0.18 per diluted share
* Reduced inventory of unsold homes by 23% in the quarter
* Unit backlog declined 39% on a decrease in sales (orders) of 21%
Highlights of fiscal year 2007 (compared to fiscal year 2006):
* Total revenues decreased 7% to $12.0 billion
* Earnings per diluted share of $2.16
* Home closings decreased 9% to 35,785
* Generated $1 billion of operating cash flow
* Successfully sold sub-prime mortgage and commercial contracting
businesses
"In reacting to one of the most difficult markets in 25 years, we accomplished important goals that lay the groundwork for the future," said Tim Eller, chairman and CEO of Centex Corp. "We reduced costs, continued to align our land position with current demand and generated $1 billion in cash. Additionally, we profitably sold our sub-prime mortgage and commercial contracting businesses. Although we still see uncertainty in many of our markets, we are in position to increase our market share and generate additional cash."
P&G said it now expects to earn $3.01 to $3.03 per share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents per share.
Analysts, on average, expect $3.03 per share. Growth at the Gillette razor and Duracell battery units was the slowest in three quarters.
Chief Engineer Rick Land said Caltrans is having difficulty locating the steel needed to fix the connector following the fiery crash of a gasoline truck Sunday morning between I-80 and southbound I-880. Steel holding up the section of I-580 weakened in the intense heat and bent, causing the roadway to pull away from support beams. Both the eastbound I-580 and southbound I-880 connectors remain closed. "The steel is going to have to be special ordered and custom fabricated," said agency spokesman Jeff Weiss. "We were calling yesterday getting assessments of what's available; it's a matter of getting someone who can fill our order. Everything is hinging on getting the steel."
Liz Claiborne said on Tuesday that quarterly profit fell, hurt by restructuring charges, lower-than-expected wholesale sales and higher markdowns. The company also said it expects adjusted 2007 earnings per share in the range of $1.90 to $2.05, excluding charges.
According to Bloomberg, the fate of the proposed $25 billion buyout of Sallie Mae, the largest U.S. provider of student loans, rests in part on a debate among Democrats over an obscure point of congressional procedure. The agreement last month between Reston, Virginia-based SLM Corp. and a group of investors led by the private-equity firm J.C. Flowers & Co. allows the buyers to withdraw if Congress cuts federal subsidies for lenders by more than the $16 billion requested by President George W. Bush in his February budget. Democrats are considering plans to do just that as they search for revenue for proposals such as lower-interest student loans.
Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank.
Circuit City expects to post a first-quarter loss of as much as $90 million before taxes as rivals cut prices on flat-panel television sets.
Bloomberg reported China, the world’s largest steel producer, will introduce export licenses for some steel products from May 20 to rein in shipments which more than doubled in the first quarter.
Prices of liquid-crystal displays used in computers began rising this month and may climb until the third quarter as Microsoft’s new Windows operating system spurs demand for wider screens, research firm iSuppli Corp. said.
Martin Hutchinson: "Japan and China, the world’s largest holders of foreign exchange reserves with $2 trillion between them are considering investing those reserves in the stock market. Russia has announced it will invest its $108 billion oil stabilization fund in foreign stocks. If you try to remember the last time major government money pools were punted in the stock market (other than for a bailout) you won’t be able to – it was in 1720. That episode didn’t end happily, but it is I suppose encouraging to see that government can avoid such an egregious mistake for as long as 287 years!"
Kurdish lawmakers plan to oppose U.S.-backed legislation to regulate Iraq's oil industry, claiming the government is seeking a greater voice in revitalizing one of OPEC's former heavyweight producers, a Kurdish official said Monday. Kurds hold 58 of the 275 parliament seats — not enough to defeat the measure on their own.
Barron's reports that Charles Schwab sold $16 million in stock in his company two days after the firm announced a buyback.
Anadarko Petroleum Corp. said Monday its first-quarter net income fell dramatically from a year ago, as the company incurred a variety of charges related to its ongoing restructuring and an unresolved tax issue in Algeria. The company said Monday that it has generated more than $10.2 billion in after-tax proceeds from announced sales. "Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date," Chairman and Chief Executive Jim Hackett said in a statement.
German unemployment fell to its lowest level in more than four years in April, in the latest sign that the recovery of Europe’s largest economy is having a positive impact on the labor market. Headline unemployment fell to 3.967m from 4.108m in March, dipping below the 4m mark for the first time since November last year.
The WSJ reported TPG, the investment operation managed by turnaround specialists David Bonderman and Jim Coulter, is in very early discussions with some of its large pension-fund investors to acquire a stake under 20%, according to people familiar with the matter.
Crain's reported Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim “breached his duty” by failing to disclose he was the subject of a grand jury investigation into his former employer’s connections to a Colombian terrorist group, according to a company filing Monday.
Nouriel Roubini: "Wealth effect due to falling prices combined with a lagged effect of HEW ( home equity withdrawal) on consumption could cost as much 2 percent of GDP growth in 2007."
Martin Weiss: "The Decline in the Dollar Is So Deep It's Unleashing
A Chain Reaction of Price Explosions In Every
One of Our Favorite Contra-Dollar Investments."
Contrary Investor: "Although a decline in goods imports may seem a good thing when it causes a contraction in the headline US trade deficit, the reality is that a contraction in the rate of change in imported US goods is also a meaningful signal of domestic economic slowing. That's the big message we want to get across...In 2006, 66% of the US trade deficit is accounted for by crude imports and the trade deficit with China. It's no wonder China/US trade circumstances are such a perceptual political flash point. Unless something acts to change the trajectory of these trends, it will probably only be a year or two until crude and China account for three-quarters of the total US trade deficit...we're an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble."
Marathon Oil Corp. reported first-quarter earnings of $717 million, or $2.07 a share, down from a year-ago profit of $784 million, or $2.13 a share. On an adjusted basis, the Houston-based oil and gas company earned $707 million, or $2.04 a share, in the latest quarter. Revenue fell in the latest three months to $13 billion from $16.54 billion in the same period a year earlier.
24/7 Real Media soared more than 20% on a news report Microsoft is planning to make a $1 billion offer to acquire the company.
Athletic apparel and footwear maker Under Amour Inc. on Tuesday said it expects higher marketing expenses in the second quarter and earnings below analyst estimates.The company expects net income in the quarter to be 2 cents or 3 cents per share, while analysts polled by Thomson Financial are looking for a profit of 7 cents per share.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April, the highest since May 2006, from 50.9 in March. The prices paid index rose to 73.0 in April, from 65.5 in March.
New orders rose to 58.5 in April from 51.6 while the employment index rose to 53.1 from 48.7.
Archer Daniels Midland Co., the nation's largest ethanol producer, said Tuesday that its fiscal third-quarter profit rose 4 percent, but the results fell short of Wall Street expectations.
Pending sales of U.S. homes fell by 4.9% in March. The pending home sales index was down 10.5% from March 2006 and is the lowest in three years.
Chemed, which provides health-care services in one segment and plumbing services in another, expects 2007 adjusted earnings of $2.85 to $3.05 a share.
Bernanke: "The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
Crude for June delivery finished Tuesday with a loss of 2%, down $1.31, at $64.40 a barrel.
June gold fell $6.20 to close at $677.30 an ounce Tuesday. But July copper prices closed up 2.2%, or 7.8 cents, at a one-week high of $3.6345 a pound as a labor strike in Peru continued.
General Motors Corp. posted a 9.5% decline in April U.S. light vehicle sales to 307,554 cars and trucks from 339,796 a year ago. The car side saw sales drop 10% while light truck sales shed 9.1%.
News Corp. confirmed it "made a friendly offer" to Dow Jones & Company to acquire all of the outstanding shares of the company for $60 a share in cash, or in a combination of cash and stock. The Bancroft family hold shares representing a majority of the company's voting power. The Bancroft family is seen opposing News Corp.'s unsolicited bid of $60 a share unsolicited offer of $60 a share for Dow Jones , owner of the Wall Street Journal, according to CNBC's David Faber. Bear Stearns believes Dow Jones will accept the News Corp. bid. I agree with Faber.This bid was not a well-kept secret. On Monday, the number of call-option contracts traded in Dow Jones jumped 14-fold to 4,335 from the average daily volume of 309 over the previous 20 trading sessions, according to Bloomberg data.
Ford Motor Co. posted a 13% decline in April U.S. auto sales to 228,623 vehicles. Car sales fell 23.6% to 80,732 while the truck side fared much better, down 5.8% to 147,891 vehicles.
Chrysler posted a 1.6% rise in April U.S. vehicle sales to 193,104 cars and trucks. Car sales fell 20% to 46,665 while the truck side jumped 11% thanks to strong results from the Jeep brand.
National City Corp. agreed to buy MAF Bancorp for about $1.9 billion in stock to expand in Chicago and enter Wisconsin.
Iran’s foreign minister will not hold a “dialogue” with US Secretary of State Condoleezza Rice at the Iraq security conference planned this week.
Japanese wages fell for a fourth month in March.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Centex reported financial results for its fiscal fourth quarter and fiscal year ended March 31, 2007.
Highlights of the quarter ended March 31, 2007 (compared to last year's fourth quarter):
* Total revenues decreased 11% to $3.67 billion
* Home closings decreased 14% to 10,582
* Loss from continuing operations was $0.18 per diluted share
* Reduced inventory of unsold homes by 23% in the quarter
* Unit backlog declined 39% on a decrease in sales (orders) of 21%
Highlights of fiscal year 2007 (compared to fiscal year 2006):
* Total revenues decreased 7% to $12.0 billion
* Earnings per diluted share of $2.16
* Home closings decreased 9% to 35,785
* Generated $1 billion of operating cash flow
* Successfully sold sub-prime mortgage and commercial contracting
businesses
"In reacting to one of the most difficult markets in 25 years, we accomplished important goals that lay the groundwork for the future," said Tim Eller, chairman and CEO of Centex Corp. "We reduced costs, continued to align our land position with current demand and generated $1 billion in cash. Additionally, we profitably sold our sub-prime mortgage and commercial contracting businesses. Although we still see uncertainty in many of our markets, we are in position to increase our market share and generate additional cash."
P&G said it now expects to earn $3.01 to $3.03 per share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents per share.
Analysts, on average, expect $3.03 per share. Growth at the Gillette razor and Duracell battery units was the slowest in three quarters.
Chief Engineer Rick Land said Caltrans is having difficulty locating the steel needed to fix the connector following the fiery crash of a gasoline truck Sunday morning between I-80 and southbound I-880. Steel holding up the section of I-580 weakened in the intense heat and bent, causing the roadway to pull away from support beams. Both the eastbound I-580 and southbound I-880 connectors remain closed. "The steel is going to have to be special ordered and custom fabricated," said agency spokesman Jeff Weiss. "We were calling yesterday getting assessments of what's available; it's a matter of getting someone who can fill our order. Everything is hinging on getting the steel."
Liz Claiborne said on Tuesday that quarterly profit fell, hurt by restructuring charges, lower-than-expected wholesale sales and higher markdowns. The company also said it expects adjusted 2007 earnings per share in the range of $1.90 to $2.05, excluding charges.
According to Bloomberg, the fate of the proposed $25 billion buyout of Sallie Mae, the largest U.S. provider of student loans, rests in part on a debate among Democrats over an obscure point of congressional procedure. The agreement last month between Reston, Virginia-based SLM Corp. and a group of investors led by the private-equity firm J.C. Flowers & Co. allows the buyers to withdraw if Congress cuts federal subsidies for lenders by more than the $16 billion requested by President George W. Bush in his February budget. Democrats are considering plans to do just that as they search for revenue for proposals such as lower-interest student loans.
Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank.
Circuit City expects to post a first-quarter loss of as much as $90 million before taxes as rivals cut prices on flat-panel television sets.
Bloomberg reported China, the world’s largest steel producer, will introduce export licenses for some steel products from May 20 to rein in shipments which more than doubled in the first quarter.
Prices of liquid-crystal displays used in computers began rising this month and may climb until the third quarter as Microsoft’s new Windows operating system spurs demand for wider screens, research firm iSuppli Corp. said.
Martin Hutchinson: "Japan and China, the world’s largest holders of foreign exchange reserves with $2 trillion between them are considering investing those reserves in the stock market. Russia has announced it will invest its $108 billion oil stabilization fund in foreign stocks. If you try to remember the last time major government money pools were punted in the stock market (other than for a bailout) you won’t be able to – it was in 1720. That episode didn’t end happily, but it is I suppose encouraging to see that government can avoid such an egregious mistake for as long as 287 years!"
Kurdish lawmakers plan to oppose U.S.-backed legislation to regulate Iraq's oil industry, claiming the government is seeking a greater voice in revitalizing one of OPEC's former heavyweight producers, a Kurdish official said Monday. Kurds hold 58 of the 275 parliament seats — not enough to defeat the measure on their own.
Barron's reports that Charles Schwab sold $16 million in stock in his company two days after the firm announced a buyback.
Anadarko Petroleum Corp. said Monday its first-quarter net income fell dramatically from a year ago, as the company incurred a variety of charges related to its ongoing restructuring and an unresolved tax issue in Algeria. The company said Monday that it has generated more than $10.2 billion in after-tax proceeds from announced sales. "Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date," Chairman and Chief Executive Jim Hackett said in a statement.
German unemployment fell to its lowest level in more than four years in April, in the latest sign that the recovery of Europe’s largest economy is having a positive impact on the labor market. Headline unemployment fell to 3.967m from 4.108m in March, dipping below the 4m mark for the first time since November last year.
The WSJ reported TPG, the investment operation managed by turnaround specialists David Bonderman and Jim Coulter, is in very early discussions with some of its large pension-fund investors to acquire a stake under 20%, according to people familiar with the matter.
Crain's reported Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim “breached his duty” by failing to disclose he was the subject of a grand jury investigation into his former employer’s connections to a Colombian terrorist group, according to a company filing Monday.
Nouriel Roubini: "Wealth effect due to falling prices combined with a lagged effect of HEW ( home equity withdrawal) on consumption could cost as much 2 percent of GDP growth in 2007."
Martin Weiss: "The Decline in the Dollar Is So Deep It's Unleashing
A Chain Reaction of Price Explosions In Every
One of Our Favorite Contra-Dollar Investments."
Contrary Investor: "Although a decline in goods imports may seem a good thing when it causes a contraction in the headline US trade deficit, the reality is that a contraction in the rate of change in imported US goods is also a meaningful signal of domestic economic slowing. That's the big message we want to get across...In 2006, 66% of the US trade deficit is accounted for by crude imports and the trade deficit with China. It's no wonder China/US trade circumstances are such a perceptual political flash point. Unless something acts to change the trajectory of these trends, it will probably only be a year or two until crude and China account for three-quarters of the total US trade deficit...we're an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble."
Marathon Oil Corp. reported first-quarter earnings of $717 million, or $2.07 a share, down from a year-ago profit of $784 million, or $2.13 a share. On an adjusted basis, the Houston-based oil and gas company earned $707 million, or $2.04 a share, in the latest quarter. Revenue fell in the latest three months to $13 billion from $16.54 billion in the same period a year earlier.
24/7 Real Media soared more than 20% on a news report Microsoft is planning to make a $1 billion offer to acquire the company.
Athletic apparel and footwear maker Under Amour Inc. on Tuesday said it expects higher marketing expenses in the second quarter and earnings below analyst estimates.The company expects net income in the quarter to be 2 cents or 3 cents per share, while analysts polled by Thomson Financial are looking for a profit of 7 cents per share.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April, the highest since May 2006, from 50.9 in March. The prices paid index rose to 73.0 in April, from 65.5 in March.
New orders rose to 58.5 in April from 51.6 while the employment index rose to 53.1 from 48.7.
Archer Daniels Midland Co., the nation's largest ethanol producer, said Tuesday that its fiscal third-quarter profit rose 4 percent, but the results fell short of Wall Street expectations.
Pending sales of U.S. homes fell by 4.9% in March. The pending home sales index was down 10.5% from March 2006 and is the lowest in three years.
Chemed, which provides health-care services in one segment and plumbing services in another, expects 2007 adjusted earnings of $2.85 to $3.05 a share.
Bernanke: "The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
Crude for June delivery finished Tuesday with a loss of 2%, down $1.31, at $64.40 a barrel.
June gold fell $6.20 to close at $677.30 an ounce Tuesday. But July copper prices closed up 2.2%, or 7.8 cents, at a one-week high of $3.6345 a pound as a labor strike in Peru continued.
General Motors Corp. posted a 9.5% decline in April U.S. light vehicle sales to 307,554 cars and trucks from 339,796 a year ago. The car side saw sales drop 10% while light truck sales shed 9.1%.
News Corp. confirmed it "made a friendly offer" to Dow Jones & Company to acquire all of the outstanding shares of the company for $60 a share in cash, or in a combination of cash and stock. The Bancroft family hold shares representing a majority of the company's voting power. The Bancroft family is seen opposing News Corp.'s unsolicited bid of $60 a share unsolicited offer of $60 a share for Dow Jones , owner of the Wall Street Journal, according to CNBC's David Faber. Bear Stearns believes Dow Jones will accept the News Corp. bid. I agree with Faber.This bid was not a well-kept secret. On Monday, the number of call-option contracts traded in Dow Jones jumped 14-fold to 4,335 from the average daily volume of 309 over the previous 20 trading sessions, according to Bloomberg data.
Ford Motor Co. posted a 13% decline in April U.S. auto sales to 228,623 vehicles. Car sales fell 23.6% to 80,732 while the truck side fared much better, down 5.8% to 147,891 vehicles.
Chrysler posted a 1.6% rise in April U.S. vehicle sales to 193,104 cars and trucks. Car sales fell 20% to 46,665 while the truck side jumped 11% thanks to strong results from the Jeep brand.
National City Corp. agreed to buy MAF Bancorp for about $1.9 billion in stock to expand in Chicago and enter Wisconsin.
Iran’s foreign minister will not hold a “dialogue” with US Secretary of State Condoleezza Rice at the Iraq security conference planned this week.
Japanese wages fell for a fourth month in March.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Monday, April 30, 2007
Risk Is Alive And Well
5/1/07 Risk Is Alive And Well
The U.S. death toll in Iraq has now reached 104 in April. If Bush and the Congress had family in harm's way in Iraq, they might stop playing politics and get our troops home.
Mike Steinhardt: "The bell is beginning to ring. We're not too far from the end of the bull market."
What happens when the markets run out of things to inflate? Reality can get ugly.
Oliver Wendell Holmes: “Controversy equalizes fools and wise men - and the fools know it."
John Hussman: "In recent weeks, investors have been enthralled with the idea that stocks are being supported not only by earnings surprises, but also by heavy repurchases, as if these are two separate effects. As I've noted before, repurchases are already reflected in the calculation of the S&P 500 index and index fundamentals such as earnings and dividend figures. To assume that repurchases are a separate source of “return to investors” is double counting."
Citigroup executives are worried that hedge funds may pressure a breakup of the world’s biggest financial services company, the Financial Times reported. The executives believe Citigroup needs to better explain to shareholders the value of keeping its businesses together, the FT said.
Bloomberg reports that the cost of shipping coal and iron- ore is about to decline as the supply of cargo vessels overwhelms demand. Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world's largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.
Vice President Dick Cheney and other Bush administration officials wanted to ``handpick'' Iraq's leaders after the fall of Saddam Hussein and limit Iraqi involvement in choosing a new government, former CIA Director George Tenet says in his book.
M3 growth stood at 10.9 percent on an annualized basis in March, up from 10.0 percent in February, the European Central Bank said Monday.
Dominion agreed to sell its offshore natural gas and oil exploration & production to ENI Petroleum for roughly $4.76 Billion.
Enpath Medical is being acquired by Wilson Greatbatch for $14.38.
Michael Panzer notes "while optimists might welcome news that the current bull run is four-and-a-half years old, "only three out of the past 15 bull markets have lasted five years or longer, with the average surviving only 3.4 years," according to Jim Stack, editor of the InvesTech Market Analyst newsletter, in U.S. News & World Report. What's more, "even that's distorted by the longevity of the 1990s bull," the magazine writes. "The median length of a bull market-- the statistical point where an equal number last longer or shorter-- is only 2.6 years."
David Geffen: "The Clintons lie with such ease, it’s troubling." Maybe it's a White House viral strain.
Tim Iacono: "Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown. The most astonishing part of this entire report is that personal consumption now accounts for 72 percent of gross domestic product, up from 71 percent during all of 2006 (using chained dollars)."
Eagle Hospitality Properties Trust Inc. agreed to be acquired by the AP AIMCAP joint venture. The deal values Eagle Hospitality, a Covington, Ky., hotel investor, at $13.35 per share and unit in cash.
March consumer spending rose a smaller-than-expected 0.3 percent. Analysts were expecting a 0.5 percent rise. Core prices eased to a 2.1 percent increase from the same month a year ago. Overall prices rose 2.4 percent from a year ago, the largest rise since August, when the 12-month gain was 3.2 percent.
The March saving rate moderated to negative 0.8 percent from minus 1.2 percent in February, the strongest rate since a negative 0.4 percent in March 2006.
Meanwhile, spending on services, which account for almost 60 percent of all outlays, dropped 0.3 percent, the biggest decline since January 2006. It might prove fruitful to keep your eye on future outlays for services. The last time I checked we were a service-oriented economy.
Israeli Prime Minister Ehud Olmert faced strident calls for his resignation in the wake of harsh findings of an official inquiry into the shortcomings of his leadership during last summer's costly but inconclusive war in Lebanon.
International Securities Exchange confirmed it's in talks to be acquired by Deutsche Boerse in a deal, "that could lead to a possible business combination with Eurex."
Hilton Hotels said it now anticipates net income in a range of $1.18 to $1.24 per share on revenue between $8.07 billion and $8.15 billion. It previously forecast a 2007 profit of $1.20 to $1.30 per share, on revenue of $8.89 billion to $9.05 billion.
April Chicago PMI 52.9% vs. 54.5% expected. The Chicago purchasing managers' index fell to 52.9% from 61.7% in March.The new orders index fell to 56.5% from 72.2%. The prices paid index rose to 64.9% from 59.1%, indicating greater inflationary pressures on firms.
Spending on U.S. construction projects rose by 0.2% in March, fueled mostly by higher outlays for private nonresidential projects. Private residential construction fell by 1% in March, but followed a revised gain in February of 1.8%, the first gain after 10 straight months of declines. Spending on private nonresidential projects rose by 2.4%, while total private construction outlays climbed by 0.2%. Public construction spending rose by 0.4%. Spending on federal construction projects, meanwhile, fell by 4.1% in March, following a drop of 7% in February.
Bill Fleckenstein: "To sum this up, money printing in the past several years by virtually every central bank on the planet has created a synchronized global boom and, with it, gobs of speculation and complete disregard for risk. The fact that our economy is slowing down due to the housing bubble's unwind is immaterial at the moment, though it will become material. In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise."
Humana reported that its Medicare Advantage membership exceeded 1.1 million at the end of March, up 50 percent from the year-ago period and 11 percent higher than at the end of 2006. Membership in Humana's stand-alone prescription drug plans totaled nearly 3.5 million as of March 31, compared to nearly 2 million a year earlier, the company said. Humana raised its full-year earnings per share projection to a range of $4.10 to $4.25, compared to the previous projection of $4 to $4.20.
Barry Ritholtz: "The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing."
Mark Hulbert points out that Investors Intelligence, a newsletter edited by Michael Burke and John Gray which monitors a technical indicator that goes by the name of "buying climaxes," noted that the high number of buying climaxes last week is a "sign of distribution" that indicates that "smart money is moving to the sidelines." What, exactly, is a buying climax? The newsletter's editors explain: "Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones."
Last week, according to their calculations, there were 206 buying climaxes.
To put that high number in context, Burke and Gray write that "buying climaxes readings over 100 are somewhat worrisome, and the current level at twice that is a further sign of topping action. We usually see at least 200 buying climaxes before the market makes a top, although very often there are 500 or 600. The current readings are a cause for increased nervousness."
Oliver Wendell Holmes: “Truth, when not sought after, rarely comes to light."
May reformulated gasoline climbed 3.4% to close the session at $2.4405 a gallon. It tallied a gain of 18.6% for the month. June reformulated gas, which became the new front-month contract, closed nearly flat at $2.2594. June crude fell 75 cents to end at $65.71 a barrel, down 2.6% for the month.
The benchmark 10-year Treasury note ended up 19/32 at 100, yielding [s:tnx] 4.626%, down from 4.697% at Friday's close.
July copper closed at $3.5565 a pound Monday, up 2.4 cents for the session to tally a gain of $13.3% for the month of April. June gold climbed $1.70 to end at $683.50 an ounce for the session, up 2.2% for the month.
Genesis HealthCare Corp. said Monday that Fillmore Capital Partners LLC has increased its acquisition offer to $65.25 a share from $64.75 a share. In addition, under the revised proposal the price will increase by roughly a penny-per-share a day, beginning Aug. 15, until the transaction closes.
The following is a worthwhile article from the BBC:
http://news.bbc.co.uk/2/hi/health/660692...
The U.S. death toll in Iraq has now reached 104 in April. If Bush and the Congress had family in harm's way in Iraq, they might stop playing politics and get our troops home.
Mike Steinhardt: "The bell is beginning to ring. We're not too far from the end of the bull market."
What happens when the markets run out of things to inflate? Reality can get ugly.
Oliver Wendell Holmes: “Controversy equalizes fools and wise men - and the fools know it."
John Hussman: "In recent weeks, investors have been enthralled with the idea that stocks are being supported not only by earnings surprises, but also by heavy repurchases, as if these are two separate effects. As I've noted before, repurchases are already reflected in the calculation of the S&P 500 index and index fundamentals such as earnings and dividend figures. To assume that repurchases are a separate source of “return to investors” is double counting."
Citigroup executives are worried that hedge funds may pressure a breakup of the world’s biggest financial services company, the Financial Times reported. The executives believe Citigroup needs to better explain to shareholders the value of keeping its businesses together, the FT said.
Bloomberg reports that the cost of shipping coal and iron- ore is about to decline as the supply of cargo vessels overwhelms demand. Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world's largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.
Vice President Dick Cheney and other Bush administration officials wanted to ``handpick'' Iraq's leaders after the fall of Saddam Hussein and limit Iraqi involvement in choosing a new government, former CIA Director George Tenet says in his book.
M3 growth stood at 10.9 percent on an annualized basis in March, up from 10.0 percent in February, the European Central Bank said Monday.
Dominion agreed to sell its offshore natural gas and oil exploration & production to ENI Petroleum for roughly $4.76 Billion.
Enpath Medical is being acquired by Wilson Greatbatch for $14.38.
Michael Panzer notes "while optimists might welcome news that the current bull run is four-and-a-half years old, "only three out of the past 15 bull markets have lasted five years or longer, with the average surviving only 3.4 years," according to Jim Stack, editor of the InvesTech Market Analyst newsletter, in U.S. News & World Report. What's more, "even that's distorted by the longevity of the 1990s bull," the magazine writes. "The median length of a bull market-- the statistical point where an equal number last longer or shorter-- is only 2.6 years."
David Geffen: "The Clintons lie with such ease, it’s troubling." Maybe it's a White House viral strain.
Tim Iacono: "Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown. The most astonishing part of this entire report is that personal consumption now accounts for 72 percent of gross domestic product, up from 71 percent during all of 2006 (using chained dollars)."
Eagle Hospitality Properties Trust Inc. agreed to be acquired by the AP AIMCAP joint venture. The deal values Eagle Hospitality, a Covington, Ky., hotel investor, at $13.35 per share and unit in cash.
March consumer spending rose a smaller-than-expected 0.3 percent. Analysts were expecting a 0.5 percent rise. Core prices eased to a 2.1 percent increase from the same month a year ago. Overall prices rose 2.4 percent from a year ago, the largest rise since August, when the 12-month gain was 3.2 percent.
The March saving rate moderated to negative 0.8 percent from minus 1.2 percent in February, the strongest rate since a negative 0.4 percent in March 2006.
Meanwhile, spending on services, which account for almost 60 percent of all outlays, dropped 0.3 percent, the biggest decline since January 2006. It might prove fruitful to keep your eye on future outlays for services. The last time I checked we were a service-oriented economy.
Israeli Prime Minister Ehud Olmert faced strident calls for his resignation in the wake of harsh findings of an official inquiry into the shortcomings of his leadership during last summer's costly but inconclusive war in Lebanon.
International Securities Exchange confirmed it's in talks to be acquired by Deutsche Boerse in a deal, "that could lead to a possible business combination with Eurex."
Hilton Hotels said it now anticipates net income in a range of $1.18 to $1.24 per share on revenue between $8.07 billion and $8.15 billion. It previously forecast a 2007 profit of $1.20 to $1.30 per share, on revenue of $8.89 billion to $9.05 billion.
April Chicago PMI 52.9% vs. 54.5% expected. The Chicago purchasing managers' index fell to 52.9% from 61.7% in March.The new orders index fell to 56.5% from 72.2%. The prices paid index rose to 64.9% from 59.1%, indicating greater inflationary pressures on firms.
Spending on U.S. construction projects rose by 0.2% in March, fueled mostly by higher outlays for private nonresidential projects. Private residential construction fell by 1% in March, but followed a revised gain in February of 1.8%, the first gain after 10 straight months of declines. Spending on private nonresidential projects rose by 2.4%, while total private construction outlays climbed by 0.2%. Public construction spending rose by 0.4%. Spending on federal construction projects, meanwhile, fell by 4.1% in March, following a drop of 7% in February.
Bill Fleckenstein: "To sum this up, money printing in the past several years by virtually every central bank on the planet has created a synchronized global boom and, with it, gobs of speculation and complete disregard for risk. The fact that our economy is slowing down due to the housing bubble's unwind is immaterial at the moment, though it will become material. In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise."
Humana reported that its Medicare Advantage membership exceeded 1.1 million at the end of March, up 50 percent from the year-ago period and 11 percent higher than at the end of 2006. Membership in Humana's stand-alone prescription drug plans totaled nearly 3.5 million as of March 31, compared to nearly 2 million a year earlier, the company said. Humana raised its full-year earnings per share projection to a range of $4.10 to $4.25, compared to the previous projection of $4 to $4.20.
Barry Ritholtz: "The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing."
Mark Hulbert points out that Investors Intelligence, a newsletter edited by Michael Burke and John Gray which monitors a technical indicator that goes by the name of "buying climaxes," noted that the high number of buying climaxes last week is a "sign of distribution" that indicates that "smart money is moving to the sidelines." What, exactly, is a buying climax? The newsletter's editors explain: "Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones."
Last week, according to their calculations, there were 206 buying climaxes.
To put that high number in context, Burke and Gray write that "buying climaxes readings over 100 are somewhat worrisome, and the current level at twice that is a further sign of topping action. We usually see at least 200 buying climaxes before the market makes a top, although very often there are 500 or 600. The current readings are a cause for increased nervousness."
Oliver Wendell Holmes: “Truth, when not sought after, rarely comes to light."
May reformulated gasoline climbed 3.4% to close the session at $2.4405 a gallon. It tallied a gain of 18.6% for the month. June reformulated gas, which became the new front-month contract, closed nearly flat at $2.2594. June crude fell 75 cents to end at $65.71 a barrel, down 2.6% for the month.
The benchmark 10-year Treasury note ended up 19/32 at 100, yielding [s:tnx] 4.626%, down from 4.697% at Friday's close.
July copper closed at $3.5565 a pound Monday, up 2.4 cents for the session to tally a gain of $13.3% for the month of April. June gold climbed $1.70 to end at $683.50 an ounce for the session, up 2.2% for the month.
Genesis HealthCare Corp. said Monday that Fillmore Capital Partners LLC has increased its acquisition offer to $65.25 a share from $64.75 a share. In addition, under the revised proposal the price will increase by roughly a penny-per-share a day, beginning Aug. 15, until the transaction closes.
The following is a worthwhile article from the BBC:
http://news.bbc.co.uk/2/hi/health/660692...
Sunday, April 29, 2007
Turning Points?
4/30/07 Turning Points?
Airbus has set out details of job reductions under its Power8 restructuring plan, including 4,100 job cuts in France, French newspaper Le Monde reported on Saturday.The restructuring calls for 10,000 Europe-wide job cuts and six full or partial factory sales by 2010. The job losses are to be split between Airbus and suppliers.
U.K. home prices, rising at the fastest pace in two years, are "very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners. "It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. "The bubble could burst in the event of a financial shock or terrorism.''
Tradingthecharts.com: "I have long believed in the credit cycle being the primary factor behind the “liquidity” that seems to be driving the global economy and financial markets. Whether it’s exotic mortgages, yen carry-trades, CDOs or LBOs the common denominator has been easy credit. Expanding credit is in theory bearish for the currency as the increased supply of dollars is discounted by the Forex market. A major low in the value of the dollar could indicate a reversal in the credit cycle which could have negative implications for all levered."
Randall Forsyth: "Meanwhile, Japan similarly is mulling diversifying a portion of its huge foreign-exchange reserves to be invested along the lines of the Government of Singapore Investment Co., or GIC. That would mean shifting from U.S. Treasury securities to higher-returning global equities and alternatives, in part to help pay for the retirement costs of Japan's aging population, the FT also said."
China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site.
ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.
George Tenet said Mr Bush had already decided to invade Iraq in December 2002, two months before Colin Powell, then secretary of state, gave his now infamous presentation on Iraqi WMD before the United Nations.
Democrats plan to highlight the unprecedented rebuke they are delivering to Bush when they send their bill to him on Tuesday. That day is the fourth anniversary of Bush's speech aboard an aircraft carrier declaring the end to major combat operations in Iraq. To remind Americans of the anniversary, antiwar groups are running television ads showing footage of Bush aboard the carrier that had been decorated with a "Mission Accomplished" banner. Meanwhile, a new compromised bill is in the works.
Iran agreed Sunday to attend a major regional conference on Iraq set for this week in Egypt.
Bill Bonner: "The important fact, at least as we see it through our glass darkly, is that the world is gushing dollars. And here we connect anklebone to leg bone. Dollars are the main export of the world's biggest economy. But that economy is the economy of the world's most debt-ridden nation. And it's the same nation that sets the value of the dollar, the paper in which the debts are measured. That same nation - and you know which one it is, dear reader - shows no sign of paying down the debt. In fact, the debt has begun to feed on itself; now, more money has to be borrowed to pay the interest on previous borrowings. Currently, 80% of the U.S. fiscal deficit is financed by foreigners; one hundred percent of the U.S. trade deficit is financed by foreigners; and all over the world, the piles of dollar bills…dollar credits…dollar shorts…dollar bets…and dollar-based debts…are mounting up. China alone is expected to have more than $1 trillion U.S. dollars in reserves by the end of this year. In short, many of the people with the most to lose from a falling dollar are people who can perfectly well get along without it."
John Mauldin: "Rising prices create their own kind of self-fulfilling momentum. As more and more people throw caution to the wind and jump into the market, hoping to capture some of the profits they see their friends making so effortlessly, you finally get down to the last bear standing. Mr. Market will do whatever it takes to prove the most people wrong. And one of his favorite things to do is to create momentum markets which defy the logic of the underlying fundamentals. It then ends in tears."
Mike Shedlock: "Capital spending bounces back in March is the fact that first quarter capital spending was down 15.3% annualized."
Paul Kasriel: "Going forward, we expect a modest rebound in real GDP growth to about a 2% annual rate in the second quarter. A sharp narrowing in the trade deficit because of strong export growth and a surge in national defense spending are the factors we expect to be responsible for this rebound, offsetting weaker private domestic spending. Without FOMC interest rate cuts commencing early in the second half of this year, we would not expect real economic growth to accelerate meaningfully."
Mike Burk: "Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC. The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963...The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong. I expect the major indices to be higher on Friday May 4 than they were on Friday April 27."
Oroborean: "The Fed took a different direction in its open market activities this week and actually started removing money from total bank deposits through reverses. The move could reflect less demand for money, but in this case is probably more of a preemptive measure to goose up bond yields and make the dollar more attractive. It's also an anti-inflationary step and if this trend develops, it would be profoundly bearish for metals, especially if in lieu of a change in interest rates."
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday. "I do think there are downside risks to the American economic growth, but in spite of those risks I really think it is quite likely that the U.S. economy is going to pick up steam and revert back to trend growth before 2007 comes to and end," Yellen said. Given "slightly elevated" levels of inflation, a period of subpar output will help dispel inflationary pressures, she added.
The House Judiciary Committee voted 32-6 to grant immunity to Monica Goodling, Gonzales' former White House liaison, for her testimony. The panel also unanimously approved -- but did not issue -- a subpoena to compel her to appear.
Airbus has set out details of job reductions under its Power8 restructuring plan, including 4,100 job cuts in France, French newspaper Le Monde reported on Saturday.The restructuring calls for 10,000 Europe-wide job cuts and six full or partial factory sales by 2010. The job losses are to be split between Airbus and suppliers.
U.K. home prices, rising at the fastest pace in two years, are "very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners. "It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. "The bubble could burst in the event of a financial shock or terrorism.''
Tradingthecharts.com: "I have long believed in the credit cycle being the primary factor behind the “liquidity” that seems to be driving the global economy and financial markets. Whether it’s exotic mortgages, yen carry-trades, CDOs or LBOs the common denominator has been easy credit. Expanding credit is in theory bearish for the currency as the increased supply of dollars is discounted by the Forex market. A major low in the value of the dollar could indicate a reversal in the credit cycle which could have negative implications for all levered."
Randall Forsyth: "Meanwhile, Japan similarly is mulling diversifying a portion of its huge foreign-exchange reserves to be invested along the lines of the Government of Singapore Investment Co., or GIC. That would mean shifting from U.S. Treasury securities to higher-returning global equities and alternatives, in part to help pay for the retirement costs of Japan's aging population, the FT also said."
China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site.
ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.
George Tenet said Mr Bush had already decided to invade Iraq in December 2002, two months before Colin Powell, then secretary of state, gave his now infamous presentation on Iraqi WMD before the United Nations.
Democrats plan to highlight the unprecedented rebuke they are delivering to Bush when they send their bill to him on Tuesday. That day is the fourth anniversary of Bush's speech aboard an aircraft carrier declaring the end to major combat operations in Iraq. To remind Americans of the anniversary, antiwar groups are running television ads showing footage of Bush aboard the carrier that had been decorated with a "Mission Accomplished" banner. Meanwhile, a new compromised bill is in the works.
Iran agreed Sunday to attend a major regional conference on Iraq set for this week in Egypt.
Bill Bonner: "The important fact, at least as we see it through our glass darkly, is that the world is gushing dollars. And here we connect anklebone to leg bone. Dollars are the main export of the world's biggest economy. But that economy is the economy of the world's most debt-ridden nation. And it's the same nation that sets the value of the dollar, the paper in which the debts are measured. That same nation - and you know which one it is, dear reader - shows no sign of paying down the debt. In fact, the debt has begun to feed on itself; now, more money has to be borrowed to pay the interest on previous borrowings. Currently, 80% of the U.S. fiscal deficit is financed by foreigners; one hundred percent of the U.S. trade deficit is financed by foreigners; and all over the world, the piles of dollar bills…dollar credits…dollar shorts…dollar bets…and dollar-based debts…are mounting up. China alone is expected to have more than $1 trillion U.S. dollars in reserves by the end of this year. In short, many of the people with the most to lose from a falling dollar are people who can perfectly well get along without it."
John Mauldin: "Rising prices create their own kind of self-fulfilling momentum. As more and more people throw caution to the wind and jump into the market, hoping to capture some of the profits they see their friends making so effortlessly, you finally get down to the last bear standing. Mr. Market will do whatever it takes to prove the most people wrong. And one of his favorite things to do is to create momentum markets which defy the logic of the underlying fundamentals. It then ends in tears."
Mike Shedlock: "Capital spending bounces back in March is the fact that first quarter capital spending was down 15.3% annualized."
Paul Kasriel: "Going forward, we expect a modest rebound in real GDP growth to about a 2% annual rate in the second quarter. A sharp narrowing in the trade deficit because of strong export growth and a surge in national defense spending are the factors we expect to be responsible for this rebound, offsetting weaker private domestic spending. Without FOMC interest rate cuts commencing early in the second half of this year, we would not expect real economic growth to accelerate meaningfully."
Mike Burk: "Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC. The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963...The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong. I expect the major indices to be higher on Friday May 4 than they were on Friday April 27."
Oroborean: "The Fed took a different direction in its open market activities this week and actually started removing money from total bank deposits through reverses. The move could reflect less demand for money, but in this case is probably more of a preemptive measure to goose up bond yields and make the dollar more attractive. It's also an anti-inflationary step and if this trend develops, it would be profoundly bearish for metals, especially if in lieu of a change in interest rates."
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday. "I do think there are downside risks to the American economic growth, but in spite of those risks I really think it is quite likely that the U.S. economy is going to pick up steam and revert back to trend growth before 2007 comes to and end," Yellen said. Given "slightly elevated" levels of inflation, a period of subpar output will help dispel inflationary pressures, she added.
The House Judiciary Committee voted 32-6 to grant immunity to Monica Goodling, Gonzales' former White House liaison, for her testimony. The panel also unanimously approved -- but did not issue -- a subpoena to compel her to appear.
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