5/24/07 Developments
The median selling price of previously owned homes across the nation was $212,300 in the first quarter, down 1.8 percent from a year earlier, according to the National Association of Realtors. That was the lowest in two years. The U.S. median home price probably will fall 1 percent in 2007 from a year earlier, the realtors' group said on May 8. That would be the first national decline since the Great Depression in the 1930s, said Lawrence Yun, an economist with the Chicago-based trade group.
OAO GMK Norilsk Nickel, the world's largest producer of the metal, increased an offer for LionOre Mining International Ltd. by 28 percent to C$6.8 billion ($6.3 billion), trumping an improved bid from Xstrata Plc. Norilsk bid C$27.50 a share, up from the C$21.50 it proposed May 3.
The House will hold two separate votes on the war-funding measure, House Appropriations Chairman David Obey of Wisconsin told reporters, one on the military spending with Iraqi government benchmarks and then a separate vote on the domestic spending. The measures will then be combined and sent to the Senate for its approval later this week. Congress is scheduled to leave Washington for the week-long Memorial Day recess on Friday.
Stride Rite gets a $20.50 buyout offer from Payless Shoes.
Alcan rejected Alcoa's bid and stated "it does not adequately reflect the value of Alcan's extremely attractive assets, strategic capabilities and growth prospects."
Physio-Control's total sales fell 52 percent last quarter after it suspended U.S. product shipments, parent company Medtronic reported Tuesday.
Redmond-based Physio, a manufacturer of automated external defibrillators, halted U.S. sales after the Food and Drug Administration found shortcomings in its quality-control procedures.
The military said seven soldiers and two Marines were killed in separate attacks Tuesday, bringing the U.S. death toll for the month to at least 80. Last month, 104 U.S. troops were killed in Iraq.
U.S. officials have warned that American casualties were likely to increase as troops made more frequent patrols during the three-month-old U.S.-led security crackdown in Baghdad.
The British pound rose after the minutes from the Bank of England's latest interest-rate meeting showed all nine members voted for a quarter-point hike to 5.5%.
New Zealand’s second-biggest listed company, Fletcher, said it would buy US-based Formica for US$700m, making it the world’s biggest laminates maker. Fletcher said it would acquire the Cincinnati-based Formica from private equity firms Cerberus Capital Management and Oaktree Capital Management to boost its global reach and earnings.
The Bancroft family is scheduled to meet on Wednesday to discuss News Corp’s $5bn takeover bid for Dow Jones, the media group they control, according to people familiar with the matter.
Target Corp. said its first-quarter profit rose almost 18 percent, although revenue was just shy of analyst expectations. The nation's second-largest discount retailer said it earned $651 million, or 75 cents per share, up from $554 million, or 63 cents per share, during the same period last year. Revenue of $14.04 billion was up 9 percent from $12.86 billion a year ago.
Ross Stores stuck to its full year profit forecast of $1.85 to $1.95 a share.
The 10-year Treasury note ended lower 9/32 at 97 05/32 with a yield
of 4.863%, up from 4.829% late Tuesday. In intraday trading, the benchmark 10-year's yield had climbed to 4.875%, the highest level since Jan. 31.
Richard McGregor: "China created fewer jobs (as a percentage of the workforce) between 1982 and 2006 than Brazil, even though it grew by an annual average of more than 10 per cent compared with Brazil’s 3-4 per cent, the IMF found.”
Bill Bonner: "It appears that the world is in the grip of two major and contradictory trends. At the top, money has never been easier to get…nor have rich people ever been more eager to get rid of it. Money changes hands so fast…and in such volume…the markets and bankers are having trouble keeping up with it. Institutional investors have so much money they don't know what to do with it. Meanwhile, down in the Lower Depths…the poor lumpen can't even afford to drive to the store to rent a movie. They're not earning any more money…while their costs continue to rise. Every year, we get a notice that a college has raised its tuition. Our insurance and health care costs seem to go up annually. Every time we fill up our tank…or eat in a restaurant…we get a nasty shock."
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. reported that data from Study 16 and Study 17 of the Phase 2B clinical trial program evaluating bremelanotide in men with erectile dysfunction (ED) were presented yesterday at the American Urological Association (AUA) Annual Meeting (AUA 2007) held in Anaheim, CA. New positive data presented showed that bremelanotide improved both self-esteem and sexual relationship in men with erectile dysfunction (ED). Other positive top line data from the Phase 2B clinical trial program were reported by the companies in November 2006 and at the 9th European Society for Sexual Medicine (ESSM) Congress in Vienna in December 2006. In order to better understand the effects that bremelanotide may have on improving quality of life and self-esteem, patients in Study 16 were administered the SEAR (Self-Esteem and Relationship), a validated psychological instrument with two major domains: sexual relationship and confidence. The SEAR data were presented at AUA 2007 by Stanley E. Althof, PhD, Professor of Psychology, Case Western Reserve School of Medicine in a session entitled Improvement in Sexual Relationship, Satisfaction, Confidence and Self-Esteem in Erectile Dysfunction Patients Treated with Bremelanotide. Dr. Althof commented, "Our analysis has shown that treatment with bremelanotide improved both the Self-Esteem and Sexual Relationship domains of the SEAR in non-diabetic ED patients and this was strongly correlated with improvements in erectile function. These results indicate that bremelanotide improves sexual confidence and has the potential to be an important treatment option for patients with ED." "An increasing focus and attention on the utility of therapy in restoring quality of life and improvements to interpersonal relationships continues to evolve and will drive the need for novel treatment options for ED," Dr. Althof added. "We are extremely pleased with the positive reception that our Phase 2B studies received at the AUA meeting," stated Dr. Trevor Hallam, Palatin's Executive Vice President of R&D. Dr. Hallam further commented, "We are looking forward to discussing these results with the FDA at an end of Phase 2 meeting later this year and moving to Phase 3 trials as soon as possible."
Paul Kasriel: "The decline in M2's relative currency component began shortly after the peak in this cycle's housing starts. Not only would undocumented workers likely not be counted in the establishment payroll statistics but they also would likely be paid in currency, not direct deposits to bank accounts. The absolute and relative slowing in U.S. currency growth in recent years is consistent with the hypothesis that there have been large layoffs of undocumented workers. In turn, this would help explain the relatively mild contraction in documented residential construction employment."
Paul Lamont: "Perhaps Chairman Bernanke does not expect it, but reports in the field, credit derivative indexes, and the Federal Reserve Bank's own research economists are warning of further U.S. mortgage woes."
If you're going to play the risk arb game, it might prove useful to think rationally. Let's take a quick look at Alcan. At $86 it has a market cap of approximately $32 billion with sales of roughly $25 billion and net profit margins of 7.6%. Alcoa has sales of $31 billion with a $35 billion market cap and net profit margins of 8.55%. In sum, they are a pretty fair match statistically. Look at Billiton with sales of $36 billion, 35% net profit margins, and a market cap of $153 billion! Their profit margins are roughly 5 times that of Alcan's. That's pretty much the case of Rio Tinto with sales of $21 billion, net profit margins over 34%, and a market cap of $93 billion. Unless Billiton and/or Rio Tinto think they can significantly increase Alcan's margins, why pay anything like $86 or $32 billion? I wouldn't. For Alcoa it's a different ballgame. It's two so-so companies joining forces. One must remember that aluminum is still a cyclical business. It's only with the Alcoa bid that Alcan has sold above $60. For the better part of 10 years it traded between $20 and $50. During this time, Alcoa has traded between $15 and $45. These two companies deserve one another. Additionally, the Metals Insider newsletter says there is a common theme emerging from US fabricators of aluminum products—reduced buying and inventory de-stocking caused by a 5% year-on-year decline in shipments. Data from the Aluminum Association backs up analysts’ views that a three-year string of increased shipments will be snapped in 2007. Reason: Annualized demand is down almost 10%. Maybe those purchasing Alcan at $85 should reflect on the facts.
The American Petroleum Institute reported a fall of 975,000 barrels in crude supplies for the week ended May 18. The Energy Department had reported an increase of 2 million barrels for the latest week. Motor gasoline supplies were down 2.3 million barrels, the API said. The government reported a rise of 1.5 million barrels. Distillate supplies were down 836,000 barrels, the API said. The government posted a 500,000-barrel rise.
July crude climbed 26 cents to close at $65.77 a barrel Wednesday and June reformulated gasoline finished at $2.3104 a gallon, up 0.41 cent for the session.
June gold rose $2.70 to close at $662.60 an ounce Wednesday. July silver climbed 11.5 cents to close at $13.105.
Microsoft Corp. has all the major pieces it needs to become a bigger player in online advertising, said the company's chief advertising strategist, laying to rest for now speculation that Microsoft might acquire Yahoo Inc.
Hesiod: "Acquisition means life to miserable mortals.”
Wednesday, May 23, 2007
The Music Continues
5/23/07 The Music Continues
According to Bloomberg, Medtronic Inc.will report that its stent for preventing heart attacks didn’t cause blood clots in test, increasing the cardiac-device maker’s chances of expanding its share of the $5.4 billion-a-year worldwide market. Medtronic Inc. reported fiscal fourth-quarter net earnings of $812 million, or 70 cents a share, up 9.7% from $740 million, or 61 cents a share, in the year-ago period. Adjusting for special litigation and restructuring charges and certain income tax benefits, adjusted earnings came in at 66 cents a share in the fiscal fourth quarter of 2007.
Michael Moskow, Pres. of the Chicago Fed: “I see the economy improving as we move through this year,” Moskow said. “Our expectation is that inflation rates will continue to come down as well during this period and I would expect the unemployment rate will not go up a great deal.”
The Bush administration is quietly on track to nearly double the number of combat troops in Iraq this year, an analysis of Pentagon deployment orders showed Monday. The little-noticed second surge, designed to reinforce U.S. troops in Iraq, is being executed by sending more combat brigades and extending tours of duty for troops already there. The actions could boost the number of combat soldiers from 52,500 in early January to as many as 98,000 by the end of this year if the Pentagon overlaps arriving and departing combat brigades. The Decider is once again acting against the will of the American people.
On Sunday, Kuwait said it would decouple its currency, the dinar, from the dollar in order to fight inflation. Its move resonates not just in the Middle East, but as far away as China and Ecuador -- other countries that also tie their economies to moves in the dollar. Will the dollar become a second-class citizen, so to speak?
Warner Music Group is likely to counter a $4.7 billion private equity buyout for long-sought rival EMI Group and turn what looked like a closed deal for the recording company into a new takeover battle, analysts said on Monday. EMI said on Monday it agreed to the offer from Terra Firma, possibly ending a seven-year standoff with smaller competitor Warner Music. Both firms feared regulators would kill any deal. Warner Music, the fourth-largest music company, is evaluating its options after Terra Firma offered to pay 2.4 billion pounds ($4.73 billion) or 265 pence a share in cash to buy No. 3 music group EMI, two sources close to the talks told Reuters. One source said Warner Music, whose acts include Madonna, Red Hot Chili Peppers and Green Day, would consider bidding more than 265 pence per share in the coming weeks. The source said Warner might also wait until Terra Firma was prepared to sell off EMI assets or the company as a whole.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations increased to 24, the highest since June, from 16.5 in April.
Gasoline inventories rose to 195.2 million barrels the week ended May 11, the second consecutive weekly increase, according to a U.S. Energy Department report on May 16. The gain left supplies 7.5 percent below the five year average.
According to Reuters, the FDA will weigh the risks of GlaxoSmithKline diabetes drug Avandia. On Monday, a medical journal reported risks related to the drug. Patients who took Avandia to reduce their blood-sugar levels were 43 percent more likely to have a heart attack than patients who were given other medications or a placebo, the study found.
Puget Sound Energy ratepayers should expect a 13.2 percent increase in their monthly electricity bills triggered by a federal court ruling earlier this month. That ruling by the 9th U.S. Circuit Court of Appeals questioned the legality of Bonneville Power Administration payments to Puget Sound Energy (PSE) and other investor-owned Northwest utilities that collectively serve some 60 percent of the region.
Staples Inc. nudged its profit guidance lower on Tuesday, saying that the pressure to cut costs among consumers and businesses could slow already sluggish U.S. sales.
Halliburton Co. is shifting the company's focus and capital investments away from North America and toward the oil and gas-rich Middle East, its chief executive Dave Lesar said here Tuesday.
Chinese stocks rose to a fresh record high for the second day in a row on Tuesday, as property developers jumped on expectations for a stronger yuan and robust housing demand. The Shanghai Composite Index gained 0.9 percent to 4,110.38, breaking above 4,100 for the first time. The Shenzhen Composite Index climbed 1.4 percent to 1,198.41, also a record high.
Iraq's Vice President Tariq Al Hashimi said Sunday he opposes a draft oil law that is crucial to Iraq's future because it gives too many concessions to international oil companies and the country's regions.
"We have a total of 140 trillion cubic feet of unrisked natural gas resources," said George Kirkland, Chevron's head of exploration, production and gas activities, at the company's annual analyst meeting in March. "With such a significant resource development opportunity, natural gas will play a larger role in our future production. Over the next 20 years natural gas will grow from 30% to nearly 45% of our daily production."
In 2005, Rigzone noted, 94% of the 1.7 billion barrels of oil equivalent that Exxon added to its reserve base came from its natural gas reserves in Qatar.
The International Monetary Fund is still considering whether to sell 400 tons of its gold stocks to help plug a widening income shortfall, the head of the global lender, Rodrigo Rato, said on Monday.
Boris Sobolev: " Average profit margins based on total cash costs fell from 44.95% in Q4/06 to 42.65% in Q1/07. This is at the same time when gold rose from an average price of $613.5/oz in Q4/06 to an average $650/oz in Q1/07 or 5.96% gain. Cash costs were negatively impacted by the industry-wide escalations in labor, spare parts and energy costs, due to the processing of lower grade ores and in some cases lower mine production. So, in fact total cash costs per ounce are rising at a faster rate than the gold price. As a result, most gold producers have become less profitable over the past 2 quarters.This appears to be one of the major reasons why gold stocks have been under-performing the yellow metal. As paradoxical as it may sound, the best thing that can happen to gold producers is an economic slowdown especially if one remembers the anti-cyclical nature of gold.As far as silver producers are concerned, their stock prices have been rising despite decreasing profit margins. But the situation there is quite different in terms of investor expectations.
Paul Kasriel: "I do agree that export growth is likely to pick up near term what with the rest of the world growing strongly and the dollar trending lower. But remember, a good part of the rest of the world's growth is derived from exports. With U.S. domestic demand slowing, this will have a negative effect on the rest of the world's exports (see U. S. Economic and Interest Outlook, May 14, 2007, "The Rest Of The World Is Going To Rejuvenate The U.S. Economy?".) In addition, foreign central banks are tightening their monetary policies, which will slow down their domestic demand growth with a lag. Lastly exports accounted for less than 11-1/2% of real GDP last year - already a record post-war high. If the other 88% of GDP (consumer spending and private domestic investment) is slowing, it is going to take one heck of an acceleration in exports to keep the U.S. economy from stalling out."
The June crude contract expired at the end of Tuesday's trading session. July crude became the front-month contract at the close of the session.
B-P is shutting down 100-thousand barrels a day of its Alaskan oil production for a "few days." The company says it has discovering a water pipeline leak at Prudhoe Bay.
State Street on Tuesday said its monthly global investor confidence index, which measures the buying and selling patterns of institutional investors, fell to 91.2 in May from a revised 93 the previous month. On a regional basis, confidence in North America also fell, but rose in Europe and Asia.
“The market is likely to be tight to 2012, and potentially beyond,” Rio Tinto energy CEO Preston Chiaro said in a presentation posted to the company’s website, citing the World Nuclear Association.
In Cairo last Sunday, Egyptian President Hosni Mubarak warned Cheney against any military confrontation with Iran because it would have "grave repercussions on the region," his spokesman Suleiman Awaad said. Mubarak also told Cheney solving the Palestinian conflict was the key to resolving the rest of the region's crises, Awaad said. Jordan also opposes any military action against Iran, said a Jordanian official after Cheney met with King Abdullah II in Aqaba.
The Justice Department has released a new batch of documents linked to the firings of 8 US attorneys. The documents were apparently released in anticipation of House testimony Wednesday by Monica Goodling, the former counsel for Attorney General Albert Gonzales. Goodling was also the White House liaison. Goodling is under immunity about her role in the firings.
Thomas Friedman: "After all, who can ask more soldiers to sacrifice their lives in Iraq for an administration that wouldn't even sacrifice its politics?"
June gold fell $3.90 to close at $659.90 an ounce Tuesday. July silver fell by 14 cents to close at $12.99 an ounce and July copper closed at $3.3025 a pound, down 2.9%, or 9.8 cents.
June reformulated gasoline was the biggest loser among the energy futures, losing 9.5 cents to close at a one-week low of $2.3063 a gallon Tuesday. June crude fell $1.30 to close at $64.97 a barrel, while July crude, which become the lead-month contract at the session's end, lost $1.36 to $65.51. June natural gas fell 1.4% to close at $7.801 per million British thermal units as traders largely ignored a prediction of an "above-normal" 2007 Atlantic hurricane season.
The biggest worry for the U.S. economy is inflation, and not the possibility of a severe economic slowdown, said Jeffrey Lacker, the president of the Richmond Fed bank. "I don't think the moderation we've seen [on inflation] is statistically significant," Lacker said.
Outback Steakhouse parent OSI Restaurant Partners Inc. said on Tuesday that a group, including Bain Capital, Catterton Partners and OSI's founders, has raised its offer by 3 percent to about $3.18 billion. The investor group raised its offer to $41.15 per share from $40 per share.
The volume of mortgage applications rose 1.6% in the week ended May 18 compared to the prior week, data compiled by the Mortgage Bankers Association show. Also on a seasonally adjusted basis, applications for mortgages to purchase homes increased 1.3% week to week, while refinancing applications were 1.9% higher.
BHP Billiton is in early-stage discussions with Alcan as the Canadian aluminum producer tries to fend off an offer from Alcoa, according to a report in The Globe and Mail newspaper. Alcan CEO Dick Evans told the newspaper that he's had discussions with third parties, and the newspaper said its sources identified BHP as having talks with the Montreal firm.
Crescent Real Estate Equities Co. has agreed to be acquired by funds managed by Morgan Stanley Real Estate for $22.80 per share in a deal valued at roughly $6.5 billion, including debt.
Kirk Kerkorian's firm Tracinda Corp. said it's in talks to buy two of MGM's best-known Las Vegas landmarks, the Bellagio and CityCenter.
The benchmark 10-year Treasury note ended down 10/32 at 97 14/32, yielding 4.829%, up from 4.789% late Monday. In intraday trading, the 10-year yield had risen to 4.831%, the highest level since Feb. 2.
Payless Shoe agrees to buy StrideRite for about $800 million.
According to Bloomberg, Medtronic Inc.will report that its stent for preventing heart attacks didn’t cause blood clots in test, increasing the cardiac-device maker’s chances of expanding its share of the $5.4 billion-a-year worldwide market. Medtronic Inc. reported fiscal fourth-quarter net earnings of $812 million, or 70 cents a share, up 9.7% from $740 million, or 61 cents a share, in the year-ago period. Adjusting for special litigation and restructuring charges and certain income tax benefits, adjusted earnings came in at 66 cents a share in the fiscal fourth quarter of 2007.
Michael Moskow, Pres. of the Chicago Fed: “I see the economy improving as we move through this year,” Moskow said. “Our expectation is that inflation rates will continue to come down as well during this period and I would expect the unemployment rate will not go up a great deal.”
The Bush administration is quietly on track to nearly double the number of combat troops in Iraq this year, an analysis of Pentagon deployment orders showed Monday. The little-noticed second surge, designed to reinforce U.S. troops in Iraq, is being executed by sending more combat brigades and extending tours of duty for troops already there. The actions could boost the number of combat soldiers from 52,500 in early January to as many as 98,000 by the end of this year if the Pentagon overlaps arriving and departing combat brigades. The Decider is once again acting against the will of the American people.
On Sunday, Kuwait said it would decouple its currency, the dinar, from the dollar in order to fight inflation. Its move resonates not just in the Middle East, but as far away as China and Ecuador -- other countries that also tie their economies to moves in the dollar. Will the dollar become a second-class citizen, so to speak?
Warner Music Group is likely to counter a $4.7 billion private equity buyout for long-sought rival EMI Group and turn what looked like a closed deal for the recording company into a new takeover battle, analysts said on Monday. EMI said on Monday it agreed to the offer from Terra Firma, possibly ending a seven-year standoff with smaller competitor Warner Music. Both firms feared regulators would kill any deal. Warner Music, the fourth-largest music company, is evaluating its options after Terra Firma offered to pay 2.4 billion pounds ($4.73 billion) or 265 pence a share in cash to buy No. 3 music group EMI, two sources close to the talks told Reuters. One source said Warner Music, whose acts include Madonna, Red Hot Chili Peppers and Green Day, would consider bidding more than 265 pence per share in the coming weeks. The source said Warner might also wait until Terra Firma was prepared to sell off EMI assets or the company as a whole.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations increased to 24, the highest since June, from 16.5 in April.
Gasoline inventories rose to 195.2 million barrels the week ended May 11, the second consecutive weekly increase, according to a U.S. Energy Department report on May 16. The gain left supplies 7.5 percent below the five year average.
According to Reuters, the FDA will weigh the risks of GlaxoSmithKline diabetes drug Avandia. On Monday, a medical journal reported risks related to the drug. Patients who took Avandia to reduce their blood-sugar levels were 43 percent more likely to have a heart attack than patients who were given other medications or a placebo, the study found.
Puget Sound Energy ratepayers should expect a 13.2 percent increase in their monthly electricity bills triggered by a federal court ruling earlier this month. That ruling by the 9th U.S. Circuit Court of Appeals questioned the legality of Bonneville Power Administration payments to Puget Sound Energy (PSE) and other investor-owned Northwest utilities that collectively serve some 60 percent of the region.
Staples Inc. nudged its profit guidance lower on Tuesday, saying that the pressure to cut costs among consumers and businesses could slow already sluggish U.S. sales.
Halliburton Co. is shifting the company's focus and capital investments away from North America and toward the oil and gas-rich Middle East, its chief executive Dave Lesar said here Tuesday.
Chinese stocks rose to a fresh record high for the second day in a row on Tuesday, as property developers jumped on expectations for a stronger yuan and robust housing demand. The Shanghai Composite Index gained 0.9 percent to 4,110.38, breaking above 4,100 for the first time. The Shenzhen Composite Index climbed 1.4 percent to 1,198.41, also a record high.
Iraq's Vice President Tariq Al Hashimi said Sunday he opposes a draft oil law that is crucial to Iraq's future because it gives too many concessions to international oil companies and the country's regions.
"We have a total of 140 trillion cubic feet of unrisked natural gas resources," said George Kirkland, Chevron's head of exploration, production and gas activities, at the company's annual analyst meeting in March. "With such a significant resource development opportunity, natural gas will play a larger role in our future production. Over the next 20 years natural gas will grow from 30% to nearly 45% of our daily production."
In 2005, Rigzone noted, 94% of the 1.7 billion barrels of oil equivalent that Exxon added to its reserve base came from its natural gas reserves in Qatar.
The International Monetary Fund is still considering whether to sell 400 tons of its gold stocks to help plug a widening income shortfall, the head of the global lender, Rodrigo Rato, said on Monday.
Boris Sobolev: " Average profit margins based on total cash costs fell from 44.95% in Q4/06 to 42.65% in Q1/07. This is at the same time when gold rose from an average price of $613.5/oz in Q4/06 to an average $650/oz in Q1/07 or 5.96% gain. Cash costs were negatively impacted by the industry-wide escalations in labor, spare parts and energy costs, due to the processing of lower grade ores and in some cases lower mine production. So, in fact total cash costs per ounce are rising at a faster rate than the gold price. As a result, most gold producers have become less profitable over the past 2 quarters.This appears to be one of the major reasons why gold stocks have been under-performing the yellow metal. As paradoxical as it may sound, the best thing that can happen to gold producers is an economic slowdown especially if one remembers the anti-cyclical nature of gold.As far as silver producers are concerned, their stock prices have been rising despite decreasing profit margins. But the situation there is quite different in terms of investor expectations.
Paul Kasriel: "I do agree that export growth is likely to pick up near term what with the rest of the world growing strongly and the dollar trending lower. But remember, a good part of the rest of the world's growth is derived from exports. With U.S. domestic demand slowing, this will have a negative effect on the rest of the world's exports (see U. S. Economic and Interest Outlook, May 14, 2007, "The Rest Of The World Is Going To Rejuvenate The U.S. Economy?".) In addition, foreign central banks are tightening their monetary policies, which will slow down their domestic demand growth with a lag. Lastly exports accounted for less than 11-1/2% of real GDP last year - already a record post-war high. If the other 88% of GDP (consumer spending and private domestic investment) is slowing, it is going to take one heck of an acceleration in exports to keep the U.S. economy from stalling out."
The June crude contract expired at the end of Tuesday's trading session. July crude became the front-month contract at the close of the session.
B-P is shutting down 100-thousand barrels a day of its Alaskan oil production for a "few days." The company says it has discovering a water pipeline leak at Prudhoe Bay.
State Street on Tuesday said its monthly global investor confidence index, which measures the buying and selling patterns of institutional investors, fell to 91.2 in May from a revised 93 the previous month. On a regional basis, confidence in North America also fell, but rose in Europe and Asia.
“The market is likely to be tight to 2012, and potentially beyond,” Rio Tinto energy CEO Preston Chiaro said in a presentation posted to the company’s website, citing the World Nuclear Association.
In Cairo last Sunday, Egyptian President Hosni Mubarak warned Cheney against any military confrontation with Iran because it would have "grave repercussions on the region," his spokesman Suleiman Awaad said. Mubarak also told Cheney solving the Palestinian conflict was the key to resolving the rest of the region's crises, Awaad said. Jordan also opposes any military action against Iran, said a Jordanian official after Cheney met with King Abdullah II in Aqaba.
The Justice Department has released a new batch of documents linked to the firings of 8 US attorneys. The documents were apparently released in anticipation of House testimony Wednesday by Monica Goodling, the former counsel for Attorney General Albert Gonzales. Goodling was also the White House liaison. Goodling is under immunity about her role in the firings.
Thomas Friedman: "After all, who can ask more soldiers to sacrifice their lives in Iraq for an administration that wouldn't even sacrifice its politics?"
June gold fell $3.90 to close at $659.90 an ounce Tuesday. July silver fell by 14 cents to close at $12.99 an ounce and July copper closed at $3.3025 a pound, down 2.9%, or 9.8 cents.
June reformulated gasoline was the biggest loser among the energy futures, losing 9.5 cents to close at a one-week low of $2.3063 a gallon Tuesday. June crude fell $1.30 to close at $64.97 a barrel, while July crude, which become the lead-month contract at the session's end, lost $1.36 to $65.51. June natural gas fell 1.4% to close at $7.801 per million British thermal units as traders largely ignored a prediction of an "above-normal" 2007 Atlantic hurricane season.
The biggest worry for the U.S. economy is inflation, and not the possibility of a severe economic slowdown, said Jeffrey Lacker, the president of the Richmond Fed bank. "I don't think the moderation we've seen [on inflation] is statistically significant," Lacker said.
Outback Steakhouse parent OSI Restaurant Partners Inc. said on Tuesday that a group, including Bain Capital, Catterton Partners and OSI's founders, has raised its offer by 3 percent to about $3.18 billion. The investor group raised its offer to $41.15 per share from $40 per share.
The volume of mortgage applications rose 1.6% in the week ended May 18 compared to the prior week, data compiled by the Mortgage Bankers Association show. Also on a seasonally adjusted basis, applications for mortgages to purchase homes increased 1.3% week to week, while refinancing applications were 1.9% higher.
BHP Billiton is in early-stage discussions with Alcan as the Canadian aluminum producer tries to fend off an offer from Alcoa, according to a report in The Globe and Mail newspaper. Alcan CEO Dick Evans told the newspaper that he's had discussions with third parties, and the newspaper said its sources identified BHP as having talks with the Montreal firm.
Crescent Real Estate Equities Co. has agreed to be acquired by funds managed by Morgan Stanley Real Estate for $22.80 per share in a deal valued at roughly $6.5 billion, including debt.
Kirk Kerkorian's firm Tracinda Corp. said it's in talks to buy two of MGM's best-known Las Vegas landmarks, the Bellagio and CityCenter.
The benchmark 10-year Treasury note ended down 10/32 at 97 14/32, yielding 4.829%, up from 4.789% late Monday. In intraday trading, the 10-year yield had risen to 4.831%, the highest level since Feb. 2.
Payless Shoe agrees to buy StrideRite for about $800 million.
Monday, May 21, 2007
More Deals
5/22/07 More Deals
Hologic on Sunday agreed to buy Cytyc in a $6.2 billion deal to create a leading firm in women's healthcare. Terms call for Hologic to pay $16.50 in cash and 0.52 of its own shares for each Cytyc share, which at Friday's prices would value Cytyc at $46.46, a 33% premium. For Hologic's fiscal year 2008, combined revenues are expected to be in excess of $1.7 billion, and combined adjusted earnings per share is expected to be in the range of $2.35 to $2.40.
Carlyle Group's push into Middle East private equity is likely to focus on investments in higher-population countries such as Egypt and Algeria more than on oil-rich Gulf states, according to Harry Alverson, managing director.
Jimmy Carter: "I think as far as the adverse impact on the nation around the world, this administration has been the worst in history."
The average price of self-serve regular gasoline hit a record high of $3.18, rising more than 11 cents over the past two weeks, according to a nationwide survey.
Lowe's said first-quarter profit declined 12% to $739 million, or 48 cents a share, from $841 million, or 53 cents a share. Sales rose 2% to $12.17 billion from $11.92 billion, with comparable-store sales down 6%. For the year, it sees earnings between $1.99 and $2.03 a share on 7% sales growth and a 1% to 2% same-store sales fall.
Logistics company EGL Inc. has received a revised takeover offer from Ceva Group, which is owned by affiliates of Apollo Management, worth $47.50 a share in cash. The firm said a special committee has determined that the offer is superior to a bid of $46.25 a share from its CEO and largest shareholder, James Crane.
Chemicals and ammunition manufacturer Olin Corp. has agreed to buy Pioneer Cos. Inc. for $35 a share. The offer represents a 19.5% premium to the previous closing price of $29.30 a share, which valued the firm at $348 million.
TPG Capital (formerly Texas Pacific Group) and GS Capital Partners will acquire Alltel for $71.50 per share in cash, the company said, in what would be among the largest private equity deals ever. Alltel's stock closed at $65.35 on Friday.
''Shrek the Third'' took in $122 million in its first weekend, breaking the franchise's own record for best debut ever for an animated film, according to studio estimates Sunday.
Six U.S. soldiers and an interpreter were killed Saturday when a bomb exploded near their position in western Baghdad, the U.S. military reported Sunday, underscoring the heightened vulnerability of U.S. forces as they increase their presence in the capital.
A seventh U.S. soldier was killed by a roadside bomb Saturday in Diwaniyah, about 100 miles south of Baghdad, the military said. Two soldiers were wounded in that attack.
The deaths raise to 71 the number of U.S. service members killed this month. According to iCasualties.org, 531 U.S. service members have been killed since Dec. 1, an average of more than three deaths a day. In all, at least 3,421 members of the U.S. military have died since the beginning of the Iraq war in March 2003.
"There is hardly anybody in America left ... who doesn't believe that it was a terrible mistake to invade a country that didn't attack us," Gore said.
Rupert Murdoch's News Corp. may be preparing to walk away from a $5 billion bid for Dow Jones & Co. after trying without success to win support from the Bancroft family, which controls the publisher of the Wall Street Journal. News Corp. ``is increasingly frustrated'' with the failure of family members to respond to overtures by Murdoch, Pali Research analyst Richard Greenfield wrote today in a note to investors.
Canada's dollar rose to the strongest level in almost 30 years as surging demand for commodities and persistent economic growth boosts speculation the nation's central bank will increase borrowing costs this year.
According to the Financial Times, European service-sector companies are even more optimistic about prospects for sales, profits, employment and investment than a year ago, according to a closely watched business survey from NTC Economics.The build-up in economic momentum across Europe is reflected in companies’ expectation that staff costs will accelerate, with fewer than one in 10 surveyed expecting slower inflation in wages.
To pay for this, many are expecting to raise prices in the next 12 months.
John Hussman: "There is, in fact, no stable relationship between earnings yields and interest rates. The relationship is actually negative in data since 1929, is marginally positive (but statistically insignificant) in data since 1950, and is only strongly positive in data from 1980 through 2000 as a statistical artifact of the disinflationary period from 1980 to 2000...Proponents of the Fed Model ignore pre-1980 data entirely. That period since 1980 on the above chart is the entire basis for the analysis. In effect, the Fed Model looks at the decline in earnings yields since 1980, and loads the entire explanation on the decline in interest rates. What actually happened is that you had a second factor – the move from extreme undervaluation (abnormally high earnings yields) to extreme overvaluation (abnormally low earnings yields). The true “fair value” relationship between earnings yields and interest rates is nothing close to 1-for-1...In fact, I discovered a few years ago that the main usefulness of the Fed Model is to identify risks in the bond market – specifically, when stock yields are low but the Fed Model gives a “buy signal” anyway, it is evidence that bond yields are unusually depressed. That signal is typically followed by poor bond market performance (with no reliable implication for stocks)...Since 1980, the difference between the S&P 500 earnings yield and the 10-year Treasury yield explains just 6% of the variability in subsequent 2-year total returns (leaving 94% of the variability unaccounted for), and just 3% of the variability in subsequent 10-year returns. If we look back to 1950, we find that the difference between the S&P 500 earnings yield and the 10-year Treasury yield explains just 3% of the variability in subsequent 2-year returns, and just 6% of the variability in subsequent 10-year returns. Adherents of the Fed Model might as well toss a coin to predict whether subsequent returns will be above or below average."
Saudi Basic Industries Corp., the world's biggest chemical company by market value, agreed to buy General Electric Co.'s plastics unit for $11.6 billion.
A forecast released today by the National Association for Business Economics puts the growth of the gross domestic product at 2.2 percent for this year. The rate was 2.7 percent in the group's previous survey, in February.
Google Inc. captured 55.2% of all Internet searches in April, while Yahoo Inc. logged a 21.9% share, according to a monthly tally released Monday by Nielsen/NetRatings Inc. Microsoft's MSN/Windows Live Search had a 9% share in April, good for third place, NetRatings said.
June gold gained $1.80 to close at $663.80 an ounce Monday. July silver gained 12.7 cents to close at $13.13 an ounce and June copper rose 7.7 cents to end at $3.4005 a pound.
Crude gained $1.33 to $66.27, while natural gas declined 3 cents to $7.91.
Dynegy Inc.said that Chevron U.S.A. Inc., a subsidiary of Chevron Corp., plans to sell all of its 96.9 million shares of Dynegy's Class A common stock in an underwritten public offering.
Al Gore: "A president who breaks the law is a threat to the very structure of our government."
Hologic on Sunday agreed to buy Cytyc in a $6.2 billion deal to create a leading firm in women's healthcare. Terms call for Hologic to pay $16.50 in cash and 0.52 of its own shares for each Cytyc share, which at Friday's prices would value Cytyc at $46.46, a 33% premium. For Hologic's fiscal year 2008, combined revenues are expected to be in excess of $1.7 billion, and combined adjusted earnings per share is expected to be in the range of $2.35 to $2.40.
Carlyle Group's push into Middle East private equity is likely to focus on investments in higher-population countries such as Egypt and Algeria more than on oil-rich Gulf states, according to Harry Alverson, managing director.
Jimmy Carter: "I think as far as the adverse impact on the nation around the world, this administration has been the worst in history."
The average price of self-serve regular gasoline hit a record high of $3.18, rising more than 11 cents over the past two weeks, according to a nationwide survey.
Lowe's said first-quarter profit declined 12% to $739 million, or 48 cents a share, from $841 million, or 53 cents a share. Sales rose 2% to $12.17 billion from $11.92 billion, with comparable-store sales down 6%. For the year, it sees earnings between $1.99 and $2.03 a share on 7% sales growth and a 1% to 2% same-store sales fall.
Logistics company EGL Inc. has received a revised takeover offer from Ceva Group, which is owned by affiliates of Apollo Management, worth $47.50 a share in cash. The firm said a special committee has determined that the offer is superior to a bid of $46.25 a share from its CEO and largest shareholder, James Crane.
Chemicals and ammunition manufacturer Olin Corp. has agreed to buy Pioneer Cos. Inc. for $35 a share. The offer represents a 19.5% premium to the previous closing price of $29.30 a share, which valued the firm at $348 million.
TPG Capital (formerly Texas Pacific Group) and GS Capital Partners will acquire Alltel for $71.50 per share in cash, the company said, in what would be among the largest private equity deals ever. Alltel's stock closed at $65.35 on Friday.
''Shrek the Third'' took in $122 million in its first weekend, breaking the franchise's own record for best debut ever for an animated film, according to studio estimates Sunday.
Six U.S. soldiers and an interpreter were killed Saturday when a bomb exploded near their position in western Baghdad, the U.S. military reported Sunday, underscoring the heightened vulnerability of U.S. forces as they increase their presence in the capital.
A seventh U.S. soldier was killed by a roadside bomb Saturday in Diwaniyah, about 100 miles south of Baghdad, the military said. Two soldiers were wounded in that attack.
The deaths raise to 71 the number of U.S. service members killed this month. According to iCasualties.org, 531 U.S. service members have been killed since Dec. 1, an average of more than three deaths a day. In all, at least 3,421 members of the U.S. military have died since the beginning of the Iraq war in March 2003.
"There is hardly anybody in America left ... who doesn't believe that it was a terrible mistake to invade a country that didn't attack us," Gore said.
Rupert Murdoch's News Corp. may be preparing to walk away from a $5 billion bid for Dow Jones & Co. after trying without success to win support from the Bancroft family, which controls the publisher of the Wall Street Journal. News Corp. ``is increasingly frustrated'' with the failure of family members to respond to overtures by Murdoch, Pali Research analyst Richard Greenfield wrote today in a note to investors.
Canada's dollar rose to the strongest level in almost 30 years as surging demand for commodities and persistent economic growth boosts speculation the nation's central bank will increase borrowing costs this year.
According to the Financial Times, European service-sector companies are even more optimistic about prospects for sales, profits, employment and investment than a year ago, according to a closely watched business survey from NTC Economics.The build-up in economic momentum across Europe is reflected in companies’ expectation that staff costs will accelerate, with fewer than one in 10 surveyed expecting slower inflation in wages.
To pay for this, many are expecting to raise prices in the next 12 months.
John Hussman: "There is, in fact, no stable relationship between earnings yields and interest rates. The relationship is actually negative in data since 1929, is marginally positive (but statistically insignificant) in data since 1950, and is only strongly positive in data from 1980 through 2000 as a statistical artifact of the disinflationary period from 1980 to 2000...Proponents of the Fed Model ignore pre-1980 data entirely. That period since 1980 on the above chart is the entire basis for the analysis. In effect, the Fed Model looks at the decline in earnings yields since 1980, and loads the entire explanation on the decline in interest rates. What actually happened is that you had a second factor – the move from extreme undervaluation (abnormally high earnings yields) to extreme overvaluation (abnormally low earnings yields). The true “fair value” relationship between earnings yields and interest rates is nothing close to 1-for-1...In fact, I discovered a few years ago that the main usefulness of the Fed Model is to identify risks in the bond market – specifically, when stock yields are low but the Fed Model gives a “buy signal” anyway, it is evidence that bond yields are unusually depressed. That signal is typically followed by poor bond market performance (with no reliable implication for stocks)...Since 1980, the difference between the S&P 500 earnings yield and the 10-year Treasury yield explains just 6% of the variability in subsequent 2-year total returns (leaving 94% of the variability unaccounted for), and just 3% of the variability in subsequent 10-year returns. If we look back to 1950, we find that the difference between the S&P 500 earnings yield and the 10-year Treasury yield explains just 3% of the variability in subsequent 2-year returns, and just 6% of the variability in subsequent 10-year returns. Adherents of the Fed Model might as well toss a coin to predict whether subsequent returns will be above or below average."
Saudi Basic Industries Corp., the world's biggest chemical company by market value, agreed to buy General Electric Co.'s plastics unit for $11.6 billion.
A forecast released today by the National Association for Business Economics puts the growth of the gross domestic product at 2.2 percent for this year. The rate was 2.7 percent in the group's previous survey, in February.
Google Inc. captured 55.2% of all Internet searches in April, while Yahoo Inc. logged a 21.9% share, according to a monthly tally released Monday by Nielsen/NetRatings Inc. Microsoft's MSN/Windows Live Search had a 9% share in April, good for third place, NetRatings said.
June gold gained $1.80 to close at $663.80 an ounce Monday. July silver gained 12.7 cents to close at $13.13 an ounce and June copper rose 7.7 cents to end at $3.4005 a pound.
Crude gained $1.33 to $66.27, while natural gas declined 3 cents to $7.91.
Dynegy Inc.said that Chevron U.S.A. Inc., a subsidiary of Chevron Corp., plans to sell all of its 96.9 million shares of Dynegy's Class A common stock in an underwritten public offering.
Al Gore: "A president who breaks the law is a threat to the very structure of our government."
Sunday, May 20, 2007
Analysis
5/21/07 Analysis
Between The Hedges: "The 50-week moving average of the percentage of bears iscurrently 37.6%, a very high level seen during only two other periods since tracking began in the 1980s. Those periods were October 1990-July 1991 and March-May 2003, both of which were near major market bottoms. The extreme readings in the50-week moving average of the percentage of bears, during those periods, peaked at 41.6% on Jan. 31, 1991 and 38.1% on April 10, 2003. We are very close to eclipsing the peak in bearish sentiment during the 2000-03 market meltdown, which is astonishing considering the macro backdrop now and then. I continue to find that steadfastly high bearish sentiment in many quarters mind-boggling for the following reasons:
· The 26.6% rise in the S&P 500 in just over 11 months,
· The 106.8% gain for the S&P 500 since the 2002 major bear market lows,
· The NYSE cumulative advance/decline line hit a new record high Wednesday of last week,
· All market-caps and styles are participating,
· The market had one of the best August/September/October runs in U.S. history,
· The Dow made another all-time high yesterday and,
· We are in the early stages of what is historically a very strong period for U.S. equities after a midterm election.
As well, despite recent gains, the forward P/E on the S&P 500 is a very reasonable 16.3, close to where it began the year(16.2), due to the historic run of double-digit profit growth increases and better-than-expected earnings and guidance in the first quarter. The S&P P/E multiple has contracted for three consecutive years. It has only contracted four consecutive years two times since 1905. Each point of multiple expansion is equivalent to a 6.6% gain in the S&P 500. I strongly suspect we will finally see expansion this year. The many bears still remain stunningly complacent, in my opinion... I still expect the S&P 500 to return a total of around 17% for the year...
I still believe the coming bullish shift in long-term sentiment with respect to U.S. stocks will result in the "mother of all short-covering rallies."
In a statement on Saturday, Genesis Healthcare said its board determined that Formation-JER's $69.35 proposal is superior to that of Fillmore and urged holders to accept the $69.35-a-share deal.
A nanocomposite particle can be constructed so that it has a mix of properties that would not otherwise happen in nature. By combining an organic matrix with
metallic clusters that can absorb light, it is possible to incorporate such
particles into cells and then destroy those targeted cells with a laser. In
a presentation at the NSTI Nanotech 2007 Conference, researchers describe
work conducted at the NanoBiotechnology Center, Department of Radiation
Medicine, Roswell Park Cancer Institute, Buffalo, NY and the University of
Michigan, Ann Arbor, MI, regarding the creation and characterization of a
dendrimer nanocomposite (DNC) matrix containing silver clusters that can be
used to target and destroy melanoma cancer cells.
Composite NanoDevices (CNDs), are an emerging class of hybrid
nanoparticulate materials. CNDs are made from dendrimer-based polymers, for
example from poly(amidoamine) [(PAMAMs)].
To visualize the device, Dr. Lajos P. Balogh says simply think of
nanoscale, dense, but soft "tumbleweed," where clusters of inorganic
materials (such as silver) can be trapped inside. The CND "tumbleweed"
device can be made in discrete sizes, carry different electric charges and
can encapsulate different materials inside. This design offers researchers
a wider choice of size, surface functionality and payload than traditional
small in vivo devices where the agent is conjugated directly to the
surface.
A laser can be used to kill cells indiscriminately, but it is really a
blunt instrument. High powered lasers do so much damage that the tissue
becomes opaque to further light. Yet, lower-powered lasers do not deliver
enough energy to kill cells. By labeling cells with CNDs, light absorption
can be selectively and locally enhanced wherever composite nanodevices are
present. Irradiation of the mix of labeled and unlabeled cells by laser
light, causes tiny bubbles to form that disrupt and damage the labeled
cells, but leave unlabeled cells unaffected. This technology holds promise
as an alternative therapy for cancer patients.
According to Dr. Balogh, "The DNC is a multi-functional platform.
Because it can carry multiple agents inside, yet present a simple outer
surface to the body, it can be programmed to deliver those agents to a
particular organ or tissue."
The Telegraph newspaper in the UK is reporting the Yahoo! may pay $1 billion for social network operation Bebo.
Mike Burk: "The small cap indices have been down for two weeks in a row, many of the short term indicators appear to have bottomed and seasonal strength kicks in the second half of the week. I expect the major indices to be higher on Friday May 25 than they were on Friday May 18."
Kevin Duffy: "The real inflationary action, however, is in credit expansion. For example, in the last 6 years, the Federal Reserve has grown its balance sheet less than $300 billion while the nation's money supply has expanded by $4.3 trillion, or 14 times as much. In other words, the central banker can bait the hook, but lenders and borrowers still have to take the bait...The trouble with pyramid schemes is that they're not designed to go in reverse. Eventually, the number of willing dupes is exhausted. The same people who panicked late to get into the game are just as likely to panic when the music stops. The longer the music plays, the more leveraged and unstable the inverted credit pyramid becomes. As the late economist Hyman Minsky observed, "stability is unstable."... In the past six years, the Fed grew its balance sheet 50%, money supply expanded 60%, and the Top Five investments banks increased total assets by 160%. In the latest quarter, the total assets of Goldman Sachs exceeded total bank credit at the Fed for the first time...As the great Austrian economist Ludwig von Mises warned, "There is no means of avoiding the final collapse of a boom brought about by credit expansion."
Thirteen state Democratic parties have now passed resolutions demanding impeachment, nine of them since Nancy Pelosi ordered the Democratic Party away from impeachment.
Former counsel to Alberto Gonzales and Justice Department liaison to the White House Monica Goodling will testify before the House Judiciary Committee on May 23.
Arab American News: "This Shi'a power will result in a huge Sunni backlash — as shown by the actions of such Sunni organizations as the Taliban and al-Qaeda — and if anything, will strengthen anti-Americanism in the region, as the revival comes at a time of rising Sunni extremism. Anti-Shi'a feelings and actions by the extremists will hurt the U.S., as anti-Shi'a feelings will solidify Sunni public opinion and expand the influence of groups such as al-Qaeda."
Deputy U.S. Treasury Secretary Robert Kimmitt: "I informed my colleagues that our fiscal deficit continues to decline and the U.S. economy is making the transition to a sustainable growth path," Kimmitt said. "While the economy grew modestly in the first quarter, we are confident it will return toward trend over the year. We see evidence that housing is stabilizing and that rising delinquencies in the subprime mortgage market have not spread more generally. Inflation remains contained and the job market is strong."
Capitalia's main stockholders approved UniCredit's offer of 1.12 of its own shares for each Capitalia share, Giovanni Puglisi, head of investor Fondazione Banco di Sicilia, said in an interview. That values Capitalia shares at 8.41 euros each, or 6.2 percent more than the closing price on May 17.
Atlantic Free Press: "Iran's oil reserves are considerable and they provide 80-90% of export earnings for the country and over 40% of the government budget. Iran is OPEC's second largest oil producer, operates OPEC's largest tanker fleet and has proven oil reserves amounting to 10% of the world total. Note that the vast majority of Iran's oil reserves are located in the southwestern Khuzestan region which is near the Iraqi border. Current crude oil production capacity is about 3.8 million bbl/d which is approximately 60% of 1974 levels. The effects of two wars (Iran-Iraq, Gulf War,) economic sanctions and government mismanagement since the 1978/9 revolution are thereby highlighted. According to the DOE, "Iran's existing oil fields have a natural decline rate estimated at 8 percent onshore and 10 percent per year offshore. The fields are in need of upgrading, modernization, and enhanced oil recovery (EOR) efforts such as gas reinjection." EOR is particularly important as 60% of Iran's oil fields are more than 50 years old. Current recovery rates are approximately 2/3 of the industry world wide average. Iranian oil exports are managed through complicated buy back and swap contracts, Turkmenistan and Kazakhstan figure prominently in the latter arrangements. The Iranian constitution prohibits the granting of petroleum rights on a concessionary basis or direct equity stake.
Iran exports crude from four large terminals of which the famous Kharg Island is by far the largest and whose capacity is under expansion. Iran's' largest oil buyers are Japan, China, South Korea and Italy in that order. The Azadegan field in Khuzistan (adjacent to Iraq border) discovered in 1999 is the largest oil reserve find in 30 years. Japan will figure prominently in its development but there are still disagreements over mine clearing. First production of medium sour crude might come online in 2009, or 2010. A very large, shallow water offshore discovery at Dasht-e Abadan near the port city of Abadan may be of a magnitude comparable to Azadegan. Regarding the important oil discoveries in the Caspian Sea, Iran is the only country that can provide a pipeline route between the Caspian Sea and the Persian Gulf... Iran is an importer of gasoline due to a shortage of refinery capacity... Iran is the second largest importer in the world of gasoline after the United States.
Iran has an estimated 970 trillion cubic feet (Tcf) in proven natural gas reserves, second only to Russia. According to DOE data, perhaps 62% of these gas fields have yet to be developed."
Between The Hedges: "The 50-week moving average of the percentage of bears iscurrently 37.6%, a very high level seen during only two other periods since tracking began in the 1980s. Those periods were October 1990-July 1991 and March-May 2003, both of which were near major market bottoms. The extreme readings in the50-week moving average of the percentage of bears, during those periods, peaked at 41.6% on Jan. 31, 1991 and 38.1% on April 10, 2003. We are very close to eclipsing the peak in bearish sentiment during the 2000-03 market meltdown, which is astonishing considering the macro backdrop now and then. I continue to find that steadfastly high bearish sentiment in many quarters mind-boggling for the following reasons:
· The 26.6% rise in the S&P 500 in just over 11 months,
· The 106.8% gain for the S&P 500 since the 2002 major bear market lows,
· The NYSE cumulative advance/decline line hit a new record high Wednesday of last week,
· All market-caps and styles are participating,
· The market had one of the best August/September/October runs in U.S. history,
· The Dow made another all-time high yesterday and,
· We are in the early stages of what is historically a very strong period for U.S. equities after a midterm election.
As well, despite recent gains, the forward P/E on the S&P 500 is a very reasonable 16.3, close to where it began the year(16.2), due to the historic run of double-digit profit growth increases and better-than-expected earnings and guidance in the first quarter. The S&P P/E multiple has contracted for three consecutive years. It has only contracted four consecutive years two times since 1905. Each point of multiple expansion is equivalent to a 6.6% gain in the S&P 500. I strongly suspect we will finally see expansion this year. The many bears still remain stunningly complacent, in my opinion... I still expect the S&P 500 to return a total of around 17% for the year...
I still believe the coming bullish shift in long-term sentiment with respect to U.S. stocks will result in the "mother of all short-covering rallies."
In a statement on Saturday, Genesis Healthcare said its board determined that Formation-JER's $69.35 proposal is superior to that of Fillmore and urged holders to accept the $69.35-a-share deal.
A nanocomposite particle can be constructed so that it has a mix of properties that would not otherwise happen in nature. By combining an organic matrix with
metallic clusters that can absorb light, it is possible to incorporate such
particles into cells and then destroy those targeted cells with a laser. In
a presentation at the NSTI Nanotech 2007 Conference, researchers describe
work conducted at the NanoBiotechnology Center, Department of Radiation
Medicine, Roswell Park Cancer Institute, Buffalo, NY and the University of
Michigan, Ann Arbor, MI, regarding the creation and characterization of a
dendrimer nanocomposite (DNC) matrix containing silver clusters that can be
used to target and destroy melanoma cancer cells.
Composite NanoDevices (CNDs), are an emerging class of hybrid
nanoparticulate materials. CNDs are made from dendrimer-based polymers, for
example from poly(amidoamine) [(PAMAMs)].
To visualize the device, Dr. Lajos P. Balogh says simply think of
nanoscale, dense, but soft "tumbleweed," where clusters of inorganic
materials (such as silver) can be trapped inside. The CND "tumbleweed"
device can be made in discrete sizes, carry different electric charges and
can encapsulate different materials inside. This design offers researchers
a wider choice of size, surface functionality and payload than traditional
small in vivo devices where the agent is conjugated directly to the
surface.
A laser can be used to kill cells indiscriminately, but it is really a
blunt instrument. High powered lasers do so much damage that the tissue
becomes opaque to further light. Yet, lower-powered lasers do not deliver
enough energy to kill cells. By labeling cells with CNDs, light absorption
can be selectively and locally enhanced wherever composite nanodevices are
present. Irradiation of the mix of labeled and unlabeled cells by laser
light, causes tiny bubbles to form that disrupt and damage the labeled
cells, but leave unlabeled cells unaffected. This technology holds promise
as an alternative therapy for cancer patients.
According to Dr. Balogh, "The DNC is a multi-functional platform.
Because it can carry multiple agents inside, yet present a simple outer
surface to the body, it can be programmed to deliver those agents to a
particular organ or tissue."
The Telegraph newspaper in the UK is reporting the Yahoo! may pay $1 billion for social network operation Bebo.
Mike Burk: "The small cap indices have been down for two weeks in a row, many of the short term indicators appear to have bottomed and seasonal strength kicks in the second half of the week. I expect the major indices to be higher on Friday May 25 than they were on Friday May 18."
Kevin Duffy: "The real inflationary action, however, is in credit expansion. For example, in the last 6 years, the Federal Reserve has grown its balance sheet less than $300 billion while the nation's money supply has expanded by $4.3 trillion, or 14 times as much. In other words, the central banker can bait the hook, but lenders and borrowers still have to take the bait...The trouble with pyramid schemes is that they're not designed to go in reverse. Eventually, the number of willing dupes is exhausted. The same people who panicked late to get into the game are just as likely to panic when the music stops. The longer the music plays, the more leveraged and unstable the inverted credit pyramid becomes. As the late economist Hyman Minsky observed, "stability is unstable."... In the past six years, the Fed grew its balance sheet 50%, money supply expanded 60%, and the Top Five investments banks increased total assets by 160%. In the latest quarter, the total assets of Goldman Sachs exceeded total bank credit at the Fed for the first time...As the great Austrian economist Ludwig von Mises warned, "There is no means of avoiding the final collapse of a boom brought about by credit expansion."
Thirteen state Democratic parties have now passed resolutions demanding impeachment, nine of them since Nancy Pelosi ordered the Democratic Party away from impeachment.
Former counsel to Alberto Gonzales and Justice Department liaison to the White House Monica Goodling will testify before the House Judiciary Committee on May 23.
Arab American News: "This Shi'a power will result in a huge Sunni backlash — as shown by the actions of such Sunni organizations as the Taliban and al-Qaeda — and if anything, will strengthen anti-Americanism in the region, as the revival comes at a time of rising Sunni extremism. Anti-Shi'a feelings and actions by the extremists will hurt the U.S., as anti-Shi'a feelings will solidify Sunni public opinion and expand the influence of groups such as al-Qaeda."
Deputy U.S. Treasury Secretary Robert Kimmitt: "I informed my colleagues that our fiscal deficit continues to decline and the U.S. economy is making the transition to a sustainable growth path," Kimmitt said. "While the economy grew modestly in the first quarter, we are confident it will return toward trend over the year. We see evidence that housing is stabilizing and that rising delinquencies in the subprime mortgage market have not spread more generally. Inflation remains contained and the job market is strong."
Capitalia's main stockholders approved UniCredit's offer of 1.12 of its own shares for each Capitalia share, Giovanni Puglisi, head of investor Fondazione Banco di Sicilia, said in an interview. That values Capitalia shares at 8.41 euros each, or 6.2 percent more than the closing price on May 17.
Atlantic Free Press: "Iran's oil reserves are considerable and they provide 80-90% of export earnings for the country and over 40% of the government budget. Iran is OPEC's second largest oil producer, operates OPEC's largest tanker fleet and has proven oil reserves amounting to 10% of the world total. Note that the vast majority of Iran's oil reserves are located in the southwestern Khuzestan region which is near the Iraqi border. Current crude oil production capacity is about 3.8 million bbl/d which is approximately 60% of 1974 levels. The effects of two wars (Iran-Iraq, Gulf War,) economic sanctions and government mismanagement since the 1978/9 revolution are thereby highlighted. According to the DOE, "Iran's existing oil fields have a natural decline rate estimated at 8 percent onshore and 10 percent per year offshore. The fields are in need of upgrading, modernization, and enhanced oil recovery (EOR) efforts such as gas reinjection." EOR is particularly important as 60% of Iran's oil fields are more than 50 years old. Current recovery rates are approximately 2/3 of the industry world wide average. Iranian oil exports are managed through complicated buy back and swap contracts, Turkmenistan and Kazakhstan figure prominently in the latter arrangements. The Iranian constitution prohibits the granting of petroleum rights on a concessionary basis or direct equity stake.
Iran exports crude from four large terminals of which the famous Kharg Island is by far the largest and whose capacity is under expansion. Iran's' largest oil buyers are Japan, China, South Korea and Italy in that order. The Azadegan field in Khuzistan (adjacent to Iraq border) discovered in 1999 is the largest oil reserve find in 30 years. Japan will figure prominently in its development but there are still disagreements over mine clearing. First production of medium sour crude might come online in 2009, or 2010. A very large, shallow water offshore discovery at Dasht-e Abadan near the port city of Abadan may be of a magnitude comparable to Azadegan. Regarding the important oil discoveries in the Caspian Sea, Iran is the only country that can provide a pipeline route between the Caspian Sea and the Persian Gulf... Iran is an importer of gasoline due to a shortage of refinery capacity... Iran is the second largest importer in the world of gasoline after the United States.
Iran has an estimated 970 trillion cubic feet (Tcf) in proven natural gas reserves, second only to Russia. According to DOE data, perhaps 62% of these gas fields have yet to be developed."
Saturday, May 19, 2007
Opinions
5/20/07 Opinions
"We believe the odds of a deal happening over time actually increases," Goldman Sachs analyst Anthony Noto said in a note to clients after news of Microsoft's acquisition of online advertising company aQuantive. Stifel Nicolaus analyst Scott Devitt was skeptical, however, saying Microsoft's $6 billion deal, its largest-ever acquisition, could be a prelude to a series of deals in which Microsoft assembles its own alternative to Yahoo.
"Paul Wolfowitz's problems at the World Bank stem in part from a widespread perception that he disproportionately represents U.S. interests rather than objectives that command a global consensus," declared a letter signed this week by more than 200 people -- including heads of aid organizations -- and sent to the executive boards of the World Bank and the IMF. It called for the traditional arrangement to be "abandoned and replaced with selection procedures that reflect two key principles: transparency of process, and competence of prospective leadership without regard to national origin." The U.S. is asking Canada and other countries about who should replace Paul Wolfowitz as the World Bank's president, Canadian Finance Minister Jim Flaherty said.
The implied yield on 3-month December ’07 Eurodollars jumped 9 bps to 5.205%, the highest level since the end of January. This is certainly an alternative to equities worth considering.
Doug Noland: "In this performance-based financial world in which we now operate, one can only sit gingerly on the sideline for so long before the strain of underperformance becomes too much to bear. To be sure, we are witnessing in real time the propensity for unchecked Credit Bubbles to (more than) sustain themselves for significantly longer than discerning analysts ever imagined - and how the resulting interplay of endless liquidity, embedded asset inflation, and speculative market dynamics inherently fosters “blow-off” excess. These dynamics were at play in the U.S. bond market back in 1993, various emerging markets throughout the nineties, tech/telecom in 1999/early-2000, and more recently in U.S. subprime and global M&A. The Fed has apparently learned little."
The NY Times reported the total number of contractors killed in Iraq climbed to at least 917, along with more than 12,000 wounded in battle or injured on the job.
Venezuela's revenues from crude exports by the state oil company fell 10 percent in the first three months of this year amid lower prices, OPEC-mandated production cuts and reports of falling production at the South American country.
Deutsche Bank's Paul Sankey: "Anybody who blames record high US gasoline prices on "gouging" at the pump simply reveals their total ignorance of global oil supply and demand fundamentals. The real reason for high pump prices is the lack of global gasoline supply relative to demand. Just in the US, overall US refining capacity, at 17 million barrels per day (mb/d), is far below demand at 22 mb/d. In turn, pump prices are effectively set by import prices. With strong demand outside the US on the back of global economic growth and a weak dollar, the era of abundant US oil supply augmented by willing international sellers is dead."
China has agreed to place $3bn of its massive foreign exchange reserves with Blackstone, US-based private equity group.
The U.S. command said Saturday five more American soldiers were killed. One died Saturday from a roadside bomb south of Baghdad. Four died Friday — one in the western province of Anbar, one by small arms fire south of the capital and two by a roadside bomb and small arms fire in northwestern Baghdad, the military said.
"Consolidation in the online ad industry and products from Google and Yahoo for selling ads in online auctions may pressure Westlake Village, California-based ValueClick to sell itself, Richard Fetyko, an analyst Merriman Curhan Ford & Co., wrote in a note to clients. One might consider selling the September 20 puts for 45 cents. The stock closed at $30.50.
I was pondering about rail car loadings being down 4.3% year over year for 2007-to-date (thru first week of May) and the first week of May is down 4.9% year over year. Yet, looking at the rail stocks, you'd think business is great. I know about the Buffett effect. I remember Buffett on US Airways. Maybe transportation isn't his forte. "What was a terrible business 30 years ago ... will never be a sensational business," Buffett said. Still, he said, "the competitive position of railroads has improved somewhat."
John Mauldin: "The housing market is still slowing. Consumer spending is slowing. Overall inflation seems to be rising, which will make it difficult for the Fed to cut rates in what seems to be an ever-closer recession. Call me old-fashioned, but this is not the environment that has been positive for the stock market in the past. Maybe things are different, and I am just missing it. And as for a recession, are we there yet? Maybe, or at least close enough that we should fasten our seatbelts in preparation for a landing. (As the flight attendant just told me - I am somewhere over the mountains in California) Let me tell you now the spin you will hear in a few months if we find that we are in or close to recession numbers (not that the under 1% we saw last quarter wasn't close):"It's only a technical recession because of the high inflation numbers caused by energy and food. If you take those out the economy is just fine. And please buy my stock, fund, etc. because things are going to get better." You gotta love it."
Rob Kirby points out “President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.”
Ted Butler: "Silver is more manipulated, due to the concentrated short position. Since last summer, while the ETF added more than 60 million ounces (to 134 million), the 4 or less big traders on the COMEX added more than 60 million ounces to their net short silver position (to 230 million)."
"We believe the odds of a deal happening over time actually increases," Goldman Sachs analyst Anthony Noto said in a note to clients after news of Microsoft's acquisition of online advertising company aQuantive. Stifel Nicolaus analyst Scott Devitt was skeptical, however, saying Microsoft's $6 billion deal, its largest-ever acquisition, could be a prelude to a series of deals in which Microsoft assembles its own alternative to Yahoo.
"Paul Wolfowitz's problems at the World Bank stem in part from a widespread perception that he disproportionately represents U.S. interests rather than objectives that command a global consensus," declared a letter signed this week by more than 200 people -- including heads of aid organizations -- and sent to the executive boards of the World Bank and the IMF. It called for the traditional arrangement to be "abandoned and replaced with selection procedures that reflect two key principles: transparency of process, and competence of prospective leadership without regard to national origin." The U.S. is asking Canada and other countries about who should replace Paul Wolfowitz as the World Bank's president, Canadian Finance Minister Jim Flaherty said.
The implied yield on 3-month December ’07 Eurodollars jumped 9 bps to 5.205%, the highest level since the end of January. This is certainly an alternative to equities worth considering.
Doug Noland: "In this performance-based financial world in which we now operate, one can only sit gingerly on the sideline for so long before the strain of underperformance becomes too much to bear. To be sure, we are witnessing in real time the propensity for unchecked Credit Bubbles to (more than) sustain themselves for significantly longer than discerning analysts ever imagined - and how the resulting interplay of endless liquidity, embedded asset inflation, and speculative market dynamics inherently fosters “blow-off” excess. These dynamics were at play in the U.S. bond market back in 1993, various emerging markets throughout the nineties, tech/telecom in 1999/early-2000, and more recently in U.S. subprime and global M&A. The Fed has apparently learned little."
The NY Times reported the total number of contractors killed in Iraq climbed to at least 917, along with more than 12,000 wounded in battle or injured on the job.
Venezuela's revenues from crude exports by the state oil company fell 10 percent in the first three months of this year amid lower prices, OPEC-mandated production cuts and reports of falling production at the South American country.
Deutsche Bank's Paul Sankey: "Anybody who blames record high US gasoline prices on "gouging" at the pump simply reveals their total ignorance of global oil supply and demand fundamentals. The real reason for high pump prices is the lack of global gasoline supply relative to demand. Just in the US, overall US refining capacity, at 17 million barrels per day (mb/d), is far below demand at 22 mb/d. In turn, pump prices are effectively set by import prices. With strong demand outside the US on the back of global economic growth and a weak dollar, the era of abundant US oil supply augmented by willing international sellers is dead."
China has agreed to place $3bn of its massive foreign exchange reserves with Blackstone, US-based private equity group.
The U.S. command said Saturday five more American soldiers were killed. One died Saturday from a roadside bomb south of Baghdad. Four died Friday — one in the western province of Anbar, one by small arms fire south of the capital and two by a roadside bomb and small arms fire in northwestern Baghdad, the military said.
"Consolidation in the online ad industry and products from Google and Yahoo for selling ads in online auctions may pressure Westlake Village, California-based ValueClick to sell itself, Richard Fetyko, an analyst Merriman Curhan Ford & Co., wrote in a note to clients. One might consider selling the September 20 puts for 45 cents. The stock closed at $30.50.
I was pondering about rail car loadings being down 4.3% year over year for 2007-to-date (thru first week of May) and the first week of May is down 4.9% year over year. Yet, looking at the rail stocks, you'd think business is great. I know about the Buffett effect. I remember Buffett on US Airways. Maybe transportation isn't his forte. "What was a terrible business 30 years ago ... will never be a sensational business," Buffett said. Still, he said, "the competitive position of railroads has improved somewhat."
John Mauldin: "The housing market is still slowing. Consumer spending is slowing. Overall inflation seems to be rising, which will make it difficult for the Fed to cut rates in what seems to be an ever-closer recession. Call me old-fashioned, but this is not the environment that has been positive for the stock market in the past. Maybe things are different, and I am just missing it. And as for a recession, are we there yet? Maybe, or at least close enough that we should fasten our seatbelts in preparation for a landing. (As the flight attendant just told me - I am somewhere over the mountains in California) Let me tell you now the spin you will hear in a few months if we find that we are in or close to recession numbers (not that the under 1% we saw last quarter wasn't close):"It's only a technical recession because of the high inflation numbers caused by energy and food. If you take those out the economy is just fine. And please buy my stock, fund, etc. because things are going to get better." You gotta love it."
Rob Kirby points out “President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.”
Ted Butler: "Silver is more manipulated, due to the concentrated short position. Since last summer, while the ETF added more than 60 million ounces (to 134 million), the 4 or less big traders on the COMEX added more than 60 million ounces to their net short silver position (to 230 million)."
Friday, May 18, 2007
Iraq
5/19/07 Iraq
Reuters reported that, according to a leading British think-tank, Iraq's government has lost control of vast areas to powerful local factions and the country is on the verge of collapse and fragmentation.
http://news.yahoo.com/s/nm/20070517/wl_n..
The People's Bank of China has widened the yuan trading band to plus or minus 0.5% per day, from a previous band of plus or minus 0.3% per day. China's central bank also lifted the bank reserve requirement ratio by a half percentage point, and increased its benchmark lending and deposit rates. The government reported Thursday that investment in urban fixed assets jumped by 25.5 percent in the first four months of the year. That exceeded the 2006 full-year growth rate of 24.5 percent. The government also has imposed investment curbs and banned some types of projects outright in the textile, auto and other industries where supply exceeds demand.
Paul Wolfowitz resigned as president of the World Bank effective June 30, the bank's directors announced Thursday.
China's crude oil production rose 2 percent in April as the country's appetite for fuel and energy grows alongside the economy, the government said Friday.
China's crude oil output rose to 15.4 million metric tons, equivalent to an average 3.76 million barrels a day, data from the National Bureau of Statistics showed. The increase lifted production for the January to April period 1.6 percent to 61.45 million tons.
The dollar matched the previous session's three-month high against the yen on Friday as investors continued to play the carry trade, selling the low-yielding Japanese currency for higher yielding units.
Saudi Basic Industries Corp., the world's biggest chemical company by market value, will buy General Electric Co.'s plastics unit for about $11 billion, two people familiar with the negotiations said.
WTRG: "Year-over-year oil exploration in the US is up 8.9 percent. Gas exploration is up 6.5 percent. The weekly average of crude oil spot prices is 13.7 percent lower than last year and natural gas spot prices are 16.2 percent higher."
In sum, despite the fact that crude is $7 a barrel cheaper than last year, gas prices are almost 50 cents higher per gallon.
Richard Daughty: " Total spending by all the governments and agencies of the United States is - AT LEAST! - $6 trillion a year! I am staggered backwards and fall on my Fat Mogambo Butt (FMB) when I realize with horror that since annual Gross Domestic Product of the USA is about $12 trillion, total government spending is fully half of GDP! Half! Half of the entire yearly output of goods and services of the whole freaking country equals total government spending! The government IS the economy!!!!"
South Florida is in an 18-month drought, and signs of the problem are everywhere — from the links to the nursery and sugar cane industries.
Lake Okeechobee, the region's primary reservoir, is down to 9.3 feet above sea level — less than half a foot above its record low. Farmers and the area's 600 golf courses must use 45 percent less water in the hardest-hit areas, and home sprinkler use is restricted to once a week.
I had to read this several times to believe the price was correct. Microsoft Corp. said it's agreed to acquire Aquantive Inc. for about $6 billion. The all-cash deal values Aquantive shares at $66.50 each. This compares to Thursday's close at $35.87.
Clear Channel shareholders to receive $39.20 in the buyout offer.
Prof. Ken Bode: "Alberto Gonzales, who claims ignorance about who put together the list of U.S. attorneys to be fired, is twisting in the wind ... And now [he] has his own Monica problem. When Ms. Goodling testifies and reveals how deeply the Justice Department has been politicized with incompetent cronies, he'll be gone too. So long, Alfredo."
"As a part of the gradual process of financial sector liberalisation in India, it is considered appropriate to introduce credit derivatives in a calibrated manner at this juncture," the Reserve Bank of India said in a release addressed to the country's commercial banks.
According to researchers at the University of Michigan, the consumer sentiment index rose to 88.7 in May from 87.1 in April.
Rigzone: " For the moment, however, flat exploration activity in the U.S. and Canada, combined with the entrance of hundreds of new rigs into the market, are weighing on drillers' margins. Although both countries are seeing diminishing returns from oil and natural gas reserves, more rigs are operating in the U.S. alone than the rest of the world combined. Producers accepted skyrocketing drilling costs while natural gas prices were rising, but this year have capped their budgets in North America, as gas has settled between $7 and $8 a million British thermal units. With more rigs competing for the same number of jobs, the prices drillers can charge, known as dayrates, have fallen by about 20% this year."
Berkshire Hathaway Inc. has agreed to acquire jewelry manufacturers Bel-Oro International and Aurafin LLC. Financial terms of the deal, which is expected to close during the second or third quarter of 2007, were not disclosed.
Crude-oil futures closed marginally higher Friday and posted a hefty gain on the week. Crude oil for June delivery edged up 8 cents to close at $64.94 a barrel on the New York Mercantile Exchange. The contract gained $2.57 on the week. Other energy prices, however, posted losses. June reformulated gasoline fell 2.89 cents to $2.4077 a gallon, June heating oil fell 2.15 cents to $1.9152 a gallon and June natural gas declined 13.1 cents to $7.944 per million British thermal units.
The benchmark 10-year Treasury note ended down 13/32 at 97 19/32; yielding 4.806%.
Gold for June delivery closed up $4.80 at $662.0 an ounce on the New York Mercantile Exchange. July platinum closed up $8.30 at $1,326.20 an ounce. June palladium rose $4.85, or 1.4%, to close at $362.25 an ounce. July copper rose 1.70 cents at $3.3235 a pound and July silver ended up 12.0 cents at $13.003 an ounce.
As of mid-May, total M&A activity world-wide totaled about $2.19 trillion, compared with the record $3.87 trillion for all of 2006, according to Dealogic. In the U.S. M&A activity totaled $717.37 billion through May 16, on pace with last year’s $1.49 trillion. Both are shy of 1999 and 2000, when activity topped $1.5 trillion in each year.Private-equity buyouts have totaled $218.7 billion so far this year, compared with $421.56 billion last year and $53.9 billion in 2000.
Goldman Sachs Group Inc. set a record Friday as its market value crossed $100 billion.
Reuters reported that, according to a leading British think-tank, Iraq's government has lost control of vast areas to powerful local factions and the country is on the verge of collapse and fragmentation.
http://news.yahoo.com/s/nm/20070517/wl_n..
The People's Bank of China has widened the yuan trading band to plus or minus 0.5% per day, from a previous band of plus or minus 0.3% per day. China's central bank also lifted the bank reserve requirement ratio by a half percentage point, and increased its benchmark lending and deposit rates. The government reported Thursday that investment in urban fixed assets jumped by 25.5 percent in the first four months of the year. That exceeded the 2006 full-year growth rate of 24.5 percent. The government also has imposed investment curbs and banned some types of projects outright in the textile, auto and other industries where supply exceeds demand.
Paul Wolfowitz resigned as president of the World Bank effective June 30, the bank's directors announced Thursday.
China's crude oil production rose 2 percent in April as the country's appetite for fuel and energy grows alongside the economy, the government said Friday.
China's crude oil output rose to 15.4 million metric tons, equivalent to an average 3.76 million barrels a day, data from the National Bureau of Statistics showed. The increase lifted production for the January to April period 1.6 percent to 61.45 million tons.
The dollar matched the previous session's three-month high against the yen on Friday as investors continued to play the carry trade, selling the low-yielding Japanese currency for higher yielding units.
Saudi Basic Industries Corp., the world's biggest chemical company by market value, will buy General Electric Co.'s plastics unit for about $11 billion, two people familiar with the negotiations said.
WTRG: "Year-over-year oil exploration in the US is up 8.9 percent. Gas exploration is up 6.5 percent. The weekly average of crude oil spot prices is 13.7 percent lower than last year and natural gas spot prices are 16.2 percent higher."
In sum, despite the fact that crude is $7 a barrel cheaper than last year, gas prices are almost 50 cents higher per gallon.
Richard Daughty: " Total spending by all the governments and agencies of the United States is - AT LEAST! - $6 trillion a year! I am staggered backwards and fall on my Fat Mogambo Butt (FMB) when I realize with horror that since annual Gross Domestic Product of the USA is about $12 trillion, total government spending is fully half of GDP! Half! Half of the entire yearly output of goods and services of the whole freaking country equals total government spending! The government IS the economy!!!!"
South Florida is in an 18-month drought, and signs of the problem are everywhere — from the links to the nursery and sugar cane industries.
Lake Okeechobee, the region's primary reservoir, is down to 9.3 feet above sea level — less than half a foot above its record low. Farmers and the area's 600 golf courses must use 45 percent less water in the hardest-hit areas, and home sprinkler use is restricted to once a week.
I had to read this several times to believe the price was correct. Microsoft Corp. said it's agreed to acquire Aquantive Inc. for about $6 billion. The all-cash deal values Aquantive shares at $66.50 each. This compares to Thursday's close at $35.87.
Clear Channel shareholders to receive $39.20 in the buyout offer.
Prof. Ken Bode: "Alberto Gonzales, who claims ignorance about who put together the list of U.S. attorneys to be fired, is twisting in the wind ... And now [he] has his own Monica problem. When Ms. Goodling testifies and reveals how deeply the Justice Department has been politicized with incompetent cronies, he'll be gone too. So long, Alfredo."
"As a part of the gradual process of financial sector liberalisation in India, it is considered appropriate to introduce credit derivatives in a calibrated manner at this juncture," the Reserve Bank of India said in a release addressed to the country's commercial banks.
According to researchers at the University of Michigan, the consumer sentiment index rose to 88.7 in May from 87.1 in April.
Rigzone: " For the moment, however, flat exploration activity in the U.S. and Canada, combined with the entrance of hundreds of new rigs into the market, are weighing on drillers' margins. Although both countries are seeing diminishing returns from oil and natural gas reserves, more rigs are operating in the U.S. alone than the rest of the world combined. Producers accepted skyrocketing drilling costs while natural gas prices were rising, but this year have capped their budgets in North America, as gas has settled between $7 and $8 a million British thermal units. With more rigs competing for the same number of jobs, the prices drillers can charge, known as dayrates, have fallen by about 20% this year."
Berkshire Hathaway Inc. has agreed to acquire jewelry manufacturers Bel-Oro International and Aurafin LLC. Financial terms of the deal, which is expected to close during the second or third quarter of 2007, were not disclosed.
Crude-oil futures closed marginally higher Friday and posted a hefty gain on the week. Crude oil for June delivery edged up 8 cents to close at $64.94 a barrel on the New York Mercantile Exchange. The contract gained $2.57 on the week. Other energy prices, however, posted losses. June reformulated gasoline fell 2.89 cents to $2.4077 a gallon, June heating oil fell 2.15 cents to $1.9152 a gallon and June natural gas declined 13.1 cents to $7.944 per million British thermal units.
The benchmark 10-year Treasury note ended down 13/32 at 97 19/32; yielding 4.806%.
Gold for June delivery closed up $4.80 at $662.0 an ounce on the New York Mercantile Exchange. July platinum closed up $8.30 at $1,326.20 an ounce. June palladium rose $4.85, or 1.4%, to close at $362.25 an ounce. July copper rose 1.70 cents at $3.3235 a pound and July silver ended up 12.0 cents at $13.003 an ounce.
As of mid-May, total M&A activity world-wide totaled about $2.19 trillion, compared with the record $3.87 trillion for all of 2006, according to Dealogic. In the U.S. M&A activity totaled $717.37 billion through May 16, on pace with last year’s $1.49 trillion. Both are shy of 1999 and 2000, when activity topped $1.5 trillion in each year.Private-equity buyouts have totaled $218.7 billion so far this year, compared with $421.56 billion last year and $53.9 billion in 2000.
Goldman Sachs Group Inc. set a record Friday as its market value crossed $100 billion.
Thursday, May 17, 2007
Humming Along
5/18/07 Humming Along
The median price for an existing single-family dwelling in the Bay Area hit a record $720,000 in April, up 6.6 percent from last April, according to a report released Wednesday by DataQuick Information Services.
That happened even though the number of existing homes sold in April fell 19.9 percent to 5,015, compared with 6,263 a year ago. The month was the 27th in a row in which sales volume declined, and April's sales count was the lowest in 12 years. The April average is 9,614. At the same time, Marin County established its own record with a median home price of $1,010,000 -- the first county in California to pass the million-dollar mark, DataQuick said. The median price for a single-family home nationally was $215,300 in March, a 0.9 percent drop from the previous year, according to the National Association of Realtors.The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.
By comparison, the worst housing slump since the Great Depression is driving Ohio and 20 other states to propose consumer protection laws and bond sales that would help homeowners stem the escalating defaults. Ohio, with the third-highest foreclosure total in the U.S. last month, is raising $100 million to help homeowners refinance risky mortgages. New York, New Jersey and Pennsylvania are planning similar sales.
Globally, buyers spent $17.38 billion on gold in the first quarter, the World Gold Council said Wednesday. That's up 22 percent from $14.21 billion a year earlier.
The World Gold Council released their ‘Gold Demand Trends’ report which indicated increased demand for gold in Q1/06 in terms of both tonnage and dollars. Net retail investment was higher by 28% compared to Q1/06 in tonnage terms, consumer demand in China and India rose by 31% and 50% respectively, industrial and dental demand was higher by 1% in tonnage terms while gold supply fell 2% below Q1/06 levels.
Japan's central bank governor said Thursday an interest rate rise was possible even if consumer prices fell, hours after government data showed the world's second largest economy grew less than expected in the first quarter.
Acxiom agreed to be acquired by investment firms Silver Lake and ValueAct Capital for $2.25 billion plus the assumption of about $756 million in debt. The proposed buyout values Little Rock, Arkansas-based Acxiom at $27.10 a share, a 14% premium to its closing price on Wednesday. Under terms of the deal, the company can solicit other proposals for the next 60 days, the companies said. The deal is expected to close in three to four months.
Li Ka-shing, Asia's richest man, said China's stock valuations "must be a bubble'' and prices are likely to decline.
24/7 Real Media Inc. has agreed to be acquired by WPP Group for $11.75 per share.
The number of initial claims in the week ending May 5 fell 5,000 to 293,000. It's the lowest level since the week ended Jan. 13. The four-week average of initial claims fell 12,000 to 305,500. This is the lowest level since April 2006. Meanwhile, the number of Americans receiving state jobless benefits fell 78,000 to 2.47 million in the week ending April 28. The four-week moving average of continuing claims fell 14,000 to 2.53 million.
OPEC doesn't see a need to boost oil supplies before the summer and will maintain its view that global oil markets are amply stocked, a top official from the group said Thursday. "There's no need for us to do more," Abdulla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires in an interview.
Penney raised its outlook for full-year earnings from continuing operations on the strength of its first-quarter results.The company now sees full-year income from continuing operations at about $5.49 per share, up from its prior forecast of $5.44 per share.
The Economic Cycle Research Institute [ECRI] leading index has been strengthening in 2007 and its growth rate has just moved to a 3-year high.
Brad Setser: "US export growth has clearly slowed. Y/y growth is now around 9%, well below its peak at 16% last fall. Haver's data on the 3m and 6m growth rates in real exports show an even sharper slowdown. And in March non-oil imports jumped up. They are now growing at a y/y pace of around 6%."
Ned Schmidt: "At end of June 2007 we will be able to look back on a ten year history where the investment return on $Gold was superior to that of U.S. equities. Talk about grand productive nature of U.S. economy will then be judged as simply the blathering of paper asset peddlers."
Despite record fuel prices above $3 per gallon, more Americans will travel by car over the Memorial Day holiday weekend than a year ago, according to a survey by travel agency AAA.
Alliance Data Systems Corp. agreed to be acquired by affiliates of private equity firm The Blackstone Group for $7.8 billion, including unspecified debt assumption. The deal values Alliance Data at $81.75 a share, a roughly 30% premium to Wednesday's closing price of $62.96.
The American Civil Liberties Union urged that Congress subpoena all of the Justice Department documents relating to the NSA warrant less wiretapping program and the new FISA court-approved program in light of the testimony that Deputy Attorney General James Comey made at a hearing before the Senate Judiciary Committee. The testimony yesterday clearly indicated that not only did the Bush administration reauthorize the NSA program in 2004 without a signature from the Justice Department; it reauthorized the program even after both the Attorney General and Comey, the acting Attorney General determined that the program was illegal.
"The American people deserve an attorney general, the chief law enforcement officer of our country, whose honesty and capability are beyond question," Hagel, a Nebraskan, said in a statement. "Attorney General Gonzales can no longer meet this standard. He has failed this country. He has lost the moral authority to lead."
TUI Group, a European tourism company, has ordered 11 Boeing 787-8 Dreamliners and 50 smaller 737 passenger jets, Boeing announced.
The U.S. index of leading economic indicators fell a worse-than-expected 0.5% in April, the Conference Board said Thursday. A plunge in building permits and a jump in unemployment claims dragged the index down last month. "The data may be pointing to slower economic conditions this summer," said Ken Goldstein, an economist for the research group. Seven of the 10 indicators declined in April. The only two gainers were stock prices and money supply. The coincident index rose 0.2% in April and the lagging index also rose 0.2%.
Natural-gas inventories rose by 95 billion cubic feet for the week ended May 11, the Energy Department said Thursday. Total stocks now stand at 1.842 trillion cubic feet, down 225 billion cubic feet from the year-ago level, but 315 billion cubic feet above the five-year average, the government data said.
The Philly Fed's index of manufacturing sentiment rose to 4.2 from 0.2 in April and March. It's the highest reading since January.
Gold for June delivery fell $4.30 to close at $657.20 an ounce on the New York Mercantile Exchange. Meanwhile, the June copper futures closed down 3.3%.
"It seems the only person who has confidence in the attorney general is President Bush," Schumer told reporters. "The president long ago should have asked the attorney general to step down." "I think the time has come for the Senate to express its will," Feinstein said. "We lack confidence in the attorney general."
For the fiscal year ending Feb. 2, 2008, Nordstrom said it now expects per-share earnings of $2.81 to $2.90, up from its previous outlook of $2.78 to $2.84.
Kohl's raised its fiscal 2007 earnings forecast to a range of $3.75 to $3.87 a share from its earlier view of $3.68 to $3.84 a share.
The benchmark 10-year Treasury note closed down 12/32 at 97 31/12; yielding 4.757%, up from 4.708% late Wednesday.
June reformulated gas climbed 9.96 cents to close at $2.4366 a gallon Thursday, leading June crude up by 3.4%, or $2.31, to $64.86 a barrel. June natural gas gained 18.5 cents to close at $8.075 per million British thermal units.
An Apple spokeswoman confirmed that the company will ship the iPhone in late June.
China’s production of metals for its power, manufacturing and building industries surged to records in April. Output of copper rose 17% to a record 274,000 metric tons, while production of aluminum surged 38% to a record 974,000 tons, the National Bureau of Statistics said.
Valero Energy Corp., the largest U.S. refiner, said Wednesday that it halted fuel output at its Houston refinery because of steam system and boiler problems. The complex can process 130,000 barrels of oil a day. ConocoPhillips, the second- largest U.S. refiner, said a unit at its plant in Sweeny, Texas, is undergoing maintenance after a leak Wednesday.
ConocoPhillips announced Thursday that it will idle a fluid catalytic cracking unit and a boiler at its refinery in Borger, Texas, for scheduled repairs. The Borger plant is capable of processing 146,000 barrels of oil a day.
The average national price of regular gasoline rose to an all-time high of $3.114 a gallon on Thursday, according to AAA and the Oil Price Information Service. That's up 1.1 cents overnight, and almost 25 cents in a month. Prices in some parts of the country, including California, have already passed $4. Naturally, inflation is of little concern to the Fed. It's only a worry for consuming Americans.
The median price for an existing single-family dwelling in the Bay Area hit a record $720,000 in April, up 6.6 percent from last April, according to a report released Wednesday by DataQuick Information Services.
That happened even though the number of existing homes sold in April fell 19.9 percent to 5,015, compared with 6,263 a year ago. The month was the 27th in a row in which sales volume declined, and April's sales count was the lowest in 12 years. The April average is 9,614. At the same time, Marin County established its own record with a median home price of $1,010,000 -- the first county in California to pass the million-dollar mark, DataQuick said. The median price for a single-family home nationally was $215,300 in March, a 0.9 percent drop from the previous year, according to the National Association of Realtors.The Bay Area numbers come with some caveats, however. The median price is skewed by strong activity at the upper end. Real estate in the region is composed of numerous micro-markets, which vary tremendously. In fact, affluent Bay Area housing markets are getting stronger, while poorer areas are softening.
By comparison, the worst housing slump since the Great Depression is driving Ohio and 20 other states to propose consumer protection laws and bond sales that would help homeowners stem the escalating defaults. Ohio, with the third-highest foreclosure total in the U.S. last month, is raising $100 million to help homeowners refinance risky mortgages. New York, New Jersey and Pennsylvania are planning similar sales.
Globally, buyers spent $17.38 billion on gold in the first quarter, the World Gold Council said Wednesday. That's up 22 percent from $14.21 billion a year earlier.
The World Gold Council released their ‘Gold Demand Trends’ report which indicated increased demand for gold in Q1/06 in terms of both tonnage and dollars. Net retail investment was higher by 28% compared to Q1/06 in tonnage terms, consumer demand in China and India rose by 31% and 50% respectively, industrial and dental demand was higher by 1% in tonnage terms while gold supply fell 2% below Q1/06 levels.
Japan's central bank governor said Thursday an interest rate rise was possible even if consumer prices fell, hours after government data showed the world's second largest economy grew less than expected in the first quarter.
Acxiom agreed to be acquired by investment firms Silver Lake and ValueAct Capital for $2.25 billion plus the assumption of about $756 million in debt. The proposed buyout values Little Rock, Arkansas-based Acxiom at $27.10 a share, a 14% premium to its closing price on Wednesday. Under terms of the deal, the company can solicit other proposals for the next 60 days, the companies said. The deal is expected to close in three to four months.
Li Ka-shing, Asia's richest man, said China's stock valuations "must be a bubble'' and prices are likely to decline.
24/7 Real Media Inc. has agreed to be acquired by WPP Group for $11.75 per share.
The number of initial claims in the week ending May 5 fell 5,000 to 293,000. It's the lowest level since the week ended Jan. 13. The four-week average of initial claims fell 12,000 to 305,500. This is the lowest level since April 2006. Meanwhile, the number of Americans receiving state jobless benefits fell 78,000 to 2.47 million in the week ending April 28. The four-week moving average of continuing claims fell 14,000 to 2.53 million.
OPEC doesn't see a need to boost oil supplies before the summer and will maintain its view that global oil markets are amply stocked, a top official from the group said Thursday. "There's no need for us to do more," Abdulla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires in an interview.
Penney raised its outlook for full-year earnings from continuing operations on the strength of its first-quarter results.The company now sees full-year income from continuing operations at about $5.49 per share, up from its prior forecast of $5.44 per share.
The Economic Cycle Research Institute [ECRI] leading index has been strengthening in 2007 and its growth rate has just moved to a 3-year high.
Brad Setser: "US export growth has clearly slowed. Y/y growth is now around 9%, well below its peak at 16% last fall. Haver's data on the 3m and 6m growth rates in real exports show an even sharper slowdown. And in March non-oil imports jumped up. They are now growing at a y/y pace of around 6%."
Ned Schmidt: "At end of June 2007 we will be able to look back on a ten year history where the investment return on $Gold was superior to that of U.S. equities. Talk about grand productive nature of U.S. economy will then be judged as simply the blathering of paper asset peddlers."
Despite record fuel prices above $3 per gallon, more Americans will travel by car over the Memorial Day holiday weekend than a year ago, according to a survey by travel agency AAA.
Alliance Data Systems Corp. agreed to be acquired by affiliates of private equity firm The Blackstone Group for $7.8 billion, including unspecified debt assumption. The deal values Alliance Data at $81.75 a share, a roughly 30% premium to Wednesday's closing price of $62.96.
The American Civil Liberties Union urged that Congress subpoena all of the Justice Department documents relating to the NSA warrant less wiretapping program and the new FISA court-approved program in light of the testimony that Deputy Attorney General James Comey made at a hearing before the Senate Judiciary Committee. The testimony yesterday clearly indicated that not only did the Bush administration reauthorize the NSA program in 2004 without a signature from the Justice Department; it reauthorized the program even after both the Attorney General and Comey, the acting Attorney General determined that the program was illegal.
"The American people deserve an attorney general, the chief law enforcement officer of our country, whose honesty and capability are beyond question," Hagel, a Nebraskan, said in a statement. "Attorney General Gonzales can no longer meet this standard. He has failed this country. He has lost the moral authority to lead."
TUI Group, a European tourism company, has ordered 11 Boeing 787-8 Dreamliners and 50 smaller 737 passenger jets, Boeing announced.
The U.S. index of leading economic indicators fell a worse-than-expected 0.5% in April, the Conference Board said Thursday. A plunge in building permits and a jump in unemployment claims dragged the index down last month. "The data may be pointing to slower economic conditions this summer," said Ken Goldstein, an economist for the research group. Seven of the 10 indicators declined in April. The only two gainers were stock prices and money supply. The coincident index rose 0.2% in April and the lagging index also rose 0.2%.
Natural-gas inventories rose by 95 billion cubic feet for the week ended May 11, the Energy Department said Thursday. Total stocks now stand at 1.842 trillion cubic feet, down 225 billion cubic feet from the year-ago level, but 315 billion cubic feet above the five-year average, the government data said.
The Philly Fed's index of manufacturing sentiment rose to 4.2 from 0.2 in April and March. It's the highest reading since January.
Gold for June delivery fell $4.30 to close at $657.20 an ounce on the New York Mercantile Exchange. Meanwhile, the June copper futures closed down 3.3%.
"It seems the only person who has confidence in the attorney general is President Bush," Schumer told reporters. "The president long ago should have asked the attorney general to step down." "I think the time has come for the Senate to express its will," Feinstein said. "We lack confidence in the attorney general."
For the fiscal year ending Feb. 2, 2008, Nordstrom said it now expects per-share earnings of $2.81 to $2.90, up from its previous outlook of $2.78 to $2.84.
Kohl's raised its fiscal 2007 earnings forecast to a range of $3.75 to $3.87 a share from its earlier view of $3.68 to $3.84 a share.
The benchmark 10-year Treasury note closed down 12/32 at 97 31/12; yielding 4.757%, up from 4.708% late Wednesday.
June reformulated gas climbed 9.96 cents to close at $2.4366 a gallon Thursday, leading June crude up by 3.4%, or $2.31, to $64.86 a barrel. June natural gas gained 18.5 cents to close at $8.075 per million British thermal units.
An Apple spokeswoman confirmed that the company will ship the iPhone in late June.
China’s production of metals for its power, manufacturing and building industries surged to records in April. Output of copper rose 17% to a record 274,000 metric tons, while production of aluminum surged 38% to a record 974,000 tons, the National Bureau of Statistics said.
Valero Energy Corp., the largest U.S. refiner, said Wednesday that it halted fuel output at its Houston refinery because of steam system and boiler problems. The complex can process 130,000 barrels of oil a day. ConocoPhillips, the second- largest U.S. refiner, said a unit at its plant in Sweeny, Texas, is undergoing maintenance after a leak Wednesday.
ConocoPhillips announced Thursday that it will idle a fluid catalytic cracking unit and a boiler at its refinery in Borger, Texas, for scheduled repairs. The Borger plant is capable of processing 146,000 barrels of oil a day.
The average national price of regular gasoline rose to an all-time high of $3.114 a gallon on Thursday, according to AAA and the Oil Price Information Service. That's up 1.1 cents overnight, and almost 25 cents in a month. Prices in some parts of the country, including California, have already passed $4. Naturally, inflation is of little concern to the Fed. It's only a worry for consuming Americans.
Wednesday, May 16, 2007
Muted Inflation
5/17/07 Muted Inflation
Regence BlueShield on Tuesday began notifying 137,000 individual-plan customers that their premiums are rising an average of 19% in July in the steepest increase for individual plans this year by a Washington state health insurer. And for 16,000 of those enrollees, the rate increase will total 40% because they also happen to be moving into an older, more expensive group.
The Bank of England: "The risks to growth are balanced, while those to inflation are weighted to the upside in the medium term."
Oracle Corp. has agreed to acquire Agile Software Corp. for $8.10 a share, or roughly $495 million.
Sugar plunged to a 23-month low after C. Czarnikow Sugar Ltd., the world’s biggest broker of the sweetner, said a 2007 global surplus will be larger than estimated. The commodity has plunged 26% just this year.
Federal statistics released Tuesday for April show that food prices in Southern California rose 5.7% from a year earlier.
Southern California home sales plunged to a 12-year low in April.
ESL Investments Inc., the hedge fund Lampert founded in 1988, acquired 15.2 million shares of Citigroup since the end of 2005.
Sony reported a wider quarterly loss on Wednesday due to losses in its game unit, but it forecast a sharp rise in profit this year as it boosts sales of its PlayStation 3 video game machine and LCD TVs.
Bausch & Lomb Inc. said it agreed to be bought by affiliates of Warburg Pincus, the global private equity firm, in a transaction valued at about $4.5 billion. The buyers will pay $65 a share and assume about $830 million in debt.
Microsoft has announced that September 25, 2007 will be the release date for its long-awaited video game blockbuster 'Halo 3.'
Deere reported $2.72 EPS vs $2.41 estimate.
Housing starts increased 2.5% to a seasonally adjusted 1.528 million annual rate, after rising by 0.3% in March, the Commerce Department said Wednesday. Originally, March starts were seen increasing by 0.8% to 1.518 million. However, building permits declined by 8.9% to the lowest since June 1997.
Ingersoll-Rand Company is considering selling its Bobcat construction unit as well as other construction related units, saying the businesses "no longer fit" its long-term strategic outlook.
A Houston Chronicle story: "You see this snapper?" said the restaurateur, dangling the fish by its tail. "You're not going to see it on menus if prices continue to go up. If you do — it'll be $50." Chefs say prices have reeled out of control since federal regulators reduced the total allowable catch for American red snapper, prompting some to take the deepwater fish off their menus and bait diners with other lures.
Brad Setser: "The $100b in headline foreign purchases of US debt and equities is deceiving. Net inflows were a bit under $50b – less than the March current account deficit ($75b or so)
If sustained, that level of “diversification” by US residents implies rather large outflows – about $500b a year. To finance that level of outflows and its current account deficit, the US would need to attract about $1400b in inflows.
That is a lot. It might imply the US would need a bigger credit line than even the People’s Bank of China is willing to provide. Financing the United States current account deficit is one thing. The current account deficit is the counterpart to China’s current account surplus (read export jobs). Financing capital flight (i.e. portfolio diversification) by US residents is another." This is an important analysis and one that should be carefully considered in making decisions on additional investments in the U.S.
Mike Shedlock: "Wages are not keeping up with costs. There is no other way to look at it. Yes home prices are dropping but with fewer and fewer people buying homes, the drop in home prices is simply not helping many...Real wages are declining and corporate profits are not shared with wage earners except at the very top end. That skew makes the decline in wages worse than it even appears (and it appears bad). The squeeze on consumers is accelerating." In sum, the standard of living for probably 97% of Americans continues to worsen.
U.S. industrial production rose 0.7% in April, the Federal Reserve reported Wednesday. Capacity utilization rose to 81.6%from 81.2%.
Federated Department Stores Inc. reported lower-than-expected quarterly profit on Wednesday, citing disappointing sales at new Macy's stores, and cut its outlook for the current period on concern about the economy.
WCI Communities seeks shareholder support to 'ensure fair sale process' Co announces that it has sent a letter to its shareholders in connection with its forthcoming annual meeting, seeking shareholder support to re-elect the current Board of Directors. The co said that its Board of Directors is committed to making sure that the sale process it has initiated and which is underway is fair, transparent and designed to get the best possible price for WCI shares in the current market and will ensure that the result will be to maximize the value of WCI shares for all of the co's shareholders. The letter also noted that at present, the co has entered into a number of confidentiality agreements with entities that have expressed an interest in acquiring WCI. The letter also advised shareholders that the election of a slate of directors proposed by Carl Icahn could jeopardize the sale process or make the process less than fair and open.
The American Petroleum Institute reported a climb of 5.2 million barrels in crude supplies for the week ended May 11. The Energy Department had reported an increase of 1 million barrels for the latest week. Motor gasoline supplies were up 2.2 million barrels, the API said. The government reported a rise of 1.7 million barrels. Distillate supplies were up 1.3 million barrels, the API said, vs. the government's 1-million-barrel rise.
German Development Minister Heidemarie Wieczorek-Zeul said World Bank President Paul Wolfowitz should quit to help restore the agency's credibility, adding that he is not welcome at a meeting in Berlin next week. "I have said it often enough that he would do a good service to the bank if he were to resign,'' Wieczorek-Zeul, Germany's minister in charge of World Bank affairs, said at a briefing in Berlin today. ``The World Bank's credibility is no longer in place.''
Hewlett-Packard Co. on Wednesday posted a quarterly net profit that fell slightly due to a tax settlement gain a year ago, but excluding that HP said profit rose 27 percent, paced by strength in its personal computer and printer businesses. Net income for its second fiscal quarter was $1.78 billion, or 65 cents per share, compared with $1.90 billion, or 66 cents per share, a year ago, which included a tax settlement gain of 15 cents. Excluding items, HP had a per-share profit of 70 cents in the just-reported quarter. Revenue rose 13 percent to $25.5 billion.
For 2007, PetSmart expects earnings of $2.03 to $2.05 a share and a same-store sales rise in the mid-single digits.
June crude fell 62 cents to close at $62.55 a barrel Wednesday. June reformulated-gasoline futures touched a low of $2.2625 a gallon -- their lowest level in a week, then recovered to close at $2.337, up 3.54 cents following news of a glitch at a Valero refinery in Houston.
June gold dropped 1.9%, or $13, to close at $661.50 an ounce Wednesday. July silver fell 2.9%, or 38.5 cents to close at $12.93 an ounce -- marking its weakest closing level since March 5. July copper fell 3.3%, or 11.5 cents, to end at $3.4225 a pound, finishing at its lowest level since April 5. Meanwhile, Newmont Mining made a new 52-week low, and that's with gold at these levels.
Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim Jr. said Wednesday the company could be sold next year, according to a media report.
Regence BlueShield on Tuesday began notifying 137,000 individual-plan customers that their premiums are rising an average of 19% in July in the steepest increase for individual plans this year by a Washington state health insurer. And for 16,000 of those enrollees, the rate increase will total 40% because they also happen to be moving into an older, more expensive group.
The Bank of England: "The risks to growth are balanced, while those to inflation are weighted to the upside in the medium term."
Oracle Corp. has agreed to acquire Agile Software Corp. for $8.10 a share, or roughly $495 million.
Sugar plunged to a 23-month low after C. Czarnikow Sugar Ltd., the world’s biggest broker of the sweetner, said a 2007 global surplus will be larger than estimated. The commodity has plunged 26% just this year.
Federal statistics released Tuesday for April show that food prices in Southern California rose 5.7% from a year earlier.
Southern California home sales plunged to a 12-year low in April.
ESL Investments Inc., the hedge fund Lampert founded in 1988, acquired 15.2 million shares of Citigroup since the end of 2005.
Sony reported a wider quarterly loss on Wednesday due to losses in its game unit, but it forecast a sharp rise in profit this year as it boosts sales of its PlayStation 3 video game machine and LCD TVs.
Bausch & Lomb Inc. said it agreed to be bought by affiliates of Warburg Pincus, the global private equity firm, in a transaction valued at about $4.5 billion. The buyers will pay $65 a share and assume about $830 million in debt.
Microsoft has announced that September 25, 2007 will be the release date for its long-awaited video game blockbuster 'Halo 3.'
Deere reported $2.72 EPS vs $2.41 estimate.
Housing starts increased 2.5% to a seasonally adjusted 1.528 million annual rate, after rising by 0.3% in March, the Commerce Department said Wednesday. Originally, March starts were seen increasing by 0.8% to 1.518 million. However, building permits declined by 8.9% to the lowest since June 1997.
Ingersoll-Rand Company is considering selling its Bobcat construction unit as well as other construction related units, saying the businesses "no longer fit" its long-term strategic outlook.
A Houston Chronicle story: "You see this snapper?" said the restaurateur, dangling the fish by its tail. "You're not going to see it on menus if prices continue to go up. If you do — it'll be $50." Chefs say prices have reeled out of control since federal regulators reduced the total allowable catch for American red snapper, prompting some to take the deepwater fish off their menus and bait diners with other lures.
Brad Setser: "The $100b in headline foreign purchases of US debt and equities is deceiving. Net inflows were a bit under $50b – less than the March current account deficit ($75b or so)
If sustained, that level of “diversification” by US residents implies rather large outflows – about $500b a year. To finance that level of outflows and its current account deficit, the US would need to attract about $1400b in inflows.
That is a lot. It might imply the US would need a bigger credit line than even the People’s Bank of China is willing to provide. Financing the United States current account deficit is one thing. The current account deficit is the counterpart to China’s current account surplus (read export jobs). Financing capital flight (i.e. portfolio diversification) by US residents is another." This is an important analysis and one that should be carefully considered in making decisions on additional investments in the U.S.
Mike Shedlock: "Wages are not keeping up with costs. There is no other way to look at it. Yes home prices are dropping but with fewer and fewer people buying homes, the drop in home prices is simply not helping many...Real wages are declining and corporate profits are not shared with wage earners except at the very top end. That skew makes the decline in wages worse than it even appears (and it appears bad). The squeeze on consumers is accelerating." In sum, the standard of living for probably 97% of Americans continues to worsen.
U.S. industrial production rose 0.7% in April, the Federal Reserve reported Wednesday. Capacity utilization rose to 81.6%from 81.2%.
Federated Department Stores Inc. reported lower-than-expected quarterly profit on Wednesday, citing disappointing sales at new Macy's stores, and cut its outlook for the current period on concern about the economy.
WCI Communities seeks shareholder support to 'ensure fair sale process' Co announces that it has sent a letter to its shareholders in connection with its forthcoming annual meeting, seeking shareholder support to re-elect the current Board of Directors. The co said that its Board of Directors is committed to making sure that the sale process it has initiated and which is underway is fair, transparent and designed to get the best possible price for WCI shares in the current market and will ensure that the result will be to maximize the value of WCI shares for all of the co's shareholders. The letter also noted that at present, the co has entered into a number of confidentiality agreements with entities that have expressed an interest in acquiring WCI. The letter also advised shareholders that the election of a slate of directors proposed by Carl Icahn could jeopardize the sale process or make the process less than fair and open.
The American Petroleum Institute reported a climb of 5.2 million barrels in crude supplies for the week ended May 11. The Energy Department had reported an increase of 1 million barrels for the latest week. Motor gasoline supplies were up 2.2 million barrels, the API said. The government reported a rise of 1.7 million barrels. Distillate supplies were up 1.3 million barrels, the API said, vs. the government's 1-million-barrel rise.
German Development Minister Heidemarie Wieczorek-Zeul said World Bank President Paul Wolfowitz should quit to help restore the agency's credibility, adding that he is not welcome at a meeting in Berlin next week. "I have said it often enough that he would do a good service to the bank if he were to resign,'' Wieczorek-Zeul, Germany's minister in charge of World Bank affairs, said at a briefing in Berlin today. ``The World Bank's credibility is no longer in place.''
Hewlett-Packard Co. on Wednesday posted a quarterly net profit that fell slightly due to a tax settlement gain a year ago, but excluding that HP said profit rose 27 percent, paced by strength in its personal computer and printer businesses. Net income for its second fiscal quarter was $1.78 billion, or 65 cents per share, compared with $1.90 billion, or 66 cents per share, a year ago, which included a tax settlement gain of 15 cents. Excluding items, HP had a per-share profit of 70 cents in the just-reported quarter. Revenue rose 13 percent to $25.5 billion.
For 2007, PetSmart expects earnings of $2.03 to $2.05 a share and a same-store sales rise in the mid-single digits.
June crude fell 62 cents to close at $62.55 a barrel Wednesday. June reformulated-gasoline futures touched a low of $2.2625 a gallon -- their lowest level in a week, then recovered to close at $2.337, up 3.54 cents following news of a glitch at a Valero refinery in Houston.
June gold dropped 1.9%, or $13, to close at $661.50 an ounce Wednesday. July silver fell 2.9%, or 38.5 cents to close at $12.93 an ounce -- marking its weakest closing level since March 5. July copper fell 3.3%, or 11.5 cents, to end at $3.4225 a pound, finishing at its lowest level since April 5. Meanwhile, Newmont Mining made a new 52-week low, and that's with gold at these levels.
Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim Jr. said Wednesday the company could be sold next year, according to a media report.
Tuesday, May 15, 2007
Some Disappointing Results
5/16/07 Some Disappointing Results
It should be noted that Daimler Chrysler's first quarter results exceeded expectations; however, one would be better served looking at the full year guidance. DaimlerChrysler Ag expects earnings before interest and taxes, or EBIT, of about $9.4 billion for full year 2007. The EBIT outlook also excludes the impact of realignment activities. DaimlerChrysler said the Chrysler Group's worldwide unit sales fell 8% in the latest quarter to 642,200 vehicles. The company's Mercedes Car Group sold 271,100 vehicles in the quarter. Looking ahead, the company said it expects total revenue for 2007 to come in around the same as its 2006 total of $204.4 billion.
Home Depot's first-quarter net income dropped 30% to $1.05 billion, or 53 cents a share, from $1.48 billion, or 70 cents a share, a year ago. Sales at the home improvement retailer rose 0.6% to $21.6 billion. Home Depot said that a challenging housing market and erratic weather across the country hit its Spring selling season. It added that its review of strategic alternatives for its supply operations is ongoing. Home Depot said that the home improvement market is expected to remain soft in 2007 and, based on the first-quarter, it's now expecting earnings at the low end of its guidance range. At the beginning of 2007, the company said that it was expecting earnings per share to decline by between 4% and 9% in the year.
Wal-Mart Stores said first-quarter net income rose 8% to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Wal-Mart said the profit rise was driven by the group's Sam's Club and international operations as well as sales of food and $4 generic drugs."While these are record sales and earnings, we feel there was an opportunity to have done better," said Lee Scott, Wal-Mart president and chief executive, in a statement. It's expecting U.S. comparable-store sales to rise between 1% and 2% after a 0.6% first-quarter rise, and second-quarter earnings from continuing operations to be between 75 cents and 79 cents. Analysts were expecting second-quarter earnings of 79 cents a share.
U.K. consumer price inflation fell to 2.8% on an annualized basis in April, down from 3.1% in March as lower gas and electricity bills began to apply downward pressure on the figure, the Office for National Statistics said Tuesday.
The French economy grew at a 0.5% quarterly, or 1.1% annualized, rate in the first quarter, the INSEE statistics agency said Tuesday.
Net Long-term TIC Flows for March rose to $67.6 billion versus $58.1 billion in February. International purchases of US stocks rose to a net $14.8 billion in March versus $13.5 billion in February.
Shares in Reuters Group rose 2.4% to 620 pence a share share after the company agreed a back a $17.2 billion buyout deal from Canada's Thomson Corp.
Shares in building materials group Hanson rose 3.6% after the group agreed to accept a $15.8 billion offer from Germany's HeidelbergCement.
Mining giant Anglo American agreed to buy a 49% interest in MMX Minas-Rio for an economic value and effective price of $1.15 billion.
Xstrata Plc, the Zug, Switzerland, mining company, increased its offer for Lionore Mining of Toronto to C$25 a share from C$18.50.
Embraer Empresa Brasileira de Aeronautica SA said Tuesday its first-quarter profit fell 60 percent, as the commercial jet maker delivered fewer planes and its operating costs increased ahead of ramped-up production.
Chinese officials warned American lawmakers on Tuesday against threatening sanctions over trade disputes ahead of talks this month and said there are no plans to speed up currency reforms despite U.S. pressure.
The German economy, Europe's largest, expanded more than economists forecast in the first quarter as companies increased spending to fill export orders and the warmest winter on record boosted construction. Gross domestic product grew 0.5 percent in the three months through March from the previous quarter, when it expanded 1 percent, the Federal Statistics office in Wiesbaden said today. Economists expected growth of 0.3 percent, according to the median of 41 estimates in a Bloomberg News survey.
Japan's core private-sector machinery orders, a key gauge of corporate capital spending, fell 4.5% in March from the previous month, government data showed, well short of market expectations for a 1.3% rise. "There was a big divergence from expectations and the yen is being sold. The outlook for machinery orders was also weak," said Masafumi Yamamoto, a currency strategist for Nikko Citigroup. In addition to the headline figure, the data showed that manufacturers expect core machinery orders to fall 11.8% in April-June from the previous quarter. At this point, with the yen's extreme weakness against the dollar, one might consider nibbling on the yen. There is a good deal of value in the yen. One should note that Japan's forex reserves increased to a record in April for the third consecutive month and now total about $916 billion.
Paul Kasriel: " So, this FOMC may decide for various reasons that the U.S. economy needs a “cleansing” recession later this year or early next. If the FOMC does not cut the funds rate early in the second half, we think it will get a recession. But our base case is that a combination of weak real economic growth, a rising unemployment rate and moderating core inflation will move the FOMC to begin cutting the fed funds rate at its August 7th meeting and, with much luck, the economy might avoid a recession later this year or early next a la 1995."
Richard Daughty: "With only 88,000 jobs created in April, things are already looking pretty grim. But things could get much worse, as the government tries to trick us by adding 'hamburger flipping' to the list of manufacturing jobs."
U.S. consumer prices increased 0.4% in April. Excluding food and energy, however, the core consumer price index rose 0.2% as expected, cutting the annual gain in the core down to a one-year low of 2.3%. The CPI is up 2.6% in the past year. I don't believe these numbers for the simple reason that I purchase food items, put gas in my car, and heat as well as cool my home. When it's all said and done, let's focus on the following:
Real average weekly earnings fell by 0.5 percent from March to April after
seasonal adjustment, according to preliminary data released today by the Bureau
of Labor Statistics of the U.S. Department of Labor. A 0.3 percent decline in
average weekly hours and a 0.5 percent increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers were partially offset by a 0.2
percent rise in average hourly earnings.
The Empire State Manufacturing index rose to 8.0 in May from 3.8 in April. The new orders and shipments indexes improved and unfilled orders also improved. The prices paid index retreated from April's level. The employment index advanced moderately.
Illinois Tool Works expects earnings of $3.27 to $3.39 a share for the year.
"It's very likely we will see much higher levels of (auto) incentives this summer than we're seeing now," says Jesse Toprak, an industry analyst with Edmunds.com. Inventories are indeed creeping higher. Toprak notes that in April, a tough month for domestic producers, the average car sat for 67 days before being sold, up from 61 days in April 2006.
"You'd have to go back to Jimmy Carter, who became totally ineffective in times of crisis and whom no one respected,'' to find a president regarded as poorly by his party as Bush, said Edward Rollins, a Republican consultant and former Reagan campaign manager. Of the 33 Senate seats on the ballot next year, Republican candidates must defend 21.
Lending Tree is laying off 440 workers, or about a fifth of its staff.
Wendy's International Inc. said a special committee of its board hired JP Morgan to serve as lead advisor on the company's ongoing review of its strategic options. The Dublin, Ohio-based restaurant operator has engaged Lehman Bros. to serve as co-advisor in the evaluation by the special committee, which was formed on April 25.
Amgen made a new low at $52+, down from $77. For long-term investors, one might consider initiating a position. This is a quality company.
“Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter," Lawrence Yun, NAR's senior economist, said in a statement. "Conditions changed fairly rapidly during the boom, but we need more patience now to see a slow, gradual recovery, which should start in the second half of this year.” The national median existing single-family home price was $212,300 in the first quarter, down 1.8% from last year's $216,100. In the fourth quarter, the median price fell 2.7% from the year earlier. Foreclosure filings continued at a brisk pace. There were 147,708 filings in April, down 1% from the month prior, but up a whopping 62% from April of 2006, according to RealtyTrac.
The Cleveland Fed reports U.S. April median CPI is up 3.4% in the past year.
Royal Dutch Shell Plc announced an additional cut in Nigerian production following a community dispute in the Niger delta. Shell's venture has 137,000 barrels a day shut, while other companies have 33,000 barrels off-line, said a Shell spokesman.
The National Association of Home Builders/Wells Fargo housing market index slid three points to 30 in May, matching the 16-year low set in September.
June crude closed at $63.17 a barrel, up 71 cents for Tuesday's trading session. June reformulated gasoline rose 0.04 cent to close at $2.3016 a gallon. June natural gas gave back 8.8 cents to close at $7.864 per million British thermal units.
June gold climbed $4.40 to close at $674.50 an ounce, ending Tuesday's session at its highest closing level in almost a week. July silver rose 8 cents to close at $13.315 an ounce, while July copper gained 4.05 cents to end at $3.5375 a pound to recoup part of Monday's 3% loss.
Paul Wolfowitz's grip on the presidency of the World Bank weakened significantly, as the White House signaled it is willing to consider a change in leadership at the multilateral antipoverty institution.
Mike Splinter, president and CEO: "Applied Materials delivered higher than expected revenue and earnings this quarter. We demonstrated our ability to execute across our business lines, deliver enhanced operational performance and open new opportunities for growth, announcing our first contracts for solar cell production lines. While the market for Display remained soft, Silicon and Fab Solutions exceeded expectations fueled by continued high levels of memory investment and momentum from market share gains."
For the full year 2007, The Limited now expects earnings per share of $1.55 to $1.65, versus its initial guidance of $1.75 to $1.90. Most of this is being blamed on weakness at Victoria's Secret.
Weekly gasoline demand in April increased as much as 1.9 percent over to the same weeks in 2006 even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.
Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly — by about two-one hundredths of a percent, EIA figures showed.
It should be noted that Daimler Chrysler's first quarter results exceeded expectations; however, one would be better served looking at the full year guidance. DaimlerChrysler Ag expects earnings before interest and taxes, or EBIT, of about $9.4 billion for full year 2007. The EBIT outlook also excludes the impact of realignment activities. DaimlerChrysler said the Chrysler Group's worldwide unit sales fell 8% in the latest quarter to 642,200 vehicles. The company's Mercedes Car Group sold 271,100 vehicles in the quarter. Looking ahead, the company said it expects total revenue for 2007 to come in around the same as its 2006 total of $204.4 billion.
Home Depot's first-quarter net income dropped 30% to $1.05 billion, or 53 cents a share, from $1.48 billion, or 70 cents a share, a year ago. Sales at the home improvement retailer rose 0.6% to $21.6 billion. Home Depot said that a challenging housing market and erratic weather across the country hit its Spring selling season. It added that its review of strategic alternatives for its supply operations is ongoing. Home Depot said that the home improvement market is expected to remain soft in 2007 and, based on the first-quarter, it's now expecting earnings at the low end of its guidance range. At the beginning of 2007, the company said that it was expecting earnings per share to decline by between 4% and 9% in the year.
Wal-Mart Stores said first-quarter net income rose 8% to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Wal-Mart said the profit rise was driven by the group's Sam's Club and international operations as well as sales of food and $4 generic drugs."While these are record sales and earnings, we feel there was an opportunity to have done better," said Lee Scott, Wal-Mart president and chief executive, in a statement. It's expecting U.S. comparable-store sales to rise between 1% and 2% after a 0.6% first-quarter rise, and second-quarter earnings from continuing operations to be between 75 cents and 79 cents. Analysts were expecting second-quarter earnings of 79 cents a share.
U.K. consumer price inflation fell to 2.8% on an annualized basis in April, down from 3.1% in March as lower gas and electricity bills began to apply downward pressure on the figure, the Office for National Statistics said Tuesday.
The French economy grew at a 0.5% quarterly, or 1.1% annualized, rate in the first quarter, the INSEE statistics agency said Tuesday.
Net Long-term TIC Flows for March rose to $67.6 billion versus $58.1 billion in February. International purchases of US stocks rose to a net $14.8 billion in March versus $13.5 billion in February.
Shares in Reuters Group rose 2.4% to 620 pence a share share after the company agreed a back a $17.2 billion buyout deal from Canada's Thomson Corp.
Shares in building materials group Hanson rose 3.6% after the group agreed to accept a $15.8 billion offer from Germany's HeidelbergCement.
Mining giant Anglo American agreed to buy a 49% interest in MMX Minas-Rio for an economic value and effective price of $1.15 billion.
Xstrata Plc, the Zug, Switzerland, mining company, increased its offer for Lionore Mining of Toronto to C$25 a share from C$18.50.
Embraer Empresa Brasileira de Aeronautica SA said Tuesday its first-quarter profit fell 60 percent, as the commercial jet maker delivered fewer planes and its operating costs increased ahead of ramped-up production.
Chinese officials warned American lawmakers on Tuesday against threatening sanctions over trade disputes ahead of talks this month and said there are no plans to speed up currency reforms despite U.S. pressure.
The German economy, Europe's largest, expanded more than economists forecast in the first quarter as companies increased spending to fill export orders and the warmest winter on record boosted construction. Gross domestic product grew 0.5 percent in the three months through March from the previous quarter, when it expanded 1 percent, the Federal Statistics office in Wiesbaden said today. Economists expected growth of 0.3 percent, according to the median of 41 estimates in a Bloomberg News survey.
Japan's core private-sector machinery orders, a key gauge of corporate capital spending, fell 4.5% in March from the previous month, government data showed, well short of market expectations for a 1.3% rise. "There was a big divergence from expectations and the yen is being sold. The outlook for machinery orders was also weak," said Masafumi Yamamoto, a currency strategist for Nikko Citigroup. In addition to the headline figure, the data showed that manufacturers expect core machinery orders to fall 11.8% in April-June from the previous quarter. At this point, with the yen's extreme weakness against the dollar, one might consider nibbling on the yen. There is a good deal of value in the yen. One should note that Japan's forex reserves increased to a record in April for the third consecutive month and now total about $916 billion.
Paul Kasriel: " So, this FOMC may decide for various reasons that the U.S. economy needs a “cleansing” recession later this year or early next. If the FOMC does not cut the funds rate early in the second half, we think it will get a recession. But our base case is that a combination of weak real economic growth, a rising unemployment rate and moderating core inflation will move the FOMC to begin cutting the fed funds rate at its August 7th meeting and, with much luck, the economy might avoid a recession later this year or early next a la 1995."
Richard Daughty: "With only 88,000 jobs created in April, things are already looking pretty grim. But things could get much worse, as the government tries to trick us by adding 'hamburger flipping' to the list of manufacturing jobs."
U.S. consumer prices increased 0.4% in April. Excluding food and energy, however, the core consumer price index rose 0.2% as expected, cutting the annual gain in the core down to a one-year low of 2.3%. The CPI is up 2.6% in the past year. I don't believe these numbers for the simple reason that I purchase food items, put gas in my car, and heat as well as cool my home. When it's all said and done, let's focus on the following:
Real average weekly earnings fell by 0.5 percent from March to April after
seasonal adjustment, according to preliminary data released today by the Bureau
of Labor Statistics of the U.S. Department of Labor. A 0.3 percent decline in
average weekly hours and a 0.5 percent increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers were partially offset by a 0.2
percent rise in average hourly earnings.
The Empire State Manufacturing index rose to 8.0 in May from 3.8 in April. The new orders and shipments indexes improved and unfilled orders also improved. The prices paid index retreated from April's level. The employment index advanced moderately.
Illinois Tool Works expects earnings of $3.27 to $3.39 a share for the year.
"It's very likely we will see much higher levels of (auto) incentives this summer than we're seeing now," says Jesse Toprak, an industry analyst with Edmunds.com. Inventories are indeed creeping higher. Toprak notes that in April, a tough month for domestic producers, the average car sat for 67 days before being sold, up from 61 days in April 2006.
"You'd have to go back to Jimmy Carter, who became totally ineffective in times of crisis and whom no one respected,'' to find a president regarded as poorly by his party as Bush, said Edward Rollins, a Republican consultant and former Reagan campaign manager. Of the 33 Senate seats on the ballot next year, Republican candidates must defend 21.
Lending Tree is laying off 440 workers, or about a fifth of its staff.
Wendy's International Inc. said a special committee of its board hired JP Morgan to serve as lead advisor on the company's ongoing review of its strategic options. The Dublin, Ohio-based restaurant operator has engaged Lehman Bros. to serve as co-advisor in the evaluation by the special committee, which was formed on April 25.
Amgen made a new low at $52+, down from $77. For long-term investors, one might consider initiating a position. This is a quality company.
“Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter," Lawrence Yun, NAR's senior economist, said in a statement. "Conditions changed fairly rapidly during the boom, but we need more patience now to see a slow, gradual recovery, which should start in the second half of this year.” The national median existing single-family home price was $212,300 in the first quarter, down 1.8% from last year's $216,100. In the fourth quarter, the median price fell 2.7% from the year earlier. Foreclosure filings continued at a brisk pace. There were 147,708 filings in April, down 1% from the month prior, but up a whopping 62% from April of 2006, according to RealtyTrac.
The Cleveland Fed reports U.S. April median CPI is up 3.4% in the past year.
Royal Dutch Shell Plc announced an additional cut in Nigerian production following a community dispute in the Niger delta. Shell's venture has 137,000 barrels a day shut, while other companies have 33,000 barrels off-line, said a Shell spokesman.
The National Association of Home Builders/Wells Fargo housing market index slid three points to 30 in May, matching the 16-year low set in September.
June crude closed at $63.17 a barrel, up 71 cents for Tuesday's trading session. June reformulated gasoline rose 0.04 cent to close at $2.3016 a gallon. June natural gas gave back 8.8 cents to close at $7.864 per million British thermal units.
June gold climbed $4.40 to close at $674.50 an ounce, ending Tuesday's session at its highest closing level in almost a week. July silver rose 8 cents to close at $13.315 an ounce, while July copper gained 4.05 cents to end at $3.5375 a pound to recoup part of Monday's 3% loss.
Paul Wolfowitz's grip on the presidency of the World Bank weakened significantly, as the White House signaled it is willing to consider a change in leadership at the multilateral antipoverty institution.
Mike Splinter, president and CEO: "Applied Materials delivered higher than expected revenue and earnings this quarter. We demonstrated our ability to execute across our business lines, deliver enhanced operational performance and open new opportunities for growth, announcing our first contracts for solar cell production lines. While the market for Display remained soft, Silicon and Fab Solutions exceeded expectations fueled by continued high levels of memory investment and momentum from market share gains."
For the full year 2007, The Limited now expects earnings per share of $1.55 to $1.65, versus its initial guidance of $1.75 to $1.90. Most of this is being blamed on weakness at Victoria's Secret.
Weekly gasoline demand in April increased as much as 1.9 percent over to the same weeks in 2006 even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.
Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly — by about two-one hundredths of a percent, EIA figures showed.
Monday, May 14, 2007
Active M&A
5/15/07 Active M&A
Cardinal Health Inc. said it would pay $42.75 a share to buy Viasys Healthcare in a purchase worth about $1.5 billion. The deal values the Conshohocken, Pa. medical device firm at a premium of 35%, or $11.20 a share, over its closing price of $31.55 a share on Friday.
Cerberus Capital Management's decision to inject $7.4 billion into Chrysler in return for an 80.1% stake in the Detroit automaker is a good deal for owner DaimlerChrysler as it will relieve it from heavy pension obligations, Equinet analyst Tim Schuldt said Monday. "They're not really getting anything for it in terms of cash, but relief from pension obligations, which is quite important," he said. DaimlerChrysler will retain the remaining 19.9%.
Members of Ford Motor Co.'s founding family are discussing the sale of part of their controlling stake in the money-losing automaker, Bloomberg News reported on Monday, citing three people with direct knowledge of the talks. Ford Motor Co. family attorney David Hempstead on Monday denied a report that the Ford's are in talks to unload their controlling stake in the troubled automaker. "The Ford family is not discussing the sale of its holdings in Ford Motor Co.," he said.
Rio Tinto Group, the world`s third-largest mining company, declined to confirm or deny a report it may have hired Morgan Stanley to help defend against possible unsolicited takeover bids. London-based Rio Tinto may have appointed the bank, the Sunday Telegraph in London said without saying where it got the information. Rio on May 9 said it didn`t receive an approach from Melbourne-based BHP Billiton or other companies.
The Sunday Telegraph reported BHP Billiton Ltd., Rio Tinto Ltd., Brazil’s Cia. Vale do Rio Doce and OAO Russian Aluminum mining companies are considering bids for aluminum producer Alcan Inc. to prevent Alcoa from acquiring the company.
Saudi Arabia kept OPEC supply curbs in place through June and West African supplies faced continuing disruption. Top exporter Saudi Arabia informed its Asian and European customers at the weekend they would receive the same amount of crude in June as in May. Asia, Saudi Arabia's biggest export market, is receiving roughly 10% below full contractual supplies, sources said on Monday.
"The rate cuts that people have been expecting in earnest late last year and early this year have slowly been priced out,'' said Brian Carlin, head of fixed-income trading in New York at JPMorgan Private Bank, which oversees $100 billion. He has clients betting against two-year notes.
Reuters opined global financial markets awash in liquidity, due partly to a weak dollar, have spawned a flurry of mergers and acquisitions this year, and as long as the greenback remains soft the boom has further to run.
Brett Steenbarger: "We've been going through a stealth correction in equities, although you wouldn't know it from the price action of the major indices. Despite Friday's rally, we saw 666 stocks make fresh 20 day highs and 775 make 20 day lows across the three main exchanges. Money flow in the Dow stocks has been below the 200 day average for four of the last six sessions, including Friday. While this tailing off of money flow does *not* mean we're seeing net outflows from stocks, it does represent a tailing off of buying."
Billions of dollars' worth of Iraq's declared oil production over the past four years is unaccounted for, possibly having been siphoned off through corruption or smuggling, The New York Times said on Saturday. Between 100,000 and 300,000 barrels of Iraq's daily output of roughly 2 million barrels is missing, it said, citing a draft report prepared by the U.S. Government Accountability Office and government energy analysts which is expected to be released next week.
GE’s NBC unit could or should merge with Yahoo! according to the WSJ.
Brier Dudley: "Microsoft has cut back on content initiatives and focused on building its search business. Content has always been Yahoo!'s strength, but it doesn't have applications to respond to Google's new thrust. A partnership could fill these gaps, without sacrificing their franchises."
According to the WSJ, a surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale process. "At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%. A four-bedroom home in Oceanside, Calif., attracted a high bid of $495,000 at the auction, 33% below the sale price recorded in November 2005 for the property. One condo in San Diego sold for $120,000, less than half of its previous value."
John Hussman: "Absent speculation about a coming depression or an extreme bubble, investors would be well advised to base their expectations for market returns in the next several years averaging somewhere in a 3-4% band around zero...The latest Investors Intelligence figures are at 53.3% bulls and just 20% bears. At such points, the average return/risk profile of the market has been unfavorable, regardless of apparent market strength."
Tribune Co. said consolidated revenue for April fell 3.6% to $399 million. Publishing revenue in April was down 8.6% at $279 million, while advertising revenue tumbled 10.3% to $217 million. Circulation revenue was down 7.2% due to selective discounting in home delivery and lower single-copy sales, Chicago-based Tribune said. Broadcasting and entertainment group revenue in April rose 10.2% to $121 million, primarily due to more Cubs home games. Television revenue fell 1.1%, hurt by a significant decrease in political advertising as well as weakness in restaurant/fast food and retail, which was partially offset by strength in automotive and movies.
Dutch TV company Endemol, the creator of the "Big Brother" and "Deal or No Deal" shows, is being bought for 2.63 billion euros ($3.6 billion) by a consortium that includes the company's founder and the media empire controlled by former Italian Premier Silvio Berlusconi's family, Mediaset said Monday.
Primedia Inc. agreed to sell about 70 magazines including Motor Trend, Hot Rod and Surfer to Source Interlink Co., a company controlled by billionaire investor Ron Burkle, for $1.2 billion in cash. The sale includes 90 Web sites, Bonita Springs, Florida- based Source Interlink said today in a statement. Primedia's Enthusiast Media group had 2006 sales of $524.8 million. The sale will leave Primedia free of debt, the company said.
China's annual consumer inflation slowed a touch in April to 3.0% from a more than two-year high of 3.3% in March.
Retired Gen. Batiste: "Mr. President, you did not listen. You continue to pursue a failed strategy that is breaking your great Army and Marine Corps. I left the Army in protest in order to speak out. Mr. President, you have placed our nation in peril." Batiste was just fired by CBS. Freedon of speech is not alive and well.
Venezuelan state oil company PDVSA will take over operations of 18 oil rigs currently run by foreign companies, the nation's oil minister said in comments published in local media on Monday.
Zman: "Accuweather’s Joe Bastardi just released an update on his thoughts for the 2007 hurricane season. Two words: lookout Florida. I give credit where credit is due and Joe was the first, to my recollection, to nail the colder late winter call in mid January. He’s looking for 13 to 14 named storms in the Atlantic with multiple strikes on Florida and even some storms which strike both Florida and the Gulf Coast. Comment: Seemingly bullish for natural gas and gasoline and we’re still months away from the most active part of the season."
The WSJ reported Indian entrepreneur and beer magnate Vijay Mallya is close to an agreement to purchase distiller Whyte & Mackay of Scotland for about £600 million, or about $1.2 billion, according to people familiar with the matter.
Average retail gasoline prices in the United States rose to a record $3.14 a gallon last week, surpassing the previous record of $3.12 set in September 2005 just after Hurricane Katrina blasted the Gulf Coast.
Average prices at the pump have risen 10% in the past month and are up 37% in the past three months, the Energy Department said in its weekly report.
More than 31 million prescriptions for anti-depressants were written last year - a rise of 6 per cent on the year before, according to Mind.
June crude was up 9 cents at $62.46 a barrel. June natural gas gained 5.3 cents to end at a one-month high of $7.952 per million British thermal units.
July copper fell 3%, or 10.7 cents, to close at $3.497 a pound. June gold fell $2.20 to close at $670.10 an ounce.
Emerson has agreed to acquire Stratos International Inc. for $8 a share in cash.
Platinum supply exceeded demand last year for the first time since 1998 and the surplus will grow because of rising South African output, according to auto catalyst manufacturer Johnson Matthey Plc.
Cardinal Health Inc. said it would pay $42.75 a share to buy Viasys Healthcare in a purchase worth about $1.5 billion. The deal values the Conshohocken, Pa. medical device firm at a premium of 35%, or $11.20 a share, over its closing price of $31.55 a share on Friday.
Cerberus Capital Management's decision to inject $7.4 billion into Chrysler in return for an 80.1% stake in the Detroit automaker is a good deal for owner DaimlerChrysler as it will relieve it from heavy pension obligations, Equinet analyst Tim Schuldt said Monday. "They're not really getting anything for it in terms of cash, but relief from pension obligations, which is quite important," he said. DaimlerChrysler will retain the remaining 19.9%.
Members of Ford Motor Co.'s founding family are discussing the sale of part of their controlling stake in the money-losing automaker, Bloomberg News reported on Monday, citing three people with direct knowledge of the talks. Ford Motor Co. family attorney David Hempstead on Monday denied a report that the Ford's are in talks to unload their controlling stake in the troubled automaker. "The Ford family is not discussing the sale of its holdings in Ford Motor Co.," he said.
Rio Tinto Group, the world`s third-largest mining company, declined to confirm or deny a report it may have hired Morgan Stanley to help defend against possible unsolicited takeover bids. London-based Rio Tinto may have appointed the bank, the Sunday Telegraph in London said without saying where it got the information. Rio on May 9 said it didn`t receive an approach from Melbourne-based BHP Billiton or other companies.
The Sunday Telegraph reported BHP Billiton Ltd., Rio Tinto Ltd., Brazil’s Cia. Vale do Rio Doce and OAO Russian Aluminum mining companies are considering bids for aluminum producer Alcan Inc. to prevent Alcoa from acquiring the company.
Saudi Arabia kept OPEC supply curbs in place through June and West African supplies faced continuing disruption. Top exporter Saudi Arabia informed its Asian and European customers at the weekend they would receive the same amount of crude in June as in May. Asia, Saudi Arabia's biggest export market, is receiving roughly 10% below full contractual supplies, sources said on Monday.
"The rate cuts that people have been expecting in earnest late last year and early this year have slowly been priced out,'' said Brian Carlin, head of fixed-income trading in New York at JPMorgan Private Bank, which oversees $100 billion. He has clients betting against two-year notes.
Reuters opined global financial markets awash in liquidity, due partly to a weak dollar, have spawned a flurry of mergers and acquisitions this year, and as long as the greenback remains soft the boom has further to run.
Brett Steenbarger: "We've been going through a stealth correction in equities, although you wouldn't know it from the price action of the major indices. Despite Friday's rally, we saw 666 stocks make fresh 20 day highs and 775 make 20 day lows across the three main exchanges. Money flow in the Dow stocks has been below the 200 day average for four of the last six sessions, including Friday. While this tailing off of money flow does *not* mean we're seeing net outflows from stocks, it does represent a tailing off of buying."
Billions of dollars' worth of Iraq's declared oil production over the past four years is unaccounted for, possibly having been siphoned off through corruption or smuggling, The New York Times said on Saturday. Between 100,000 and 300,000 barrels of Iraq's daily output of roughly 2 million barrels is missing, it said, citing a draft report prepared by the U.S. Government Accountability Office and government energy analysts which is expected to be released next week.
GE’s NBC unit could or should merge with Yahoo! according to the WSJ.
Brier Dudley: "Microsoft has cut back on content initiatives and focused on building its search business. Content has always been Yahoo!'s strength, but it doesn't have applications to respond to Google's new thrust. A partnership could fill these gaps, without sacrificing their franchises."
According to the WSJ, a surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale process. "At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%. A four-bedroom home in Oceanside, Calif., attracted a high bid of $495,000 at the auction, 33% below the sale price recorded in November 2005 for the property. One condo in San Diego sold for $120,000, less than half of its previous value."
John Hussman: "Absent speculation about a coming depression or an extreme bubble, investors would be well advised to base their expectations for market returns in the next several years averaging somewhere in a 3-4% band around zero...The latest Investors Intelligence figures are at 53.3% bulls and just 20% bears. At such points, the average return/risk profile of the market has been unfavorable, regardless of apparent market strength."
Tribune Co. said consolidated revenue for April fell 3.6% to $399 million. Publishing revenue in April was down 8.6% at $279 million, while advertising revenue tumbled 10.3% to $217 million. Circulation revenue was down 7.2% due to selective discounting in home delivery and lower single-copy sales, Chicago-based Tribune said. Broadcasting and entertainment group revenue in April rose 10.2% to $121 million, primarily due to more Cubs home games. Television revenue fell 1.1%, hurt by a significant decrease in political advertising as well as weakness in restaurant/fast food and retail, which was partially offset by strength in automotive and movies.
Dutch TV company Endemol, the creator of the "Big Brother" and "Deal or No Deal" shows, is being bought for 2.63 billion euros ($3.6 billion) by a consortium that includes the company's founder and the media empire controlled by former Italian Premier Silvio Berlusconi's family, Mediaset said Monday.
Primedia Inc. agreed to sell about 70 magazines including Motor Trend, Hot Rod and Surfer to Source Interlink Co., a company controlled by billionaire investor Ron Burkle, for $1.2 billion in cash. The sale includes 90 Web sites, Bonita Springs, Florida- based Source Interlink said today in a statement. Primedia's Enthusiast Media group had 2006 sales of $524.8 million. The sale will leave Primedia free of debt, the company said.
China's annual consumer inflation slowed a touch in April to 3.0% from a more than two-year high of 3.3% in March.
Retired Gen. Batiste: "Mr. President, you did not listen. You continue to pursue a failed strategy that is breaking your great Army and Marine Corps. I left the Army in protest in order to speak out. Mr. President, you have placed our nation in peril." Batiste was just fired by CBS. Freedon of speech is not alive and well.
Venezuelan state oil company PDVSA will take over operations of 18 oil rigs currently run by foreign companies, the nation's oil minister said in comments published in local media on Monday.
Zman: "Accuweather’s Joe Bastardi just released an update on his thoughts for the 2007 hurricane season. Two words: lookout Florida. I give credit where credit is due and Joe was the first, to my recollection, to nail the colder late winter call in mid January. He’s looking for 13 to 14 named storms in the Atlantic with multiple strikes on Florida and even some storms which strike both Florida and the Gulf Coast. Comment: Seemingly bullish for natural gas and gasoline and we’re still months away from the most active part of the season."
The WSJ reported Indian entrepreneur and beer magnate Vijay Mallya is close to an agreement to purchase distiller Whyte & Mackay of Scotland for about £600 million, or about $1.2 billion, according to people familiar with the matter.
Average retail gasoline prices in the United States rose to a record $3.14 a gallon last week, surpassing the previous record of $3.12 set in September 2005 just after Hurricane Katrina blasted the Gulf Coast.
Average prices at the pump have risen 10% in the past month and are up 37% in the past three months, the Energy Department said in its weekly report.
More than 31 million prescriptions for anti-depressants were written last year - a rise of 6 per cent on the year before, according to Mind.
June crude was up 9 cents at $62.46 a barrel. June natural gas gained 5.3 cents to end at a one-month high of $7.952 per million British thermal units.
July copper fell 3%, or 10.7 cents, to close at $3.497 a pound. June gold fell $2.20 to close at $670.10 an ounce.
Emerson has agreed to acquire Stratos International Inc. for $8 a share in cash.
Platinum supply exceeded demand last year for the first time since 1998 and the surplus will grow because of rising South African output, according to auto catalyst manufacturer Johnson Matthey Plc.
Sunday, May 13, 2007
The Escalating Costs Of Acquisitions
5/14/07 The Escalating Cost Of Acquisitions
Mylan Laboratories Inc. said it definitively agreed to pay 4.9 billion euros, or about $6.7 billion, for the generic-drug operations of Merck KGaA, the Darmstadt, Germany, drugmaker. Mylan said in a statement late Saturday that it had secured funding for the deal through Merrill Lynch, Citigroup and Goldman Sachs. The deal should dilute full-year earnings in the first year, break even in year two and add significantly to earnings in year three, Mylan said. There is increased competition in the generic drug business, and it is difficult for me to put much faith in earnings estimates going out three years.
In 2006, Wisconsin produced 2.4 billion pounds of cheese, while California turned out 2.21 billion pounds. But in the past five years, California's cheese production grew 28 percent compared with Wisconsin's 8 percent, according to the California Milk Advisory Board. At current growth rates, California should pass its rival this year or next.
William Orville Douglas: “Every time you pick up the newspaper you read about one company merging with another company. Of course, we have laws to protect competition in the United States, but one can't help thinking that, if the trend continues the whole country will soon be merged into one large company.”
China's money supply growth exceeded the government target for a third month and lending accelerated, adding pressure on the central bank to raise interest rates. M2, which includes cash and all deposits, rose 17.1 percent in April from a year earlier, the People's Bank of China said on its Web site today, after gaining 17.3 percent in March.
Iran agreed to hold talks with the U.S. over Iraq, the Iranian Foreign Ministry said in comments distributed by the state-owned Islamic Republic News Agency. Iran agreed to the talks to ``relieve the pain and suffering of the Iraqi people, support the government of Prime Minister Prime Minister Nuri al-Maliki and stabilize peace and security in Iraq,'' Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying today by IRNA. The talks will be held in Iraq, with a date set by the end of this week, IRNA reported.
According to the Government Accountability Office, the top 10 oil companies in terms of reserve holdings are, with one exception, government owned. And they are in places unfriendly to America, like Iran and Venezuela, or nations already suffering from political instability, like Iraq and Nigeria, or countries in politically risky regions, such as the Mideast states of Saudi Arabia, Libya and Kuwait. Only the Mexico-owned oil company can be ranked as reliably friendly to the United States and it accounts for just 2 percent of the top 10's reserves.
Spiro T. Agnew: "The American people should be made aware of the trend toward monopolization of the great public information vehicles and the concentration of more and more power over public opinion in fewer and fewer hands."
The Oil Drum: "Sixty percent of employees confirmed that the price of gas has significantly reduced the amount of money they have to spend on other things, while 45 percent reported the need to pay off debts more slowly or not at all. Finally, 26 percent indicated that the cost of gas has necessitated going without basics such as heat or air conditioning, or even cutting back on food purchases, over the past few months."
Fortunately, inflation is muted. That's why the price of a stamp rose to 41 cents on Monday. How many increases have there been over the past 10 years?
Germany, the Netherlands, France and the U.K. have all said that Wolfowitz is more of a liability than an asset to the bank, the world's largest aid agency.
President Evo Morales vowed to move forward with his campaign to nationalize Bolivia's oil and gas industry while presiding Saturday over ceremonies marking the transfer of two Brazilian-owned oil refineries to state hands.
Bolivia this week agreed to buy back formerly state-owned refineries from Brazilian state energy company Petroleo Brasileiro SA for $112 million.
On Friday, the government announced it would negotiate the purchase of a majority share in the Bolivian operations of four more foreign companies, as dictated by Morales' nationalization decree last year.
Rigzone pointed out that BJ Tubular Services ( a BJ Services division) on Friday announced it is expanding its growing fleet of hydraulic hydrohammers with the addition of the S-280, the group's most powerful hydrohammer. Its ability to drive bigger piles and achieve deeper penetration will enable BJ to drive the larger caissons required for many construction projects being carried out in the Gulf of Mexico.
"This is where the new - extremely powerful - hydrohammer comes into play," said Brad Pellegrin, area manager – The Americas for BJ Tubular Services. "Given that this new hydrohammer has a maximum energy rate of 206,400 pounds per blow, and can deliver 45 blows per minute, we can now achieve the greater penetration required for the larger caissons and piles." Beyond construction applications, the hydrohammer may be used to drive well conductors, too. Operators exploring for deep gas on the continental shelf often require longer, heavier casing strings for their wells. This means the conductors must support much more weight. As a result, the conductors being driven are much larger, many measuring 96-inches x 60-inches. "We're not completely surprised at the amount of interest in this new hammer due to recent trends we've seen in the offshore pile-driving market. We knew once engineers found out about this new tool, it would be the hammer of choice for many projects," said Dow Drobish, country manager-USA for BJ Tubular Services, who manages operations in the Gulf of Mexico.
From the BBC via The Daily Reckoning: "So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI). "For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years. "During the five years from 2000 to 2005, the U.S. economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. "Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%. "But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s..."From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%. "The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262. In the 1960s, the comparable figure was 24." In other words, the ratio of the top earners to the bottom earners has risen 1000% since the Johnson administration.
Jim Rogers: “Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich”
Mylan Laboratories Inc. said it definitively agreed to pay 4.9 billion euros, or about $6.7 billion, for the generic-drug operations of Merck KGaA, the Darmstadt, Germany, drugmaker. Mylan said in a statement late Saturday that it had secured funding for the deal through Merrill Lynch, Citigroup and Goldman Sachs. The deal should dilute full-year earnings in the first year, break even in year two and add significantly to earnings in year three, Mylan said. There is increased competition in the generic drug business, and it is difficult for me to put much faith in earnings estimates going out three years.
In 2006, Wisconsin produced 2.4 billion pounds of cheese, while California turned out 2.21 billion pounds. But in the past five years, California's cheese production grew 28 percent compared with Wisconsin's 8 percent, according to the California Milk Advisory Board. At current growth rates, California should pass its rival this year or next.
William Orville Douglas: “Every time you pick up the newspaper you read about one company merging with another company. Of course, we have laws to protect competition in the United States, but one can't help thinking that, if the trend continues the whole country will soon be merged into one large company.”
China's money supply growth exceeded the government target for a third month and lending accelerated, adding pressure on the central bank to raise interest rates. M2, which includes cash and all deposits, rose 17.1 percent in April from a year earlier, the People's Bank of China said on its Web site today, after gaining 17.3 percent in March.
Iran agreed to hold talks with the U.S. over Iraq, the Iranian Foreign Ministry said in comments distributed by the state-owned Islamic Republic News Agency. Iran agreed to the talks to ``relieve the pain and suffering of the Iraqi people, support the government of Prime Minister Prime Minister Nuri al-Maliki and stabilize peace and security in Iraq,'' Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying today by IRNA. The talks will be held in Iraq, with a date set by the end of this week, IRNA reported.
According to the Government Accountability Office, the top 10 oil companies in terms of reserve holdings are, with one exception, government owned. And they are in places unfriendly to America, like Iran and Venezuela, or nations already suffering from political instability, like Iraq and Nigeria, or countries in politically risky regions, such as the Mideast states of Saudi Arabia, Libya and Kuwait. Only the Mexico-owned oil company can be ranked as reliably friendly to the United States and it accounts for just 2 percent of the top 10's reserves.
Spiro T. Agnew: "The American people should be made aware of the trend toward monopolization of the great public information vehicles and the concentration of more and more power over public opinion in fewer and fewer hands."
The Oil Drum: "Sixty percent of employees confirmed that the price of gas has significantly reduced the amount of money they have to spend on other things, while 45 percent reported the need to pay off debts more slowly or not at all. Finally, 26 percent indicated that the cost of gas has necessitated going without basics such as heat or air conditioning, or even cutting back on food purchases, over the past few months."
Fortunately, inflation is muted. That's why the price of a stamp rose to 41 cents on Monday. How many increases have there been over the past 10 years?
Germany, the Netherlands, France and the U.K. have all said that Wolfowitz is more of a liability than an asset to the bank, the world's largest aid agency.
President Evo Morales vowed to move forward with his campaign to nationalize Bolivia's oil and gas industry while presiding Saturday over ceremonies marking the transfer of two Brazilian-owned oil refineries to state hands.
Bolivia this week agreed to buy back formerly state-owned refineries from Brazilian state energy company Petroleo Brasileiro SA for $112 million.
On Friday, the government announced it would negotiate the purchase of a majority share in the Bolivian operations of four more foreign companies, as dictated by Morales' nationalization decree last year.
Rigzone pointed out that BJ Tubular Services ( a BJ Services division) on Friday announced it is expanding its growing fleet of hydraulic hydrohammers with the addition of the S-280, the group's most powerful hydrohammer. Its ability to drive bigger piles and achieve deeper penetration will enable BJ to drive the larger caissons required for many construction projects being carried out in the Gulf of Mexico.
"This is where the new - extremely powerful - hydrohammer comes into play," said Brad Pellegrin, area manager – The Americas for BJ Tubular Services. "Given that this new hydrohammer has a maximum energy rate of 206,400 pounds per blow, and can deliver 45 blows per minute, we can now achieve the greater penetration required for the larger caissons and piles." Beyond construction applications, the hydrohammer may be used to drive well conductors, too. Operators exploring for deep gas on the continental shelf often require longer, heavier casing strings for their wells. This means the conductors must support much more weight. As a result, the conductors being driven are much larger, many measuring 96-inches x 60-inches. "We're not completely surprised at the amount of interest in this new hammer due to recent trends we've seen in the offshore pile-driving market. We knew once engineers found out about this new tool, it would be the hammer of choice for many projects," said Dow Drobish, country manager-USA for BJ Tubular Services, who manages operations in the Gulf of Mexico.
From the BBC via The Daily Reckoning: "So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI). "For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years. "During the five years from 2000 to 2005, the U.S. economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%. "Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%. "But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s..."From 1992 to 2005, the pay of chief executive officers of major companies rose by 186%. "The equivalent figure for median hourly wages was 7.2%, leaving the ratio of CEOs' pay to that of the average worker at 262. In the 1960s, the comparable figure was 24." In other words, the ratio of the top earners to the bottom earners has risen 1000% since the Johnson administration.
Jim Rogers: “Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich”
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