11/8/07 When They Raid....
The hottest home market in the U.S. has been in King County, Wa. However, in the month of October, the median price of homes sold in King County declined compared with a year ago. It was the first decline since he nationwide recession in the early 1990s. According to the Northwest Multiple Listing Service, the number of single-family houses and condos on the market in King County jumped 44% compared with last year. For each of the past six months, the supply has been at least 40% higher than a year ago. In sum, when they raid the whore house, they take all the girls-- even if your sister, the best looking of the bunch, is the last to go.
In early Wednesday trading, January-dated platinum futures rose as high as $1,498.80 an ounce and silver futures rose as high as $16.275 an ounce. Gold rose to a 27-year high. Crude traded above $98. Meanwhile, The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves. The dollar fell against all 16 of the most-active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar. The New York Board of Trade's dollar index dropped to 75.21 today, the lowest since the gauge started in March 1973. In other words, the purchasing power on Main Street got crushed.
Navigation device maker TomTom said it intends to make a new offer for digital map provider Tele Atlas of 30 euros a share in cash. The new offer values the company at 2.9 billion euros, trumping a 24.50 euro-a-share bid from Garmin received last week. TomTom's new offer represents an 81% premium to the Tele Atlas closing price on July 20, the last day before the first bid for the company emerged.
Australia raised its key interest rates by a quarter percentage point Wednesday, its second hike in 2007, to contain inflation. The Reserve Bank of Australia's cash rate target stands at 6.75% following the increase.
GM posted a $38.96 billion quarterly net loss, hurt by a large charge related to tax accounting, though it narrowed its loss at its core North American operations.
Richard Daughty: "So Mr. Mishkin joins Alan Greenspan, running around saying, "It's not my fault! It's not my fault!", when the whole world spent all that time watching him and the Fed bludgeoning the dollar, then standing over the prostrate, bloody body of the dollar, holding the murder weapon in his hands! Not his fault? There is nobody else whose fault it could be!"
The president of the Federal Reserve Bank of Philadelphia said he already expected growth to slow to an annual pace of 1.5 percent or less. But he said he would not support another rate cut unless the slowdown appeared to be even sharper than that.
"We will favor stronger currencies over weaker ones, and will readjust accordingly," said Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. At the same conference, Xu Jian, a central bank vice director, said the dollar is losing its exclusive status. "The world's currency structure has changed; the dollar is losing its status as the world currency," Xu said.
At $3.05, heating oil price sets a Mass. record. Only 7 percent of U.S. households use heating oil, also known as "red diesel," to heat their homes, but in the cold Northeastern states about 32 percent of households do. Maine has the highest usage with about 80 percent.
Capital One Financial Corp. said it could record several hundred million dollars more in charge-offs in 2008 than previously forecast, due to persistent loan delinquencies and the troubled housing market. The stock got crushed.
Washington Mutual, the largest U.S. savings and loan, said on Wednesday it expects credit losses in the first quarter of 2008 similar to those in the current quarter as the slumping U.S. housing market makes it more difficult for people to pay their bills. The Seattle-based thrift maintained its Oct. 17 forecast for 2007 credit losses of $2.7 billion to $2.9 billion, nearly twice as high as it projected in July. The stock got crushed and traded below $20.
Six in 10 U.S. consumers say a recession is likely in the next three to six months, a new survey on holiday spending said Wednesday.
Dorothy Thompson: "There is nothing to fear except the persistent refusal to find out the truth, the persistent refusal to analyze the causes of happenings."
The FT says that the "super-fund" to bail out financial instruments tied to mortgage-backed securities may be dead. Speaking about the fund to the paper: “As far as we can see, it appears dead in the water right now,” said one senior Wall Street banker. According to the FT, "some observers fear it might now prove impossible to create the superfund quickly enough to help banks deal with the funding problems dogging SIVs – off-balance sheet entities that use short-term debt to fund longer-dated investments."
According to the FT, there have been 76 abandoned buyout deals worth $202.3 billion so far in 2007. That's not chicken feed.
The productivity of the U.S. nonfarm workplace jumped at an annual rate of 4.9% in the third quarter, the fastest growth in four years, the Labor Department reported Wednesday. Unit labor costs, a key gauge of inflationary pressures from wages, fell at an annual rate of 0.2% in the period between July and September, the lowest in a year. Economists were forecasting a 3.6% increase in productivity and a 0.8% rise in unit labor costs. In the past year, productivity increased 2.4%, the largest four-quarter growth since early 2005. Unit labor costs have risen 4.3%. Downward revisions to the second quarter took some of the luster off the third-quarter results. Productivity was revised lower to 2.2% from 2.6%, while unit labor costs were revised up to 2.2% from 1.4%. Overall, the above numbers reveal the average employee has worked his/her butt off and not received commensurate compensation. That's why so many believe life sucks in the slow lane.
The risk of companies defaulting on their debt rose to the highest since August on concern banks face more writedowns on bonds linked to subprime mortgages, according to traders of credit-default swaps. Contracts on the iTraxx Crossover Series 8 Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 12 basis points to 357 basis points, the highest since Aug. 16 when mortgage lender Countrywide Financial Corp. drew on emergency funding to stay afloat. Contracts on the CDX North America Investment-Grade Series 9 index also rose.
WCI will cut about 575 workers and this reduction is expected to generate annual savings of roughly $46 million in salary and benefits. Restructuring costs are forecast at $5.4 million, with about $1 million booked in the third quarter and the rest in the fourth quarter."This prolonged downturn requires that we continue to assess our overhead and make reductions in order to remain viable through the trough of this cycle," said Jerry Starkey, chief executive, in the statement.
"Our remaining workforce of roughly 2,100 employees represents a 46% reduction from our peak employment in mid-2006 of 3,889 employees," the CEO added.
AOL agreed to buy online advertising company Quigo for an undisclosed sum. Quigo's technology lets advertisers buy Web ads based on specific pages, sections, topics or keywords. Its FeedPoint search engine marketing business helps advertisers manage their relationships with search engines and comparison shopping sites. Quigo will be the fourth advertising company AOL bought this year. Earlier, the company acquired mobile advertising company Third Screen Media, German ad platform ADTECH AG, and TACODA, a behavioral targeting company.
The U.S. Energy Department said U.S. crude oil inventories in the week ending Nov. 2 fell by 800,000 million barrels, gasoline inventories fell by 800,000 barrels last week, and distillate stocks increased by 100,000 barrels. Meanwhile, crude supplies rose by 2.3 million barrels to 313.3 million barrels in the week ending Nov. 2, the American Petroleum Institute reported on Wednesday. Distillate stocks rose by 0.5 million barrels to 136.7 million barrels in the same period, while gasoline stocks fell by 2.5 million barrels to 193.6 million barrels, API said.
Federal Reserve Bank of St. Louis President William Poole said the housing industry's woes may not end soon and policy makers might need to consider ``additional rate cuts'' should the problems spread.
This pertains to FASB 157, a subject I wrote about yesterday. U.S. banks and brokers face as much as $100 billion of writedowns because of Level 3 accounting rules, in addition to the losses caused by the subprime credit slump, according to Royal Bank of Scotland Group Plc. The Financial Accounting Standards Board's rule 157 will make it harder for companies to avoid putting market prices on securities considered hardest to value, known as Level 3 assets, Royal Bank's chief credit strategist Bob Janjuah in London wrote in a note today. The new rule is effective Nov. 15.
Morgan Stanley expects fourth-quarter earnings to be reduced by about $2.5 billion from a write-down of its U.S. subprime exposure.The Wall Street investment bank said revenue has been reduced by $3.7 billion for the two months ended Oct. 31 because of the write-down. It said the actual impact on quarterly results will be determined by market events. Some observers had expected a larger write-down.
In mid-morning trading on Wed., the VIX rallied sharply to back over 25. By the end of the day it had jumped to 26.49, a rise of 5 points for the day.
Gold at record closing high of $833.50 an ounce on Nymex. Crude oil for December delivery closed on Wednesday down 33 cents, or 0.3%, at $96.37 a barrel on the New York Mercantile Exchange.
It was just a matter of time. Too many Hindenburg Omens. The Dow dropped 361, the Nasdaq 76, and the S&P 500 declined 45 points.
Bertrand Russell: "Collective fear stimulates herd instinct, and tends to produce ferocity toward those who are not regarded as members of the herd."
American International Group's third-quarter net income came in at $3.09 billion, or $1.19 a share, down 27% from a year earlier when the insurance giant made $4.22 billion or $1.61 a share. Adjusted net income, which excludes net realized investment gains and losses and other items, was $3.49 billion, or $1.35 a share, the company reported. AIG was expected to make $1.62 a share, according to the average estimate of 19 analysts in a Thomson Financial survey. AIG's mortgage guaranty business reported an operating loss in the quarter amid continued deterioration in the U.S. housing market. The company's derivatives unit, AIG Financial Products, also reported an operating loss in the quarter due mainly to unrealized market valuation losses in its credit default swap portfolio.
The stock got crushed for 6 points to $56.
Cisco's CEO Chambers: "We continue to believe with caveats that long term growth 12-17% guidance year over year.... Cisco will always be affected by spending patterns etc.... GUIDANCE for fiscal 2008 is middle of long-term rate and the 13-16% was right in middle of range. Revenue guidance for Q2 2008 revenue growth of 16% year over year. "We will execute similar stratgey for the next decade that we did in early 1990's...."We too see some of the same problems evident in US market, but believes Cisco is in a unique position. The US enterprise is experiencing some softness, and it sees lumpy growth from U.S. enterprises....." "We believe that in Web 2.0, WE ARE IN THE FIRST INNING OF A NINE INNING GAME....." Profit taking hit the shares for $4 and they traded at $29+. Wall Street is not for the faint of heart these days.
Consumer credit rose at an annual rate of 1.8% in September as credit card debt and non-revolving debt like auto loans both grew at a slower pace. The overall increase of $3.7 billion pushed total outstanding consumer credit up to $2.48 trillion in September, the Federal Reserve said. Revolving credit like credit card debt climbed by 4.4% versus 9.3% in August, while non-revolving credit rose by 0.3% compared to 6.4% in September.
Moody's Investors Service said on Wednesday that it has cut or may downgrade ratings on structured investment vehicles (SIVs) with roughly $33 billion in debt. SIVs are a type of fund that borrow short term in asset-backed commerical paper markets and then invest that money in longer-term assets such as mortgage-backed securities and collateralized debt obligations.
More than 6,800 properties in the 13 core counties of metro Atlanta were advertised for auction Tuesday — a record setting number, up 49 percent from the same month last year.
According to the WSJ, Fitch Ratings says downgrades of corporate bonds rose in the third quarter to $92.1 billion, their highest level in two years. Meantime, interest rates on junk bonds have risen, potentially straining the ability of low-grade issuers to tap the credit markets for fresh loans or to refinance existing debt. Fitch predicts a jump in corporate defaults, from less than 1% of all debt outstanding in 2007 to more than 4% in 2008. If this happens, it will become harder still for companies to borrow.
Wally Amos: "There are two reasons why people fail. One is irresponsibility. The second is fear."
Wednesday, November 07, 2007
Tuesday, November 06, 2007
Tougher Times
11/7/07 Tougher Times
Central bankers past and present warned on Tuesday of more pain to come for the U.S. economy and that banks worldwide could take several months yet to reveal full losses from U.S. subprime mortgage lending.
Nouriel Roubini: "It is now clear that the delusional hope that the severe credit and liquidity crunch that hit US and global financial markets would ease has been shattered by the events of the last few weeks. This credit crunch is getting much worse and its financial and real fallout will be severe.The amount of losses that financial institutions have already recognized - $20 billion – is just the very tip of the iceberg of much larger losses that will end up in the hundreds of billions of dollars. At stake – in subprime alone – is about a trillion of sub-prime related RMBS and hundreds of billions of mortgage related CDOs. But calling this crisis a sub-prime meltdown is ludicrous as by now the contagion has seriously spread to near prime and prime mortgages. And it is spreading to subprime and near prime credit cards and auto loans where deliquencies are rising and will sharply rise further in the year ahead. And it is spreading to every corner of the securitized financial system that is either frozen or on the way to freeze: CDOs issuance is near dead; the LBO market – and the related leveraged loans market – is piling deals that have been postponed, restructured or cancelled; the liquidity squeeze in the interbank market – especially at the one month to three months maturities - is continuing; the losses that banks and investment banks will experience in the next few quarters will erode their Tier 1 capital ratio; the ABCP and related SIV sectors are near dead and unraveling; and since the Super-conduit will flop the only options are those of bringing those SIV assets on balance sheet (with significant capital and liquidity effects) or sell them at a large loss; similar problems and crunches are emerging in the CLO, CMO and CMBS markets; junk bonds spreads are widening and corporate default rates will soon start to rise. Every corner of the securitization world is now under severe stress, including so called highly rated and “safe” (AAA and AA) securities."
Henry Miller: “Actually we are a vulgar, pushing mob whose passions are easily mobilized by demagogues, newspaper men, religious quacks, agitators and such like. To call this a society of free peoples is blasphemous. What have we to offer the world besides the superabundant loot which we recklessly plunder from the earth under the maniacal delusion that this insane activity represents progress and enlightenment?”
Citigroup Inc. may have to write down an additional $2.7 billion worth of subprime-mortgage backed and related securities, boosting its losses from asset-backed bonds to as much as $13.7 billion, CreditSights Inc. said. That would wipe out its reported profit so far this year.
In early Tuesday trading, the U.S. dollar slumped to a new record low against the euro, with the euro rising as high as $1.4555. Gold futures surged $10.90 to $821.80 an ounce. Silver topped $15. December oil futures pushed to $97 a barrel, a record.
IndyMac Bancorp Inc., a major mortgage lender, swung to a third-quarter net loss from a year-earlier profit. The loss reflects credit costs, wider spreads in the secondary mortgage market, and severance costs, offset in part by hedging efforts and the sale and leaseback of a property, IndyMac said. The loss was $202.7 million, or $2.77 a share, compared with net income of $86.2 million, or $1.19, in the year-earlier period.
CIBC analyst Meredith Whitney -- whose downgrade of Citi last week triggered a sharp drop in the stock and the retirement of CEO Charles Prince -- told the Daily Telegraph newspaper the only way forward is to carve the bank up and sell it off. "That's really the only thing they can do. They don't have the capital to manage it as an ongoing entity," she told the paper.
Hovnanian Enterprises Inc. reported that for the fourth quarter ended Oct. 31, it delivered 3,969 homes, 19% fewer than in the year-earlier period. In the quarter, Hovnanian signed contracts on 2,781 homes, down 10% from a year earlier. Tighter mortgage-underwriting standards led to an increase in the quarter's cancellation rate to 40% from 35%. Contract backlog at Oct. 31 was 5,938 homes, down 30% from a year earlier. The company said that it reduced the debt on its balance sheet by $390 million in the period. Ara Hovnanian, chief executive of home builder Hovnanian Enterprises Inc., said U.S. housing won't likely get back to a "balanced marketplace" until 2010. Meanwhile, 2008 will be "another challenging year" and he's not looking for strong earnings from home builders. "By the tail end of 2008 we should get some positive momentum in sales, setting up a recovery in 2009," Hovnanian said. Home builders by then should return to profitability, although earnings will be more meager than the recent boom years.
Beazer Homes USA will cut 650 positions, or 25% of its workforce, and halted its 10-cents a share dividend. Preliminary figures showed home closings down 39% and new home orders down 53% on a 68% cancellation rate. The company is still working to complete restatements.
U.K. Chancellor Alistair Darling made the final decision to rule out a potential takeover of stricken lender Northern Rock by Lloyds TSB said Bank of England governor Mervyn King, according to a BBC report.
Shares of Alibaba.com jumped 129% in early trade amid strong retail interest in the online export facilitator. Shares of Alibaba.com were quoted at HK$31.00 in early trade, up from its initial offering price of HK$13.50.
Overall, ICSC continues to expect that October sales will increase by about 2%, on a year-over-year basis.
The average pump price for diesel fuel in the U.S. soared to an all-time high -- even when adjusted for inflation -- of $3.303 a gallon over the last week, the Energy Department said. What impact will this record price have on the trucking company margins or will they simply tack on a fuel surcharge to customers? Either way, it's more inflation in the pipeline(no pun intended).
Japan's broadest indicator of the outlook for the economy fell to the lowest level in a decade, signaling growth may stall. The leading index was zero percent in September, the Cabinet Office said.
"Everyone is being very risk-averse," says Bill Larkin, fixed-income portfolio manager at Cabot Money Management, who notes Treasury bond prices are so high they offer "ridiculously low yields." Taking inflation into account, they barely offer any real return at all, he says.
John Adams: “These bickerings of opposite parties, and their mutual reproaches their declamations, their sing-song, their triumphs and defiance, their dismal and prophecies, are all delusion.”
China may become a net exporter of stainless steel next year as output rises faster than demand growth, said Baoshan Iron & Steel, the nation’s second-largest producer of the alloy.
Gov. Arnold Schwarzenegger ordered all state departments to draft plans for deep spending cuts after receiving word that California's budget is plunging further into the red -- largely because of the troubled housing market.
State officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state's accounts in order.
George Soros forecast on that the U.S. economy is "on the verge of a very serious economic correction" after decades of overspending.
Valero Energy's third-quarter earnings fell 20 percent as the margins to make gasoline fell sharply from the record levels reached in the second quarter. Net income fell to $1.27 billion, or $2.09 a share, from $1.60 billion, or $2.55 a share, in the year-ago period. Excluding items, Valero posted quarterly earnings from continuing operations of $1.40 a share.
"We've only begun to see the pain from the standpoint of the homeowner in terms of those monthly payments," said Bill Gross, chief investment officer of Pacific Investment Management or Pimco. "Defaults and delinquencies will increase as we extend throughout 2007 and into 2008."
According to The Chicago Tribune "sources close to the situation said Gannett Co (GCI)., Tribune Co (TRB)., Hearst Corp., Media News Group and Cox Newspapers may band together to form a common ad sales force that could offer national advertisers "one-stop shopping" for ad space on big-market Web sites across the nation.
Microsoft was removed from Conviction Buy List at Goldman Sachs.
Brett Steenbarger: "The wise trader told me that there are only two types of trades: winning trades and trades where you pay for information."
The Oil Drum: "The Organization of Petroleum Exporting Countries raised production 1.6 percent in October in advance of the group's pledge to increase supplies starting this month, a Bloomberg News Survey showed. OPEC pumped an average 31.16 million barrels a day last month, up 495,000 barrels from September, according to the survey of oil companies, producers and analysts. The 10 members with production quotas, all except Angola and Iraq, increased output by 305,000 barrels to 27.135 million barrels a day, the highest since October 2006."
China's two main oil companies have promised to step up diesel production, the government said Tuesday, following two weeks of shortages blamed on price controls that have disrupted trucking and caused long lines at filling stations.
Will Hutton
Sunday November 4, 2007
The Observer : "I have been following the financial markets for more than 30 years. Crises have come and gone, but the one unfolding since August and which intensified last week is the most serious. It is not just that its impact is cascading around the world because of the new interconnectedness of global finance, it is that the authorities, particularly in Britain and America, have lost control and do not have the means to regain it as quickly as we might hope. With an oil price approaching $100 a barrel, we are in an uncharted and dangerous place."
Peabody forecast EBITDA from continuing operations of $900 million to $1 billion with earnings of $1.50 to $1.75 a share.
Emerson Electric Co. said Tuesday it expects its fiscal 2008 earnings per share to be up 10 percent to 15 percent from its 2007 results. Based on the company's 2007 profit of $2.66 per share, the outlook implies a profit of $2.93 per share to $3.06 per share for the year. Analysts polled by Thomson Financial expect a 2008 profit of $2.98. The company also projected reported sales growth of 7 percent to 10 percent for 2008.
Ryland CEO Chad Dreier said shaky consumer confidence is still the biggest issue impacting the housing market. Buyers are nervous they will buy a house only to see the price fall later, the CEO said at an investment conference hosted by UBS. Although he said price incentives from builders aren't likely to get any bigger than they currently are, he said there was nothing in the housing market to make him "feel good" at the moment.
The last time Nordstrom's traded at $33+ was early in the third quarter of 2006. The last time Starbucks traded at $24+ was in the third quarter of 2005. The last time Citigroup sold at $34+ was in the first quarter of 2003. The latter maintains they will keep paying the dividend. Thus the stock now yields 6%+.
A judge Monday set a tentative July trial date in the dispute between Sallie Mae and an investor group seeking to terminate its proposed $25 billion buyout of the student lender. Vice Chancellor Leo Strine Jr. said the trial date could be pushed back if Sallie Mae wants a preliminary ruling on whether legislation enacted after it agreed in April to be bought out represents a material adverse effect, nullifying the deal.
On Nov. 15, FASB 157 goes into effect. Here is a link telling you about these new accounting standards:
http://www.fasb.org/st/summary/stsum157.shtml
Crude oil futures closed up $2.72, or 2.9%, at a new record closing high of $96.70 a barrel on the New York Mercantile Exchange.
Gold futures rallied Tuesday to their highest level since 1980. Gold for December delivery rose $12.60 to end at $823.40 an ounce on the New York Mercantile Exchange.
The U.S. Dollar Index fell to another new low at 76.02.
In favor and out of favor: Gamestop has a market cap of $9.4 billion. Nordstrom's has a market cap of $8.1 billion. How long will that disparity continue?
The VIX dropped almost $3 to just below $22.
Will Rogers: “If we ever pass out as a great nation we ought to put on our tombstone 'America died from a delusion that she had moral leadership'.”
Central bankers past and present warned on Tuesday of more pain to come for the U.S. economy and that banks worldwide could take several months yet to reveal full losses from U.S. subprime mortgage lending.
Nouriel Roubini: "It is now clear that the delusional hope that the severe credit and liquidity crunch that hit US and global financial markets would ease has been shattered by the events of the last few weeks. This credit crunch is getting much worse and its financial and real fallout will be severe.The amount of losses that financial institutions have already recognized - $20 billion – is just the very tip of the iceberg of much larger losses that will end up in the hundreds of billions of dollars. At stake – in subprime alone – is about a trillion of sub-prime related RMBS and hundreds of billions of mortgage related CDOs. But calling this crisis a sub-prime meltdown is ludicrous as by now the contagion has seriously spread to near prime and prime mortgages. And it is spreading to subprime and near prime credit cards and auto loans where deliquencies are rising and will sharply rise further in the year ahead. And it is spreading to every corner of the securitized financial system that is either frozen or on the way to freeze: CDOs issuance is near dead; the LBO market – and the related leveraged loans market – is piling deals that have been postponed, restructured or cancelled; the liquidity squeeze in the interbank market – especially at the one month to three months maturities - is continuing; the losses that banks and investment banks will experience in the next few quarters will erode their Tier 1 capital ratio; the ABCP and related SIV sectors are near dead and unraveling; and since the Super-conduit will flop the only options are those of bringing those SIV assets on balance sheet (with significant capital and liquidity effects) or sell them at a large loss; similar problems and crunches are emerging in the CLO, CMO and CMBS markets; junk bonds spreads are widening and corporate default rates will soon start to rise. Every corner of the securitization world is now under severe stress, including so called highly rated and “safe” (AAA and AA) securities."
Henry Miller: “Actually we are a vulgar, pushing mob whose passions are easily mobilized by demagogues, newspaper men, religious quacks, agitators and such like. To call this a society of free peoples is blasphemous. What have we to offer the world besides the superabundant loot which we recklessly plunder from the earth under the maniacal delusion that this insane activity represents progress and enlightenment?”
Citigroup Inc. may have to write down an additional $2.7 billion worth of subprime-mortgage backed and related securities, boosting its losses from asset-backed bonds to as much as $13.7 billion, CreditSights Inc. said. That would wipe out its reported profit so far this year.
In early Tuesday trading, the U.S. dollar slumped to a new record low against the euro, with the euro rising as high as $1.4555. Gold futures surged $10.90 to $821.80 an ounce. Silver topped $15. December oil futures pushed to $97 a barrel, a record.
IndyMac Bancorp Inc., a major mortgage lender, swung to a third-quarter net loss from a year-earlier profit. The loss reflects credit costs, wider spreads in the secondary mortgage market, and severance costs, offset in part by hedging efforts and the sale and leaseback of a property, IndyMac said. The loss was $202.7 million, or $2.77 a share, compared with net income of $86.2 million, or $1.19, in the year-earlier period.
CIBC analyst Meredith Whitney -- whose downgrade of Citi last week triggered a sharp drop in the stock and the retirement of CEO Charles Prince -- told the Daily Telegraph newspaper the only way forward is to carve the bank up and sell it off. "That's really the only thing they can do. They don't have the capital to manage it as an ongoing entity," she told the paper.
Hovnanian Enterprises Inc. reported that for the fourth quarter ended Oct. 31, it delivered 3,969 homes, 19% fewer than in the year-earlier period. In the quarter, Hovnanian signed contracts on 2,781 homes, down 10% from a year earlier. Tighter mortgage-underwriting standards led to an increase in the quarter's cancellation rate to 40% from 35%. Contract backlog at Oct. 31 was 5,938 homes, down 30% from a year earlier. The company said that it reduced the debt on its balance sheet by $390 million in the period. Ara Hovnanian, chief executive of home builder Hovnanian Enterprises Inc., said U.S. housing won't likely get back to a "balanced marketplace" until 2010. Meanwhile, 2008 will be "another challenging year" and he's not looking for strong earnings from home builders. "By the tail end of 2008 we should get some positive momentum in sales, setting up a recovery in 2009," Hovnanian said. Home builders by then should return to profitability, although earnings will be more meager than the recent boom years.
Beazer Homes USA will cut 650 positions, or 25% of its workforce, and halted its 10-cents a share dividend. Preliminary figures showed home closings down 39% and new home orders down 53% on a 68% cancellation rate. The company is still working to complete restatements.
U.K. Chancellor Alistair Darling made the final decision to rule out a potential takeover of stricken lender Northern Rock by Lloyds TSB said Bank of England governor Mervyn King, according to a BBC report.
Shares of Alibaba.com jumped 129% in early trade amid strong retail interest in the online export facilitator. Shares of Alibaba.com were quoted at HK$31.00 in early trade, up from its initial offering price of HK$13.50.
Overall, ICSC continues to expect that October sales will increase by about 2%, on a year-over-year basis.
The average pump price for diesel fuel in the U.S. soared to an all-time high -- even when adjusted for inflation -- of $3.303 a gallon over the last week, the Energy Department said. What impact will this record price have on the trucking company margins or will they simply tack on a fuel surcharge to customers? Either way, it's more inflation in the pipeline(no pun intended).
Japan's broadest indicator of the outlook for the economy fell to the lowest level in a decade, signaling growth may stall. The leading index was zero percent in September, the Cabinet Office said.
"Everyone is being very risk-averse," says Bill Larkin, fixed-income portfolio manager at Cabot Money Management, who notes Treasury bond prices are so high they offer "ridiculously low yields." Taking inflation into account, they barely offer any real return at all, he says.
John Adams: “These bickerings of opposite parties, and their mutual reproaches their declamations, their sing-song, their triumphs and defiance, their dismal and prophecies, are all delusion.”
China may become a net exporter of stainless steel next year as output rises faster than demand growth, said Baoshan Iron & Steel, the nation’s second-largest producer of the alloy.
Gov. Arnold Schwarzenegger ordered all state departments to draft plans for deep spending cuts after receiving word that California's budget is plunging further into the red -- largely because of the troubled housing market.
State officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state's accounts in order.
George Soros forecast on that the U.S. economy is "on the verge of a very serious economic correction" after decades of overspending.
Valero Energy's third-quarter earnings fell 20 percent as the margins to make gasoline fell sharply from the record levels reached in the second quarter. Net income fell to $1.27 billion, or $2.09 a share, from $1.60 billion, or $2.55 a share, in the year-ago period. Excluding items, Valero posted quarterly earnings from continuing operations of $1.40 a share.
"We've only begun to see the pain from the standpoint of the homeowner in terms of those monthly payments," said Bill Gross, chief investment officer of Pacific Investment Management or Pimco. "Defaults and delinquencies will increase as we extend throughout 2007 and into 2008."
According to The Chicago Tribune "sources close to the situation said Gannett Co (GCI)., Tribune Co (TRB)., Hearst Corp., Media News Group and Cox Newspapers may band together to form a common ad sales force that could offer national advertisers "one-stop shopping" for ad space on big-market Web sites across the nation.
Microsoft was removed from Conviction Buy List at Goldman Sachs.
Brett Steenbarger: "The wise trader told me that there are only two types of trades: winning trades and trades where you pay for information."
The Oil Drum: "The Organization of Petroleum Exporting Countries raised production 1.6 percent in October in advance of the group's pledge to increase supplies starting this month, a Bloomberg News Survey showed. OPEC pumped an average 31.16 million barrels a day last month, up 495,000 barrels from September, according to the survey of oil companies, producers and analysts. The 10 members with production quotas, all except Angola and Iraq, increased output by 305,000 barrels to 27.135 million barrels a day, the highest since October 2006."
China's two main oil companies have promised to step up diesel production, the government said Tuesday, following two weeks of shortages blamed on price controls that have disrupted trucking and caused long lines at filling stations.
Will Hutton
Sunday November 4, 2007
The Observer : "I have been following the financial markets for more than 30 years. Crises have come and gone, but the one unfolding since August and which intensified last week is the most serious. It is not just that its impact is cascading around the world because of the new interconnectedness of global finance, it is that the authorities, particularly in Britain and America, have lost control and do not have the means to regain it as quickly as we might hope. With an oil price approaching $100 a barrel, we are in an uncharted and dangerous place."
Peabody forecast EBITDA from continuing operations of $900 million to $1 billion with earnings of $1.50 to $1.75 a share.
Emerson Electric Co. said Tuesday it expects its fiscal 2008 earnings per share to be up 10 percent to 15 percent from its 2007 results. Based on the company's 2007 profit of $2.66 per share, the outlook implies a profit of $2.93 per share to $3.06 per share for the year. Analysts polled by Thomson Financial expect a 2008 profit of $2.98. The company also projected reported sales growth of 7 percent to 10 percent for 2008.
Ryland CEO Chad Dreier said shaky consumer confidence is still the biggest issue impacting the housing market. Buyers are nervous they will buy a house only to see the price fall later, the CEO said at an investment conference hosted by UBS. Although he said price incentives from builders aren't likely to get any bigger than they currently are, he said there was nothing in the housing market to make him "feel good" at the moment.
The last time Nordstrom's traded at $33+ was early in the third quarter of 2006. The last time Starbucks traded at $24+ was in the third quarter of 2005. The last time Citigroup sold at $34+ was in the first quarter of 2003. The latter maintains they will keep paying the dividend. Thus the stock now yields 6%+.
A judge Monday set a tentative July trial date in the dispute between Sallie Mae and an investor group seeking to terminate its proposed $25 billion buyout of the student lender. Vice Chancellor Leo Strine Jr. said the trial date could be pushed back if Sallie Mae wants a preliminary ruling on whether legislation enacted after it agreed in April to be bought out represents a material adverse effect, nullifying the deal.
On Nov. 15, FASB 157 goes into effect. Here is a link telling you about these new accounting standards:
http://www.fasb.org/st/summary/stsum157.shtml
Crude oil futures closed up $2.72, or 2.9%, at a new record closing high of $96.70 a barrel on the New York Mercantile Exchange.
Gold futures rallied Tuesday to their highest level since 1980. Gold for December delivery rose $12.60 to end at $823.40 an ounce on the New York Mercantile Exchange.
The U.S. Dollar Index fell to another new low at 76.02.
In favor and out of favor: Gamestop has a market cap of $9.4 billion. Nordstrom's has a market cap of $8.1 billion. How long will that disparity continue?
The VIX dropped almost $3 to just below $22.
Will Rogers: “If we ever pass out as a great nation we ought to put on our tombstone 'America died from a delusion that she had moral leadership'.”
Monday, November 05, 2007
More Write Offs?
11/6/07 More Write Offs?
The Citigroup board of directors named Sir Win Bischoff, chairman of Citi's European operations, as interim CEO, and senior advisor Robert Rubin as chairman. In addition, the company will write off between $8 billion and $11 billion to reflect additional subprime losses since Sept. 30.
Citigroup said "while significant uncertainty continues to prevail in financial markets, it expects, taking into account maintaining its current dividend level, that its capital ratios will return within the range of targeted levels by the end of the second quarter of 2008." As a result, the company "has no plans to reduce its current dividend level."
According to the WSJ, Kraft is close to selling Post cereals to Ralcorp for $2.8 billion.
Gramercy Capital agreed to buy American Financial in a $3.4 billion cash and stock deal, including assumed debt.
Film and television writers struck the production studios, their first job action in almost two decades, on Monday when labor negotiations broke down, The Wall Street Journal Online reported. Members of the Writers Guild of America are set to picket TV networks and movie studios in New York and Los Angeles on Monday, the Journal reported.
Oil and gas company EnCana Corp. said it will pay $2.55 billion for the Deep Bossier natural gas and land interests of privately owned Leor Energy.
Pakistani shares staged their biggest one-day fall in history Monday amid reports police used tear gas to break up a demonstration by lawyers against the state of emergency rule imposed by the country's president and head of the army over the weekend.
EADS is going to have to take between 1.2 billion and 1.4 billion euros ($2 billion) in charges during the third quarter on delivery delays to the A400M military transdport plane.
Shares of PetroChina Co. began trading in Shanghai Monday at nearly thrice its initial public offering price, on heavy demand from local retail and institutional investors. The energy major began trading at 48.60 yuan ($6.48), compared to its IPO price of 16.70 yuan.
Bob Hoye: "The Fed has little influence on the curve, or credit spreads, and the concept of a national credit market is nonsense."
``Rising risk aversion related to concerns over the subprime issue is playing for some Japanese yen strength,'' said Daragh Maher, London-based senior currency strategist at Calyon, the investment-banking arm of Credit Agricole SA, France's second- biggest bank. ``That's a counterpoint to an exit from some of the riskier assets.''
The median family income in San Diego County is $69,400, according to the latest data from the U.S. Department of Housing and Urban Development. That puts us slightly below the median family income of $73,700 in Madison, Wis.; $71,400 in Denver; $72,600 in Norwich, Conn.; or $72,800 in Worcester, Mass. – to cite some examples from HUD's database...In San Diego, the median sale price of an existing single-family home in the second quarter was $614,000, according to the National Association of Realtors. Compare that with $223,500 in Madison, $255,200 in Denver, $276,600 in Norwich and $278,900 in Worcester.
China's Premier Wen Jiabao has warned his government will do what it takes to prevent bubbles and fluctuations in the stock market, state media said Monday.
"The government will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market," Premier Wen Jiabao told reporters, according to the China Daily website. "Preventing asset bubbles is like preventing inflation and it is the government's responsibility to ensure a fair, healthy and transparent stock market," Wen said.
Qatar dropped its 10.5 billion-pound ($21.9 billion) bid for J Sainsbury Plc after ``deterioration'' in the credit markets and demands by the U.K. supermarket chain's pension fund made the deal too expensive.
Floyd Norris: "Over the last 12 months, the government’s current numbers indicate that the private sector added an average of 115,000 jobs a month. But 80 percent of those jobs came from the statistical adjustments."
Arab Gulf states offered to provide enriched uranium to Iran, aiming to resolve the international standoff over the country’s nuclear program, citing a top Saudi official. Under the plan, Saudi Arabia, Bahrain, Kuwait, Oman, the United Arab Emirates and Qatar will set up a nuclear enrichment plant in a “neutral” country, citing Saudi Arabian Foreign Minister Prince Saud Al-Faisal.
China and the U.S. will set up a military hotline, hold high-level nuclear strategy talks and increase joint exercises, U.S. Defense Secretary Robert Gates and his Chinese counterpart, General Cao Gangchuan, said.
Barry Ritholtz: "Watch the August 9th lows. A break on any volume on the Dow and the Transports will issue a major sell signal. For the Industrials, thats Dow 12846; The Transports are not too far the low of 4672. These are your lines in the sand. A break of both gives a Dow Theory Sell Signal."
The average price of regular gasoline on Friday was $2.96 a gallon, mid-grade was $3.08, and premium was $3.19, oil industry analyst Trilby Lundberg said.
PetroChina passed Exxon as the world's largest company by market cap.
The head of Japan's central bank hinted Monday that interest rates in the world's second largest economy should rise if Japan wants to keep prices in line with economic growth. The Bank of Japan last raised a benchmark interest rate to 0.5 percent in February from 0.25 percent. But the bank since has kept interest rates steady amid lingering concerns about slower growth in the U.S. economy, a key export market for Japan.
As reported in today’s FT, for example, Merrill Lynch, has written down mid-quality ABX debt to 63 cents in the dollar, even though the bank’s own analysts say its worth only 40. UBS, meanwhile, assumes the same debt to be worth 90 cents in the dollar. “Simple math would imply that UBS needs an additional $8bn write-down [on its $15.4bn holdings] if the ABX pricing is correct,” Merrill themselves had the cheek to point out in a report on their rival.
Citigroup Inc.in a quarterly regulatory filing Monday said its so-called level 3 assets as of Sept. 30 were $134.84 billion. Level 3 assets are holdings that are so illiquid, or trade so infrequently, that they have no reliable price, so their valuations are based on management's best guess. The investment bank said its total liabilities related to level 3 assets at quarter-end were $40.36 billion, according to the Form 10-Q. Citigroup said it often hedges its level 3 positions.
According to FT's Alphaville, as noted in Monday's blog by Sam Jones:
"Here’s a breakdown of the main CDO exposures:
Citi
$10bn senior rated CDO debt
$8bn mezzanine CDO debt
$2.7bn “warehoused” CDOs
£200m CDO squared
Merrill Lynch
$8.3bn senior rated CDO debt
$5.3bn mezzanine CDO debt
$1bn “warehoused” CDO debt
$600m CDO squared
UBS
$20.2bn senior rated CDO debt
$1.8bn warehoused CDO debt
Total exposure undisclosed:
Bank of America
Undisclosed
Barclays
Q3s due November 27
Deutsche
$1.6bn on “trading activities in relative value trading in both debt and equity, CDO correlation trading and residential mortgage-backed securities.”
JPMorgan
$339m (net of hedges) “on collateralized debt obligation (CDO) warehouses and unsold positions.”
Lehman Brothers
Undisclosed
Morgan Stanley
Undisclosed
Wachovia
$534m writedown on CDOs"
John Hussman: "Last week, the Associated Press reported: “The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, the largest cash infusion since September 2001, to help companies get through a credit crunch." The truth is that the entire $41 billion was nothing more than a predictable rollover of existing repurchases...The Fed has injected no “liquidity” at all into the banking system for months...the shrinkage in the commercial paper market will be matched by an expansion in bank financing. This will not be new “money creation” but replacement financing through an alternative intermediary. Moreover, the apparent “money on the sidelines” in banks and money market funds will not represent cash waiting to be deployed. It will represent claims on money that has already left the building and has long been spent."
IAC says to separate into five publicly traded companies. IAC to spin off HSN, Ticketmaster, Interval, LendingTree.
AK Steel will increase by about 6% transaction prices for all hot-rolled and cold-rolled stainless steel sheet, strip, tubular quality and continuous mill plate products, effective with shipments on Nov. 12.
Dell has entered into a definitive agreement to acquire EqualLogic, a leading provider of high-performance iSCSI storage area network (SAN) solutions uniquely optimized for virtualization. The acquisition will strengthen Dell’s product and channel leadership in simplifying and virtualizing IT for customers globally. iSCSI SAN technology represents the fastest growing part of the storage business. Under the terms of the agreement, Dell will purchase EqualLogic for approximately $1.4 billion in cash. The acquisition of EqualLogic is expected to close late in the fourth quarter of Dell's fiscal year 2008 or early in the first quarter of fiscal 2009.
Retailers are forecast to have their worst holiday season in five years amid credit and housing market woes, according to trade group National Retail Federation.
Global Research's Debbie Lewis: "When will United States Citizens ever decide enough is enough and fire Washington?
Congress is pulling another fast one and no one is paying attention. As if wanting to control the entire population via the latest proposed commission, H.R. 1955, otherwise known as the “Violent Radicalization and Homegrown Terrorism Prevention Act of 2007,” is a slick piece of legislation. The way it reads, we are heading straight for an Authoritarian style government (like we are not in one already!).
This new bill is to be added to Title VIII of the Homeland Security Act of 2002, another questionable piece of legislation. Where, may one ask, is representation for “We the People?” The vote for passage in the House of Representatives was 404 ayes to 6 nays and 22 representatives not voting. People on the right or the left think their representation is the best, but quite frankly, there is clearly little difference. Of the fifteen sponsors for this bill, eleven of them are Democrats. The bill has now moved to the Senate for approval, with its two sponsors being Republican."
The Institute for Supply Management's index gauging the health of non-manufacturing industries registered 55.8, up from 54.8 in September. The closely-watched employment index fell to 51.8% from 52.7% in September. New orders rose to 55.7% from 53.4% in the prior month. The price index declined to 63.5% from 66.1%.
CNBC is saying the Richard Parsons will step down as CEO of Time Warner effective the end of the year, and that the announcement will be made today. He will remain as Chairman. Jeff Bewkes, current president, will move to the CEO job.
Sweet, light crude for December delivery closed down $1.95, or 2%, to 93.98 a barrel on New York Mercantile Exchange.
Major banks made it much tougher for all types of customers to get loans over the past three months, the Fed reported, providing some fresh details on how bad the credit crunch was. As credit standards toughened, demand for loans also fell. Residential mortgages were harder to get than at any time in the 17-year history of the Fed's survey of banks' senior loan officers, the Fed said. Credit standards tightened for borrowers with the best credit, with 40% of banks requiring prime borrowers to jump over a higher bar before receiving mortgages.
The rate of deliquencies and foreclosures in the subprime mortgage market could get worse before getting better, said Federal Reserve Governor Randall Kroszner on Monday. "All indications are that housing activity is continuing to weaken," and therefore house prices are likely to remain sluggish, Kroszner said in a speech to the Consumer Bankers Association. In addition, many of the initial teaser rates of subprime mortgages have yet to expire, and once they do that will boost the monthly minimum payment for many financially strapped homeowners.
Leo Tolstoy: “Laws are rules, made by people who govern by means of organized violence, for non-compliance with which the non-complier is subjected to blows, to loss of liberty, or even to being murdered.”
The Citigroup board of directors named Sir Win Bischoff, chairman of Citi's European operations, as interim CEO, and senior advisor Robert Rubin as chairman. In addition, the company will write off between $8 billion and $11 billion to reflect additional subprime losses since Sept. 30.
Citigroup said "while significant uncertainty continues to prevail in financial markets, it expects, taking into account maintaining its current dividend level, that its capital ratios will return within the range of targeted levels by the end of the second quarter of 2008." As a result, the company "has no plans to reduce its current dividend level."
According to the WSJ, Kraft is close to selling Post cereals to Ralcorp for $2.8 billion.
Gramercy Capital agreed to buy American Financial in a $3.4 billion cash and stock deal, including assumed debt.
Film and television writers struck the production studios, their first job action in almost two decades, on Monday when labor negotiations broke down, The Wall Street Journal Online reported. Members of the Writers Guild of America are set to picket TV networks and movie studios in New York and Los Angeles on Monday, the Journal reported.
Oil and gas company EnCana Corp. said it will pay $2.55 billion for the Deep Bossier natural gas and land interests of privately owned Leor Energy.
Pakistani shares staged their biggest one-day fall in history Monday amid reports police used tear gas to break up a demonstration by lawyers against the state of emergency rule imposed by the country's president and head of the army over the weekend.
EADS is going to have to take between 1.2 billion and 1.4 billion euros ($2 billion) in charges during the third quarter on delivery delays to the A400M military transdport plane.
Shares of PetroChina Co. began trading in Shanghai Monday at nearly thrice its initial public offering price, on heavy demand from local retail and institutional investors. The energy major began trading at 48.60 yuan ($6.48), compared to its IPO price of 16.70 yuan.
Bob Hoye: "The Fed has little influence on the curve, or credit spreads, and the concept of a national credit market is nonsense."
``Rising risk aversion related to concerns over the subprime issue is playing for some Japanese yen strength,'' said Daragh Maher, London-based senior currency strategist at Calyon, the investment-banking arm of Credit Agricole SA, France's second- biggest bank. ``That's a counterpoint to an exit from some of the riskier assets.''
The median family income in San Diego County is $69,400, according to the latest data from the U.S. Department of Housing and Urban Development. That puts us slightly below the median family income of $73,700 in Madison, Wis.; $71,400 in Denver; $72,600 in Norwich, Conn.; or $72,800 in Worcester, Mass. – to cite some examples from HUD's database...In San Diego, the median sale price of an existing single-family home in the second quarter was $614,000, according to the National Association of Realtors. Compare that with $223,500 in Madison, $255,200 in Denver, $276,600 in Norwich and $278,900 in Worcester.
China's Premier Wen Jiabao has warned his government will do what it takes to prevent bubbles and fluctuations in the stock market, state media said Monday.
"The government will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market," Premier Wen Jiabao told reporters, according to the China Daily website. "Preventing asset bubbles is like preventing inflation and it is the government's responsibility to ensure a fair, healthy and transparent stock market," Wen said.
Qatar dropped its 10.5 billion-pound ($21.9 billion) bid for J Sainsbury Plc after ``deterioration'' in the credit markets and demands by the U.K. supermarket chain's pension fund made the deal too expensive.
Floyd Norris: "Over the last 12 months, the government’s current numbers indicate that the private sector added an average of 115,000 jobs a month. But 80 percent of those jobs came from the statistical adjustments."
Arab Gulf states offered to provide enriched uranium to Iran, aiming to resolve the international standoff over the country’s nuclear program, citing a top Saudi official. Under the plan, Saudi Arabia, Bahrain, Kuwait, Oman, the United Arab Emirates and Qatar will set up a nuclear enrichment plant in a “neutral” country, citing Saudi Arabian Foreign Minister Prince Saud Al-Faisal.
China and the U.S. will set up a military hotline, hold high-level nuclear strategy talks and increase joint exercises, U.S. Defense Secretary Robert Gates and his Chinese counterpart, General Cao Gangchuan, said.
Barry Ritholtz: "Watch the August 9th lows. A break on any volume on the Dow and the Transports will issue a major sell signal. For the Industrials, thats Dow 12846; The Transports are not too far the low of 4672. These are your lines in the sand. A break of both gives a Dow Theory Sell Signal."
The average price of regular gasoline on Friday was $2.96 a gallon, mid-grade was $3.08, and premium was $3.19, oil industry analyst Trilby Lundberg said.
PetroChina passed Exxon as the world's largest company by market cap.
The head of Japan's central bank hinted Monday that interest rates in the world's second largest economy should rise if Japan wants to keep prices in line with economic growth. The Bank of Japan last raised a benchmark interest rate to 0.5 percent in February from 0.25 percent. But the bank since has kept interest rates steady amid lingering concerns about slower growth in the U.S. economy, a key export market for Japan.
As reported in today’s FT, for example, Merrill Lynch, has written down mid-quality ABX debt to 63 cents in the dollar, even though the bank’s own analysts say its worth only 40. UBS, meanwhile, assumes the same debt to be worth 90 cents in the dollar. “Simple math would imply that UBS needs an additional $8bn write-down [on its $15.4bn holdings] if the ABX pricing is correct,” Merrill themselves had the cheek to point out in a report on their rival.
Citigroup Inc.in a quarterly regulatory filing Monday said its so-called level 3 assets as of Sept. 30 were $134.84 billion. Level 3 assets are holdings that are so illiquid, or trade so infrequently, that they have no reliable price, so their valuations are based on management's best guess. The investment bank said its total liabilities related to level 3 assets at quarter-end were $40.36 billion, according to the Form 10-Q. Citigroup said it often hedges its level 3 positions.
According to FT's Alphaville, as noted in Monday's blog by Sam Jones:
"Here’s a breakdown of the main CDO exposures:
Citi
$10bn senior rated CDO debt
$8bn mezzanine CDO debt
$2.7bn “warehoused” CDOs
£200m CDO squared
Merrill Lynch
$8.3bn senior rated CDO debt
$5.3bn mezzanine CDO debt
$1bn “warehoused” CDO debt
$600m CDO squared
UBS
$20.2bn senior rated CDO debt
$1.8bn warehoused CDO debt
Total exposure undisclosed:
Bank of America
Undisclosed
Barclays
Q3s due November 27
Deutsche
$1.6bn on “trading activities in relative value trading in both debt and equity, CDO correlation trading and residential mortgage-backed securities.”
JPMorgan
$339m (net of hedges) “on collateralized debt obligation (CDO) warehouses and unsold positions.”
Lehman Brothers
Undisclosed
Morgan Stanley
Undisclosed
Wachovia
$534m writedown on CDOs"
John Hussman: "Last week, the Associated Press reported: “The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, the largest cash infusion since September 2001, to help companies get through a credit crunch." The truth is that the entire $41 billion was nothing more than a predictable rollover of existing repurchases...The Fed has injected no “liquidity” at all into the banking system for months...the shrinkage in the commercial paper market will be matched by an expansion in bank financing. This will not be new “money creation” but replacement financing through an alternative intermediary. Moreover, the apparent “money on the sidelines” in banks and money market funds will not represent cash waiting to be deployed. It will represent claims on money that has already left the building and has long been spent."
IAC says to separate into five publicly traded companies. IAC to spin off HSN, Ticketmaster, Interval, LendingTree.
AK Steel will increase by about 6% transaction prices for all hot-rolled and cold-rolled stainless steel sheet, strip, tubular quality and continuous mill plate products, effective with shipments on Nov. 12.
Dell has entered into a definitive agreement to acquire EqualLogic, a leading provider of high-performance iSCSI storage area network (SAN) solutions uniquely optimized for virtualization. The acquisition will strengthen Dell’s product and channel leadership in simplifying and virtualizing IT for customers globally. iSCSI SAN technology represents the fastest growing part of the storage business. Under the terms of the agreement, Dell will purchase EqualLogic for approximately $1.4 billion in cash. The acquisition of EqualLogic is expected to close late in the fourth quarter of Dell's fiscal year 2008 or early in the first quarter of fiscal 2009.
Retailers are forecast to have their worst holiday season in five years amid credit and housing market woes, according to trade group National Retail Federation.
Global Research's Debbie Lewis: "When will United States Citizens ever decide enough is enough and fire Washington?
Congress is pulling another fast one and no one is paying attention. As if wanting to control the entire population via the latest proposed commission, H.R. 1955, otherwise known as the “Violent Radicalization and Homegrown Terrorism Prevention Act of 2007,” is a slick piece of legislation. The way it reads, we are heading straight for an Authoritarian style government (like we are not in one already!).
This new bill is to be added to Title VIII of the Homeland Security Act of 2002, another questionable piece of legislation. Where, may one ask, is representation for “We the People?” The vote for passage in the House of Representatives was 404 ayes to 6 nays and 22 representatives not voting. People on the right or the left think their representation is the best, but quite frankly, there is clearly little difference. Of the fifteen sponsors for this bill, eleven of them are Democrats. The bill has now moved to the Senate for approval, with its two sponsors being Republican."
The Institute for Supply Management's index gauging the health of non-manufacturing industries registered 55.8, up from 54.8 in September. The closely-watched employment index fell to 51.8% from 52.7% in September. New orders rose to 55.7% from 53.4% in the prior month. The price index declined to 63.5% from 66.1%.
CNBC is saying the Richard Parsons will step down as CEO of Time Warner effective the end of the year, and that the announcement will be made today. He will remain as Chairman. Jeff Bewkes, current president, will move to the CEO job.
Sweet, light crude for December delivery closed down $1.95, or 2%, to 93.98 a barrel on New York Mercantile Exchange.
Major banks made it much tougher for all types of customers to get loans over the past three months, the Fed reported, providing some fresh details on how bad the credit crunch was. As credit standards toughened, demand for loans also fell. Residential mortgages were harder to get than at any time in the 17-year history of the Fed's survey of banks' senior loan officers, the Fed said. Credit standards tightened for borrowers with the best credit, with 40% of banks requiring prime borrowers to jump over a higher bar before receiving mortgages.
The rate of deliquencies and foreclosures in the subprime mortgage market could get worse before getting better, said Federal Reserve Governor Randall Kroszner on Monday. "All indications are that housing activity is continuing to weaken," and therefore house prices are likely to remain sluggish, Kroszner said in a speech to the Consumer Bankers Association. In addition, many of the initial teaser rates of subprime mortgages have yet to expire, and once they do that will boost the monthly minimum payment for many financially strapped homeowners.
Leo Tolstoy: “Laws are rules, made by people who govern by means of organized violence, for non-compliance with which the non-complier is subjected to blows, to loss of liberty, or even to being murdered.”
Sunday, November 04, 2007
The Merry Go Round
11/5/07 The Merry Go Round
According to the UK Observer, BT Group will cut 5,000 middle managers.
Pakistan's Musharraf suspended that country's Constitution and then replaced the Chief Justice. He didn't stop there. He filled the capital city with police officers, and this gives all the appearance of martial law. Since Bush picks his friends so well, he has chosen to provide Musharraf with more than $10 billion since 2001. Musharraf supposedly was one of Bush's foremost allies in fighting terrorism. In the meantime, this is an attempt to derail elections that were designed to return the nation to democracy after eight years of military-backed government.
Jack Handy: “In some places it's known as a tornado. In others, a cyclone. And in still others, the Idiot's Merry-go-round. But around here they'll always be known as screw-boys.”
Cargill Inc said on Saturday it was recalling more than 1 million pounds of ground beef distributed in the United States because of possible E. coli contamination. Is it any wonder many countries don't want our beef?
As there is a raised risk of E. coli O157:H7 contamination of 414000 cases of pizza products with pepperoni toppings, the makers, General Mills, has announced a voluntary recall of said pizzas.
More and more, the four scariest letters for parents and students across the country are MRSA, for methicillin-resistant Staphylococcus aureus.
Private equity firm Apax is looking at making an offer for ITV after the broadcaster's share price dropped below 100 pence in recent days, the Financial Mail reported on Sunday.
Mike Burk: "The good news is:
• The NYSE composite hit an all time high, NASDAQ 100 (NDX) and the NASDAQ composite (OTC) hit a multi year highs last week.
Short Term
The Hindenburg Omen, a signal developed by Jim Miekka, has received a lot of publicity lately. The signal has had some false positives, but it has also preceded every major decline. The parameters are:
NYSE new highs and new lows must both exceed 2.8% of NYSE issues traded (currently 93).
The NYSE composite must be above its level of 50 trading days earlier.
The McClellan Oscillator must be negative.
When the above conditions have been met the signal is in effect for 30 days.
On Friday all of the conditions were met. Even 10% trends (19 day EMA's) of NYSE new highs and new lows exceeded 93 (NYSE NH 148 and NYSE NL 102). The NYSE composite is 2 days off its all time high...Since late February every new high on the OTC has been accompanied by a progressively lower high in OTC NH...During the 3rd year of the Presidential Cycle the OTC has been up only 36% of the time. The SPX by all measures as well as the OTC over all years have been up slightly over half of the time...Most of the indicators deteriorated last week and seasonality is not an asset for the coming week.
I expect the major indices to be lower on Friday November 9 than they were on Friday November 2."
Alex Wallenwein: "With its oil backing largely gone, and no gold backing since '71,and the competition from the euro, and the outrageous trade deficit, and now the US subprime mortgage-induced worldwide credit crunch, there is little reason for other nations to keep using the dollar for settling their trade accounts. In economics, lower demand always means lower value - in this case forex (foreign exchange) value. That's where we are today...Well, as you know, inverted pyramids can't stand on their own. They must be held up. That which has held up the dollar-pyramid was oil - and oil is now migrating to the euro. The problem is that the euro is also just evidence of a debt. The volume of dollars now circulating in the world must eventually be replaced by euros if the world is to continue to function - and that will put the euro into the same dire straits as those the dollar is now in. That is the fiat-Titanic's iceberg."
Neil Diamond: "When you're on a merry-go-round, you miss a lot of the scenery."
Mike Shedlock: "The bond insurance industry has guaranteed more than $1 trillion of bonds issued by U.S. cities and states as well as bonds backed by mortgages, credit cards and other assets, and the guarantee allows borrowers to use the insurers' AAA rating. A loss of confidence by investors in the insurers' credit quality threatens the survival of the industry and the price of the thousands of bonds it guarantees."
Tens of thousands of residents in the Mexican state of Tabasco were still trapped in their houses on Saturday by floods that have put much of the state under
water.
"In the U.S. there will be huge additional worldwide demand falling on industries such as basic materials, industrial and transport companies," said James Paulsen, chief investment strategist with Wells Capital Management in Minneapolis. "I would argue that these companies, therefore, have a pretty good profile going forward."
In terms of market cap, Google has risen to the number 5 slot! According to Fortune, Google will announced its new mobile phone product on Monday with its first US partners being T-Mobile and Sprint.
A shipbuilder that is one of Whidbey Island's largest private employers, and one of three shipyards under contract to help build new vessels for Washington State Ferries, has closed its doors and laid off 250 workers, citing financial problems and a pending lawsuit. Nichols Bros. Boat Builders, with facilities in Freeland and Langley, had operated on Whidbey Island since 1964.
As of Sept. 30, the unpaid principal balance on WaMu's option ARMs exceeded the loans' original principal amount by $1.5 billion, meaning customers owed $1.5 billion more in principal than what they originally borrowed. By comparison, that figure was $681 million a year earlier, when WaMu had $67.14 billion, or 16 percent more, option ARMs on its books. For the nine months ended Sept. 30, WaMu recognized $1.05 billion in earnings as a result of neg-am within its option-ARM portfolio. That represented 7.2 percent of its $14.61 billion of total interest income year-to-date. By comparison, neg-am contributed 1.8 percent of the interest income for all of 2005 and just 0.2 percent for 2004. While the loan-loss allowance rose 22 percent to $1.89 billion during the 12 months ended Sept. 30, nonperforming assets rose 128 percent to $5.45 billion. So even if WaMu adds $1.3 billion in provisions next quarter, its loan-loss allowance still won't be close to catching up. In my view, this is a company that needs new management and an infusion of capital.
The European Central Bank and Bank of England are forecast to keep borrowing costs unchanged Nov. 8, which may entice investors away from U.S. assets.
Dubai port operator DP World has launched an initial public offering for 17 percent of its shares in one of the biggest ever flotations in the Gulf region. The company, one of the world's largest container-port operators, said at a news conference it was selling 2.822 bln shares, or 17 pct of its 16.6 bln shares, at an indicative price of 1-1.30 usd per share. The offer, which could be expanded to up to 20 pct of the firm's shares, is open to citizens and residents of the United Arab Emirates and its Gulf Arab partners Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.
China will have to continue raising its domestic resources prices, even though the move could result in additional inflationary pressure, in order to correct the distortions in the economy caused by underpriced fuel, a senior official at the People's Bank of China (PBoC) said. Assistant governor Yi Gang said the Chinese government has to choose the 'lesser evil' -- inflation -- instead of allowing underpriced resources to cause a further imbalance in the economy. 'Inflation is the lesser evil compared to distortions in the economy,' Yi told a forum.
"We get pressured every single day to inflate our values," said Dan Tosh, principal at Tosh & Associates, an appraisal firm in Brentwood, Ca. "We get people telling us we'll never work again, or they won't pay us because we won't play ball."
The Oil Drum: "77 percent of the world’s oil reserves are held by national oil companies with no private equity, and there are 13 state-owned oil companies with more reserves than ExxonMobil, the largest multinational oil company. The popular perception in the United States is that if leaders of oil countries nationalize their oil, they are bucking a global trend toward privatization. In reality, nationalized oil is the trend. And the percentage of oil controlled by state-owned companies is likely to continue rising, mainly because of the demographics of oil. Deposits are being exhausted in wealthy countries — the ones that exploited their oil first and generally have the most private oil — and are being found largely in developing countries, where oil tends to belong to the state."
Alexei Sayle: "There's a lot of stupid rules connected with eating out, like you should only ever drink white wine with fish. That's bloody stupid isn't it - have you ever tried getting pissed with a haddock?"
According to the UK Observer, BT Group will cut 5,000 middle managers.
Pakistan's Musharraf suspended that country's Constitution and then replaced the Chief Justice. He didn't stop there. He filled the capital city with police officers, and this gives all the appearance of martial law. Since Bush picks his friends so well, he has chosen to provide Musharraf with more than $10 billion since 2001. Musharraf supposedly was one of Bush's foremost allies in fighting terrorism. In the meantime, this is an attempt to derail elections that were designed to return the nation to democracy after eight years of military-backed government.
Jack Handy: “In some places it's known as a tornado. In others, a cyclone. And in still others, the Idiot's Merry-go-round. But around here they'll always be known as screw-boys.”
Cargill Inc said on Saturday it was recalling more than 1 million pounds of ground beef distributed in the United States because of possible E. coli contamination. Is it any wonder many countries don't want our beef?
As there is a raised risk of E. coli O157:H7 contamination of 414000 cases of pizza products with pepperoni toppings, the makers, General Mills, has announced a voluntary recall of said pizzas.
More and more, the four scariest letters for parents and students across the country are MRSA, for methicillin-resistant Staphylococcus aureus.
Private equity firm Apax is looking at making an offer for ITV after the broadcaster's share price dropped below 100 pence in recent days, the Financial Mail reported on Sunday.
Mike Burk: "The good news is:
• The NYSE composite hit an all time high, NASDAQ 100 (NDX) and the NASDAQ composite (OTC) hit a multi year highs last week.
Short Term
The Hindenburg Omen, a signal developed by Jim Miekka, has received a lot of publicity lately. The signal has had some false positives, but it has also preceded every major decline. The parameters are:
NYSE new highs and new lows must both exceed 2.8% of NYSE issues traded (currently 93).
The NYSE composite must be above its level of 50 trading days earlier.
The McClellan Oscillator must be negative.
When the above conditions have been met the signal is in effect for 30 days.
On Friday all of the conditions were met. Even 10% trends (19 day EMA's) of NYSE new highs and new lows exceeded 93 (NYSE NH 148 and NYSE NL 102). The NYSE composite is 2 days off its all time high...Since late February every new high on the OTC has been accompanied by a progressively lower high in OTC NH...During the 3rd year of the Presidential Cycle the OTC has been up only 36% of the time. The SPX by all measures as well as the OTC over all years have been up slightly over half of the time...Most of the indicators deteriorated last week and seasonality is not an asset for the coming week.
I expect the major indices to be lower on Friday November 9 than they were on Friday November 2."
Alex Wallenwein: "With its oil backing largely gone, and no gold backing since '71,and the competition from the euro, and the outrageous trade deficit, and now the US subprime mortgage-induced worldwide credit crunch, there is little reason for other nations to keep using the dollar for settling their trade accounts. In economics, lower demand always means lower value - in this case forex (foreign exchange) value. That's where we are today...Well, as you know, inverted pyramids can't stand on their own. They must be held up. That which has held up the dollar-pyramid was oil - and oil is now migrating to the euro. The problem is that the euro is also just evidence of a debt. The volume of dollars now circulating in the world must eventually be replaced by euros if the world is to continue to function - and that will put the euro into the same dire straits as those the dollar is now in. That is the fiat-Titanic's iceberg."
Neil Diamond: "When you're on a merry-go-round, you miss a lot of the scenery."
Mike Shedlock: "The bond insurance industry has guaranteed more than $1 trillion of bonds issued by U.S. cities and states as well as bonds backed by mortgages, credit cards and other assets, and the guarantee allows borrowers to use the insurers' AAA rating. A loss of confidence by investors in the insurers' credit quality threatens the survival of the industry and the price of the thousands of bonds it guarantees."
Tens of thousands of residents in the Mexican state of Tabasco were still trapped in their houses on Saturday by floods that have put much of the state under
water.
"In the U.S. there will be huge additional worldwide demand falling on industries such as basic materials, industrial and transport companies," said James Paulsen, chief investment strategist with Wells Capital Management in Minneapolis. "I would argue that these companies, therefore, have a pretty good profile going forward."
In terms of market cap, Google has risen to the number 5 slot! According to Fortune, Google will announced its new mobile phone product on Monday with its first US partners being T-Mobile and Sprint.
A shipbuilder that is one of Whidbey Island's largest private employers, and one of three shipyards under contract to help build new vessels for Washington State Ferries, has closed its doors and laid off 250 workers, citing financial problems and a pending lawsuit. Nichols Bros. Boat Builders, with facilities in Freeland and Langley, had operated on Whidbey Island since 1964.
As of Sept. 30, the unpaid principal balance on WaMu's option ARMs exceeded the loans' original principal amount by $1.5 billion, meaning customers owed $1.5 billion more in principal than what they originally borrowed. By comparison, that figure was $681 million a year earlier, when WaMu had $67.14 billion, or 16 percent more, option ARMs on its books. For the nine months ended Sept. 30, WaMu recognized $1.05 billion in earnings as a result of neg-am within its option-ARM portfolio. That represented 7.2 percent of its $14.61 billion of total interest income year-to-date. By comparison, neg-am contributed 1.8 percent of the interest income for all of 2005 and just 0.2 percent for 2004. While the loan-loss allowance rose 22 percent to $1.89 billion during the 12 months ended Sept. 30, nonperforming assets rose 128 percent to $5.45 billion. So even if WaMu adds $1.3 billion in provisions next quarter, its loan-loss allowance still won't be close to catching up. In my view, this is a company that needs new management and an infusion of capital.
The European Central Bank and Bank of England are forecast to keep borrowing costs unchanged Nov. 8, which may entice investors away from U.S. assets.
Dubai port operator DP World has launched an initial public offering for 17 percent of its shares in one of the biggest ever flotations in the Gulf region. The company, one of the world's largest container-port operators, said at a news conference it was selling 2.822 bln shares, or 17 pct of its 16.6 bln shares, at an indicative price of 1-1.30 usd per share. The offer, which could be expanded to up to 20 pct of the firm's shares, is open to citizens and residents of the United Arab Emirates and its Gulf Arab partners Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.
China will have to continue raising its domestic resources prices, even though the move could result in additional inflationary pressure, in order to correct the distortions in the economy caused by underpriced fuel, a senior official at the People's Bank of China (PBoC) said. Assistant governor Yi Gang said the Chinese government has to choose the 'lesser evil' -- inflation -- instead of allowing underpriced resources to cause a further imbalance in the economy. 'Inflation is the lesser evil compared to distortions in the economy,' Yi told a forum.
"We get pressured every single day to inflate our values," said Dan Tosh, principal at Tosh & Associates, an appraisal firm in Brentwood, Ca. "We get people telling us we'll never work again, or they won't pay us because we won't play ball."
The Oil Drum: "77 percent of the world’s oil reserves are held by national oil companies with no private equity, and there are 13 state-owned oil companies with more reserves than ExxonMobil, the largest multinational oil company. The popular perception in the United States is that if leaders of oil countries nationalize their oil, they are bucking a global trend toward privatization. In reality, nationalized oil is the trend. And the percentage of oil controlled by state-owned companies is likely to continue rising, mainly because of the demographics of oil. Deposits are being exhausted in wealthy countries — the ones that exploited their oil first and generally have the most private oil — and are being found largely in developing countries, where oil tends to belong to the state."
Alexei Sayle: "There's a lot of stupid rules connected with eating out, like you should only ever drink white wine with fish. That's bloody stupid isn't it - have you ever tried getting pissed with a haddock?"
Saturday, November 03, 2007
Another CEO Bites The Dust
11/4/07 Another CEO Bites The Dust
Citigroup Inc.'s CEO Charles Prince will offer to resign on Sunday, reported the Wall Street Journal.
Ford Motor Co. and the union representing its 54,000 U.S. factory workers agreed on a new 4-year contract.
Bank credit now exceeds $9 trillion.
The FT reports five-year credit default swaps tied to Citigroup widened to 60 bps, meaning it cost $60,000 annually to insure Citigroup's debt against default for five years. A couple of weeks ago, that figure stood at $27,000. Contracts on Merrill Lynch…rose $18,000 to $103,000.
Bloomberg reports currency traders are betting in the forward exchange rate market that the Hong Kong Monetary Authority will abandon its currency’s 24-year peg to the U.S. dollar.
According to the FT, November prices for the type of milk used to make cheese are up 85% from a year ago, while yoghurt milk is up 141% and skimmed milk powder 155%.
Doug Noland: " When I read of mounting energy and food shortages and witness the unfolding run on the U.S. financial sector, as an analyst I must contemplate the likelihood we have entered a uniquely unstable monetary environment at home and abroad. In short, the backdrop exists where incredible dollar liquidity flows could be released (from myriad sources) upon key things (notably energy, food, metals and commodities) already in severe supply and demand imbalance. Again, how much are the Chinese willing to pay for energy? The Russians for food? The Indians for commodities in general? How much will investors be willing to pay for precious metals as a store of value? How aggressively will the speculators “front run” all of them? Can the Fed afford to continue fueling this bonfire?...I’ll admit that I am rather amazed that key financial stocks – including the financial guarantors, “money center banks”, and Wall Street firms – were hammered yet the market maintained its composure. NASDAQ was actually up on the week, as major technology indexes added to their robust y-t-d gains. I’ll assume there is a confluence of great complacency and gamesmanship, with operators determined to play aggressively through year-end (bonuses and payouts). I wouldn’t bet on the stock market holding 2007 gains for another eight weeks. The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It's absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn...According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it...There is today no alternative to a wrenching recession. The economy is terribly maladjusted, while the financial sector is at this point incapable of intermediating the massive amount of ongoing Credit necessary to keep this Bubble Economy inflated. Wall Street “structured finance” is today faltering badly, now leaving the highly vulnerable banking system with the task of sustaining the ill-fated boom."
Bus drivers in the bustling southern province of Guangdong have a new daily chore: Hunting for diesel. Amid widespread shortages, service stations allow drivers just a few quarts at a time, forcing buses to stop repeatedly to fill up while passengers fume, said Dai Guowei, an employee of the Zhaoshang Passenger Transport Co.
George Ure: " If you plug in $850 to the Minneapolis Fed inflation calculator, and the year 1980 and simply adjust for inflation to 2007, you'll see that in order for gold to make a new high today, it would need to exceed $2,128.09 per ounce. Of course, there was a lot less actual demand for gold back then, and a lot less industrial and now growing medical demand for silver, too."
The Jerusalem Post reportedthe September 6 raid over Syria was carried out by the US Air Force, the Al-Jazeera Web site reported Friday. The Web site quoted Israeli and Arab sources as saying that two US jets armed with tactical nuclear weapons carried out an attack on a suspected nuclear site under construction. The sources were quoted as saying that Israeli F-15 and F-16 jets provided cover for the US planes. The sources added that each US plane carried one tactical nuclear weapon and that the site was hit by one bomb and was totally destroyed.
This is old news. Sugar groups have used campaign cash and far-reaching alliances with labor unions and politicians to expand their influence far beyond the 15 states and few dozen congressional districts where sugar is grown by fewer than 6,000 farmers. The Government Accountability Office has estimated that the sugar program costs consumers and food processors between $1 billion and $2 billion annually in higher prices for sugar and a vast array of products that contain it. Meanwhile, the new sugar subsidy would cost taxpayers tens of millions of dollars a year, according to economists and U.S. officials.
Lehman's research on BJ Services: Set price target at $33. Earnings in 08 $2.38, 09 $2.90 and 10 $3.55.
Bronco Drilling shares get almost no respect. Much higher than expected drilling margins drove quarterly earnings to $.38 per share after one time items. This topped estimates by 5 cents a share.
Plato: “Those who are too smart to engage in politics are punished by being governed by those who are dumber.”
Citigroup Inc.'s CEO Charles Prince will offer to resign on Sunday, reported the Wall Street Journal.
Ford Motor Co. and the union representing its 54,000 U.S. factory workers agreed on a new 4-year contract.
Bank credit now exceeds $9 trillion.
The FT reports five-year credit default swaps tied to Citigroup widened to 60 bps, meaning it cost $60,000 annually to insure Citigroup's debt against default for five years. A couple of weeks ago, that figure stood at $27,000. Contracts on Merrill Lynch…rose $18,000 to $103,000.
Bloomberg reports currency traders are betting in the forward exchange rate market that the Hong Kong Monetary Authority will abandon its currency’s 24-year peg to the U.S. dollar.
According to the FT, November prices for the type of milk used to make cheese are up 85% from a year ago, while yoghurt milk is up 141% and skimmed milk powder 155%.
Doug Noland: " When I read of mounting energy and food shortages and witness the unfolding run on the U.S. financial sector, as an analyst I must contemplate the likelihood we have entered a uniquely unstable monetary environment at home and abroad. In short, the backdrop exists where incredible dollar liquidity flows could be released (from myriad sources) upon key things (notably energy, food, metals and commodities) already in severe supply and demand imbalance. Again, how much are the Chinese willing to pay for energy? The Russians for food? The Indians for commodities in general? How much will investors be willing to pay for precious metals as a store of value? How aggressively will the speculators “front run” all of them? Can the Fed afford to continue fueling this bonfire?...I’ll admit that I am rather amazed that key financial stocks – including the financial guarantors, “money center banks”, and Wall Street firms – were hammered yet the market maintained its composure. NASDAQ was actually up on the week, as major technology indexes added to their robust y-t-d gains. I’ll assume there is a confluence of great complacency and gamesmanship, with operators determined to play aggressively through year-end (bonuses and payouts). I wouldn’t bet on the stock market holding 2007 gains for another eight weeks. The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It's absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn...According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it...There is today no alternative to a wrenching recession. The economy is terribly maladjusted, while the financial sector is at this point incapable of intermediating the massive amount of ongoing Credit necessary to keep this Bubble Economy inflated. Wall Street “structured finance” is today faltering badly, now leaving the highly vulnerable banking system with the task of sustaining the ill-fated boom."
Bus drivers in the bustling southern province of Guangdong have a new daily chore: Hunting for diesel. Amid widespread shortages, service stations allow drivers just a few quarts at a time, forcing buses to stop repeatedly to fill up while passengers fume, said Dai Guowei, an employee of the Zhaoshang Passenger Transport Co.
George Ure: " If you plug in $850 to the Minneapolis Fed inflation calculator, and the year 1980 and simply adjust for inflation to 2007, you'll see that in order for gold to make a new high today, it would need to exceed $2,128.09 per ounce. Of course, there was a lot less actual demand for gold back then, and a lot less industrial and now growing medical demand for silver, too."
The Jerusalem Post reportedthe September 6 raid over Syria was carried out by the US Air Force, the Al-Jazeera Web site reported Friday. The Web site quoted Israeli and Arab sources as saying that two US jets armed with tactical nuclear weapons carried out an attack on a suspected nuclear site under construction. The sources were quoted as saying that Israeli F-15 and F-16 jets provided cover for the US planes. The sources added that each US plane carried one tactical nuclear weapon and that the site was hit by one bomb and was totally destroyed.
This is old news. Sugar groups have used campaign cash and far-reaching alliances with labor unions and politicians to expand their influence far beyond the 15 states and few dozen congressional districts where sugar is grown by fewer than 6,000 farmers. The Government Accountability Office has estimated that the sugar program costs consumers and food processors between $1 billion and $2 billion annually in higher prices for sugar and a vast array of products that contain it. Meanwhile, the new sugar subsidy would cost taxpayers tens of millions of dollars a year, according to economists and U.S. officials.
Lehman's research on BJ Services: Set price target at $33. Earnings in 08 $2.38, 09 $2.90 and 10 $3.55.
Bronco Drilling shares get almost no respect. Much higher than expected drilling margins drove quarterly earnings to $.38 per share after one time items. This topped estimates by 5 cents a share.
Plato: “Those who are too smart to engage in politics are punished by being governed by those who are dumber.”
Friday, November 02, 2007
Diplomacy And Omens
11/3/07 Diplomacy And Omens
A top American diplomat pressed for harsher U.N. sanctions against Iran for its nuclear program on Friday, while Iran's former president said talks with the U.N. atomic watchdog were progressing and warned against threatening his country.
Meanwhile, Obama, if elected, would engage in extensive diplomacy with Iran.
It is hard to imagine that a Democrat-led Congress just passed a resolution giving Bush the authority to invade Iran. Has Iran ever invaded another country? We have though. It's called Iraq.
N.Y. Attorney General Andrew Cuomo accused Washington Mutual of pressuring appraisers to inflate home values. Do you think WaMu has a monopoly on this activity?
An investor group led by former Chief Executive Officer Maurice Greenberg Friday called on American International Group Inc.to consider alternatives for the company, including sale of some of its operations.
Cigna expects 2008 adjusted income from operations of $1.16 billion to $1.22 billion, or $4.00 to $4.20 a share.
The U.S. economy created 166,000 net jobs in October, the best job growth since May, the Labor Department reported Friday. The unemployment rate was steady at 4.7% as expected. A separate survey of 60,000 households showed a loss of 250,000 workers, the third decline in the past four months. Jobs continued to be lost in the manufacturing and construction sectors, offset by growth in public schools, health care, business services, food service, and temporary-help services. Average hourly earnings rose 3 cents to $17.58 an hour, or 0.2%. Average hourly earnings are up 3.8% in the past year.
George Ure: " Now, just how much of it was created by the CES Birth-Death Model, which statistically supposes jobs created? Try 103,000 for October. A true skeptic would say 166 thousand new jobs, backing out 103 thousand CES Birth/Death Model estimated, leaves a real gain of 63-thousand, but any port in a storm, right?"
Merrill Lynch has engaged in deals with hedge funds to delay when it had to record losses on risky mortgage-backed securities, and the Securities and Exchange Commission has started a probe looking at how Wall Street is valuing mortgage securities, The Wall Street Journal reported Friday, citing people close to the situation.
Mazda, Japan's fifth-largest automaker, said net profit for the second fiscal quarter reached 26.6 billion yen ($232.1 million), up from 20.6 billion yen in the year-ago period. Revenue rose 7% to 841.9 billion yen from 787.1 billion yen. For the full year, Mazda kept its forecast for a group net profit of 85 billion yen.
Doug Casey: " The rapidly approaching dilemma for the Federal Reserve comes down to a choice between (1) engineering a standard sort of recovery from the next recession by speeding up monetary growth and reducing interest rates and (2) keeping the dollar afloat.
Choose the “solution” behind Door Number One and trigger a monetary crisis. Open Door Number Two and our heavily indebted economy is devastated by the higher interest rates needed to support the U.S. dollar. For all the reasons discussed above, and with the next presidential election season now kicking off, the odds heavily favor inflation.
In fact, Fed Chairman Ben Bernanke virtually gave the game away in a speech in Frankfurt on November 10, 2006.
“It would be fair to say that monetary and credit aggregates have not played a central role in the formulation of U.S. monetary policy.”
In other words, the total amount of money in the system – what we “print” – plays no serious role in current U.S. policy. That’s a politic way of admitting that the U.S. government is planning to paper over all its many obligations and accelerate a trend that has been in motion since the creation of the Fed in 1913."
The Federal Reserve added $41 billion in temporary reserves to the banking system, the largest one-day cash infusion since the terrorist attacks of September 2001.
Chevron's net income for the three months ended Sept. 30 fell to $3.72 billion, or $1.75 per share, compared with $5.02 billion, or $2.29 per share, during the same period a year earlier. The CEO said "margins were squeezed as escalating costs for crude-oil feedstocks could not be fully recovered in a U.S. marketplace that was well-supplied with gasoline and other refined products."
The mood in credit derivatives markets turned ugly on Thursday, with the cost of insuring corporate debt hitting multi-week highs on both sides of the Atlantic. "It's scary out there - there's blood on the streets," a trader at a US brokerage said. "It's a real mess." Funny. The Dow and the S&P don't look scary. How can that be?
According to market research firm IMS Health, the global pharmaceutical market will grow 5 to 6% during 2008 to as much as $745 billion, after a rather anemic 6 to 7% increase in 2007. In the world's two largest markets for pharmaceuticals, the U.S. and Europe, drugs sales are only projected to grow 4 to 5% next year, their slowest pace since the early 1960s.
Peter Schiff: " Had the government assumed a higher rate of inflation, say 2.6% (identical to the rate used to deflate second quarter GDP,) the 3rd quarter gain would have been only 2.1%, well shy of the consensus forecast. My guess is that inflation is actually running at an annualized rate closer to 10%. Therefore using a more honest deflator, the U.S. economy is actually contracting, which would explain the recent anecdotal evidence provided by various economic polls, voter dissatisfaction and consumer sentiment numbers. In fact, if one simply measures U.S. GDP using gold or any other currency, it is clear that we are already in a recession."
Copper tumbled 3.2%, the most in 11 weeks, after stockpiles monitored by the London Metal Exchange rose 8.3% this week to the highest level since April. Supplies surged 28% in October, according to the LME.
According AMG Data, Including ETF activity, Equity funds report net cash inflows totaling $7.275 billion in the week ended 10/31/07 with Domestic funds reporting net inflows of $4.115 billion and Non-domestic funds reporting net inflows of $3.160 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$565 million with Domestic funds reporting net outflows of -$942 million and Non-domestic funds reporting net inflows totaling $376 million.
The Oil Drum: "Industry insider and writer on oil Matthew Simmons bet $5,000 with a New York Times columnist that oil prices would reach $200 in 2010. Simmons calculates that $65 a barrel translates to 10 cents a cup, still 10 times cheaper than bottled water.
Brett Steenbarger: "In short, when the VIX jumps from 15 to 25, the effect is similar to doubling position size overnight. Moreover, markets will--to the eye of the trader--move twice as fast; a given market move will occur in half the time. This will make it feel as though markets are moving *differently*. Finally, when volatility doubles, the average movement against one's positions will double. If stop levels are not adjusted appropriately, it's easy to get stopped out and chopped up unless one's timing is impeccable."
The OPEC will need to pump more than the additional 500,000 barrels a day agreed in September to avoid tight crude and product inventory levels, the head of the U.S. Department of Energy's data section said Thursday.
The ABX index tracks AAA mortgage bonds. Not surprisingly, this index has made new lows this week. It would be wise to keep one's eye on this index. It will provide a clue to the health of the financial indices. Specifically, the AAA-rated ABX Index (for home loans made in the second half of last year) dropped under 80.0, down almost 3.50 from Friday's close of 83.4. The lesser-rated AA-rated ABX Index traded under 48.0 after closing at over 52.0 on Friday.
In early Friday trading, the euro made a fresh record high of $1.4525. The pound sterling was trading at $2.0819, up from $2.0789 Thursday. The dollar index, which measures the greenback against a basket of currencies, was down to 76.26. Does anyone in Congress care about the standard of living for those on Main Street?
Since Jan. 2005, Allstate Insurance has traded between the mid-60's and 50. The stock traded at $50+ on Friday. For patient investors, it might be worth a look.
Robert McHugh: "We have seen now five Hindenburg Omens since October 16th, the other four occurring October 17th, 18th, 25th, and again another Hindenburg Omen observation today, Thursday, November 1st."
Gold for December delivery rallied $14.80 to finish at $808.50 an ounce on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $810.70, a level not seen since 1980.
Crude-oil futures finished on Friday up $2.44, or 2.6%, at a record closing price of $95.93 a barrel on the New York Mercantile Exchange. Natural gas closed at $8.41.
Berkshire Hathaway's third-quarter net income came in at $4.55 billion, or $2,942 per class A share, up 64% from a year earlier when the the insurance-focused conglomerate run by Warren Buffett made $2.77 billion, or $1,797 a share. Investment and derivative gains of $1.99 billion, or $1,287 per class A share, accounted for all the gains in the period. Operating income, which excludes net realized investment gains and losses, was $2.56 billion, or $1,655 per class A share, down slightly from a year earlier when Berkshire made an operating profit of $2.6 billion, or $1,684 a share, the company said.
Citigroup Inc.is expected to hold an emergency board meeting this weekend, the Wall Street Journal reported Friday.
Jim Rogers: ``Bernanke loves printing money,'' Rogers said in an interview in New York. ``This man is a nut. The dollar is collapsing, commodities are going through the roof, which means inflation's going through the roof. These people are leading us to terrible problems down the line.'' Rogers, the 65-year-old chairman of Beeland Interests Inc., also said he's selling short shares of Citigroup Inc., the biggest U.S. bank, and Fannie Mae, the largest provider of money for U.S. home loans. Investors should buy commodities and the Chinese currency, Rogers said.
A top American diplomat pressed for harsher U.N. sanctions against Iran for its nuclear program on Friday, while Iran's former president said talks with the U.N. atomic watchdog were progressing and warned against threatening his country.
Meanwhile, Obama, if elected, would engage in extensive diplomacy with Iran.
It is hard to imagine that a Democrat-led Congress just passed a resolution giving Bush the authority to invade Iran. Has Iran ever invaded another country? We have though. It's called Iraq.
N.Y. Attorney General Andrew Cuomo accused Washington Mutual of pressuring appraisers to inflate home values. Do you think WaMu has a monopoly on this activity?
An investor group led by former Chief Executive Officer Maurice Greenberg Friday called on American International Group Inc.to consider alternatives for the company, including sale of some of its operations.
Cigna expects 2008 adjusted income from operations of $1.16 billion to $1.22 billion, or $4.00 to $4.20 a share.
The U.S. economy created 166,000 net jobs in October, the best job growth since May, the Labor Department reported Friday. The unemployment rate was steady at 4.7% as expected. A separate survey of 60,000 households showed a loss of 250,000 workers, the third decline in the past four months. Jobs continued to be lost in the manufacturing and construction sectors, offset by growth in public schools, health care, business services, food service, and temporary-help services. Average hourly earnings rose 3 cents to $17.58 an hour, or 0.2%. Average hourly earnings are up 3.8% in the past year.
George Ure: " Now, just how much of it was created by the CES Birth-Death Model, which statistically supposes jobs created? Try 103,000 for October. A true skeptic would say 166 thousand new jobs, backing out 103 thousand CES Birth/Death Model estimated, leaves a real gain of 63-thousand, but any port in a storm, right?"
Merrill Lynch has engaged in deals with hedge funds to delay when it had to record losses on risky mortgage-backed securities, and the Securities and Exchange Commission has started a probe looking at how Wall Street is valuing mortgage securities, The Wall Street Journal reported Friday, citing people close to the situation.
Mazda, Japan's fifth-largest automaker, said net profit for the second fiscal quarter reached 26.6 billion yen ($232.1 million), up from 20.6 billion yen in the year-ago period. Revenue rose 7% to 841.9 billion yen from 787.1 billion yen. For the full year, Mazda kept its forecast for a group net profit of 85 billion yen.
Doug Casey: " The rapidly approaching dilemma for the Federal Reserve comes down to a choice between (1) engineering a standard sort of recovery from the next recession by speeding up monetary growth and reducing interest rates and (2) keeping the dollar afloat.
Choose the “solution” behind Door Number One and trigger a monetary crisis. Open Door Number Two and our heavily indebted economy is devastated by the higher interest rates needed to support the U.S. dollar. For all the reasons discussed above, and with the next presidential election season now kicking off, the odds heavily favor inflation.
In fact, Fed Chairman Ben Bernanke virtually gave the game away in a speech in Frankfurt on November 10, 2006.
“It would be fair to say that monetary and credit aggregates have not played a central role in the formulation of U.S. monetary policy.”
In other words, the total amount of money in the system – what we “print” – plays no serious role in current U.S. policy. That’s a politic way of admitting that the U.S. government is planning to paper over all its many obligations and accelerate a trend that has been in motion since the creation of the Fed in 1913."
The Federal Reserve added $41 billion in temporary reserves to the banking system, the largest one-day cash infusion since the terrorist attacks of September 2001.
Chevron's net income for the three months ended Sept. 30 fell to $3.72 billion, or $1.75 per share, compared with $5.02 billion, or $2.29 per share, during the same period a year earlier. The CEO said "margins were squeezed as escalating costs for crude-oil feedstocks could not be fully recovered in a U.S. marketplace that was well-supplied with gasoline and other refined products."
The mood in credit derivatives markets turned ugly on Thursday, with the cost of insuring corporate debt hitting multi-week highs on both sides of the Atlantic. "It's scary out there - there's blood on the streets," a trader at a US brokerage said. "It's a real mess." Funny. The Dow and the S&P don't look scary. How can that be?
According to market research firm IMS Health, the global pharmaceutical market will grow 5 to 6% during 2008 to as much as $745 billion, after a rather anemic 6 to 7% increase in 2007. In the world's two largest markets for pharmaceuticals, the U.S. and Europe, drugs sales are only projected to grow 4 to 5% next year, their slowest pace since the early 1960s.
Peter Schiff: " Had the government assumed a higher rate of inflation, say 2.6% (identical to the rate used to deflate second quarter GDP,) the 3rd quarter gain would have been only 2.1%, well shy of the consensus forecast. My guess is that inflation is actually running at an annualized rate closer to 10%. Therefore using a more honest deflator, the U.S. economy is actually contracting, which would explain the recent anecdotal evidence provided by various economic polls, voter dissatisfaction and consumer sentiment numbers. In fact, if one simply measures U.S. GDP using gold or any other currency, it is clear that we are already in a recession."
Copper tumbled 3.2%, the most in 11 weeks, after stockpiles monitored by the London Metal Exchange rose 8.3% this week to the highest level since April. Supplies surged 28% in October, according to the LME.
According AMG Data, Including ETF activity, Equity funds report net cash inflows totaling $7.275 billion in the week ended 10/31/07 with Domestic funds reporting net inflows of $4.115 billion and Non-domestic funds reporting net inflows of $3.160 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$565 million with Domestic funds reporting net outflows of -$942 million and Non-domestic funds reporting net inflows totaling $376 million.
The Oil Drum: "Industry insider and writer on oil Matthew Simmons bet $5,000 with a New York Times columnist that oil prices would reach $200 in 2010. Simmons calculates that $65 a barrel translates to 10 cents a cup, still 10 times cheaper than bottled water.
Brett Steenbarger: "In short, when the VIX jumps from 15 to 25, the effect is similar to doubling position size overnight. Moreover, markets will--to the eye of the trader--move twice as fast; a given market move will occur in half the time. This will make it feel as though markets are moving *differently*. Finally, when volatility doubles, the average movement against one's positions will double. If stop levels are not adjusted appropriately, it's easy to get stopped out and chopped up unless one's timing is impeccable."
The OPEC will need to pump more than the additional 500,000 barrels a day agreed in September to avoid tight crude and product inventory levels, the head of the U.S. Department of Energy's data section said Thursday.
The ABX index tracks AAA mortgage bonds. Not surprisingly, this index has made new lows this week. It would be wise to keep one's eye on this index. It will provide a clue to the health of the financial indices. Specifically, the AAA-rated ABX Index (for home loans made in the second half of last year) dropped under 80.0, down almost 3.50 from Friday's close of 83.4. The lesser-rated AA-rated ABX Index traded under 48.0 after closing at over 52.0 on Friday.
In early Friday trading, the euro made a fresh record high of $1.4525. The pound sterling was trading at $2.0819, up from $2.0789 Thursday. The dollar index, which measures the greenback against a basket of currencies, was down to 76.26. Does anyone in Congress care about the standard of living for those on Main Street?
Since Jan. 2005, Allstate Insurance has traded between the mid-60's and 50. The stock traded at $50+ on Friday. For patient investors, it might be worth a look.
Robert McHugh: "We have seen now five Hindenburg Omens since October 16th, the other four occurring October 17th, 18th, 25th, and again another Hindenburg Omen observation today, Thursday, November 1st."
Gold for December delivery rallied $14.80 to finish at $808.50 an ounce on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $810.70, a level not seen since 1980.
Crude-oil futures finished on Friday up $2.44, or 2.6%, at a record closing price of $95.93 a barrel on the New York Mercantile Exchange. Natural gas closed at $8.41.
Berkshire Hathaway's third-quarter net income came in at $4.55 billion, or $2,942 per class A share, up 64% from a year earlier when the the insurance-focused conglomerate run by Warren Buffett made $2.77 billion, or $1,797 a share. Investment and derivative gains of $1.99 billion, or $1,287 per class A share, accounted for all the gains in the period. Operating income, which excludes net realized investment gains and losses, was $2.56 billion, or $1,655 per class A share, down slightly from a year earlier when Berkshire made an operating profit of $2.6 billion, or $1,684 a share, the company said.
Citigroup Inc.is expected to hold an emergency board meeting this weekend, the Wall Street Journal reported Friday.
Jim Rogers: ``Bernanke loves printing money,'' Rogers said in an interview in New York. ``This man is a nut. The dollar is collapsing, commodities are going through the roof, which means inflation's going through the roof. These people are leading us to terrible problems down the line.'' Rogers, the 65-year-old chairman of Beeland Interests Inc., also said he's selling short shares of Citigroup Inc., the biggest U.S. bank, and Fannie Mae, the largest provider of money for U.S. home loans. Investors should buy commodities and the Chinese currency, Rogers said.
Thursday, November 01, 2007
Credit Issues And Headwinds
11/2/07 Credit Issues And Headwinds
Thomas Jefferson: “Banking establishments are more dangerous than standing armies.”
Citigroup was downgraded to sector underperformer from sector performer at CIBC World Markets, with the broker citing worries about its dividend payments. "We believe over near term, Citigroup will need to raise over $30 billion in capital through either asset sales, a dividend cut, a capital raise or combination thereof," the broker said. The stock traded down to a 4 year low at $38+. A management change is long long long overdue. The market cap is now below $200 billion.
Tele Atlas intends to recommend the Garmin offer unless TomTom matches it by the close of business on Nov. 8. Tele Atlas stressed it needs a binding offer from Garmin before it can switch its recommendation. So far Garmin has only declared its intention of making an offer for Tele Atlas of 24.50 euros a share in cash, which represents a 15% premium to the TomTom offer. Should TomTom match the Garmin offer, then Tele Atlas will continue to recommend the Dutch company's bid. If it fails to match the offer then Tele Atlas will terminate its agreement with the firm.
Unilever's third-quarter net profit rose 37% to 1.01 billion euros from 737 million euros as revenue for the period rose 1% to 10.24 billion euros. Underlying sales were up 4.5%. Revenue fell 0.6% in Europe and 2.3% in the Americas, but this was more than offset by strong growth in Asia and Africa, with India and China showing particularly strong growth. Commodity prices pressures have increased sharply, but have been offset through increased prices which helped raise the group's margin by 0.2 percentage points. Earnings were also boosted by increased an increased contribution from joint ventures and lower financing costs. Unilever said it remains confident it will meet its targets for 2007.
Online recruitment rose to its highest level since May, with management and military opportunities leading the rise, the Monster Employment Index showed. The index is published by Monster, the online-recruitment Website. The index reached 188, up two points from September and up 16 points from the year-earlier month. The index was last this high when it reached 189 in May 2007. The biggest jump in industries was in public administration, which rose 29 points, or 19%. That reflected more online job ads from the federal government. The biggest decline was in transportation and warehousing, down 8 points. Geographically, New England showed the highest rate of increase while the Mountain and Pacific regions showed the slowest growth.
China's manufacturing activity reached a 31-month high in October, driven by growth in domestic orders while overseas order growth remained positive. A gauge of purchasing activity rose to 55.2 in October from 55 in September, according to the purchasing managers' index compiled by CLSA Asia-Pacific Markets. October's gains mark the 23rd consecutive month of expansion in Chinese manufacturing, the report said.
A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc. The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year. There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.
Bloomberg's John Berry: "The members of the Federal Open Market Committee also effectively told investors and analysts not to expect another such reduction at the committee's next meeting on Dec. 11. That signal was clear from the FOMC's statement, which said, ``The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth.''
Henry To: "While foreign investment banks, commercial banks, hedge funds, and private equity funds are still creating liquidity (although this is slowing down as well), the Federal Reserve itself has continued to restrain liquidity from the global financial system, despite a lower discount and Fed Funds rate since July 15th. This is evident by the dismal 2.0% growth (a rate that is below that of inflation) in the St. Louis Adjusted Monetary base over the last 12 months. Another indicator of deteriorating liquidity is the blowout of credit spreads in the U.S. markets over the last few months. With the rally off the mid August lows, one would think that credit spreads have settled down since then, but that has not been the case."
China unexpectedly increased fuel prices by as much as 10 percent in an ``urgent step'' to help the nation's oil refiners cover surging costs as crude touched records above $96 a barrel. To ``guarantee domestic refined oil supply and promote energy conservation,'' gasoline, diesel and jet fuel prices will rise 500 yuan ($67) a metric ton starting today, the National Development and Reform Commission said late yesterday. China Petroleum & Chemical Corp., Asia's largest refiner, surged in Hong Kong and Shanghai trading.
According to the FT, the ongoing crisis in the US housing market is pushing a key mortgage-linked derivatives index to new lows, threatening to unleash a further bout of credit market upheaval. The price swing in the index, known as the ABX, is particularly significant, since it is starting to reduce the value of credit instruments that carried high credit ratings, and were therefore supposed to be ultra-safe.
Starbucks launches bottled Frappuccino in China today, a market with lots of potential customers but little history with ready-to-drink coffee drinks. Starbucks kicks off the new drink at stores in Hong Kong, Shanghai and Beijing and at convenience stores and other locations in Hong Kong and Shanghai.
Exxon Mobil Corp., the world's biggest oil company, posted a second straight drop in quarterly profit for the first time in five years after equipment and power failures slowed fuel output and refining margins narrowed. Third-quarter net income fell to $9.41 billion, or $1.70 a share, from $10.5 billion, or $1.77, a year earlier, the Irving, Texas-based company said today in a statement. The company was expected to earn $1.74 a share, the average of 16 analyst estimates compiled by Bloomberg.
Nouriel Roubini: "Consensus for Q4 is for a growth of 1.8% with some mainstream firms, such as JP Morgan, recently predicting 1%. Now that the inventory issue will likely subtract - as the Morgan Stanley commentary suggest - about 0.9% to previous estimates of Q4 growth, the consensus should revise its Q4 forecast to about 1% or below, straight into a "growth recession" territory. Thus, a growth rate in the 1% or below range looks like the most likely current outcome for Q4's growth rate. It is important to keep in mind that several of the bearish factors slowing down the economy emerged only late in Q3 and will thus affect growth only in Q4 and beyond: the sharp rise in oil prices, the severe liquidity and credit crunch that started only two thirds into Q3, the effects of these shocks on consumer and business confidence and planned capital expenditure, the worsening of the housing recession and the acceleration in the rate of fall in home prices. And the headwinds slowing down consumption - that is down in October relative to September based on weekly UBS/ICSC and Redbook data on same store chain store sales - are building up: lower home values, lower home equity withdrawal, credit crunch in mortgages and rising default rates in other parts of consumer debt, rising debt servicing ratios as ARMs reset, falling consumer confidence, rising oil and gasoline prices, slowdown in employment growth. At the same side supply side factors (ISM, regional Feds' ISM reports, inventories, durable goods orders) also suggest a significant slowdown ahead in Q4. So as the WSJ put it today the GDP growth is "Not Built to Last"!
Altria Group Inc.will pay $2.9 billion to buy John Middleton, Inc., a manufacturer of machine-made large cigars, from privately held Bradford Holdings. The net cost of the acquisition, after deducting approximately $700 million in present value tax benefits arising from the terms of the transaction, is $2.2 billion.
For the fourth quarter, Timberland anticipates revenue declines in the mid-single digit range reflecting soft market conditions in the U.S. and Europe and operating margin declines in the range of 200 basis points, excluding restructuring costs. For 2008, Timberland is targeting mid-single digit first half revenue declines and improved operating results. The footwear and apparel maker expects soft market trends will be offset by its "efforts to drive operational efficiencies" and its decision to close about 50 retail stores by the end of the first quarter of 2008. The company also said it would realign its U.S sales team and global product development organization to "eliminate redundancies and improve efficiencies."
Credit Suisse had a 1.1B franc writedown on leveraged loans that the bank was unable to resell after credit markets dried up in July and August, and another 1.1B franc writedown on residential and commercial mortgages and CDOs.
After adjusting for inflation, after-tax incomes rose 0.2% in September and real spending increased 0.1%. Meanwhile, inflation was steady. in September. The personal consumption expenditure index rose 0.2% on the month. The core rate of inflation - which excludes food and energy prices - also rose 0.2%, as expected. In the past year, the PCE price index has risen 2.4%, while the core PCE index was up 1.8%, the same as the previous month. Obviously, there is no validity to these inflation numbers from the government.
First-time claims for state unemployment benefits dropped to their lowest level in three weeks during the week ending Oct. 27, while the number of workers continuing to claim unemployment benefits rose to its highest level since Sept. 1, the Labor Department reported Thursday. Initial jobless claims fell to 327,000, a decrease of 6,000, the government data show. It's the lowest since Oct. 6. Continuing claims for unemployment benefits rose by 65,000 to 2.58 million. The four-week average of those claims also shot up by 13,000, to 2.53 million.
Crude-oil futures for December delivery retreated from Wednesday's record high, closing down $1.04, or 1.1%, at $93.49 a barrel Thursday on the New York Mercantile Exchange.
Natural gas supplies rose by 66 billion cubic feet to 3,509 billion cubic feet as of Oct. 26, the Energy Department reported on Thursday. Natural gas closed up 28 cents to $8.61.
Gold for December delivery finished down $1.60 at $793.70 an ounce on the New York Mercantile Exchange.
MetroPCS Communications Inc. on Thursday withdrew its $4.7 billion offer to acquire rival Leap Wireless International Inc., two months after Leap rejected its unsolicited bid.
CIBC World Markets trimmed their 2008 and 2009 profit forecasts for the Bank of America.
The outstanding level of asset-backed commercial paper fell for the 12th straight week, the Federal Reserve reported Thursday. Asset-backed paper dropped by $9 billion, or 1%, to $875 billion, and this represents a plunge of $308 billion, or 26%, since the crisis of confidence in credit began in early August.
The U.S. manufacturing sector grew at a slower pace for a fourth straight month in October, according to the Institute for Supply Management index released Thursday. The ISM index fell to 50.9% from 52% in September.The new orders index fell to 52.5% from 53.4% in September. The production index dropped to 49.6% in October from 54.6% in September. The prices paid index rose to 63% from 59%.
Chrysler plans to cut more than 10,000 jobs, and that is in addition to the 13,000 layoffs announced in February.
U.S. District Court Judge Patricia Minaldi ruled this week that the Interior Department's Minerals Management Service could not order Kerr-McGee Oil and Gas Corp. � now owned by Houston-based Anadarko Petroleum Corp. � to pay royalties on production in the deep waters of the Gulf of Mexico solely because oil and gas prices rose to specific thresholds.
GMAC Financial Services lost $1.6 billion in the third quarter as it fell victim to the turmoil sweeping through the mortgage industry, the lender said Thursday.The former financing arm of General Motors Corp. said its mortgage business, ResCap, lost $2.3 billion during the third quarter, offsetting profits elsewhere in the business. GMAC cited "unprecedented disruptions" in the mortgage industry, stung by sinking home prices and an aversion among banks and investors to buying home loans.
Democrats, ignoring a veto threat, will try to force President George W. Bush to approve an increase in domestic spending by combining it with legislation funding military construction and veterans' programs.
Lawmakers said they will merge the appropriations bills into a single $750 billion measure, making Bush accept a $10 billion increase for education, health care and job-training programs or veto legislation benefiting active and retired military personnel near Veterans Day.
`"Trade is the only thing holding up manufacturing and otherwise it's looking weak,'' said Edward McKelvey, senior economist at Goldman Sachs Group Inc. in New York. ``The spending numbers suggest softer momentum coming out of the third quarter. The economy is in transition, and the growth we saw in the third quarter is in the rear-view mirror.''
Roche will build a second R&D center in China, spending $100 million to create the first fully functional China clinical drug R&D center that is owned by a multinational pharmaceutical company.
George Friedman: "The United States simply does not have the numbers of ground troops needed to invade and occupy Iran -- particularly given the geography and topography of the country. Therefore, any U.S. attack would rely on the forces available, namely air and naval forces...the United States simply does not have the numbers of ground troops needed to invade and occupy Iran -- particularly given the geography and topography of the country. Therefore, any U.S. attack would rely on the forces available, namely air and naval forces."
John Emerich Edward Dalberg Acton: “The danger is not that a particular class is unfit to govern. Every class is unfit to govern.”
The Dow Jones Industrial Average ended down 362 points, or 2.6%, at 13,567, its worst day since October 19, which marked the anniversary of Black Monday.The S&P 500 index fell 40 points, or 2.6%, to 1,508, while the Nasdaq Composite lost 64 points, or 2.3%, to 2,794. Microsoft bucked the trend and landed 25 cents higher on the day.
Thomas Jefferson: “Banking establishments are more dangerous than standing armies.”
Citigroup was downgraded to sector underperformer from sector performer at CIBC World Markets, with the broker citing worries about its dividend payments. "We believe over near term, Citigroup will need to raise over $30 billion in capital through either asset sales, a dividend cut, a capital raise or combination thereof," the broker said. The stock traded down to a 4 year low at $38+. A management change is long long long overdue. The market cap is now below $200 billion.
Tele Atlas intends to recommend the Garmin offer unless TomTom matches it by the close of business on Nov. 8. Tele Atlas stressed it needs a binding offer from Garmin before it can switch its recommendation. So far Garmin has only declared its intention of making an offer for Tele Atlas of 24.50 euros a share in cash, which represents a 15% premium to the TomTom offer. Should TomTom match the Garmin offer, then Tele Atlas will continue to recommend the Dutch company's bid. If it fails to match the offer then Tele Atlas will terminate its agreement with the firm.
Unilever's third-quarter net profit rose 37% to 1.01 billion euros from 737 million euros as revenue for the period rose 1% to 10.24 billion euros. Underlying sales were up 4.5%. Revenue fell 0.6% in Europe and 2.3% in the Americas, but this was more than offset by strong growth in Asia and Africa, with India and China showing particularly strong growth. Commodity prices pressures have increased sharply, but have been offset through increased prices which helped raise the group's margin by 0.2 percentage points. Earnings were also boosted by increased an increased contribution from joint ventures and lower financing costs. Unilever said it remains confident it will meet its targets for 2007.
Online recruitment rose to its highest level since May, with management and military opportunities leading the rise, the Monster Employment Index showed. The index is published by Monster, the online-recruitment Website. The index reached 188, up two points from September and up 16 points from the year-earlier month. The index was last this high when it reached 189 in May 2007. The biggest jump in industries was in public administration, which rose 29 points, or 19%. That reflected more online job ads from the federal government. The biggest decline was in transportation and warehousing, down 8 points. Geographically, New England showed the highest rate of increase while the Mountain and Pacific regions showed the slowest growth.
China's manufacturing activity reached a 31-month high in October, driven by growth in domestic orders while overseas order growth remained positive. A gauge of purchasing activity rose to 55.2 in October from 55 in September, according to the purchasing managers' index compiled by CLSA Asia-Pacific Markets. October's gains mark the 23rd consecutive month of expansion in Chinese manufacturing, the report said.
A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc. The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year. There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.
Bloomberg's John Berry: "The members of the Federal Open Market Committee also effectively told investors and analysts not to expect another such reduction at the committee's next meeting on Dec. 11. That signal was clear from the FOMC's statement, which said, ``The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth.''
Henry To: "While foreign investment banks, commercial banks, hedge funds, and private equity funds are still creating liquidity (although this is slowing down as well), the Federal Reserve itself has continued to restrain liquidity from the global financial system, despite a lower discount and Fed Funds rate since July 15th. This is evident by the dismal 2.0% growth (a rate that is below that of inflation) in the St. Louis Adjusted Monetary base over the last 12 months. Another indicator of deteriorating liquidity is the blowout of credit spreads in the U.S. markets over the last few months. With the rally off the mid August lows, one would think that credit spreads have settled down since then, but that has not been the case."
China unexpectedly increased fuel prices by as much as 10 percent in an ``urgent step'' to help the nation's oil refiners cover surging costs as crude touched records above $96 a barrel. To ``guarantee domestic refined oil supply and promote energy conservation,'' gasoline, diesel and jet fuel prices will rise 500 yuan ($67) a metric ton starting today, the National Development and Reform Commission said late yesterday. China Petroleum & Chemical Corp., Asia's largest refiner, surged in Hong Kong and Shanghai trading.
According to the FT, the ongoing crisis in the US housing market is pushing a key mortgage-linked derivatives index to new lows, threatening to unleash a further bout of credit market upheaval. The price swing in the index, known as the ABX, is particularly significant, since it is starting to reduce the value of credit instruments that carried high credit ratings, and were therefore supposed to be ultra-safe.
Starbucks launches bottled Frappuccino in China today, a market with lots of potential customers but little history with ready-to-drink coffee drinks. Starbucks kicks off the new drink at stores in Hong Kong, Shanghai and Beijing and at convenience stores and other locations in Hong Kong and Shanghai.
Exxon Mobil Corp., the world's biggest oil company, posted a second straight drop in quarterly profit for the first time in five years after equipment and power failures slowed fuel output and refining margins narrowed. Third-quarter net income fell to $9.41 billion, or $1.70 a share, from $10.5 billion, or $1.77, a year earlier, the Irving, Texas-based company said today in a statement. The company was expected to earn $1.74 a share, the average of 16 analyst estimates compiled by Bloomberg.
Nouriel Roubini: "Consensus for Q4 is for a growth of 1.8% with some mainstream firms, such as JP Morgan, recently predicting 1%. Now that the inventory issue will likely subtract - as the Morgan Stanley commentary suggest - about 0.9% to previous estimates of Q4 growth, the consensus should revise its Q4 forecast to about 1% or below, straight into a "growth recession" territory. Thus, a growth rate in the 1% or below range looks like the most likely current outcome for Q4's growth rate. It is important to keep in mind that several of the bearish factors slowing down the economy emerged only late in Q3 and will thus affect growth only in Q4 and beyond: the sharp rise in oil prices, the severe liquidity and credit crunch that started only two thirds into Q3, the effects of these shocks on consumer and business confidence and planned capital expenditure, the worsening of the housing recession and the acceleration in the rate of fall in home prices. And the headwinds slowing down consumption - that is down in October relative to September based on weekly UBS/ICSC and Redbook data on same store chain store sales - are building up: lower home values, lower home equity withdrawal, credit crunch in mortgages and rising default rates in other parts of consumer debt, rising debt servicing ratios as ARMs reset, falling consumer confidence, rising oil and gasoline prices, slowdown in employment growth. At the same side supply side factors (ISM, regional Feds' ISM reports, inventories, durable goods orders) also suggest a significant slowdown ahead in Q4. So as the WSJ put it today the GDP growth is "Not Built to Last"!
Altria Group Inc.will pay $2.9 billion to buy John Middleton, Inc., a manufacturer of machine-made large cigars, from privately held Bradford Holdings. The net cost of the acquisition, after deducting approximately $700 million in present value tax benefits arising from the terms of the transaction, is $2.2 billion.
For the fourth quarter, Timberland anticipates revenue declines in the mid-single digit range reflecting soft market conditions in the U.S. and Europe and operating margin declines in the range of 200 basis points, excluding restructuring costs. For 2008, Timberland is targeting mid-single digit first half revenue declines and improved operating results. The footwear and apparel maker expects soft market trends will be offset by its "efforts to drive operational efficiencies" and its decision to close about 50 retail stores by the end of the first quarter of 2008. The company also said it would realign its U.S sales team and global product development organization to "eliminate redundancies and improve efficiencies."
Credit Suisse had a 1.1B franc writedown on leveraged loans that the bank was unable to resell after credit markets dried up in July and August, and another 1.1B franc writedown on residential and commercial mortgages and CDOs.
After adjusting for inflation, after-tax incomes rose 0.2% in September and real spending increased 0.1%. Meanwhile, inflation was steady. in September. The personal consumption expenditure index rose 0.2% on the month. The core rate of inflation - which excludes food and energy prices - also rose 0.2%, as expected. In the past year, the PCE price index has risen 2.4%, while the core PCE index was up 1.8%, the same as the previous month. Obviously, there is no validity to these inflation numbers from the government.
First-time claims for state unemployment benefits dropped to their lowest level in three weeks during the week ending Oct. 27, while the number of workers continuing to claim unemployment benefits rose to its highest level since Sept. 1, the Labor Department reported Thursday. Initial jobless claims fell to 327,000, a decrease of 6,000, the government data show. It's the lowest since Oct. 6. Continuing claims for unemployment benefits rose by 65,000 to 2.58 million. The four-week average of those claims also shot up by 13,000, to 2.53 million.
Crude-oil futures for December delivery retreated from Wednesday's record high, closing down $1.04, or 1.1%, at $93.49 a barrel Thursday on the New York Mercantile Exchange.
Natural gas supplies rose by 66 billion cubic feet to 3,509 billion cubic feet as of Oct. 26, the Energy Department reported on Thursday. Natural gas closed up 28 cents to $8.61.
Gold for December delivery finished down $1.60 at $793.70 an ounce on the New York Mercantile Exchange.
MetroPCS Communications Inc. on Thursday withdrew its $4.7 billion offer to acquire rival Leap Wireless International Inc., two months after Leap rejected its unsolicited bid.
CIBC World Markets trimmed their 2008 and 2009 profit forecasts for the Bank of America.
The outstanding level of asset-backed commercial paper fell for the 12th straight week, the Federal Reserve reported Thursday. Asset-backed paper dropped by $9 billion, or 1%, to $875 billion, and this represents a plunge of $308 billion, or 26%, since the crisis of confidence in credit began in early August.
The U.S. manufacturing sector grew at a slower pace for a fourth straight month in October, according to the Institute for Supply Management index released Thursday. The ISM index fell to 50.9% from 52% in September.The new orders index fell to 52.5% from 53.4% in September. The production index dropped to 49.6% in October from 54.6% in September. The prices paid index rose to 63% from 59%.
Chrysler plans to cut more than 10,000 jobs, and that is in addition to the 13,000 layoffs announced in February.
U.S. District Court Judge Patricia Minaldi ruled this week that the Interior Department's Minerals Management Service could not order Kerr-McGee Oil and Gas Corp. � now owned by Houston-based Anadarko Petroleum Corp. � to pay royalties on production in the deep waters of the Gulf of Mexico solely because oil and gas prices rose to specific thresholds.
GMAC Financial Services lost $1.6 billion in the third quarter as it fell victim to the turmoil sweeping through the mortgage industry, the lender said Thursday.The former financing arm of General Motors Corp. said its mortgage business, ResCap, lost $2.3 billion during the third quarter, offsetting profits elsewhere in the business. GMAC cited "unprecedented disruptions" in the mortgage industry, stung by sinking home prices and an aversion among banks and investors to buying home loans.
Democrats, ignoring a veto threat, will try to force President George W. Bush to approve an increase in domestic spending by combining it with legislation funding military construction and veterans' programs.
Lawmakers said they will merge the appropriations bills into a single $750 billion measure, making Bush accept a $10 billion increase for education, health care and job-training programs or veto legislation benefiting active and retired military personnel near Veterans Day.
`"Trade is the only thing holding up manufacturing and otherwise it's looking weak,'' said Edward McKelvey, senior economist at Goldman Sachs Group Inc. in New York. ``The spending numbers suggest softer momentum coming out of the third quarter. The economy is in transition, and the growth we saw in the third quarter is in the rear-view mirror.''
Roche will build a second R&D center in China, spending $100 million to create the first fully functional China clinical drug R&D center that is owned by a multinational pharmaceutical company.
George Friedman: "The United States simply does not have the numbers of ground troops needed to invade and occupy Iran -- particularly given the geography and topography of the country. Therefore, any U.S. attack would rely on the forces available, namely air and naval forces...the United States simply does not have the numbers of ground troops needed to invade and occupy Iran -- particularly given the geography and topography of the country. Therefore, any U.S. attack would rely on the forces available, namely air and naval forces."
John Emerich Edward Dalberg Acton: “The danger is not that a particular class is unfit to govern. Every class is unfit to govern.”
The Dow Jones Industrial Average ended down 362 points, or 2.6%, at 13,567, its worst day since October 19, which marked the anniversary of Black Monday.The S&P 500 index fell 40 points, or 2.6%, to 1,508, while the Nasdaq Composite lost 64 points, or 2.3%, to 2,794. Microsoft bucked the trend and landed 25 cents higher on the day.
Wednesday, October 31, 2007
The Month Ends With Fireworks
11/1/07 October Ends With Fireworks
First Consulting Group Inc., a provider of information-technology products and services for health care and life sciences, agreed to be acquired for $13 a share, or $365 million, cash by Computer Sciences Corp., the companies said.
Clorox Co. will acquire personal-care product company Burt's Bees for $925 million net of an additional $25 million payment for anticipated tax benefits, in a move to capitalize on the popularity in "natural" products. Clorox will fund the all-cash deal through a combination of cash and short-term borrowings.
Uranium spot prices averaged $96.33 a pound in the quarter, compared to $50.83 a pound a year ago.
Japan will experience zero inflation in fiscal 2007 and a 0.4% rise in fiscal 2008, in terms of the consumer price index, excluding fresh foods, the Bank of Japan said in its semi-annual statement on the economy Wednesday.
The Bank of Japan voted 8-to-1 Wednesday to keep its key interest rate unchanged at 0.5%. Board member Atsushi Mizuno voted against the motion.
Garmin Ltd. proposed to buy Tele Atlas NV for 24.5 euros ($35.31) a share, or 2.3 billion euros ($3.31 billion). Separately, Garmin reported third-quarter earnings rose 57%.
Alcatel-Lucent, the world's largest telecommunications equipment company, on Wednesday said it will cut an additional 4,000 jobs in 2009 as it posted its third straight quarterly loss.
Canada's dollar rose to the highest since 1960. Canada's dollar rose to $1.0496 at 4:48 p.m. in Toronto, from $1.0482 yesterday. It touched $1.0511, the highest since March 28, 1960. One U.S. dollar buys 95.26 Canadian cents.
Robert Orben: “Inflation is bringing us true democracy. For the first time in history, luxuries and necessities are selling at the same price."
Mike Burk:"The OTC has been up 68% of the time in November, and including a 22% loss in 2000 and a 14% loss in 1973 it has had an average gain of 1.7% for the month. Performance during the 3rd year of the Presidential Cycle has been only slightly less, up 64% of the time with an average gain of 1.6%...Over all years the SPX has been up 55% of the time in November with an average gain of 0.4%. During the 3rd year of the Presidential Cycle it has been up 53% of the time with an average loss of 0.6%. The losses were distorted by an average loss of 4.48% for the 5 cycles before 1950."
Richard Daughty: "China's General Administration of Customs reported that China alone imported 39.3% more crude oil in July than it did this time last year! Not only that, but Liquefied Natural Gas (LNG) imports soared five-fold, too! 500%!"
Private payrolls grew by 106,000 in October, following a revised 61,000 gain in September, ADP reported Wednesday.
"Our business momentum continued to build in the third quarter," Irene Rosenfeld, Kraft's chairman and chief executive, said in a statement. "Although we face a difficult input cost environment, we are making the necessary investments to strengthen our brand equity."Kraft also maintained its outlook for 2007 earnings per share of $1.60 to $1.62, or $1.80 to $1.82 excluding items.
MasterCard Inc.said third-quarter profit climbed 63 percent as customer spending increased.
Private equity firm Cerberus has terminated its acquisition offer to acquire Affiliated Computer Services Inc. This was a $6.2 Billion deal that valued Affiliated at $62 per share.
The Wall Street Journal stated "Sadad I. Al-Husseini, an oil consultant and former executive at Aramco, Saudi Arabia's national oil company, gave a particularly chilling assessment of the world's oil outlook. The major oil-producing nations, he said, are inflating their oil reserves by as much as 300 billion barrels."
U.S. employment costs increased 0.8% in the third quarter after a 0.9% gain in the second quarter, the Labor Department reported Wednesday. Benefit costs rose 0.8% in the quarter, while wages and salaries also rose 0.8%. Over the past year, employment costs have increased 3.3%, the same rate as in the second quarter. Wages and salary costs have increased 3.3% in the past year, while benefit costs increased 3.2%.
More suspect government numbers: The U.S. economy grew at a 3.9% annual pace in third quarter, the best performance in six quarters, the Commerce Department estimated. There were strong contributions from consumers, exports, capital spending, military spending, and inventory building. And for the big laugh!
The GDP price index, the broadest measure of price changes in the economy, rose just 0.8% annualized, matching a nine-year low. Consumer prices rose 1.7%, while core consumer prices, which exclude food and energy prices, rose 1.8%. With respect to government numbers, fairy tales don't come true.
George Ure pointed out that the 5.6 San Jose quake at 8PM Tuesday happened a mere 26 minutes from a 7.2 shaker off on the other side of the Pacific plate in the northern Mariana Islands.
In early Wednesday trading Google topped $700 a share.
The Treasury Department will auction $18 billion in notes and bonds next week in its quarterly refunding auctions, the government said Wednesday. The department will auction $13 billion in 10-year notes and $5 billion in 29-year, 6-month bonds to refund $51.5 billion in maturing securities and pay down approximately $33.5 billion.
Private nonresidential construction spending climbed by 1.5%, while public construction spending rose by 1.9%, the Commerce Department said. But spending on housing projects fell by 1.4%, the 19th straight decline and a reflection of the ongoing slump in the housing and mortgage markets. That spending is down 16.4% in the last year.
Business activity in the Chicago region contracted in October, according to a survey of corporate purchasing managers released on Wednesday. The Chicago purchasing-managers' index fell to 49.7% in October from 54.2% in September.
Oil refinery capacity utilization down to 86.2%. Heating oil still climbing and now at $2.48, another record high. Forecasters expect lower temperatures to move into the Midwest by mid-month, increasing demand for natural gas to run furnaces. About 79 percent of homes in the Midwest rely on gas for heating, according to the Energy Department.
Crude supplies fell by 3.9 million barrels to 312.7 million barrels in the week ending Oct. 26, the Energy Department said on Wednesday. Gasoline supplies rose by 1.3 million barrels to 195.1 million barrels in the latest week, while distillate stocks grew by 800,000 barrels to 135.3 million barrels, the Energy Department said.
Crude supplies fell by 3.3 million barrels to 311 million barrels in the week ending Oct. 26, American Petroleum Institute reported on Wednesday. Distillate stocks rose by 3.1 million barrels to 136.2 million barrels in the same period, while gasoline stocks fell by 800,000 barrels to 196.1 million barrels, API said.
Palatin Technologies, Inc.announced the initiation of dosing in a Phase 1 clinical trial of PL-3994, a long acting analog of atrial natriuretic peptide, under development for treatment of acute decompensated congestive heart failure (CHF). The trial is being conducted under an Investigational New Drug application Palatin submitted to the U.S. Food and Drug Administration. Future plans include the development of PL-3994 for long term administration in patients with chronic congestive heart failure. Dr. Trevor Hallam, Palatin's Executive Vice President for Research and Development, stated, "We are excited to begin clinical trials of PL-3994, a compound developed by Palatin scientists that has the potential to become a new tool for physicians to advance the treatment of congestive heart failure. CHF is the single most common cause of hospitalization in the U.S. for patients older than 65 years of age and an underserved medical condition." Atrial natriuretic peptide (ANP) is a naturally produced peptide hormone involved in regulation of water and sodium levels in the circulation. Palatin's PL-3994 is a peptidomimetic compound, which incorporates features of both natural ANP and small molecules. Preclinical studies have demonstrated that PL-3994 is highly potent. Its longer duration of action is believed to relate to diminished affinity for the natriuretic peptide clearance receptor and increased resistance to the enzyme neutral endopeptidase, both pathways for clearance of endogenous natriuretic peptides. In animal models, PL-3994 was able to induce diuresis (excretion of fluids) with a limited decrease in blood pressure. The compound is well absorbed by the subcutaneous route of administration.
The euro hit another new high against the dollar and the dollar index made another new low, 76.62, against a basket of currencies.
Crude-oil futures rose 4.6% to $94.53 a barrel on the New York Mercantile Exchange on Wednesday after the Federal Open Market Committee cut the fed funds rate by 0.25% to 4.5%. "The Fed cuts were pretty much as expected but more bad news for the dollar which means oil will likely rally even more," said Kevin Kerr, president of Kerrtrade.com and Editor of Dow Jones MarketWatch's Global Resources Trader.
Crude-oil futures hit a new record high in after-hours trading on Wednesday, surging as high as $95.28 a barrel on the New York Mercantile Exchange. Crude oil for December delivery was last up $4.84, or over 5%, at $95.22 a barrel on Nymex. Crude got all the headlines; however, natural gas had a big move and closed at $8.38. That's the highest price for some time.
Gold for December delivery rose $7.50 to end at $795.30 an ounce on the New York Mercantile Exchange.
Aon Corp. said late Wednesday that it will eliminate 2,700 jobs as part of a new re-organization plan.
Crocs Inc. fell $17.05, or 23 percent, to $57.70 after the official close of U.S. exchanges. Quarterly sales were somewhat less than anticipated.
Treasuries fell after the Federal Reserve lowered interest rates for a second time in two months and suggested additional reductions may prove unnecessary.
Moody's Corp. will begin cutting jobs as soon as next month as the credit-market slump saps demand for its bond-rating services.
Bill Vaughn: “Some idea of inflation comes from seeing a youngster get his first job at a salary you dreamed of as the culmination of your career."
First Consulting Group Inc., a provider of information-technology products and services for health care and life sciences, agreed to be acquired for $13 a share, or $365 million, cash by Computer Sciences Corp., the companies said.
Clorox Co. will acquire personal-care product company Burt's Bees for $925 million net of an additional $25 million payment for anticipated tax benefits, in a move to capitalize on the popularity in "natural" products. Clorox will fund the all-cash deal through a combination of cash and short-term borrowings.
Uranium spot prices averaged $96.33 a pound in the quarter, compared to $50.83 a pound a year ago.
Japan will experience zero inflation in fiscal 2007 and a 0.4% rise in fiscal 2008, in terms of the consumer price index, excluding fresh foods, the Bank of Japan said in its semi-annual statement on the economy Wednesday.
The Bank of Japan voted 8-to-1 Wednesday to keep its key interest rate unchanged at 0.5%. Board member Atsushi Mizuno voted against the motion.
Garmin Ltd. proposed to buy Tele Atlas NV for 24.5 euros ($35.31) a share, or 2.3 billion euros ($3.31 billion). Separately, Garmin reported third-quarter earnings rose 57%.
Alcatel-Lucent, the world's largest telecommunications equipment company, on Wednesday said it will cut an additional 4,000 jobs in 2009 as it posted its third straight quarterly loss.
Canada's dollar rose to the highest since 1960. Canada's dollar rose to $1.0496 at 4:48 p.m. in Toronto, from $1.0482 yesterday. It touched $1.0511, the highest since March 28, 1960. One U.S. dollar buys 95.26 Canadian cents.
Robert Orben: “Inflation is bringing us true democracy. For the first time in history, luxuries and necessities are selling at the same price."
Mike Burk:"The OTC has been up 68% of the time in November, and including a 22% loss in 2000 and a 14% loss in 1973 it has had an average gain of 1.7% for the month. Performance during the 3rd year of the Presidential Cycle has been only slightly less, up 64% of the time with an average gain of 1.6%...Over all years the SPX has been up 55% of the time in November with an average gain of 0.4%. During the 3rd year of the Presidential Cycle it has been up 53% of the time with an average loss of 0.6%. The losses were distorted by an average loss of 4.48% for the 5 cycles before 1950."
Richard Daughty: "China's General Administration of Customs reported that China alone imported 39.3% more crude oil in July than it did this time last year! Not only that, but Liquefied Natural Gas (LNG) imports soared five-fold, too! 500%!"
Private payrolls grew by 106,000 in October, following a revised 61,000 gain in September, ADP reported Wednesday.
"Our business momentum continued to build in the third quarter," Irene Rosenfeld, Kraft's chairman and chief executive, said in a statement. "Although we face a difficult input cost environment, we are making the necessary investments to strengthen our brand equity."Kraft also maintained its outlook for 2007 earnings per share of $1.60 to $1.62, or $1.80 to $1.82 excluding items.
MasterCard Inc.said third-quarter profit climbed 63 percent as customer spending increased.
Private equity firm Cerberus has terminated its acquisition offer to acquire Affiliated Computer Services Inc. This was a $6.2 Billion deal that valued Affiliated at $62 per share.
The Wall Street Journal stated "Sadad I. Al-Husseini, an oil consultant and former executive at Aramco, Saudi Arabia's national oil company, gave a particularly chilling assessment of the world's oil outlook. The major oil-producing nations, he said, are inflating their oil reserves by as much as 300 billion barrels."
U.S. employment costs increased 0.8% in the third quarter after a 0.9% gain in the second quarter, the Labor Department reported Wednesday. Benefit costs rose 0.8% in the quarter, while wages and salaries also rose 0.8%. Over the past year, employment costs have increased 3.3%, the same rate as in the second quarter. Wages and salary costs have increased 3.3% in the past year, while benefit costs increased 3.2%.
More suspect government numbers: The U.S. economy grew at a 3.9% annual pace in third quarter, the best performance in six quarters, the Commerce Department estimated. There were strong contributions from consumers, exports, capital spending, military spending, and inventory building. And for the big laugh!
The GDP price index, the broadest measure of price changes in the economy, rose just 0.8% annualized, matching a nine-year low. Consumer prices rose 1.7%, while core consumer prices, which exclude food and energy prices, rose 1.8%. With respect to government numbers, fairy tales don't come true.
George Ure pointed out that the 5.6 San Jose quake at 8PM Tuesday happened a mere 26 minutes from a 7.2 shaker off on the other side of the Pacific plate in the northern Mariana Islands.
In early Wednesday trading Google topped $700 a share.
The Treasury Department will auction $18 billion in notes and bonds next week in its quarterly refunding auctions, the government said Wednesday. The department will auction $13 billion in 10-year notes and $5 billion in 29-year, 6-month bonds to refund $51.5 billion in maturing securities and pay down approximately $33.5 billion.
Private nonresidential construction spending climbed by 1.5%, while public construction spending rose by 1.9%, the Commerce Department said. But spending on housing projects fell by 1.4%, the 19th straight decline and a reflection of the ongoing slump in the housing and mortgage markets. That spending is down 16.4% in the last year.
Business activity in the Chicago region contracted in October, according to a survey of corporate purchasing managers released on Wednesday. The Chicago purchasing-managers' index fell to 49.7% in October from 54.2% in September.
Oil refinery capacity utilization down to 86.2%. Heating oil still climbing and now at $2.48, another record high. Forecasters expect lower temperatures to move into the Midwest by mid-month, increasing demand for natural gas to run furnaces. About 79 percent of homes in the Midwest rely on gas for heating, according to the Energy Department.
Crude supplies fell by 3.9 million barrels to 312.7 million barrels in the week ending Oct. 26, the Energy Department said on Wednesday. Gasoline supplies rose by 1.3 million barrels to 195.1 million barrels in the latest week, while distillate stocks grew by 800,000 barrels to 135.3 million barrels, the Energy Department said.
Crude supplies fell by 3.3 million barrels to 311 million barrels in the week ending Oct. 26, American Petroleum Institute reported on Wednesday. Distillate stocks rose by 3.1 million barrels to 136.2 million barrels in the same period, while gasoline stocks fell by 800,000 barrels to 196.1 million barrels, API said.
Palatin Technologies, Inc.announced the initiation of dosing in a Phase 1 clinical trial of PL-3994, a long acting analog of atrial natriuretic peptide, under development for treatment of acute decompensated congestive heart failure (CHF). The trial is being conducted under an Investigational New Drug application Palatin submitted to the U.S. Food and Drug Administration. Future plans include the development of PL-3994 for long term administration in patients with chronic congestive heart failure. Dr. Trevor Hallam, Palatin's Executive Vice President for Research and Development, stated, "We are excited to begin clinical trials of PL-3994, a compound developed by Palatin scientists that has the potential to become a new tool for physicians to advance the treatment of congestive heart failure. CHF is the single most common cause of hospitalization in the U.S. for patients older than 65 years of age and an underserved medical condition." Atrial natriuretic peptide (ANP) is a naturally produced peptide hormone involved in regulation of water and sodium levels in the circulation. Palatin's PL-3994 is a peptidomimetic compound, which incorporates features of both natural ANP and small molecules. Preclinical studies have demonstrated that PL-3994 is highly potent. Its longer duration of action is believed to relate to diminished affinity for the natriuretic peptide clearance receptor and increased resistance to the enzyme neutral endopeptidase, both pathways for clearance of endogenous natriuretic peptides. In animal models, PL-3994 was able to induce diuresis (excretion of fluids) with a limited decrease in blood pressure. The compound is well absorbed by the subcutaneous route of administration.
The euro hit another new high against the dollar and the dollar index made another new low, 76.62, against a basket of currencies.
Crude-oil futures rose 4.6% to $94.53 a barrel on the New York Mercantile Exchange on Wednesday after the Federal Open Market Committee cut the fed funds rate by 0.25% to 4.5%. "The Fed cuts were pretty much as expected but more bad news for the dollar which means oil will likely rally even more," said Kevin Kerr, president of Kerrtrade.com and Editor of Dow Jones MarketWatch's Global Resources Trader.
Crude-oil futures hit a new record high in after-hours trading on Wednesday, surging as high as $95.28 a barrel on the New York Mercantile Exchange. Crude oil for December delivery was last up $4.84, or over 5%, at $95.22 a barrel on Nymex. Crude got all the headlines; however, natural gas had a big move and closed at $8.38. That's the highest price for some time.
Gold for December delivery rose $7.50 to end at $795.30 an ounce on the New York Mercantile Exchange.
Aon Corp. said late Wednesday that it will eliminate 2,700 jobs as part of a new re-organization plan.
Crocs Inc. fell $17.05, or 23 percent, to $57.70 after the official close of U.S. exchanges. Quarterly sales were somewhat less than anticipated.
Treasuries fell after the Federal Reserve lowered interest rates for a second time in two months and suggested additional reductions may prove unnecessary.
Moody's Corp. will begin cutting jobs as soon as next month as the credit-market slump saps demand for its bond-rating services.
Bill Vaughn: “Some idea of inflation comes from seeing a youngster get his first job at a salary you dreamed of as the culmination of your career."
Tuesday, October 30, 2007
More Earning Reports
10/31/07 More Earning Reports
BJ Services Company reported net income of $189.4 million for the fourth fiscal quarter ended September 30, 2007, or $0.64 per diluted share. The quarter's diluted earnings per share increased 12% compared to the $0.57 per diluted share reported in the previous quarter and decreased 16% compared to the $0.76 per diluted share for the fourth quarter of fiscal 2006. For the fiscal year ended September 30, 2007, consolidated revenue of $4.8 billion increased 10% from the $4.4 billion generated during fiscal 2006 and earnings per diluted share of $2.55 improved 1% from the $2.52 reported in fiscal 2006.
Oilfield Services Group fourth quarter 2007 revenue of $224.6 million increased 16% sequentially and increased 27% year over year.
For the first quarter of 2008, the company expects to report earnings of 58 cents to 60 cents per share. BJ Services reported a profit of 70 cents in the first quarter of 2007. Analysts expected earnings, on average, of $2.50 in 2008 and 63 cents in the first quarter, according to a survey by Thomson Financial. "For fiscal 2008, we project revenue and margin improvement in all segments of our business except U.S./Mexico pressure pumping operations where pricing pressure is expected to continue during the year," the company said in a statement.
In my view, the company learned its lesson in making projections during the first part of 2007 and is low balling the numbers for 2008 which began Oct. 1. In addition, despite the pricing pressure for the pumping industry in U.S./Mexico, and taking into consideration the high return on equity for the overall company,
I strongly believe BJ Services will be acquired over the coming months. The present valuation is way out of synch in comparison with Baker Hughes and others.
Division Sequential Year Over Year
Tubular Services 4 % 19 %
Process & Pipeline Services 38 % 52 %
Chemical Services 12 % 32 %
Completion Tools -9 % 23 %
Completion Fluids 8 % -12 %
Under Armour lifted its 2007 revenue estimate to $590 million to $600 million from $580 million to
$590 million. For 2008, the company said it expects net revenue and income from operations to exceed its long-term growth target of 20% to
25%.
The British pound rose to a new 26-year high against the U.S. dollar.
The Reserve Bank of India Tuesday left its short-term interest rates unchanged, as expected,
while raising banks' reserve requirements by 0.5 percentage point to 7.5%. The increase in banks' cash reserve requirement will become
effective Nov. 10. "At the current juncture and looking ahead, on the domestic front, the biggest challenge for monetary policy is the
management of capital flows and the attendant implications for liquidity and overall stability," wrote the central bank in a statement
after announcing its quarterly policy review. The RBI retained its 8.5% forecast for the country's economic growth for the year ending March
31, 2008.
Vulcan Materials, Inc., the largest producer of construction aggregates in the United States,
said net income in the third quarter edged down to $135.4 million, or $1.38 a share, from $135.7 million, or $1.39 a share, in
the year-ago quarter. Profit in the most recent quarter included a 9 cents a share loss from discontinued operations. Earnings from
continuing operations were $144 million, or $1.47 a share. Analysts polled by Thomson Financial were anticipating earnings from ongoing
operations of $1.59 a share. Sales slipped 0.4% to $844.9 million, also missing views of $952.4 million. The Birmingham, Ala. company said it
expects aggregate volumes in the fourth quarter will continue to be "hampered" by a downturn in residential construction and plans to close
its acquisition of Florida Rock Industries then.
Sweden raises rates to 4%. The central bank added it expected growth to continue - although it
will moderate - and rates to be raised to 4.25 per cent in the first
half of 2008.
Australia cut the wheat crop forecast for the third time.
UBS fears credit crunch will last into 2008.
Procter & Gamble Co.'s first-quarter profit increased
14 percent, matching analysts' estimates, on rising overseas
sales of Fusion razors and a weaker dollar.
The weaker dollar will add 3 percentage points to sales and will help revenue climb as
much as 8 percent, the company said. P&G previously had
forecast a sales gain of at most 7 percent.
The CEO of Colgate-Palmolive stated the company "will deliver
double-digit earnings per share growth for the balance of 2007 and full year 2008."
The decline in prices of existing single-family homes accelerated in August and fell at their fastest pace since 1991, according to the Standard & Poor's/Case Shiller national home price index. S&P said its composite month-over-month index of 10 major metropolitan areas declined 0.8 percent in August to 214.35, for a 5 percent year-over-year drop, S&P said in a statement on Tuesday.
"The fall in home prices is showing no real signs of a slowdown or turnaround," Robert Shiller, founder of the indexes and chief economist at MacroMarkets LLC, said in a statement.
"While it is difficult to predict a recovery in our domestic offshore drilling business, there are some early signs of a moderate increase in demand as we enter the fourth quarter," Hercules Offshore said.
Natural gas continues to improve at $8.04 per million BTUs. Patience is being rewarded and the shorts are beginning to feel some pain. Companies like BJ Services are dependent on natural gas as well as oil and should benefit with prices rising.
Crude-oil futures for December delivery closed down $3.15, or 3.4%, at $90.38 a barrel on the New York Mercantile Exchange, after setting a record high close of $93.53 on Monday.
Gold for December delivery closed down $4.80 at $787.80 an ounce on the New York Mercantile Exchange.
Merrill Lynch ousts CEO O'Neal.
Bush said he would reject any attempt by Congress to force him to accept legislation with increased domestic spending by combining it with funding for military operations and veterans health care.
According to Peter Gumbel of Fortune, he quarterly delinquency rate on credit card debt for Capital One, Washington Mutual, Citigroup, J.P. Morgan Chase, and Bank of America rose an average of 13% in the third quarter, compared with a 2% drop in the previous quarter. Is this the next shoe to drop? It may take a bit of time to reveal its true colors, but I believe the consumer's cash flow is in trouble.
BJ Services Company reported net income of $189.4 million for the fourth fiscal quarter ended September 30, 2007, or $0.64 per diluted share. The quarter's diluted earnings per share increased 12% compared to the $0.57 per diluted share reported in the previous quarter and decreased 16% compared to the $0.76 per diluted share for the fourth quarter of fiscal 2006. For the fiscal year ended September 30, 2007, consolidated revenue of $4.8 billion increased 10% from the $4.4 billion generated during fiscal 2006 and earnings per diluted share of $2.55 improved 1% from the $2.52 reported in fiscal 2006.
Oilfield Services Group fourth quarter 2007 revenue of $224.6 million increased 16% sequentially and increased 27% year over year.
For the first quarter of 2008, the company expects to report earnings of 58 cents to 60 cents per share. BJ Services reported a profit of 70 cents in the first quarter of 2007. Analysts expected earnings, on average, of $2.50 in 2008 and 63 cents in the first quarter, according to a survey by Thomson Financial. "For fiscal 2008, we project revenue and margin improvement in all segments of our business except U.S./Mexico pressure pumping operations where pricing pressure is expected to continue during the year," the company said in a statement.
In my view, the company learned its lesson in making projections during the first part of 2007 and is low balling the numbers for 2008 which began Oct. 1. In addition, despite the pricing pressure for the pumping industry in U.S./Mexico, and taking into consideration the high return on equity for the overall company,
I strongly believe BJ Services will be acquired over the coming months. The present valuation is way out of synch in comparison with Baker Hughes and others.
Division Sequential Year Over Year
Tubular Services 4 % 19 %
Process & Pipeline Services 38 % 52 %
Chemical Services 12 % 32 %
Completion Tools -9 % 23 %
Completion Fluids 8 % -12 %
Under Armour lifted its 2007 revenue estimate to $590 million to $600 million from $580 million to
$590 million. For 2008, the company said it expects net revenue and income from operations to exceed its long-term growth target of 20% to
25%.
The British pound rose to a new 26-year high against the U.S. dollar.
The Reserve Bank of India Tuesday left its short-term interest rates unchanged, as expected,
while raising banks' reserve requirements by 0.5 percentage point to 7.5%. The increase in banks' cash reserve requirement will become
effective Nov. 10. "At the current juncture and looking ahead, on the domestic front, the biggest challenge for monetary policy is the
management of capital flows and the attendant implications for liquidity and overall stability," wrote the central bank in a statement
after announcing its quarterly policy review. The RBI retained its 8.5% forecast for the country's economic growth for the year ending March
31, 2008.
Vulcan Materials, Inc., the largest producer of construction aggregates in the United States,
said net income in the third quarter edged down to $135.4 million, or $1.38 a share, from $135.7 million, or $1.39 a share, in
the year-ago quarter. Profit in the most recent quarter included a 9 cents a share loss from discontinued operations. Earnings from
continuing operations were $144 million, or $1.47 a share. Analysts polled by Thomson Financial were anticipating earnings from ongoing
operations of $1.59 a share. Sales slipped 0.4% to $844.9 million, also missing views of $952.4 million. The Birmingham, Ala. company said it
expects aggregate volumes in the fourth quarter will continue to be "hampered" by a downturn in residential construction and plans to close
its acquisition of Florida Rock Industries then.
Sweden raises rates to 4%. The central bank added it expected growth to continue - although it
will moderate - and rates to be raised to 4.25 per cent in the first
half of 2008.
Australia cut the wheat crop forecast for the third time.
UBS fears credit crunch will last into 2008.
Procter & Gamble Co.'s first-quarter profit increased
14 percent, matching analysts' estimates, on rising overseas
sales of Fusion razors and a weaker dollar.
The weaker dollar will add 3 percentage points to sales and will help revenue climb as
much as 8 percent, the company said. P&G previously had
forecast a sales gain of at most 7 percent.
The CEO of Colgate-Palmolive stated the company "will deliver
double-digit earnings per share growth for the balance of 2007 and full year 2008."
The decline in prices of existing single-family homes accelerated in August and fell at their fastest pace since 1991, according to the Standard & Poor's/Case Shiller national home price index. S&P said its composite month-over-month index of 10 major metropolitan areas declined 0.8 percent in August to 214.35, for a 5 percent year-over-year drop, S&P said in a statement on Tuesday.
"The fall in home prices is showing no real signs of a slowdown or turnaround," Robert Shiller, founder of the indexes and chief economist at MacroMarkets LLC, said in a statement.
"While it is difficult to predict a recovery in our domestic offshore drilling business, there are some early signs of a moderate increase in demand as we enter the fourth quarter," Hercules Offshore said.
Natural gas continues to improve at $8.04 per million BTUs. Patience is being rewarded and the shorts are beginning to feel some pain. Companies like BJ Services are dependent on natural gas as well as oil and should benefit with prices rising.
Crude-oil futures for December delivery closed down $3.15, or 3.4%, at $90.38 a barrel on the New York Mercantile Exchange, after setting a record high close of $93.53 on Monday.
Gold for December delivery closed down $4.80 at $787.80 an ounce on the New York Mercantile Exchange.
Merrill Lynch ousts CEO O'Neal.
Bush said he would reject any attempt by Congress to force him to accept legislation with increased domestic spending by combining it with funding for military operations and veterans health care.
According to Peter Gumbel of Fortune, he quarterly delinquency rate on credit card debt for Capital One, Washington Mutual, Citigroup, J.P. Morgan Chase, and Bank of America rose an average of 13% in the third quarter, compared with a 2% drop in the previous quarter. Is this the next shoe to drop? It may take a bit of time to reveal its true colors, but I believe the consumer's cash flow is in trouble.
Monday, October 29, 2007
Quite A Start To The Week
10/30/07 Quite A start To The Week
Gold for December delivery climbed $9 to $796 per ounce at midday during Asian business hours Monday, after earlier touching a session high of $796.80 an ounce. Crude-oil futures topped $93 a barrel for the first time on Monday.
China trade surplus to reach $250B this year. The yuan rose the most in two years after China's central bank signaled it will allow the currency to appreciate faster to help narrow a record trade surplus and slow inflation.
Mexico's state-owned oil company Pemex was shutting down about one-fifth of its daily output on Sunday due to bad weather, but said it expects to quickly resume output within days. U.S. crude oil futures jumped as much as 1 percent to a record high $92.79 a barrel on news of the outage.
Anglo-Swiss miner Xstrata Plc on Monday offered A$3.1 billion ($2.8 billion) for Australian nickel miner Jubilee Mines NL , seeking to consolidate its position as a global nickel producer. The bid was unanimously recommended by the Jubilee board.
Oracle let its $17-a-share offer for BEA expire and invited holders to confront the company, following Icahn's similar call.
John Hussman: "There is virtually a 1-to-1 correspondence between “improvements” in the U.S. trade deficit and deterioration in U.S. gross domestic investment."
BEA Systems' board said it is "not opposed to an acquisition of the company," adding that it is in the process of exploring ways to maximize shareholder value, including a sale. However, the board called Oracle's bid "unacceptable" because it "significantly undervalues BEA.
Barrick Gold Corp.has entered into an agreement with Arizona Star Resource Corp.that will see Barrick make an offer to acquire Arizona Star at C$18 a share, or a total of C$773 million. Barrick said the offer represents a 27% premium over Arizona Star's 20-day average trading price on the Toronto Stock Exchange. Barrick said its offer has been approved by the board of Arizona Star, and all directors and officers of Arizona Star have entered into written agreements to tender their shares to Barrick's offer.
According to the Washington Post, confronted by mounting U.S. and U.N. pressure, Iran has been steadily shifting its trade from West to East and, with the benefit of record high oil prices, is likely to be able to withstand the new U.S. sanctions, according to U.S., European and Iranian analysts. China, a permanent member of the Security Council that can veto any U.N. resolution, is expected to overtake Germany as Iran's biggest trading partner this year.
The euro climbed to $1.4438 in midmorning Monday trading, the highest level since it began trading in January 1999.
China's Sinopec Corp is seeking another 60,000 tonnes of diesel for November, having bought the same volume for the month, which will take its imports to an 11-month peak, as the country suffered shortages. PetroChina will raise $8.9 billion in the world's biggest share sale this year to expand refineries and increase output at oilfields.
The Treasury Department expects to borrow a total of $201 billion in net marketable debt over the first and second fiscal quarters, the department said Monday. Treasury expects to borrow $68 billion in the first fiscal quarter and $133 billion in the second quarter.
December crude oil futures rose for a fourth day and closed at a record high of $93.53 a barrel on New York Mercantile Exchange.
Gold for December delivery climbed $9 to $796 per ounce at midday during Asian business hours Monday, after earlier touching a session high of $796.80 an ounce. Crude-oil futures topped $93 a barrel for the first time on Monday.
China trade surplus to reach $250B this year. The yuan rose the most in two years after China's central bank signaled it will allow the currency to appreciate faster to help narrow a record trade surplus and slow inflation.
Mexico's state-owned oil company Pemex was shutting down about one-fifth of its daily output on Sunday due to bad weather, but said it expects to quickly resume output within days. U.S. crude oil futures jumped as much as 1 percent to a record high $92.79 a barrel on news of the outage.
Anglo-Swiss miner Xstrata Plc on Monday offered A$3.1 billion ($2.8 billion) for Australian nickel miner Jubilee Mines NL , seeking to consolidate its position as a global nickel producer. The bid was unanimously recommended by the Jubilee board.
Oracle let its $17-a-share offer for BEA expire and invited holders to confront the company, following Icahn's similar call.
John Hussman: "There is virtually a 1-to-1 correspondence between “improvements” in the U.S. trade deficit and deterioration in U.S. gross domestic investment."
BEA Systems' board said it is "not opposed to an acquisition of the company," adding that it is in the process of exploring ways to maximize shareholder value, including a sale. However, the board called Oracle's bid "unacceptable" because it "significantly undervalues BEA.
Barrick Gold Corp.has entered into an agreement with Arizona Star Resource Corp.that will see Barrick make an offer to acquire Arizona Star at C$18 a share, or a total of C$773 million. Barrick said the offer represents a 27% premium over Arizona Star's 20-day average trading price on the Toronto Stock Exchange. Barrick said its offer has been approved by the board of Arizona Star, and all directors and officers of Arizona Star have entered into written agreements to tender their shares to Barrick's offer.
According to the Washington Post, confronted by mounting U.S. and U.N. pressure, Iran has been steadily shifting its trade from West to East and, with the benefit of record high oil prices, is likely to be able to withstand the new U.S. sanctions, according to U.S., European and Iranian analysts. China, a permanent member of the Security Council that can veto any U.N. resolution, is expected to overtake Germany as Iran's biggest trading partner this year.
The euro climbed to $1.4438 in midmorning Monday trading, the highest level since it began trading in January 1999.
China's Sinopec Corp is seeking another 60,000 tonnes of diesel for November, having bought the same volume for the month, which will take its imports to an 11-month peak, as the country suffered shortages. PetroChina will raise $8.9 billion in the world's biggest share sale this year to expand refineries and increase output at oilfields.
The Treasury Department expects to borrow a total of $201 billion in net marketable debt over the first and second fiscal quarters, the department said Monday. Treasury expects to borrow $68 billion in the first fiscal quarter and $133 billion in the second quarter.
December crude oil futures rose for a fourth day and closed at a record high of $93.53 a barrel on New York Mercantile Exchange.
Sunday, October 28, 2007
The New Week
10/29/07 The New Week
Merrill Lynch & Co.'s directors have reached a consensus on removing E. Stanley O'Neal as chairman and chief executive of the New York investment bank, people briefed on the discussions told the New York Times.
"We will encourage Chinese banks to go abroad to participate in international competition and overseas acquisitions to improve global competitiveness," Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission, told a financial forum in Xianghe, Hebei province.
Robert McHugh: "Now that the Dollar dropped down to 77.00, we are in a high risk situation of a devaluation of the dollar all the way down to 40.00. Remember, this mess started with the Dollar at 120.00 five years ago. 40.00? Not all at once, but over the course of several years. Perhaps all at once, should the government elect to flat-out issue an edict that a dollar is now worth 50 cents. Would they? Maybe. Why? It is a way to repudiate half of all the debt in the United States. Why would they want to do that? Perhaps if a recession became a depression, or the risk thereof. Perhaps if Housing was to absolutely dive into the tank. It would be a way to relieve mortgage holders of a huge chunk of their obligations in lieu of mass foreclosures, and bailout financial institutions holding substantial portfolios of mortgage backed securities - IF households can get their hands on enough of these hyperinflated dollars. However, the problem for the middle class, is will any of this monetary hyperinflation find its way into their checking or savings accounts? Will their incomes rise from this artificial economics policy? We don't think much of it will."
Vladimir Putin, Russia’s president, on Friday compared US plans to build a missile defence shield near Russia’s borders to the 1962 Cuban missile crisis that brought the world to the brink of nuclear war.
Brad Setser: "A hundred dollars bought about 5 barrels of oil at the end of 2001 (and around 110 euros). A hundred dollars now just buys a single barrel and change, and about 70 euros. Oil may be priced in dollars, but anyone who set aside a bunch of dollars to assure their ability to pay for their oil import bill would be sorely disappointed."
Merrill Lynch & Co.'s directors have reached a consensus on removing E. Stanley O'Neal as chairman and chief executive of the New York investment bank, people briefed on the discussions told the New York Times.
"We will encourage Chinese banks to go abroad to participate in international competition and overseas acquisitions to improve global competitiveness," Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission, told a financial forum in Xianghe, Hebei province.
Robert McHugh: "Now that the Dollar dropped down to 77.00, we are in a high risk situation of a devaluation of the dollar all the way down to 40.00. Remember, this mess started with the Dollar at 120.00 five years ago. 40.00? Not all at once, but over the course of several years. Perhaps all at once, should the government elect to flat-out issue an edict that a dollar is now worth 50 cents. Would they? Maybe. Why? It is a way to repudiate half of all the debt in the United States. Why would they want to do that? Perhaps if a recession became a depression, or the risk thereof. Perhaps if Housing was to absolutely dive into the tank. It would be a way to relieve mortgage holders of a huge chunk of their obligations in lieu of mass foreclosures, and bailout financial institutions holding substantial portfolios of mortgage backed securities - IF households can get their hands on enough of these hyperinflated dollars. However, the problem for the middle class, is will any of this monetary hyperinflation find its way into their checking or savings accounts? Will their incomes rise from this artificial economics policy? We don't think much of it will."
Vladimir Putin, Russia’s president, on Friday compared US plans to build a missile defence shield near Russia’s borders to the 1962 Cuban missile crisis that brought the world to the brink of nuclear war.
Brad Setser: "A hundred dollars bought about 5 barrels of oil at the end of 2001 (and around 110 euros). A hundred dollars now just buys a single barrel and change, and about 70 euros. Oil may be priced in dollars, but anyone who set aside a bunch of dollars to assure their ability to pay for their oil import bill would be sorely disappointed."
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