1/10/08 Forecasts
Robert McHugh:"We are in the midst of a stock market crash that started at 14,200 in October 2007, and is likely to continue to at least 11,500 the first half of 2008."
Stock Traders Almanac: " When the Dow closes below its December closing low in the first quarter, it is frequently an excellent warning sign. The December Low Indicator was originated by Lucien Hooper, a Forbes columnist and Wall Street analyst back in the 1970s. Hooper dismissed the importance of January and January's first week as reliable indicators. He noted that the trend could be random or even manipulated during a holiday-shortened week. Instead, said Hooper, “Pay much more attention to the December low. If that low is violated during the first quarter of the New Year, watch out! 13 of the 27 occurrences were followed by gains for the rest of the year – and full year gains – after the low for the year was reached. Hooper’s “Watch Out†warning was absolutely correct. All but one of the instances since 1952 experienced further declines, as the Dow fell an additional 10.1% on average when December's low was breached in Q1. Only three significant drops occurred when December’s low was not breached in Q1 (1974, 1981, and 1987)."
Mike Shedlock: "The interest expense for December alone was a whopping $106 billion. Using a three month average, Federal expenses just on interest is $615 billion."
The California Public Employees Retirement System said Wednesday it has taken a 9.9% stake in U.S. private-equity house Silver Lake Partners. Calpers has also agreed to make further commitments to Silver Lake funds, whose investments are focused on the technology industry.
At 7 a.m. Eastern, February gold futures rose $8 to $888.30 an ounce. February gold finished up $1.40 at $881.70 an ounce.
Countrywide's fourth-quarter fundings were $69 billion, exceeding forecasts. "Prepayment speeds continued to decline throughout the quarter, which has enhanced the economic value of our mortgage servicing rights asset," the lender said. Average daily mortgage loan application activity for December was $1.5 billion, down from $1.9 billion in November.
E*Trade Financial Corp. said that it has made significant progress toward executing its turnaround plan in recent weeks. The company has sold around $3 billion of additional available-for-sale securities. Also, its home equity loan portfolio continued to run off as anticipated, ending the year with under $12 billion in balances. The firm has also reduced bank wholesale borrowing levels by eliminating around $3.5 billion in Federal Home Loan Bank advances and repurchase agreements quarter over quarter. E*Trade said that it expects 2007 year-end tier I and risk-based bank capital to be equal to or better than 5.9% and 11.1%. It will also fully exit its institutional trading business by closing its remaining trading desk and has formed a special committee to aggressively reduce real estate portfolio risk.
DuPont lifted its outlook for 2008 earnings to a range of $3.35 to $3.55 a share compared to an earlier forecast of $3.31 to $3.52 a share, saying it expects growth in its agriculture and nutrition business segment and in its emerging market operations to more than compensate for a slower U.S. economy.
In the U.K., Marks & Spencer reported a 2.2% same-store sales decline and the stock dropped 14%.
Shares of Chinese personal computer maker Lenovo Group tumbled 10.7% with heavy volumes in Hong Kong Wednesday on a brokerage downgrade and reports its chairman has cautioned the Chinese economy has become highly dependent on the U.S. market.
Mortgage application volume skyrocketed 32.2 percent during the holiday shortened week ending Jan. 4, ending three consecutive weeks of sharp declines, according to the Mortgage Bankers Association's weekly application survey.
Richard Daughty: "Instead of the town saying, 'Oh, my God! What kind of ravenous vampires have we become?' and lowering their...damned taxes, 'The town is pushing a program that would let seniors work part-time...to help pay off some of their property taxes.'" From AP, we can't believe our eyes when we read, "Plan Would Let Seniors Work to Pay Taxes". It seems that in Greenburgh, N.Y., the damned local government is eating the financial guts out of its citizens. For example, a 76-year old woman named Audrey Davison lives alone, gets a $620 Social Security check per month ($7,440 a year), and has to pay $12,000 a year in property taxes on the house that she has lived in for 43 years! Instead of the town saying, "Oh, my God! What kind of ravenous vampires have we become?" and lowering their damned spending and the damned taxes, "The town is pushing a program that would let seniors work part-time, for $7 an hour, to help pay off some of their property taxes."
The New York Times reports that McGraw-Hill will cut 3% of its staff.
According to a Bloomberg story, the U.S. will skirt recession as consumer spending slows without collapsing, a survey of economists showed. Economic growth will average 1.5 percent in the first six months of 2008, matching the fourth quarter's pace, according to the median estimate of 62 economists surveyed by Bloomberg News from Jan. 3 to Jan. 8. The rate of expansion would be the weakest since the last nine months of 2001.
Goldman Sachs Group Inc. said the U.S. economy is probably slipping into recession and expects the Federal Reserve to respond by slashing interest rates. Goldman expects the Fed to cut its benchmark rate to 2.5 percent by the third quarter, according to an e-mailed strategy note. Goldman said in November the Fed would reduce its key rate, currently at 4.25 percent, to 3 percent by the middle of 2008.
Steel Partners, a New York investment firm that owns 9.1 percent of Rowan's stock, said it will nominate three candidates to Rowan's board of directors in an effort to unlock more value from the company. "Because Rowan owns and operates both a contract-drilling-service business and a significant manufacturing company, we believe the market continues to mistakenly apply a conglomerate discount to its stock," Warren Lichtenstein, managing member of Steel Partners, said in a statement. "If elected, our nominees would work with the board and management of Rowan to implement a strategy to unlock that intrinsic value of the company." But Rowan Chairman and CEO Daniel McNease made clear that Steel Partners' move to assert greater influence on Rowan's board was unwelcome and would not go unchallenged.
MBIA, the world's largest bond insurer, on Wednesday slashed its common stock dividend 62 percent as part of a plan to strengthen capital and preserve the ``triple-A'' credit ratings it depends on to operate normally. The company reduced its quarterly dividend to 13 cents per share from 34 cents, in a bid to save $80 million a year. It also said its main insurance unit plans to sell $1 billion of debt maturing in 2033. Last month, MBIA said Warburg Pincus agreed to invest $500 million in common stock, and receive warrants to buy additional shares.
Bill Bonner: "A barrel of oil is worth about 1/8 of an ounce of gold. That's about what it was worth in 2001…and it's about what it is worth now. And wheat…and soybeans…and farmland…they're all correctly priced too. At least in terms of each other. But many people are getting the wrong signals. They're mistaking inflation gains for real gains…and they're making errors. That's what happened to the homebuilders, who thought that higher nominal prices meant that there was more real demand. Finally, they realized that the higher prices were largely an illusion. In the first place, they represented no real increase in demand…and in the second place; nominal prices went so high that people couldn't afford to pay them. Result: falling sales. And now we see farmers planting more soybeans as if they were houses. Argentina is covered with soybeans. And America is covered with corn and houses. House prices have already started to go down. It won't be long before farm prices collapse too. All mistakes are corrected."
Mosaic Co.'s fiscal second-quarter net income rose sharply to $394 million, or 89 cents a share, from $65.9 million, or 15 cents a share, a year earlier. Results for the latest quarter included a foreign currency transaction loss of 9 cents a share and a tax benefit of 8 cents a share. Sales at the the Plymouth, Minn., fertilizer company grew 44% to $2.2 billion in the period ended Nov. 30. Analysts polled by Thomson Financial expected earnings of 73 cents a share and revenue of $2.17 billion.
Marathon Oil Corp. anticipates fourth-quarter oil costs in the range of $190 million to $210 million, higher than its prior guidance of $110 million to $150 million. The Houston-based company cited the expensing of non-commercial Flathead wells in the Gulf of Mexico for the increase. Additionally Marathon said its liquid hydrocarbon and natural gas production available for sale during the fourth quarter is expected to be about 350,000 barrels of oil equivalent per day, or boepd, compared to its guidance of 330,000 to 355,000 boepd.
Over the past 2 months, Cisco has dropped from $34 to $25+. For long term investors, this appears to possess a favorable risk/reward scenario. The last time we suggested Cisco was in the Spring of 2003 at the $15.50 level. Patience was rewarded.
St. Louis Federal Reserve President William Poole: "The fundamentals of our economy remain strong ... and 2008 looks to be a year of rising growth."
U.S. crude inventories dropped by 6.8 million barrels in the latest week, much more than expected by analysts, U.S. Energy Information Administration reported on Wednesday. U.S. crude inventories dropped to 282.8 million barrels in the week ending Jan. 4, EIA reported. Gasoline supplies rose by 5.3 million barrels in the latest week, and distillate stocks grew by 1.5 million barrels, EIA reported.
The Dow Jones U.S. Home Construction Index was down about 4% in afternoon trading.
Countrywide Financial Corp , the largest U.S. mortgage lender, said on Wednesday that foreclosures and late payments rose in December to the highest on record, though it made more loans than expected in the fourth quarter.
George Ure on the NH primary: "Curiously, lots of comment on the 'net this morning about how "Ain't it curious that Obama won where the ballots were hand counted?".
There's a good backgrounder at the www.blackboxvoting.org site worth a read.. Article here.
Just for good measure, there's the matter of Obama and Ron Paul poll workers kicked out of some precincts. "
According to Bloomberg, the Nigerian militant group known as the Movement for the Emancipation of the Niger Delta, or MEND, said it's planning a major attack against the oil industry. ``An attack is imminent that will rock the foundation of the international oil market,'' MEND spokesman Jomo Gbomo said in an e-mail to Bloomberg. A ``smoke screen'' is being devised to divert attention away from the actual target, he said. Gbomo said the strike would be a reprisal for a government attack last month on a warlord's camp. Nigeria is Africa's biggest oil producer.
Excluding a favorable restructuring adjustment and a tax benefit stemming from the sale of Alcoa's packaging and consumer businesses, earnings would have come in at 36 cents a share. Analysts polled by Thomson Financial had expected a profit of 33 cents a share on sales of $6.92 billion. Earnings growth was held back by higher freight and energy costs.
The Dow industrials gained 146.2 points to end at 12,735.3. The S&P 500 climbed 18.92 points to close at 1,409.11, while the Nasdaq Composite snapped an eight-day losing streak, rising 34.04 points to finish at 2,474.55.
Wednesday, January 09, 2008
Tuesday, January 08, 2008
Replacements
1/9/08 Replacements
Starbucks Corp. Chairman Howard Schultz is reclaiming the chief executive's chair as part of a major restructuring initiative to slow the company's U.S. growth and improve offerings for its customers. The ouster of CEO Jim Donald, coupled with plans to close some U.S. stores and slow down opening new ones, comes as the world's largest chain of coffee houses has seen its stock plummet 50 percent over the last year amid declining traffic in its domestic stores. Starbucks wouldn't say how many stores would close and declined to detail its revised growth plans until it reports fiscal first-quarter earnings on Jan. 30.
Bear Stearns Chief Executive James Cayne is resigning under pressure from shareholders upset over the firm's losses amid a slew of problems sparked by the collapse of mortgage markets, The Wall Street Journal reported Monday. Cayne was expected to be replaced by Bear Stearns President Alan Schwartz, a 57-year-old investment banker.
Microsoft Corp. bid $1.2 billion for the Norwegian search engine company Fast Search & Transfer ASA on Tuesday as it seeks to help companies trawl for information on the Internet. The offer of $2.97 per share was 42 percent premium to the Norwegian company's recent average share price, and caused the stock to soar by nearly the same amount in early trading on the Oslo stock exchange. Fast's board unanimously recommended that shareholders accept the offer, a news release said. Fast, founded in 1997, employs about 500 people, and specializes in high-end Internet search and business intelligence systems now used by many major companies worldwide.
Joy Global said it's buying Continental Global, a maker of conveyor systems for use in mining and other industrial applications, from NES Group Inc. for $270 million. Continental's 2007 sales of conveyor equipment are expected to be approximately $340 million.
Gold for February delivery hit $883.80 an ounce on the New York Mercantile Exchange, surpassing the previous record of $875 set on Jan. 21, 1980. The contract surged $18.30 to end at $880.30 an ounce, a new all-time closing high.
Japanese automotive sales fell last year to their lowest level in 35 years, as a declining population and shifting cultural values among younger consumers weighed on vehicle demand, according to reports Tuesday. Vehicle sales fell 7.6% to 3.434 million units, its fourth consecutive annual decline and the lowest level since 1972 when 3.406 million vehicles were sold, according to wire reports which cited data released by the Japan Automobile Dealers Association.
Retail sales fell by 0.5% month-on-month in the euro area in November, according to data released Tuesday by the Eurostat statistics agency.
British house prices increased by 1.3% in December following three successive monthly falls, the lender Halifax reported Tuesday.
Family Dollar Stores Inc said on Tuesday quarterly profit fell as sales at older stores declined and customers cut their discretionary spending. The discount retailer said profit was $51.9 million, or 37 cents per share, for its fiscal first quarter ended December 1, compared with $54.1 million, or 36 cents per share, in the comparable quarter a year earlier. Profit rose on a per-share basis as the company had fewer shares outstanding in the period.
The housing market in King County (eastside of Seattle) ended 2007 on a sour note as the median single-family house price last month fell 1.1 percent from December 2006. It was the first time in recent history that prices declined year-over-year. And the number of homes for sale rose 61 percent in King County, continuing a trend that started in April, the Northwest Multiple Listing Service reported Monday. The MLS is an association of Realtors that compiles home-sales statistics for King, Snohomish, Pierce, Kitsap and 15 other counties. In King County — which had nearly 11,000 houses and condos for sale in December, by far the most in the four-county region — it would have taken seven months to sell off that inventory at last month's sales rate.
Stephen Roach:"The US has been the main culprit behind the destabilising global imbalances of recent years. America's massive current account deficit absorbs about 75 per cent of the world's surplus saving. Most believe that a weaker US dollar is the best cure for these imbalances. Yet a broad measure of the US dollar has dropped 23 per cent since February 2002 in real terms, with only minimal impact on America's gaping external imbalance. Dollar bears argue that more currency depreciation is needed. Protectionists insist that China - which has the largest bilateral trade imbalance with the US - should bear a disproportionate share of the next down leg in the US dollar. There is good reason to doubt this view. America's current account deficit is due more to bubbles in asset prices than to a misaligned dollar. A resolution will require more of a correction in asset prices than a further depreciation of the dollar. At the core of the problem is one of the most insidious characteristics of an asset-dependent economy - a chronic shortfall in domestic saving. With America's net national saving averaging a mere 1.4 per cent of national income over the past five years, the US has had to import surplus saving from abroad to keep growing. That means it must run massive current account and trade deficits to attract the foreign capital...A sharp decline in asset prices is necessary to rebalance the US economy. It is the only realistic hope to shift the mix of saving away from asset appreciation back to that supported by income generation. That could entail as much as a 20-30 per cent decline in overall US housing prices and a related deflating of the bubble of cheap and easy credit. Those trends now appear to be under way."
Harrah's receives 98%+ of the consents required in its tender offer for its senior notes.
Supervalu said it now expects to earn $2.71 to $2.77 per share. That's down from $2.73 to $2.83 it previously forecast. Analysts were expecting $2.77. ''We are pleased with our overall results, despite some headwind from softer than expected retail sales in the quarter,'' Chairman and Chief Executive Jeff Noddle said in a statement.
247WallSt: "t is not official, but the odds that the buyers of Clear Channel (CCU) will walk on the deal are probably north of 99%. The total value of the buy-out is $19.5 billion. According to the FT "scepticism that Thomas H. Lee and Bain Capital will go through with their purchase on the original terms has been fed by the falling share prices of comparable companies." The break-up fee for the deal is $500 million."
Cisco's John Chambers: "We think 12 to 17 percent growth is very doable if our vision, our differentiation strategy and execution is right. That's pretty strong for a company that's $40 billion in sales."
Venezuelan Energy Minister Rafael Ramirez says that there is no need for OPEC to raise its production, warning "the time of cheap oil is over."
Citigroup Inc., the biggest U.S. bank, may be forced to write down $16 billion in the fourth quarter and post a larger loss than previously estimated, Merrill Lynch & Co. analyst Guy Moszkowski said.
Chain-store sales for the week ended Jan. 5 rose 1.9% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales increased 0.4%. "Gift-card redemptions and post-Christmas bargain hunting seemed to drive consumer demand over the last week," said Michael Niemira, ICSC chief economist. Niemira lowered his December sales forecast to a gain of 1% from a previous estimate of 1.5%. "It was a moderate November-December holiday sales performance, but clearly softer than in recent years," he added.
Avon Products Inc. expects to cut a net of about 2400 jobs as part of a restructuring program begun in 2005. The reductions would come from restructuring some international direct selling operations, most significantly in Germany; realigning supply chain operations in Western Europe and Latin America; and outsourcing call centers and transaction processing functions.
Philadelphia Fed President Charles Plosser said he believes the weak U.S. economy will "improve appreciably" by the second half of the year, before the effect of any additional rate cuts would be felt. At the same time, Plosser said he saw "worrisome signs of underlying price pressures."
KB Home reported financial results for its fourth quarter and fiscal year ended November 30, 2007. Results include:
* Revenues totaled $2.07 billion for the quarter ended November 30, 2007, down from $3.01 billion in the corresponding quarter of 2006, primarily reflecting lower housing revenues. Fourth quarter 2007 housing revenues of $2.02 billion were 31% lower than in the year-earlier period. This decline reflected a 22% year-over-year decrease in new home deliveries to 8,132 in the fourth quarter of 2007 from 10,386 in the 2006 fourth quarter, and a 12% year-over-year decrease in the average selling price to $247,800 in 2007 from $280,000 in 2006.
* The Company reported a loss from continuing operations before income taxes of $399.0 million for the quarter ended November 30, 2007 due to pretax, non-cash charges of $403.4 million associated with inventory and joint venture impairments and the abandonment of certain land option contracts. In the year-earlier quarter, the Company posted a loss from continuing operations before income taxes of $171.1 million due to $343.3 million of pretax, non-cash impairment and abandonment charges.
* During the fourth quarter of 2007, the Company recorded an after-tax, non-cash charge of $514.2 million to establish a valuation allowance related to its deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The valuation allowance is reflected as a charge to fourth quarter income tax expense and a reduction of the Company’s deferred tax assets as of November 30, 2007. Including the valuation allowance, the Company recorded a net loss of $772.7 million or $9.99 per diluted share in the fourth quarter of 2007. In the fourth quarter of 2006, the Company’s net loss totaled $49.6 million or $.64 per diluted share.
* The Company delivered 23,743 new homes in fiscal year 2007, down 26% from the 32,124 new homes it delivered in fiscal year 2006. Revenues totaled $6.42 billion in fiscal year 2007, decreasing 32% from $9.38 billion in fiscal year 2006, reflecting fewer new home deliveries and a 9% year-over-year decline in the average selling price to $261,600 from $287,700. The Company posted a loss from continuing operations of $1.41 billion in fiscal year 2007 due to non-cash charges associated with inventory and joint venture impairments and land option contract abandonments; goodwill impairment; and the deferred tax assets valuation allowance. In fiscal year 2006, the Company generated income from continuing operations of $392.9 million. Including the results of its French discontinued operations, the Company posted a net loss of $929.4 million or $12.04 per diluted share in fiscal year 2007 and net income of $482.4 million or $5.82 per diluted share in fiscal year 2006.
* The Company continued to generate positive cash flows in the 2007 fourth quarter, ending the year with a cash balance of $1.33 billion at November 30, 2007. The Company increased its cash balance by $625.2 million from November 30, 2006 in addition to reducing debt by $758.5 million. Furthermore, the Company had no borrowings outstanding under its $1.5 billion revolving credit facility as of November 30, 2007. The Company’s ratio of debt to total capital was 53.9% at November 30, 2007 compared to 50.0% at November 30, 2006. Net of cash, the ratio of debt to total capital improved 12.1 percentage points to 31.1% at November 30, 2007 from 43.2% at November 30, 2006.
Barack Obama expanded his lead over Hillary Clinton in New Hampshire to 13 points as voting began in the state's critical presidential primary, according to a Reuters/C-SPAN/Zogby poll released on Tuesday.
The Washington Times reports that the Secret Service has in recent days ramped up the security it provides for Democratic presidential candidate Barack Obama. "The Illinois senator's security now rivals that of President Bush, with a dozen Secret Service agents wearing dark suits and earpieces leading bomb-sniffing dogs through event venues, sweeping all equipment brought by journalists and flanking the candidate as he plunges into crowds of supporters," the paper says.
The pending home sales index, based on contracts signed but not closed in November, fell 2.6% in November and was down 19.2% in the past year, the National Association of Realtors reported Tuesday.
Eli Lilly and Company said Tuesday that the U.S. Food and Drug Administration has approved its flagship erectile dysfunction drug Cialis for daily use.
Scientists in China have identified about 400 genes that appear to make some people more easily addicted to drugs, opening the way for more effective therapies and addiction control. Experts believe genetic factors account for up to 60 percent of a person's vulnerability to drug addiction, with environmental factors accounting for the remainder.
Credit-default swaps, used to help protect against the risk a company won't pay its debt, may cause losses of $250 billion this year as corporate defaults rise, Pacific Investment Management Co.'s Bill Gross said. ``Credit-default swaps are perhaps the most egregious offenders'' in today's banking system, Gross wrote on the company's Web site today. The federal funds rate, the Fed's key policy tool, will likely be cut to 3 percent by mid-year, said Gross, chief investment officer of Pacific Investment Management Company, in Newport Beach, California.
Sprint Nextel Corp.'s soft launch of its Xohm mobile Internet service is underway in Chicago, Baltimore and Washington, D.C, the telecommunications company said Tuesday. Sprint is launching the high-speed service with employees as it prepares for a commercial introduction later this year. The company is building a nationwide mobile broadband network using WiMax technology, which is seen as a cost-effective alternative to cellular broadband.
Amgen Inc.sees a 2007 adjusted profit near the low end of a $4.30 to $4.50 a share range, up from a previous range of $4.13 to $4.23 a share.
The chief executive of AT&T said the U.S. economic slowdown was hurting the company's consumer business, sending shares of the largest U.S. phone company down 4.8 percent.
The Dow Jones Industrial Average fell 238.4 points to 12,589.1. The S&P 500 shed 26 points to end at 1,390.18, while the Nasdaq Composite declined 58.95 points to 2,440.51.
U.S. consumers took on more debt in November, increasing their credit-card balances at the fourth fastest pace during the six-year expansion, the Federal Reserve reported Tuesday. Total seasonally adjusted consumer debt increased by $15.5 billion, or a 7.5% annual rate, in November to $2.51 trillion after a revised 1% rise in October, the Fed reported. It was the biggest gain in outstanding debt since August.
Crude oil for February delivery closed up $1.24, or 1.3%, at $96.33 a barrel on the New York Mercantile Exchange.
Countrywide shares dropped 27.4 percent in its steepest decline since the stock market crash of 1987. The plunge came amid speculation the company may file for bankruptcy as it struggles to emerge from the mortgage and credit market crisis in one piece. The company denied the speculation.
Starbucks Corp. Chairman Howard Schultz is reclaiming the chief executive's chair as part of a major restructuring initiative to slow the company's U.S. growth and improve offerings for its customers. The ouster of CEO Jim Donald, coupled with plans to close some U.S. stores and slow down opening new ones, comes as the world's largest chain of coffee houses has seen its stock plummet 50 percent over the last year amid declining traffic in its domestic stores. Starbucks wouldn't say how many stores would close and declined to detail its revised growth plans until it reports fiscal first-quarter earnings on Jan. 30.
Bear Stearns Chief Executive James Cayne is resigning under pressure from shareholders upset over the firm's losses amid a slew of problems sparked by the collapse of mortgage markets, The Wall Street Journal reported Monday. Cayne was expected to be replaced by Bear Stearns President Alan Schwartz, a 57-year-old investment banker.
Microsoft Corp. bid $1.2 billion for the Norwegian search engine company Fast Search & Transfer ASA on Tuesday as it seeks to help companies trawl for information on the Internet. The offer of $2.97 per share was 42 percent premium to the Norwegian company's recent average share price, and caused the stock to soar by nearly the same amount in early trading on the Oslo stock exchange. Fast's board unanimously recommended that shareholders accept the offer, a news release said. Fast, founded in 1997, employs about 500 people, and specializes in high-end Internet search and business intelligence systems now used by many major companies worldwide.
Joy Global said it's buying Continental Global, a maker of conveyor systems for use in mining and other industrial applications, from NES Group Inc. for $270 million. Continental's 2007 sales of conveyor equipment are expected to be approximately $340 million.
Gold for February delivery hit $883.80 an ounce on the New York Mercantile Exchange, surpassing the previous record of $875 set on Jan. 21, 1980. The contract surged $18.30 to end at $880.30 an ounce, a new all-time closing high.
Japanese automotive sales fell last year to their lowest level in 35 years, as a declining population and shifting cultural values among younger consumers weighed on vehicle demand, according to reports Tuesday. Vehicle sales fell 7.6% to 3.434 million units, its fourth consecutive annual decline and the lowest level since 1972 when 3.406 million vehicles were sold, according to wire reports which cited data released by the Japan Automobile Dealers Association.
Retail sales fell by 0.5% month-on-month in the euro area in November, according to data released Tuesday by the Eurostat statistics agency.
British house prices increased by 1.3% in December following three successive monthly falls, the lender Halifax reported Tuesday.
Family Dollar Stores Inc said on Tuesday quarterly profit fell as sales at older stores declined and customers cut their discretionary spending. The discount retailer said profit was $51.9 million, or 37 cents per share, for its fiscal first quarter ended December 1, compared with $54.1 million, or 36 cents per share, in the comparable quarter a year earlier. Profit rose on a per-share basis as the company had fewer shares outstanding in the period.
The housing market in King County (eastside of Seattle) ended 2007 on a sour note as the median single-family house price last month fell 1.1 percent from December 2006. It was the first time in recent history that prices declined year-over-year. And the number of homes for sale rose 61 percent in King County, continuing a trend that started in April, the Northwest Multiple Listing Service reported Monday. The MLS is an association of Realtors that compiles home-sales statistics for King, Snohomish, Pierce, Kitsap and 15 other counties. In King County — which had nearly 11,000 houses and condos for sale in December, by far the most in the four-county region — it would have taken seven months to sell off that inventory at last month's sales rate.
Stephen Roach:"The US has been the main culprit behind the destabilising global imbalances of recent years. America's massive current account deficit absorbs about 75 per cent of the world's surplus saving. Most believe that a weaker US dollar is the best cure for these imbalances. Yet a broad measure of the US dollar has dropped 23 per cent since February 2002 in real terms, with only minimal impact on America's gaping external imbalance. Dollar bears argue that more currency depreciation is needed. Protectionists insist that China - which has the largest bilateral trade imbalance with the US - should bear a disproportionate share of the next down leg in the US dollar. There is good reason to doubt this view. America's current account deficit is due more to bubbles in asset prices than to a misaligned dollar. A resolution will require more of a correction in asset prices than a further depreciation of the dollar. At the core of the problem is one of the most insidious characteristics of an asset-dependent economy - a chronic shortfall in domestic saving. With America's net national saving averaging a mere 1.4 per cent of national income over the past five years, the US has had to import surplus saving from abroad to keep growing. That means it must run massive current account and trade deficits to attract the foreign capital...A sharp decline in asset prices is necessary to rebalance the US economy. It is the only realistic hope to shift the mix of saving away from asset appreciation back to that supported by income generation. That could entail as much as a 20-30 per cent decline in overall US housing prices and a related deflating of the bubble of cheap and easy credit. Those trends now appear to be under way."
Harrah's receives 98%+ of the consents required in its tender offer for its senior notes.
Supervalu said it now expects to earn $2.71 to $2.77 per share. That's down from $2.73 to $2.83 it previously forecast. Analysts were expecting $2.77. ''We are pleased with our overall results, despite some headwind from softer than expected retail sales in the quarter,'' Chairman and Chief Executive Jeff Noddle said in a statement.
247WallSt: "t is not official, but the odds that the buyers of Clear Channel (CCU) will walk on the deal are probably north of 99%. The total value of the buy-out is $19.5 billion. According to the FT "scepticism that Thomas H. Lee and Bain Capital will go through with their purchase on the original terms has been fed by the falling share prices of comparable companies." The break-up fee for the deal is $500 million."
Cisco's John Chambers: "We think 12 to 17 percent growth is very doable if our vision, our differentiation strategy and execution is right. That's pretty strong for a company that's $40 billion in sales."
Venezuelan Energy Minister Rafael Ramirez says that there is no need for OPEC to raise its production, warning "the time of cheap oil is over."
Citigroup Inc., the biggest U.S. bank, may be forced to write down $16 billion in the fourth quarter and post a larger loss than previously estimated, Merrill Lynch & Co. analyst Guy Moszkowski said.
Chain-store sales for the week ended Jan. 5 rose 1.9% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales increased 0.4%. "Gift-card redemptions and post-Christmas bargain hunting seemed to drive consumer demand over the last week," said Michael Niemira, ICSC chief economist. Niemira lowered his December sales forecast to a gain of 1% from a previous estimate of 1.5%. "It was a moderate November-December holiday sales performance, but clearly softer than in recent years," he added.
Avon Products Inc. expects to cut a net of about 2400 jobs as part of a restructuring program begun in 2005. The reductions would come from restructuring some international direct selling operations, most significantly in Germany; realigning supply chain operations in Western Europe and Latin America; and outsourcing call centers and transaction processing functions.
Philadelphia Fed President Charles Plosser said he believes the weak U.S. economy will "improve appreciably" by the second half of the year, before the effect of any additional rate cuts would be felt. At the same time, Plosser said he saw "worrisome signs of underlying price pressures."
KB Home reported financial results for its fourth quarter and fiscal year ended November 30, 2007. Results include:
* Revenues totaled $2.07 billion for the quarter ended November 30, 2007, down from $3.01 billion in the corresponding quarter of 2006, primarily reflecting lower housing revenues. Fourth quarter 2007 housing revenues of $2.02 billion were 31% lower than in the year-earlier period. This decline reflected a 22% year-over-year decrease in new home deliveries to 8,132 in the fourth quarter of 2007 from 10,386 in the 2006 fourth quarter, and a 12% year-over-year decrease in the average selling price to $247,800 in 2007 from $280,000 in 2006.
* The Company reported a loss from continuing operations before income taxes of $399.0 million for the quarter ended November 30, 2007 due to pretax, non-cash charges of $403.4 million associated with inventory and joint venture impairments and the abandonment of certain land option contracts. In the year-earlier quarter, the Company posted a loss from continuing operations before income taxes of $171.1 million due to $343.3 million of pretax, non-cash impairment and abandonment charges.
* During the fourth quarter of 2007, the Company recorded an after-tax, non-cash charge of $514.2 million to establish a valuation allowance related to its deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The valuation allowance is reflected as a charge to fourth quarter income tax expense and a reduction of the Company’s deferred tax assets as of November 30, 2007. Including the valuation allowance, the Company recorded a net loss of $772.7 million or $9.99 per diluted share in the fourth quarter of 2007. In the fourth quarter of 2006, the Company’s net loss totaled $49.6 million or $.64 per diluted share.
* The Company delivered 23,743 new homes in fiscal year 2007, down 26% from the 32,124 new homes it delivered in fiscal year 2006. Revenues totaled $6.42 billion in fiscal year 2007, decreasing 32% from $9.38 billion in fiscal year 2006, reflecting fewer new home deliveries and a 9% year-over-year decline in the average selling price to $261,600 from $287,700. The Company posted a loss from continuing operations of $1.41 billion in fiscal year 2007 due to non-cash charges associated with inventory and joint venture impairments and land option contract abandonments; goodwill impairment; and the deferred tax assets valuation allowance. In fiscal year 2006, the Company generated income from continuing operations of $392.9 million. Including the results of its French discontinued operations, the Company posted a net loss of $929.4 million or $12.04 per diluted share in fiscal year 2007 and net income of $482.4 million or $5.82 per diluted share in fiscal year 2006.
* The Company continued to generate positive cash flows in the 2007 fourth quarter, ending the year with a cash balance of $1.33 billion at November 30, 2007. The Company increased its cash balance by $625.2 million from November 30, 2006 in addition to reducing debt by $758.5 million. Furthermore, the Company had no borrowings outstanding under its $1.5 billion revolving credit facility as of November 30, 2007. The Company’s ratio of debt to total capital was 53.9% at November 30, 2007 compared to 50.0% at November 30, 2006. Net of cash, the ratio of debt to total capital improved 12.1 percentage points to 31.1% at November 30, 2007 from 43.2% at November 30, 2006.
Barack Obama expanded his lead over Hillary Clinton in New Hampshire to 13 points as voting began in the state's critical presidential primary, according to a Reuters/C-SPAN/Zogby poll released on Tuesday.
The Washington Times reports that the Secret Service has in recent days ramped up the security it provides for Democratic presidential candidate Barack Obama. "The Illinois senator's security now rivals that of President Bush, with a dozen Secret Service agents wearing dark suits and earpieces leading bomb-sniffing dogs through event venues, sweeping all equipment brought by journalists and flanking the candidate as he plunges into crowds of supporters," the paper says.
The pending home sales index, based on contracts signed but not closed in November, fell 2.6% in November and was down 19.2% in the past year, the National Association of Realtors reported Tuesday.
Eli Lilly and Company said Tuesday that the U.S. Food and Drug Administration has approved its flagship erectile dysfunction drug Cialis for daily use.
Scientists in China have identified about 400 genes that appear to make some people more easily addicted to drugs, opening the way for more effective therapies and addiction control. Experts believe genetic factors account for up to 60 percent of a person's vulnerability to drug addiction, with environmental factors accounting for the remainder.
Credit-default swaps, used to help protect against the risk a company won't pay its debt, may cause losses of $250 billion this year as corporate defaults rise, Pacific Investment Management Co.'s Bill Gross said. ``Credit-default swaps are perhaps the most egregious offenders'' in today's banking system, Gross wrote on the company's Web site today. The federal funds rate, the Fed's key policy tool, will likely be cut to 3 percent by mid-year, said Gross, chief investment officer of Pacific Investment Management Company, in Newport Beach, California.
Sprint Nextel Corp.'s soft launch of its Xohm mobile Internet service is underway in Chicago, Baltimore and Washington, D.C, the telecommunications company said Tuesday. Sprint is launching the high-speed service with employees as it prepares for a commercial introduction later this year. The company is building a nationwide mobile broadband network using WiMax technology, which is seen as a cost-effective alternative to cellular broadband.
Amgen Inc.sees a 2007 adjusted profit near the low end of a $4.30 to $4.50 a share range, up from a previous range of $4.13 to $4.23 a share.
The chief executive of AT&T said the U.S. economic slowdown was hurting the company's consumer business, sending shares of the largest U.S. phone company down 4.8 percent.
The Dow Jones Industrial Average fell 238.4 points to 12,589.1. The S&P 500 shed 26 points to end at 1,390.18, while the Nasdaq Composite declined 58.95 points to 2,440.51.
U.S. consumers took on more debt in November, increasing their credit-card balances at the fourth fastest pace during the six-year expansion, the Federal Reserve reported Tuesday. Total seasonally adjusted consumer debt increased by $15.5 billion, or a 7.5% annual rate, in November to $2.51 trillion after a revised 1% rise in October, the Fed reported. It was the biggest gain in outstanding debt since August.
Crude oil for February delivery closed up $1.24, or 1.3%, at $96.33 a barrel on the New York Mercantile Exchange.
Countrywide shares dropped 27.4 percent in its steepest decline since the stock market crash of 1987. The plunge came amid speculation the company may file for bankruptcy as it struggles to emerge from the mortgage and credit market crisis in one piece. The company denied the speculation.
Monday, January 07, 2008
The Terror Card
1/8/08 The Terror Card
John Hussman: " Market conditions presently feature a Pandora's Box of rich valuations, vulnerable profit margins, rising default risk, rapidly deteriorating market internals, failing support levels, and accumulating evidence of oncoming recession."
According to the WSJ, McDonald's plans to install coffee bars at its nearly 14,000 U.S. locations starting this year, its biggest menu addition in three decades. The effort to poach Starbucks customers aims to add $1 billion to the fast-food chain's annual sales.
The price of 100 dollars for a barrel of crude oil is "not necessarily very high" given the high demand of oil and higher production costs, the president of OPEC said Sunday.
According to the WSJ, for the first time in four years, the national vacancy rate for office buildings rose in the fourth quarter, as an unusually large amount of new space came on the market and tenants shied way from signing new leases. Demand for commercial buildings has begun to slow and vacancy rates to climb in several markets, such as Orange County, Calif., and Las Vegas, that have been particularly hard hit by the nation's housing slump and turmoil in the residential mortgage market.
Robert McHugh: "Given the worsening housing and credit market situation, look for the Fed to print and pump M-3 at this economy as if every dollar was worth a thousand votes. The world economy will be cheering this effort, because if they cannot export their goods to a dollar-rich U.S. consumer, their economies will tank. Period. World Central Banks should fully support the Fed's printing presses. And they have, failing to cut their rates, and participating in the recent liquidity flood. Kiss the dollar goodbye. It is being sacrificed."
San Antonio-based Valero, which began gasoline operations in California in 2000, now owns two of the state's 14 fuel-making refineries and displays its brand on 921 service stations out of a statewide total of around 9,400. In the last three years, the company has added nearly 300 Valero locations to its California roster.
Hong Kong shares fell sharply Monday morning as new economic data out of the U.S. added to fears of a recession. The blue-chip Hang Seng Index was down 708.55 points, or 2.57 percent, at 26,811.14 points by midmorning, having dipped by nearly 3 percent early in the day.All 43 blue chips were down, tracking Friday's declines on Wall Street
Citigroup is considering cutting 5 percent to 10 percent of its work force, which totals 327,000, CNBC television reported on Monday, without citing sources.
Steven Deitz: “A people who's primary aims are driving, shopping, and television are subject to terrorism at any time.”
The U.S. military said that Iranian Revolutionary Guard gunboats harassed three U.S. warships on Sunday in the Strait of Hormuz, according to news reports Monday. NBC news quoted U.S. military officials as saying the event was a "significant provocative act." The network said on its MSNBC.com Web site that no shots were fired but that the Iranian ships threatened to "blow up" the U.S. vessels. The encounter lasted between 15 and 25 minutes. Iran's Foreign Ministry said Monday that a confrontation between Iranian boats and U.S. Navy ships in the Persian Gulf over the weekend was "something normal" and was resolved. It suggested the Iranian boats had not recognized the U.S. vessels.
Nothing like playing the terror card during the primaries. As for Bill Clinton, he's no Putin.
Loesje: “Is it the extremist, or the media, that blow things up?"
Today, the Space and Science Research Center, (SSRC) in Orlando, Florida announces that it has confirmed the recent web announcement of NASA solar physicists that there are substantial changes occurring in the sun’s surface. The SSRC has further researched these changes and has concluded they will bring about the next climate change to one of a long lasting cold era.
Today, Director of the SSRC, John Casey has reaffirmed earlier research he led that independently discovered the sun’s changes are the result of a family of cycles that bring about climate shifts from cold climate to warm and back again.
“We today confirm the recent announcement by NASA that there are historic and important changes taking place on the sun’s surface. This will have only one outcome - a new climate change is coming that will bring an extended period of deep cold to the planet. This is not however a unique event for the planet although it is critically important news to this and the next generations. It is but the normal sequence of alternating climate changes that has been going on for thousands of years. Further according to our research, this series of solar cycles are so predictable that they can be used to roughly forecast the next series of climate changes many decades in advance. I have verified the accuracy of these cycles’ behavior over the last 1,100 years relative to temperatures on Earth, to well over 90%.”
As to what these changes are Casey says, “The sun’s surface flows have slowed dramatically as NASA has indicated. This process of surface movement, what NASA calls the “conveyor belt” essentially sweeps up old sunspots and deposits new ones. NASA’s studies have found that when the surface movement slows down, sunspot counts drop significantly. All records of sunspot counts and other proxies of solar activity going back 6,000 years clearly validates our own findings that when we have sunspot counts lower then 50 it means only one thing - an intense cold climate, globally. NASA says the solar cycle 25, the one after the next that starts this spring will be at 50 or lower. The general opinion of the SSRC scientists is that it could begin even sooner within 3 years with the next solar cycle 24. What we are saying today is that my own research and that of the other scientists at the SSRC verifies that NASA is right about one thing – a solar cycle of 50 or lower is headed our way. With this next solar minimum predicted by NASA, what I call a “solar hibernation,” the SSRC forecasts a much colder Earth just as it has transpired before for thousands of years. If NASA is the more accurate on the schedule, then we may see even warmer temperatures before the bottom falls out. If the SSRC and other scientists around the world are correct then we have only a few years to prepare before 20-30 years of lasting and possibly dangerous cold arrive.”
``The only lesson the U.S. has learned from Japan is how to clean up the post-bubble mess,'' says Roach, now chairman of Morgan Stanley in Asia. ``America has failed to learn the much more important lesson -- how to avoid dangerously destabilizing bubbles in the first place. The Greenspan/Bernanke ideology still places disproportionate emphasis on the former while ignoring the latter at great peril.''
"Let me be clear that no single policy or action will undo the excesses of the last few years," Paulson said...Treasury Secretary Henry Paulson said investors remain wary of U.S. markets and that further signs of ``slower growth'' will emerge before the economy shakes off the effects of the housing crisis. ``It will take additional time for markets to regain confidence,'' Paulson said in a speech to the New York Society of Security Analysts today in New York. ``We will likely have further indications of slower growth in the weeks and months ahead.''
Gold for February delivery fell $3.70 to end at $862 an ounce on the New York Mercantile Exchange. Crude oil for February delivery dropped $2.82, or nearly 3%, to finish at $95.09 a barrel on the New York Mercantile Exchange.
The U.S. economy is in a recession, David Rosenberg, chief North American economist for Merrill Lynch, wrote Monday. "Friday's employment report strongly suggests that an official recession has arrived," Rosenberg said in a note to clients.
Claudius Claudianus: "He who strikes terror in others is himself continually in fear."
John Hussman: " Market conditions presently feature a Pandora's Box of rich valuations, vulnerable profit margins, rising default risk, rapidly deteriorating market internals, failing support levels, and accumulating evidence of oncoming recession."
According to the WSJ, McDonald's plans to install coffee bars at its nearly 14,000 U.S. locations starting this year, its biggest menu addition in three decades. The effort to poach Starbucks customers aims to add $1 billion to the fast-food chain's annual sales.
The price of 100 dollars for a barrel of crude oil is "not necessarily very high" given the high demand of oil and higher production costs, the president of OPEC said Sunday.
According to the WSJ, for the first time in four years, the national vacancy rate for office buildings rose in the fourth quarter, as an unusually large amount of new space came on the market and tenants shied way from signing new leases. Demand for commercial buildings has begun to slow and vacancy rates to climb in several markets, such as Orange County, Calif., and Las Vegas, that have been particularly hard hit by the nation's housing slump and turmoil in the residential mortgage market.
Robert McHugh: "Given the worsening housing and credit market situation, look for the Fed to print and pump M-3 at this economy as if every dollar was worth a thousand votes. The world economy will be cheering this effort, because if they cannot export their goods to a dollar-rich U.S. consumer, their economies will tank. Period. World Central Banks should fully support the Fed's printing presses. And they have, failing to cut their rates, and participating in the recent liquidity flood. Kiss the dollar goodbye. It is being sacrificed."
San Antonio-based Valero, which began gasoline operations in California in 2000, now owns two of the state's 14 fuel-making refineries and displays its brand on 921 service stations out of a statewide total of around 9,400. In the last three years, the company has added nearly 300 Valero locations to its California roster.
Hong Kong shares fell sharply Monday morning as new economic data out of the U.S. added to fears of a recession. The blue-chip Hang Seng Index was down 708.55 points, or 2.57 percent, at 26,811.14 points by midmorning, having dipped by nearly 3 percent early in the day.All 43 blue chips were down, tracking Friday's declines on Wall Street
Citigroup is considering cutting 5 percent to 10 percent of its work force, which totals 327,000, CNBC television reported on Monday, without citing sources.
Steven Deitz: “A people who's primary aims are driving, shopping, and television are subject to terrorism at any time.”
The U.S. military said that Iranian Revolutionary Guard gunboats harassed three U.S. warships on Sunday in the Strait of Hormuz, according to news reports Monday. NBC news quoted U.S. military officials as saying the event was a "significant provocative act." The network said on its MSNBC.com Web site that no shots were fired but that the Iranian ships threatened to "blow up" the U.S. vessels. The encounter lasted between 15 and 25 minutes. Iran's Foreign Ministry said Monday that a confrontation between Iranian boats and U.S. Navy ships in the Persian Gulf over the weekend was "something normal" and was resolved. It suggested the Iranian boats had not recognized the U.S. vessels.
Nothing like playing the terror card during the primaries. As for Bill Clinton, he's no Putin.
Loesje: “Is it the extremist, or the media, that blow things up?"
Today, the Space and Science Research Center, (SSRC) in Orlando, Florida announces that it has confirmed the recent web announcement of NASA solar physicists that there are substantial changes occurring in the sun’s surface. The SSRC has further researched these changes and has concluded they will bring about the next climate change to one of a long lasting cold era.
Today, Director of the SSRC, John Casey has reaffirmed earlier research he led that independently discovered the sun’s changes are the result of a family of cycles that bring about climate shifts from cold climate to warm and back again.
“We today confirm the recent announcement by NASA that there are historic and important changes taking place on the sun’s surface. This will have only one outcome - a new climate change is coming that will bring an extended period of deep cold to the planet. This is not however a unique event for the planet although it is critically important news to this and the next generations. It is but the normal sequence of alternating climate changes that has been going on for thousands of years. Further according to our research, this series of solar cycles are so predictable that they can be used to roughly forecast the next series of climate changes many decades in advance. I have verified the accuracy of these cycles’ behavior over the last 1,100 years relative to temperatures on Earth, to well over 90%.”
As to what these changes are Casey says, “The sun’s surface flows have slowed dramatically as NASA has indicated. This process of surface movement, what NASA calls the “conveyor belt” essentially sweeps up old sunspots and deposits new ones. NASA’s studies have found that when the surface movement slows down, sunspot counts drop significantly. All records of sunspot counts and other proxies of solar activity going back 6,000 years clearly validates our own findings that when we have sunspot counts lower then 50 it means only one thing - an intense cold climate, globally. NASA says the solar cycle 25, the one after the next that starts this spring will be at 50 or lower. The general opinion of the SSRC scientists is that it could begin even sooner within 3 years with the next solar cycle 24. What we are saying today is that my own research and that of the other scientists at the SSRC verifies that NASA is right about one thing – a solar cycle of 50 or lower is headed our way. With this next solar minimum predicted by NASA, what I call a “solar hibernation,” the SSRC forecasts a much colder Earth just as it has transpired before for thousands of years. If NASA is the more accurate on the schedule, then we may see even warmer temperatures before the bottom falls out. If the SSRC and other scientists around the world are correct then we have only a few years to prepare before 20-30 years of lasting and possibly dangerous cold arrive.”
``The only lesson the U.S. has learned from Japan is how to clean up the post-bubble mess,'' says Roach, now chairman of Morgan Stanley in Asia. ``America has failed to learn the much more important lesson -- how to avoid dangerously destabilizing bubbles in the first place. The Greenspan/Bernanke ideology still places disproportionate emphasis on the former while ignoring the latter at great peril.''
"Let me be clear that no single policy or action will undo the excesses of the last few years," Paulson said...Treasury Secretary Henry Paulson said investors remain wary of U.S. markets and that further signs of ``slower growth'' will emerge before the economy shakes off the effects of the housing crisis. ``It will take additional time for markets to regain confidence,'' Paulson said in a speech to the New York Society of Security Analysts today in New York. ``We will likely have further indications of slower growth in the weeks and months ahead.''
Gold for February delivery fell $3.70 to end at $862 an ounce on the New York Mercantile Exchange. Crude oil for February delivery dropped $2.82, or nearly 3%, to finish at $95.09 a barrel on the New York Mercantile Exchange.
The U.S. economy is in a recession, David Rosenberg, chief North American economist for Merrill Lynch, wrote Monday. "Friday's employment report strongly suggests that an official recession has arrived," Rosenberg said in a note to clients.
Claudius Claudianus: "He who strikes terror in others is himself continually in fear."
Sunday, January 06, 2008
Storms Brewing?
1/7/08 Storms Brewing?
BHP Billiton's CEO Kloppers talking about the proposal to buy Rio: "It is about unlocking material value that would otherwise be lost," he said.
Goldman Sachs is close to completing a 15 billion pound ($29.5 billion) financing package to be used by suitors for UK lender Northern Rock , the Sunday Times reported, adding details may be unveiled this week.
Fed Vice Chairman Donald Kohn: "When, as now, the FOMC believes that uncertainty is high, it may need to give greater weight to new information and be readier to revise its forecasts. "Policy decisions may also take into account the substantial risk that the economy will turn out differently than the most likely forecast, especially when that alternative is seen as having unusually large costs," he said.
Chinese toy exports up 20% in year to October. Chinese toy exports to U.S. up 13% in year to October.
According to the WSJ, Russia's Gazprom OAO is in discussions with the Nigerian government about signing an energy deal that would see the giant state-run natural gas company help explore and develop the West African nation's giant gas resources, a senior Nigerian oil official and Gazprom officials said.
Mike Burk: "The Russell 2000 (R2K) rose for 6 consecutive days through December 26 then fell for 6 consecutive days as of last Friday. This is pretty unusual, having occurred only 6 other times since 1979...the high number of new lows on Friday (539 on the NYSE and 429 on the NASDAQ) suggest another retest of the lows is likely...Next week is the week prior to the 2nd Friday in January during the 4th year of the Presidential Cycle...Historically the SPX has been up about half of the time with modest gains. The OTC however, has been quite strong, up 82% of the time during the 4th year of the Presidential Cycle with an average again over 2%...The market is very oversold and likely to rally. I expect the major indices to be higher on Friday January 11 than they were on Friday January 4."
European Central Bank President Jean- Claude Trichet said financial-market tensions are receding and the bank remains committed to fighting inflation.``Tensions have receded while remaining significant,'' Trichet said today in a speech at a convention of Germany's Christian Democratic Union party in Wiesbaden, near Frankfurt. ``The ECB's Governing Council stands ready to counter upside risks to price stability, in line with its mandate.''
AAA reported Friday that the average price for a gallon of regular gasoline nationwide was $3.07, up from $2.32 a year ago.
If oil prices stay up, Americans also may see higher prices for a host of other petroleum-derived products, from light bulbs and paint to golf balls and deodorant."There's oil in everything around us," said Edward Morse, chief energy economist at Lehman Bros. in New York. So it's impossible not to be touched by $100 oil. "Whether it's the direct impact of heating oil or diesel or gasoline, the indirect impact is sort of ubiquitous in the world we live in," he said. "And it affects everyone's pocketbook because it affects the amount we can spend on the things we need and want."
Ford sees the EcoBoost four-cylinder and six-cylinder engines — which will be unveiled at this month's North American International Auto Show in Detroit — as a key part of its strategy to improve fuel economy in the near term, along with improved aerodynamics and lighter materials. The 2009 Lincoln MKS sedan, out later this year, will be the first Ford vehicle with EcoBoost as an option. Ford said EcoBoost will give the MKS's 3.5-liter, twin-turbocharged V6 the power and torque of a V8.Ford says EcoBoost can deliver up to 20 percent better fuel economy and a 15 percent improvement in emissions without compromising driving performance.
"The big drain on the economy for the past year and a half has been housing ... eventually that is going to bottom out and when that bottom outs, even if it doesn't expand, it will
remove that negative drag on the economy," White House Council Of Economic Advisers Chairman Edward Lazear said a live interview. "Housing has been unfortunately a negative and that should stop probably in the next six months," he said. If you buy what Lazear is saying, then the housing stocks as a group should soon bottom out. I don't buy his prediction.
The U.S. trade deficit probably widened in November as Americans spent a record amount on imported oil, economists said a report this week may show. The gap between imports and exports expanded to $59.5 billion, a five-month high, according to the median estimate of economists surveyed by Bloomberg News ahead of the Commerce Department's Jan. 11 report.
As global credit markets tighten, the ANZ is expected to lift rates on some fixed loans by 0.25 percentage points to around 8.54 per cent. The National Australia Bank has indicated it will raise its rate by 0.12 percentage points.
Iran said on Sunday that U.S. President George W. Bush's planned trip to the Middle East was aimed at interfering in relations among regional states. "We consider such a trip as interference in the relations of the countries in the region and propaganda," Iranian Foreign Ministry spokesman Mohammad-Ali Hosseini told reporters during his weekly briefing.
BHP Billiton's CEO Kloppers talking about the proposal to buy Rio: "It is about unlocking material value that would otherwise be lost," he said.
Goldman Sachs is close to completing a 15 billion pound ($29.5 billion) financing package to be used by suitors for UK lender Northern Rock , the Sunday Times reported, adding details may be unveiled this week.
Fed Vice Chairman Donald Kohn: "When, as now, the FOMC believes that uncertainty is high, it may need to give greater weight to new information and be readier to revise its forecasts. "Policy decisions may also take into account the substantial risk that the economy will turn out differently than the most likely forecast, especially when that alternative is seen as having unusually large costs," he said.
Chinese toy exports up 20% in year to October. Chinese toy exports to U.S. up 13% in year to October.
According to the WSJ, Russia's Gazprom OAO is in discussions with the Nigerian government about signing an energy deal that would see the giant state-run natural gas company help explore and develop the West African nation's giant gas resources, a senior Nigerian oil official and Gazprom officials said.
Mike Burk: "The Russell 2000 (R2K) rose for 6 consecutive days through December 26 then fell for 6 consecutive days as of last Friday. This is pretty unusual, having occurred only 6 other times since 1979...the high number of new lows on Friday (539 on the NYSE and 429 on the NASDAQ) suggest another retest of the lows is likely...Next week is the week prior to the 2nd Friday in January during the 4th year of the Presidential Cycle...Historically the SPX has been up about half of the time with modest gains. The OTC however, has been quite strong, up 82% of the time during the 4th year of the Presidential Cycle with an average again over 2%...The market is very oversold and likely to rally. I expect the major indices to be higher on Friday January 11 than they were on Friday January 4."
European Central Bank President Jean- Claude Trichet said financial-market tensions are receding and the bank remains committed to fighting inflation.``Tensions have receded while remaining significant,'' Trichet said today in a speech at a convention of Germany's Christian Democratic Union party in Wiesbaden, near Frankfurt. ``The ECB's Governing Council stands ready to counter upside risks to price stability, in line with its mandate.''
AAA reported Friday that the average price for a gallon of regular gasoline nationwide was $3.07, up from $2.32 a year ago.
If oil prices stay up, Americans also may see higher prices for a host of other petroleum-derived products, from light bulbs and paint to golf balls and deodorant."There's oil in everything around us," said Edward Morse, chief energy economist at Lehman Bros. in New York. So it's impossible not to be touched by $100 oil. "Whether it's the direct impact of heating oil or diesel or gasoline, the indirect impact is sort of ubiquitous in the world we live in," he said. "And it affects everyone's pocketbook because it affects the amount we can spend on the things we need and want."
Ford sees the EcoBoost four-cylinder and six-cylinder engines — which will be unveiled at this month's North American International Auto Show in Detroit — as a key part of its strategy to improve fuel economy in the near term, along with improved aerodynamics and lighter materials. The 2009 Lincoln MKS sedan, out later this year, will be the first Ford vehicle with EcoBoost as an option. Ford said EcoBoost will give the MKS's 3.5-liter, twin-turbocharged V6 the power and torque of a V8.Ford says EcoBoost can deliver up to 20 percent better fuel economy and a 15 percent improvement in emissions without compromising driving performance.
"The big drain on the economy for the past year and a half has been housing ... eventually that is going to bottom out and when that bottom outs, even if it doesn't expand, it will
remove that negative drag on the economy," White House Council Of Economic Advisers Chairman Edward Lazear said a live interview. "Housing has been unfortunately a negative and that should stop probably in the next six months," he said. If you buy what Lazear is saying, then the housing stocks as a group should soon bottom out. I don't buy his prediction.
The U.S. trade deficit probably widened in November as Americans spent a record amount on imported oil, economists said a report this week may show. The gap between imports and exports expanded to $59.5 billion, a five-month high, according to the median estimate of economists surveyed by Bloomberg News ahead of the Commerce Department's Jan. 11 report.
As global credit markets tighten, the ANZ is expected to lift rates on some fixed loans by 0.25 percentage points to around 8.54 per cent. The National Australia Bank has indicated it will raise its rate by 0.12 percentage points.
Iran said on Sunday that U.S. President George W. Bush's planned trip to the Middle East was aimed at interfering in relations among regional states. "We consider such a trip as interference in the relations of the countries in the region and propaganda," Iranian Foreign Ministry spokesman Mohammad-Ali Hosseini told reporters during his weekly briefing.
Saturday, January 05, 2008
A More Problematic 2008
1/6/08 A More Problematic 2008
Doug Noland: "Resulting recessionary forces are so powerful I am confounded as to why the vast majority of analysts and strategists maintain ridiculously low probabilities for recession for 2008. It’s upon us. And a key economic Issue 2008 is how rapidly and deeply the Bubble economy falters, a dynamic that will be greatly influenced by the performance of the financial markets.
As we begin 2008, I believe the U.S. Bubble economy is unusually susceptible to stock market weakness. Consumer confidence has waned right along with home prices, yet I’ll suggest that equities market resiliency had worked to support the general view that U.S. economic fundamentals remained sound. Prolonging the equities market Bubble also played a role in cushioning the Credit market crisis. Faltering stock prices will now batter fragile consumer and debt market sentiment, creating a spiral of market weakness begetting and reinforcing economic weakness. Moreover, I expect negative sentiment to be reinforced by what will soon be a steady stream of headline-grabbing job cuts, especially in the financial and retail sectors. I would argue that, in the case of both the stock market and corporate America, last year’s disregard for the true ramifications of the bursting Credit Bubble will make for a more problematic 2008 in the markets and otherwise...Wall Street today wishes desperately that the Fed will completely disregard global issues and aggressively reflate. It is the nature of Bubbles that such easy “money” policies would work to exacerbate Bubble excess, with minimal impact on those that had already burst.
There are today great – and apparently unappreciated - risks associated with aggressive Fed rates cuts further aggravating global liquidity, financial flows, and currency market excesses and instabilities. This is not 2001/02 or 1998, and the current backdrop is the antithesis of the early-nineties global “disinflationary” backdrop that provided the Greenspan Federal Reserve the flexibility to orchestrate a historic banking system recapitalization and economic reflation...The U.S. Credit system handed the Global Credit Bubble Baton to domestic financial systems the likes of China, Russia, India, Brazil, the oil/commodity producing economies, and the emerging markets more generally. These immature and unsound “contemporary” financial systems are today perpetrating a Credit fiasco paralleling U.S. subprime but on a much grander scale. Keep in mind that only deep-seated underlying U.S. systemic weakness (manifesting into massive financial outflows and a depreciating currency) could have engendered the profligate backdrop where (fundamentally deficient) Credit systems across the globe could inflate with such reckless abandon. The bottom line is that Credit Bubble and “Ponzi” dynamics are working their seductive and disastrous effects now on an unprecedented international scale. To those arguing that aggressive Fed rates cuts pose inconsequential risk, I have the following retort: “only if you exclude the risk of global financial and economic collapse...The difference between a deep recession and a devastating depression hinges – as it has historically – on maintaining market faith and confidence in “money.” A serious Issue 2008 has the perceived soundness of “money” today in the most serious jeopardy in almost 80 years...As for Issues 2008, there are obviously many and they are unusually varied – a wide spectrum of financial, economic, political, environmental and geopolitical risks. I really fear a major California bust has commenced. But what worries me most at the present is the possibility of a “run” on the leveraged speculating community, a circumstance that could potentially precipitate a “seizing up” of even the more “money-like” debt markets at home and abroad. I foresee chaotic markets. As always, I can only hope my fears prove unfounded."
David Roskoph: "The U.S economy has been made into a voracious credit pyramid desperately needing bigger bubbles just to stay afloat. This is the consequence of the illusion we have been sold – perpetual prosperity. Propping up asset bubbles with more fiat money ultimately threatens not more just inflation but a rapid deflation when the music stops. The dollar retracing the past 40 years’ growth is mainly due to the realization that financial engineering was accepted as organic growth. It wasn’t and the jig is up. The extent of that failed paradigm finally resulted in issuing mortgages like after dinner mints and showed just how desperate we have become to simulate (no T) growth. The mindless creation of credit bubble after credit bubble, and subsequent debasement of our currency, has willingly ceded our global economic position. The recent fire sale on our assets (to other countries no less) might someday become a liquidation sale if this practice remains unchecked. Private bank officials are held responsible for such practices because they don’t have a printing press. Government bank officials sell their accolades because they do. The Federal Reserve directly oversaw each and every credit bubble and the bad loan policies that bore them. They were close enough to hear that great sucking sound of artificially inflated home equity being withdrawn and pumped into an ever more credit dependent economy. Now what? All the Reserve can do to repair their abdication of oversight is posture and print more fiat money. Our trip deep into uncharted economic waters has sustained until now only because of the misplaced notion that all the kings’ men can make things better. Chairman Bernanke, Secretary Paulson and President Bush are pedaling prosperity while administering duck tape patches as fast as they can. The rhetoric we now hear certainly reminds one of the popular themes that decorated the great depression - prosperity is just around the corner, it’s a matter of time, only confidence is lacking. It is not a matter of recession or no recession; that is a distraction. Rather it is a matter of stagflation or Japan-style depression. A plain old recession would be a miracle. Step back and listen to the blaring sirens howsoever ubiquitous they may have become. This portends to be far more than just another slow down and the misguided belief that deflations/depressions are an anachronism, reserved for more primitive thinkers, is about to be tested. Japan no doubt had a similar notion as 1989 ended."
Peter Schiff: "Wall Street continues to buy into government propaganda designed to confuse the public about the true cause of inflation. They dismiss rising prices as resulting from economic growth and then minimize the impact by relying on bogus CPI statistics. This completely misses the point that legitimate economic growth causes prices to fall and not to rise. True economic growth comes from increased production, which lowers consumer prices by increasing supply, particularly for basic necessities such as food. The reality is that despite some genuine economic growth abroad, governments are creating so much inflation that food prices are raising anyway.
Finally, Wall Street takes solace in the fact that long-term interest rates on U.S. Treasuries apparently reflect a benign outlook for future inflation as well. However, today’s high bond prices are more a function short-term bets being placed by leveraged speculators and central bank buying, not the rational expectations of long-term private investors. Rather than reflecting quiescent inflation, low long-term interest rates result from a bubble in the bond market. When it bursts, the true rate of inflation, as reflected in the relentless run up in gold prices, will finally be priced in.
In the meantime, with $100 oil, $850 gold, and beans in the teens, Wall Street still feels the Fed has the green light to keep cutting interest rates. Unfortunately on this point they are right. Rather than raising rates on its own terms and accepting the consequences, the Fed will instead wait for a true financial crisis to emerge, at which point it will be forced to raise rates on the much more draconian terms imposed by our foreign creditors."
Gary Dorsch: "On average, the S&P 500 index lost 26% of its value, during the past 11 recessions since 1945. Recessions usually occur every 5.5 years, and the last recession was in 2002. What then for the roughly 80 million US stock market operators? Does a US economic recession translate into a weaker stock market? Can the US Treasury's "Plunge Protection Team" (PPT) put a safety net under the stock market with government intervention and massive injections of cash from the Bernanke Fed? Because of America's influence on the global stock markets, recessions have also led to an average 23% loss in the MSCI-World Index. There are few places to hide during recessions, with all 10 sectors of the S&P 500 posting declines during recession periods. The Dow Jones Industrials, an influential stock market barometer in the world, appears to be building a bearish "Head & Shoulders" pattern, if left to its own natural devices, and free of government and Fed intervention...Yet Fed rate cuts could unleash the most explosive money supply growth and hyper-inflation that the US economy has seen in decades, and weaken the value of the US$. Hyper-inflation and sharply higher oil prices can increase input costs to manufacturers, and squeeze the pocketbooks of consumers, wrecking havoc on the stability of the US economy. By the end of 2008, the DJI to Gold ratio might tumble towards 10 oz's of gold, down from 15.2 oz's today, completely wiping out the Greenspan miracle from 1996-2000."
Washington Mutual, which in 2003 aggressively entered the Chicago-area retail banking scene, is closing 25 of its 146 local offices, its second significant branch pruning in little more than a year. The Seattle-based institution ranks fifth in the number of Chicago-area branches, according to recent numbers from the Federal Deposit Insurance Corp. But it ranks only 28th in Chicago-area deposit market share, at 0.51 percent.
Donald Coxe, global portfolio strategist at BMO Financial Group said at the Empire Club's 14th annual investment outlook in Toronto on Thursday:"The greatest challenge to the world is not US$100 oil; it's getting enough food so that the new middle class can eat the way our middle class does, and that means we've got to expand food output dramatically."
Have dry bulk as well as tankers rates peaked?
The Federal Reserve announced Friday that it is increasing the amount of money available to banks through the new auction process it created to ease the nation's severe credit squeeze. The Fed again pledged to continue the auctions "for as long as necessary."The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion.
Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve may not be able to avoid a recession even if central bank policy makers lower borrowing costs by at least another percentage point. ``I'm not sure if the Fed can do that by reducing rates to 3.5 percent or 3 percent or even lower,'' Gross, the founder and chief investment officer of Pacific Investment Management Co., said in a Bloomberg Television interview. ``The Fed has been behind the curve for a long time.''
Nouriel Roubini: "The US December employment report today – together with elevated figures for initial and continued claims for unemployment benefits in the last few weeks – confirms that the last factor that was supporting the economy and a shopped-out consumer – income and labor generation – is now faltering making a recession effectively unavoidable." How about we're in a recession now.
Shares of Ford Motor Co. dropped to their lowest level in 22 years on Friday, one day after 2007 sales figures showed that Toyota Motor Corp. had dethroned Ford as the No. 2 auto seller in the U.S. Ford shares dipped as low as $6 during Friday's trading, recovering to close down 32 cents, or nearly 5 percent, at $6.13.
Carl Swenlin: "Currently, the stock market is still in the process of retesting the November lows. This process needs to end now or some serious technical damage will be done, specifically the long-term rising trend line is in danger of being decisively violated. On the chart below you can see the long-term rising trend line is being tested, and a decisive violation would be a decline to about 1375, where coincidentally there is another support line. Unfortunately, that doesn't give me much comfort because that line looks a lot like the neckline of a rounded or double top, and considering that a decline to 1375 will generate long-term moving average sell signals, my guess is that the chances of the neckline holding or surviving a retest would be slim to none."
Bill Bonner: "Since January 2001, the ratio of shares to gold has fallen in half. Not because shares have come down, but because gold has gone up. The trade has been a good one. Will it be good in the year ahead? Again, we can't say. But since we're guessing, our guess is that there is more juice in this trade. Gold is clearly in a bull market. If the force of inflation prevails, it is impossible that the bull market will come to an end with the price barely higher than the peak set 27 years ago. And, if gold does not go up, it will be because the force of deflation has the upper hand, which will almost certainly mean lower stock prices. One way or another, the Trade of the Decade still looks like a good one. Like a good marriage or a bad movie, we'll stick with it to see how it turns out."
Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee: "Five non-manufacturing industries reported increased activity in December. Members' comments in December vary by industry segment and remain concerned about the economy. The overall indication in December is continued economic growth in the non-manufacturing sector, but at a slightly slower pace than in November."
China Petroleum & Chemical Corp. (SNP) spokesman Huang Wensheng Friday denied a report by the official Xinhua News Agency that the company's net profit last year rose 38%. "The report is wrong. We are still in a process of auditing our performance results and will publish the annual performance report at the end of March or early April," Huang told Dow Jones Newswires.
The People’s Bank of China keeps repeating that a strong dollar is in their interest. The Bush Administration maintains they have a strong dollar policy. Meanwhile, the U.S. dollar index is less than one point away from making a new low. Would you rather own the yuan or the dollar? The Indian rupee or the dollar?
President Bush: "And all who step forward in freedom's cause can count on a friend in the United States." I guess that includes Pakistan and military rule.
Anais Nin: "Life shrinks and expands in proportion to one's courage."
Doug Noland: "Resulting recessionary forces are so powerful I am confounded as to why the vast majority of analysts and strategists maintain ridiculously low probabilities for recession for 2008. It’s upon us. And a key economic Issue 2008 is how rapidly and deeply the Bubble economy falters, a dynamic that will be greatly influenced by the performance of the financial markets.
As we begin 2008, I believe the U.S. Bubble economy is unusually susceptible to stock market weakness. Consumer confidence has waned right along with home prices, yet I’ll suggest that equities market resiliency had worked to support the general view that U.S. economic fundamentals remained sound. Prolonging the equities market Bubble also played a role in cushioning the Credit market crisis. Faltering stock prices will now batter fragile consumer and debt market sentiment, creating a spiral of market weakness begetting and reinforcing economic weakness. Moreover, I expect negative sentiment to be reinforced by what will soon be a steady stream of headline-grabbing job cuts, especially in the financial and retail sectors. I would argue that, in the case of both the stock market and corporate America, last year’s disregard for the true ramifications of the bursting Credit Bubble will make for a more problematic 2008 in the markets and otherwise...Wall Street today wishes desperately that the Fed will completely disregard global issues and aggressively reflate. It is the nature of Bubbles that such easy “money” policies would work to exacerbate Bubble excess, with minimal impact on those that had already burst.
There are today great – and apparently unappreciated - risks associated with aggressive Fed rates cuts further aggravating global liquidity, financial flows, and currency market excesses and instabilities. This is not 2001/02 or 1998, and the current backdrop is the antithesis of the early-nineties global “disinflationary” backdrop that provided the Greenspan Federal Reserve the flexibility to orchestrate a historic banking system recapitalization and economic reflation...The U.S. Credit system handed the Global Credit Bubble Baton to domestic financial systems the likes of China, Russia, India, Brazil, the oil/commodity producing economies, and the emerging markets more generally. These immature and unsound “contemporary” financial systems are today perpetrating a Credit fiasco paralleling U.S. subprime but on a much grander scale. Keep in mind that only deep-seated underlying U.S. systemic weakness (manifesting into massive financial outflows and a depreciating currency) could have engendered the profligate backdrop where (fundamentally deficient) Credit systems across the globe could inflate with such reckless abandon. The bottom line is that Credit Bubble and “Ponzi” dynamics are working their seductive and disastrous effects now on an unprecedented international scale. To those arguing that aggressive Fed rates cuts pose inconsequential risk, I have the following retort: “only if you exclude the risk of global financial and economic collapse...The difference between a deep recession and a devastating depression hinges – as it has historically – on maintaining market faith and confidence in “money.” A serious Issue 2008 has the perceived soundness of “money” today in the most serious jeopardy in almost 80 years...As for Issues 2008, there are obviously many and they are unusually varied – a wide spectrum of financial, economic, political, environmental and geopolitical risks. I really fear a major California bust has commenced. But what worries me most at the present is the possibility of a “run” on the leveraged speculating community, a circumstance that could potentially precipitate a “seizing up” of even the more “money-like” debt markets at home and abroad. I foresee chaotic markets. As always, I can only hope my fears prove unfounded."
David Roskoph: "The U.S economy has been made into a voracious credit pyramid desperately needing bigger bubbles just to stay afloat. This is the consequence of the illusion we have been sold – perpetual prosperity. Propping up asset bubbles with more fiat money ultimately threatens not more just inflation but a rapid deflation when the music stops. The dollar retracing the past 40 years’ growth is mainly due to the realization that financial engineering was accepted as organic growth. It wasn’t and the jig is up. The extent of that failed paradigm finally resulted in issuing mortgages like after dinner mints and showed just how desperate we have become to simulate (no T) growth. The mindless creation of credit bubble after credit bubble, and subsequent debasement of our currency, has willingly ceded our global economic position. The recent fire sale on our assets (to other countries no less) might someday become a liquidation sale if this practice remains unchecked. Private bank officials are held responsible for such practices because they don’t have a printing press. Government bank officials sell their accolades because they do. The Federal Reserve directly oversaw each and every credit bubble and the bad loan policies that bore them. They were close enough to hear that great sucking sound of artificially inflated home equity being withdrawn and pumped into an ever more credit dependent economy. Now what? All the Reserve can do to repair their abdication of oversight is posture and print more fiat money. Our trip deep into uncharted economic waters has sustained until now only because of the misplaced notion that all the kings’ men can make things better. Chairman Bernanke, Secretary Paulson and President Bush are pedaling prosperity while administering duck tape patches as fast as they can. The rhetoric we now hear certainly reminds one of the popular themes that decorated the great depression - prosperity is just around the corner, it’s a matter of time, only confidence is lacking. It is not a matter of recession or no recession; that is a distraction. Rather it is a matter of stagflation or Japan-style depression. A plain old recession would be a miracle. Step back and listen to the blaring sirens howsoever ubiquitous they may have become. This portends to be far more than just another slow down and the misguided belief that deflations/depressions are an anachronism, reserved for more primitive thinkers, is about to be tested. Japan no doubt had a similar notion as 1989 ended."
Peter Schiff: "Wall Street continues to buy into government propaganda designed to confuse the public about the true cause of inflation. They dismiss rising prices as resulting from economic growth and then minimize the impact by relying on bogus CPI statistics. This completely misses the point that legitimate economic growth causes prices to fall and not to rise. True economic growth comes from increased production, which lowers consumer prices by increasing supply, particularly for basic necessities such as food. The reality is that despite some genuine economic growth abroad, governments are creating so much inflation that food prices are raising anyway.
Finally, Wall Street takes solace in the fact that long-term interest rates on U.S. Treasuries apparently reflect a benign outlook for future inflation as well. However, today’s high bond prices are more a function short-term bets being placed by leveraged speculators and central bank buying, not the rational expectations of long-term private investors. Rather than reflecting quiescent inflation, low long-term interest rates result from a bubble in the bond market. When it bursts, the true rate of inflation, as reflected in the relentless run up in gold prices, will finally be priced in.
In the meantime, with $100 oil, $850 gold, and beans in the teens, Wall Street still feels the Fed has the green light to keep cutting interest rates. Unfortunately on this point they are right. Rather than raising rates on its own terms and accepting the consequences, the Fed will instead wait for a true financial crisis to emerge, at which point it will be forced to raise rates on the much more draconian terms imposed by our foreign creditors."
Gary Dorsch: "On average, the S&P 500 index lost 26% of its value, during the past 11 recessions since 1945. Recessions usually occur every 5.5 years, and the last recession was in 2002. What then for the roughly 80 million US stock market operators? Does a US economic recession translate into a weaker stock market? Can the US Treasury's "Plunge Protection Team" (PPT) put a safety net under the stock market with government intervention and massive injections of cash from the Bernanke Fed? Because of America's influence on the global stock markets, recessions have also led to an average 23% loss in the MSCI-World Index. There are few places to hide during recessions, with all 10 sectors of the S&P 500 posting declines during recession periods. The Dow Jones Industrials, an influential stock market barometer in the world, appears to be building a bearish "Head & Shoulders" pattern, if left to its own natural devices, and free of government and Fed intervention...Yet Fed rate cuts could unleash the most explosive money supply growth and hyper-inflation that the US economy has seen in decades, and weaken the value of the US$. Hyper-inflation and sharply higher oil prices can increase input costs to manufacturers, and squeeze the pocketbooks of consumers, wrecking havoc on the stability of the US economy. By the end of 2008, the DJI to Gold ratio might tumble towards 10 oz's of gold, down from 15.2 oz's today, completely wiping out the Greenspan miracle from 1996-2000."
Washington Mutual, which in 2003 aggressively entered the Chicago-area retail banking scene, is closing 25 of its 146 local offices, its second significant branch pruning in little more than a year. The Seattle-based institution ranks fifth in the number of Chicago-area branches, according to recent numbers from the Federal Deposit Insurance Corp. But it ranks only 28th in Chicago-area deposit market share, at 0.51 percent.
Donald Coxe, global portfolio strategist at BMO Financial Group said at the Empire Club's 14th annual investment outlook in Toronto on Thursday:"The greatest challenge to the world is not US$100 oil; it's getting enough food so that the new middle class can eat the way our middle class does, and that means we've got to expand food output dramatically."
Have dry bulk as well as tankers rates peaked?
The Federal Reserve announced Friday that it is increasing the amount of money available to banks through the new auction process it created to ease the nation's severe credit squeeze. The Fed again pledged to continue the auctions "for as long as necessary."The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion.
Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve may not be able to avoid a recession even if central bank policy makers lower borrowing costs by at least another percentage point. ``I'm not sure if the Fed can do that by reducing rates to 3.5 percent or 3 percent or even lower,'' Gross, the founder and chief investment officer of Pacific Investment Management Co., said in a Bloomberg Television interview. ``The Fed has been behind the curve for a long time.''
Nouriel Roubini: "The US December employment report today – together with elevated figures for initial and continued claims for unemployment benefits in the last few weeks – confirms that the last factor that was supporting the economy and a shopped-out consumer – income and labor generation – is now faltering making a recession effectively unavoidable." How about we're in a recession now.
Shares of Ford Motor Co. dropped to their lowest level in 22 years on Friday, one day after 2007 sales figures showed that Toyota Motor Corp. had dethroned Ford as the No. 2 auto seller in the U.S. Ford shares dipped as low as $6 during Friday's trading, recovering to close down 32 cents, or nearly 5 percent, at $6.13.
Carl Swenlin: "Currently, the stock market is still in the process of retesting the November lows. This process needs to end now or some serious technical damage will be done, specifically the long-term rising trend line is in danger of being decisively violated. On the chart below you can see the long-term rising trend line is being tested, and a decisive violation would be a decline to about 1375, where coincidentally there is another support line. Unfortunately, that doesn't give me much comfort because that line looks a lot like the neckline of a rounded or double top, and considering that a decline to 1375 will generate long-term moving average sell signals, my guess is that the chances of the neckline holding or surviving a retest would be slim to none."
Bill Bonner: "Since January 2001, the ratio of shares to gold has fallen in half. Not because shares have come down, but because gold has gone up. The trade has been a good one. Will it be good in the year ahead? Again, we can't say. But since we're guessing, our guess is that there is more juice in this trade. Gold is clearly in a bull market. If the force of inflation prevails, it is impossible that the bull market will come to an end with the price barely higher than the peak set 27 years ago. And, if gold does not go up, it will be because the force of deflation has the upper hand, which will almost certainly mean lower stock prices. One way or another, the Trade of the Decade still looks like a good one. Like a good marriage or a bad movie, we'll stick with it to see how it turns out."
Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee: "Five non-manufacturing industries reported increased activity in December. Members' comments in December vary by industry segment and remain concerned about the economy. The overall indication in December is continued economic growth in the non-manufacturing sector, but at a slightly slower pace than in November."
China Petroleum & Chemical Corp. (SNP) spokesman Huang Wensheng Friday denied a report by the official Xinhua News Agency that the company's net profit last year rose 38%. "The report is wrong. We are still in a process of auditing our performance results and will publish the annual performance report at the end of March or early April," Huang told Dow Jones Newswires.
The People’s Bank of China keeps repeating that a strong dollar is in their interest. The Bush Administration maintains they have a strong dollar policy. Meanwhile, the U.S. dollar index is less than one point away from making a new low. Would you rather own the yuan or the dollar? The Indian rupee or the dollar?
President Bush: "And all who step forward in freedom's cause can count on a friend in the United States." I guess that includes Pakistan and military rule.
Anais Nin: "Life shrinks and expands in proportion to one's courage."
Employment Data
1/5/08 Employment Data
The People's Bank of China pledged to keep monetary policy on a tightening bias, with the focus to remain on using further increases in the ratio of reserves banks must set aside as deposits as the main policy tool to rein in the economy, according to reports. Wire reports citing a report by the 21st Century Business Herald also said China's central bank plans to allow more flexibility in the yuan exchange mechanism, a euphemism that normally means faster appreciation of the Chinese currency against the U.S. dollar.
China Petroleum & Chemical Corp., or Sinopec, saw it net profit climb to 70 billion yuan ($9.6 billion) in 2007, up 38.2% from a year earlier, according to wire reports which cited a Xinhua News Agency report.
An investment group led by U.S. investment fund Aetos Capital LLC has emerged as the highest bidder for Japanese property developer Daito Trust Construction Co, offering up to 930 billion yen ($8.5 billion) to acquire all outstanding shares in the company, according to reports.
Patterson-UTI Energy Inc. operated fewer drilling rigs last month, the oil drilling contractor said Friday, as daily contract rates for the broader sector remained under pressure. Patterson operated an average of 239 rigs in December, down from 246 the previous month and 278 a year earlier. It posted an average 230 rigs in the U.S. and 9 in Canada. During the fourth quarter, Patterson operated an average 241 rigs, including 231 in the U.S. and 10 in Canada.
United Airlines, the nation's second largest carrier, said its December traffic slipped 1.2 percent as bad weather hit its two biggest hubs.
Microsoft Corp sold 4.3 million Xbox 360 video game consoles in the last three months of 2007, helped by hit titles such as "Halo 3" and "Mass Effect," according to company data released on Thursday; however, the company said it was "disappointed" with problems that had plagued its online gaming service for days and offered a free downloadable game to more than 8 million worldwide users of the network.
Japanese stock prices fell 4% Friday after weakness on Wall Street and higher oil prices raised concerns about the state of the global economy. It was the lowest level in the last year and one half. A sharply higher yen, which erodes earnings Japanese companies make on overseas markets when repatriated, also weighed on stock prices.
The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession. Payments are considered delinquent if they are 30 or more days past due.
A Silicon Valley startup is promising to blanket San Francisco with free wireless Internet service, reviving a crusade that crumbled last year after two much larger companies, EarthLink Inc. and Google Inc., scrapped their plans to build a high-speed network for Web surfing. Meraki Networks Inc., whose financial backers include Google, hopes to complete the ambitious project within the next year by persuading thousands of San Francisco residents to set up free radio repeaters on their rooftops and in their homes. The 21-month-old company is to announce its plans Friday.
Barry Ritoltz: "It has been my position that the increasing proportion of Birth Death jobs as a total percentage of NFP has rendered the BLS data meaningless. The straight line extrapolation of the B/D adjustment is, by design, unable to catch any change in economic direction. Hence, the absurd determination that 199,000 small business construction jobs have been created since January 2007. Consider: The B/D generated 1,239,000 jobs from February thru November 2007. That's rather surprising, since the total NFP jobs created since January 2007 was 1,208,000. In other words, the Net Birth/Death jobs created over 10 months was actually greater than the total NFP jobs created in all of 2007. That's rather odd, don't you think?."
Credit-default swaps on the Markit CDX North America Investment Grade Series 8 Index rose 1 basis point to 84.75 at 8:02 a.m. in New York, according to Deutsche Bank AG. The index has risen 7 basis points this week and is poised for its biggest increase since the week of Nov. 9, Bloomberg data show.
Asian liquefied petroleum gas rose on speculation colder winter weather may boost demand as inventories drop in the U.S. and China.
Retailer Talbots Inc. said Friday it will close 78 kids' and mens' stores by September and discontinue those businesses as part of a bid to focus more on its core customer — women who are 35 years old or older. The company also said its fourth-quarter sales so far were trending lower for both its Talbots and J.Jill brands.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$8.343 billion in the week ended 1/2/08 with Domestic funds reporting net outflows of -$8.228 billion and Non-domestic funds reporting net outflows of -$115 million; Excluding ETF activity, equity funds report net cash outflows totaling -$4.061 billion with Domestic funds reporting net outflows of -$2.779 billion and Non-domestic funds reporting net outflows totaling -$1.283 billion, as net outflows are reported in every sector but Gold & NR ($154 Mil), Energy ($20 Mil), and Utilities ($15 Mil).
The dollar fell sharply against other major currencies on Friday, after a report showed that the unemployment rate shot up to 5% in December as job growth stalled, a sign that the U.S. economic slump has spread to the labor market. U.S. seasonally adjusted nonfarm payrolls rose by 18,000 in December, the weakest job growth since August 2003, according to a survey of thousands of businesses. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.5% at 75.495.
Job growth was revised up by a total of 10,000 in November and October. Private-sector payrolls fell by 13,000, the biggest decline in more than four years.
The number of unemployed persons increased by 474,000 to 7.7 million in December and the unemployment rate rose by 0.3 percentage point to 5.0 percent. A year earlier, the number of unemployed persons was 6.8 million, and the jobless rate was 4.4 percent.
Bed Bath & Beyond Inc. dropped $2.31 to $25.09. The largest U.S. home-furnishings retailer said quarterly profit fell for the first time in at least 15 years as customers grappled with declining home values and higher energy costs.
Treasury two-year note yields fell to the lowest since November 2004 after job growth slowed in December, increasing speculation the Federal Reserve will cut borrowing costs more than forecast to prevent a recession.
YRC Worldwide Inc. declined $1.70, or 12 percent, to $12.12, the lowest since June 2000. The largest U.S. trucking company had its debt lowered to junk by Fitch Ratings, which cited weak industry conditions and a planned writedown in the value of two units.
U.S. Energy Information Administration reported natural gas inventories in the world's largest energy consumer fell by 87 billion cubic feet in the week ending Dec. 28, less than a drop of 157 billion cubic feet expected by analysts at energy research firm Global Insight. After the data, natural gas futures for February delivery fell 12.4 cents, or 1.5%, to $7.550 per million British thermal units on the New York Mercantile Exchange. However, they then rallied back up to close at $7.84.
Investors now expect the Federal Reserve to cut its overnight interest rate by a half percentage point in January, according to prices in the Chicago Board of Trade's federal funds futures markets. The odds of a 50-basis-point interest-rate cut rose to 56% on Friday following a very weak employment report showing the jobless rate jumping to 5%.
Sallie Mae, formally known as SLM Corp., said in a regulatory filing Thursday that it planned to "be more selective" in making student loans, both those backed by the federal government and the higher-rate private loans. The Reston, Va.-based company reaped a bonanza in recent years from the boom in student lending, with some 10 million customers, and around $25 billion in private student loans and $128 billion in government-backed loans outstanding. The company said in its filing with the Securities and Exchange Commission that it was retrenching in the business because of market conditions and the landmark student-loan law that took effect last October, cutting billions of dollars in federal subsidies for student lenders. Meanwhile, defaults are rising on student loans, and credit-market tremors similar to those linked to the mortgage crisis have recently started to surface in the $85 billion student-loan market.
Crude for February delivery closed down $1.27, or 1.3%, at $97.91 a barrel on the New York Mercantile Exchange.
PHH Corp. said late Friday it received a $50 million reverse termination fee from Blackstone Capital Partners.
Motorola Inc.said late Friday that it laid of an additional 1,600 employees during the fourth quarter in a company-wide restructuring effort.
The New York Mercantile Exchange Inc., a subsidiary of Nymex Holdings Inc., will list European-style crude oil and natural gas options contracts on the CME Globex electronic trading platform on Jan. 20 for trade on Jan 22, Nymex said late Friday. Starting Jan. 22, European-style crude oil options contracts will also be available for trading on the Nymex trading floor during normal open outcry hours.
In the first week of trading in a new year can you ever remember, in a single day, that the Nasdaq dropped 98 points, the S&P 35 points, and the Dow 256 points?
With credit markets continuing their downward spiral, investors could see their dividends disappearing in 2008. Dividend cuts or suspensions will continue to pick up among financial services firms in 2008, said Howard Silverblatt, a senior index analyst at Standard & Poor's.
The People's Bank of China pledged to keep monetary policy on a tightening bias, with the focus to remain on using further increases in the ratio of reserves banks must set aside as deposits as the main policy tool to rein in the economy, according to reports. Wire reports citing a report by the 21st Century Business Herald also said China's central bank plans to allow more flexibility in the yuan exchange mechanism, a euphemism that normally means faster appreciation of the Chinese currency against the U.S. dollar.
China Petroleum & Chemical Corp., or Sinopec, saw it net profit climb to 70 billion yuan ($9.6 billion) in 2007, up 38.2% from a year earlier, according to wire reports which cited a Xinhua News Agency report.
An investment group led by U.S. investment fund Aetos Capital LLC has emerged as the highest bidder for Japanese property developer Daito Trust Construction Co, offering up to 930 billion yen ($8.5 billion) to acquire all outstanding shares in the company, according to reports.
Patterson-UTI Energy Inc. operated fewer drilling rigs last month, the oil drilling contractor said Friday, as daily contract rates for the broader sector remained under pressure. Patterson operated an average of 239 rigs in December, down from 246 the previous month and 278 a year earlier. It posted an average 230 rigs in the U.S. and 9 in Canada. During the fourth quarter, Patterson operated an average 241 rigs, including 231 in the U.S. and 10 in Canada.
United Airlines, the nation's second largest carrier, said its December traffic slipped 1.2 percent as bad weather hit its two biggest hubs.
Microsoft Corp sold 4.3 million Xbox 360 video game consoles in the last three months of 2007, helped by hit titles such as "Halo 3" and "Mass Effect," according to company data released on Thursday; however, the company said it was "disappointed" with problems that had plagued its online gaming service for days and offered a free downloadable game to more than 8 million worldwide users of the network.
Japanese stock prices fell 4% Friday after weakness on Wall Street and higher oil prices raised concerns about the state of the global economy. It was the lowest level in the last year and one half. A sharply higher yen, which erodes earnings Japanese companies make on overseas markets when repatriated, also weighed on stock prices.
The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession. Payments are considered delinquent if they are 30 or more days past due.
A Silicon Valley startup is promising to blanket San Francisco with free wireless Internet service, reviving a crusade that crumbled last year after two much larger companies, EarthLink Inc. and Google Inc., scrapped their plans to build a high-speed network for Web surfing. Meraki Networks Inc., whose financial backers include Google, hopes to complete the ambitious project within the next year by persuading thousands of San Francisco residents to set up free radio repeaters on their rooftops and in their homes. The 21-month-old company is to announce its plans Friday.
Barry Ritoltz: "It has been my position that the increasing proportion of Birth Death jobs as a total percentage of NFP has rendered the BLS data meaningless. The straight line extrapolation of the B/D adjustment is, by design, unable to catch any change in economic direction. Hence, the absurd determination that 199,000 small business construction jobs have been created since January 2007. Consider: The B/D generated 1,239,000 jobs from February thru November 2007. That's rather surprising, since the total NFP jobs created since January 2007 was 1,208,000. In other words, the Net Birth/Death jobs created over 10 months was actually greater than the total NFP jobs created in all of 2007. That's rather odd, don't you think?."
Credit-default swaps on the Markit CDX North America Investment Grade Series 8 Index rose 1 basis point to 84.75 at 8:02 a.m. in New York, according to Deutsche Bank AG. The index has risen 7 basis points this week and is poised for its biggest increase since the week of Nov. 9, Bloomberg data show.
Asian liquefied petroleum gas rose on speculation colder winter weather may boost demand as inventories drop in the U.S. and China.
Retailer Talbots Inc. said Friday it will close 78 kids' and mens' stores by September and discontinue those businesses as part of a bid to focus more on its core customer — women who are 35 years old or older. The company also said its fourth-quarter sales so far were trending lower for both its Talbots and J.Jill brands.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$8.343 billion in the week ended 1/2/08 with Domestic funds reporting net outflows of -$8.228 billion and Non-domestic funds reporting net outflows of -$115 million; Excluding ETF activity, equity funds report net cash outflows totaling -$4.061 billion with Domestic funds reporting net outflows of -$2.779 billion and Non-domestic funds reporting net outflows totaling -$1.283 billion, as net outflows are reported in every sector but Gold & NR ($154 Mil), Energy ($20 Mil), and Utilities ($15 Mil).
The dollar fell sharply against other major currencies on Friday, after a report showed that the unemployment rate shot up to 5% in December as job growth stalled, a sign that the U.S. economic slump has spread to the labor market. U.S. seasonally adjusted nonfarm payrolls rose by 18,000 in December, the weakest job growth since August 2003, according to a survey of thousands of businesses. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.5% at 75.495.
Job growth was revised up by a total of 10,000 in November and October. Private-sector payrolls fell by 13,000, the biggest decline in more than four years.
The number of unemployed persons increased by 474,000 to 7.7 million in December and the unemployment rate rose by 0.3 percentage point to 5.0 percent. A year earlier, the number of unemployed persons was 6.8 million, and the jobless rate was 4.4 percent.
Bed Bath & Beyond Inc. dropped $2.31 to $25.09. The largest U.S. home-furnishings retailer said quarterly profit fell for the first time in at least 15 years as customers grappled with declining home values and higher energy costs.
Treasury two-year note yields fell to the lowest since November 2004 after job growth slowed in December, increasing speculation the Federal Reserve will cut borrowing costs more than forecast to prevent a recession.
YRC Worldwide Inc. declined $1.70, or 12 percent, to $12.12, the lowest since June 2000. The largest U.S. trucking company had its debt lowered to junk by Fitch Ratings, which cited weak industry conditions and a planned writedown in the value of two units.
U.S. Energy Information Administration reported natural gas inventories in the world's largest energy consumer fell by 87 billion cubic feet in the week ending Dec. 28, less than a drop of 157 billion cubic feet expected by analysts at energy research firm Global Insight. After the data, natural gas futures for February delivery fell 12.4 cents, or 1.5%, to $7.550 per million British thermal units on the New York Mercantile Exchange. However, they then rallied back up to close at $7.84.
Investors now expect the Federal Reserve to cut its overnight interest rate by a half percentage point in January, according to prices in the Chicago Board of Trade's federal funds futures markets. The odds of a 50-basis-point interest-rate cut rose to 56% on Friday following a very weak employment report showing the jobless rate jumping to 5%.
Sallie Mae, formally known as SLM Corp., said in a regulatory filing Thursday that it planned to "be more selective" in making student loans, both those backed by the federal government and the higher-rate private loans. The Reston, Va.-based company reaped a bonanza in recent years from the boom in student lending, with some 10 million customers, and around $25 billion in private student loans and $128 billion in government-backed loans outstanding. The company said in its filing with the Securities and Exchange Commission that it was retrenching in the business because of market conditions and the landmark student-loan law that took effect last October, cutting billions of dollars in federal subsidies for student lenders. Meanwhile, defaults are rising on student loans, and credit-market tremors similar to those linked to the mortgage crisis have recently started to surface in the $85 billion student-loan market.
Crude for February delivery closed down $1.27, or 1.3%, at $97.91 a barrel on the New York Mercantile Exchange.
PHH Corp. said late Friday it received a $50 million reverse termination fee from Blackstone Capital Partners.
Motorola Inc.said late Friday that it laid of an additional 1,600 employees during the fourth quarter in a company-wide restructuring effort.
The New York Mercantile Exchange Inc., a subsidiary of Nymex Holdings Inc., will list European-style crude oil and natural gas options contracts on the CME Globex electronic trading platform on Jan. 20 for trade on Jan 22, Nymex said late Friday. Starting Jan. 22, European-style crude oil options contracts will also be available for trading on the Nymex trading floor during normal open outcry hours.
In the first week of trading in a new year can you ever remember, in a single day, that the Nasdaq dropped 98 points, the S&P 35 points, and the Dow 256 points?
With credit markets continuing their downward spiral, investors could see their dividends disappearing in 2008. Dividend cuts or suspensions will continue to pick up among financial services firms in 2008, said Howard Silverblatt, a senior index analyst at Standard & Poor's.
Thursday, January 03, 2008
Jobs
1/4/08 Jobs
Landmark Communications, a privately held company held by the Batten family, is putting its Weather Channel property up for sale, and the winning bidder could end up spending more than $5 billion, according to a report in The New York Times on Thursday.
State Street Corp.said it's taking a fourth-quarter charge of $279 million, or 71 cents a share, to establish a reserve to address legal exposure and other costs associated with the under-performance of certain active fixed-income strategies managed by State Street Global Advisors, its investment arm.
Harrah's Entertainment Inc. extended Chairman, President and Chief Executive Gary Loveman's contract Thursday and said the executive is likely to stay in those roles after its $17.1 billion buyout is complete. Harrah's, which is being taken private by affiliates of Texas Pacific Group and Apollo Management LP, said the acquisition is expected to close early this year.
Federal Reserve policy makers agreed at last month's meeting that they might need to cut interest rates again as turmoil in the credit and housing markets began to crimp consumer spending. Some Fed members even saw the risk of a vicious cycle pulling down both financial markets and the economy, and possibly requiring "substantial further easing of policy," according to minutes of the Federal Open Market Committee's Dec. 11 meeting.
Greg Ip: "U.S. house prices "likely would have to fall considerably" to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly. The study tracks rents and home prices back to 1960.
Beijing says it is plowing $34 billion into building up for the Olympics -- five times what Sydney spent for the 2000 games.
Brett Steenbarger: "This past week, we've seen 10-year Treasury yields fall over 7% and the S&P 500 Index (SPY) drop by nearly 3%. With fears of recession, traders and investors appear to be seeking the safe haven of Treasuries. I went back to 2002 (N = 1488 trading days) and found 51 occasions in which ten-year yields dropped more than 5% in a week during a stock market decline. Interestingly, the following week, the S&P 500 Index averaged a whopping gain of 1.73% (40 up, 11 down)--much stronger than the average five-day gain of .05% (766 up, 671 down) for the remainder of the sample. It appears that the flight to quality may also represent panic selling, something we see more at a short-term market bottom than a top."
A new report by the Organization of Petroleum Exporting Countries (OPEC) indicates the group will be more hard pressed than previously thought to meet the world's surging oil needs and could fail to supply its share of global oil markets by 2037. The report in the December issue of the OPEC Review, published by the organization's Vienna-based Secretariat, also says Kuwait is likely to be an extremely inconsistent and unstable supplier and questions Saudi Arabia's assertion it is capable of meeting world oil demand for the next 50 years.
Two-year Treasury notes rose, with the yield spread against 10-year securities at the widest since January 2005, as traders added to bets the Federal Reserve will cut interest rates to stave off recession.
Companies in the U.S. private sector added 40,000 jobs in December, according to the ADP employment report released Thursday. The report comes a day before the Labor Department reports on nonfarm payroll growth for December. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 65,000, close to the 58,000 now expected. Services industries added 71,000 jobs in December, while goods-producing industries cut 31,000 jobs, including 16,000 in manufacturing.
Homa Bahrami: “Job security is gone. The driving force of a career must come from the individual.”
Big corporations took a breather from cutting jobs in December, with announced layoff plans falling 39% to 44,416, the lowest level of the year, according to the monthly tally from outplacement firm Challenger Gray & Christmas released Thursday. For all of 2007, announced layoffs fell 8.5% to 768,264, the lowest since the recession year of 2001. The financial sector was battered in 2007, with 153,105 announced cuts, more than three times the previous year's total. Automakers eliminated 78,880 jobs in 2007, about half the 158,766 jobs cut in 2006. In December, the retail sector cut the most jobs (7,961), followed by automotive, pharmaceutical and financial.
Seasonally adjusted initial jobless claims fell 21,000 to 336,000 in the week ended Dec. 29, the government reported Thursday. The four-week moving average for initial jobless claims fell 750 to 343,750, according to the Labor Department. The prior week's initial jobless claims level was revised to 357,000 from an earlier estimate of 349,000. Continuing jobless claims gained 46,000, reaching 2.76 million for the week ended Dec. 22 - the highest level since Oct. 22, 2005. The four-week moving average for continuing jobless claims rose 42,000 to 2.69 million - the highest since Nov. 19, 2005. A Labor Department spokesman said states with large increases in claims cited short-term layoffs.
For fiscal 2008, Monsanto projected earnings of $2.50 to $2.60 a share, excluding the impact of former unit Solutia Inc.'s emergence from bankruptcy. Monsanto said it could post a gain of 22 cents to 24 cents a share in the second quarter for the settlement of its claim, in which Monsanto will receive a 17% stake in the reorganized Solutia. The St. Louis genetically modified seed and chemical company expects the fiscal second and third quarters to be the primary drivers for the company's fiscal 2008 earnings.
CVS Caremark narrows 2007 EPS forecast upward to $1.91-$1.92
ConocoPhillips' debt balance is expected to be approximately $21.7 billion at the end of the fourth quarter. The company anticipates fourth-quarter repurchases under the share repurchase program to be approximately $2.5 billion, for a total of approximately $7 billion for the year.
Higher oil prices pushed the value of factory orders up by 1.5% in November, the biggest increase in four months, the Commerce Department reported Thursday. Orders for durable goods were weaker than reported a week ago, falling 0.1% instead rising 0.1% gain as initially reported. Orders for nondurable goods surged 3% on higher oil prices. Excluding the 15.9% rise in petroleum orders, new orders fell 0.2%. Factory shipments rose 1.5%, also the biggest gain since July.
German unemployment fell to a six-year low last month, more than double the fall economists had predicted, underlying the strength of Europe's largest economy ahead of what could be a challenging year. In its monthly report, published yesterday, the Federal Labour Agency said seasonally-adjusted unemployment had dropped by 78,000 to 3.4m, almost twice the average monthly fall in the past year. Altogether, more than half-a-million people came off jobless benefits in the past year.
According to Bloomberg, the risk of companies defaulting rose to the highest in a month on concern the U.S. economy is heading toward recession, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index climbed 2.25 basis points to 83.25 today, according to Deutsche Bank AG. Credit-default swap indexes in Europe and Asia also reached the highest since the start of December. Investors are speculating the worst U.S. housing slump in 27 years is spreading to the wider economy after the Institute of Supply Management reported the biggest fall in manufacturing in five years yesterday.
A total of 179 North American companies have a high risk of default or may need to change details of their debt agreements, Moody's Investors Service said.
India's tourism minister said Thursday that the dollar will no longer be accepted at the Taj Mahal and other national tourist sites.
Crude inventories fell by 700,000 barrels to 297.7 million barrels in the week ending Dec. 28, the American Petroleum Institute reported on Thursday, according to Moody's Economy.com. Distillate stocks rose by 4.7 million barrels to 133.7 million barrels in the same period, while gasoline stocks gained by 6.9 million barrels to 212.9 million barrels, the API said. Also on Thursday, U.S. Energy Information Administration reported crude supplies fell by 4 million barrels to 289.6 million barrels in the latest week. Crude-oil futures broke over $100 a barrel level on Thursday after a government report showed U.S. crude inventories dropped more than expected.
Drugstores reported unusually weak December sales on Thursday, weighed down by a slow flu season, lower-priced generic drugs and sluggish sales of seasonal items.
Since August, asset-backed paper has fallen by $421 billion, or 35%. Total commercial paper rose by $13.2 billion, or 0.7%, last week, as financial paper fell $3.4 billion and non-financial paper dropped $9.6 billion.
“Obviously, the recession risk is rising sharply,” said David Wyss, chief economist at Standard & Poors. “We're getting to near even odds for recession in the first half of the year.”
Gold for February delivery rose $9.10 to end at $869.10 an ounce on the New York Mercantile Exchange, a 28-year high. Crude for February delivery closed down 44 cents, or 0.4%, at $99.18 a barrel on the New York Mercantile Exchange.
Ford Motor Co. reported U.S. December sales fell 9% to 212,094 vehicles from a year ago, with the Lincoln and Land Rover models posting the biggest percentage declines. Ford said 2007 U.S. sales dropped 12% to 2.57 million, with its namesake Ford and Jaguar models posting the biggest declines. In a press release, Ford said it expects the economic environment to "remain challenging" in 2008.
Sales of GM cars and light trucks fell 4.4% to 319,837 in December.
U.S. personal bankruptcy filings jumped 40 percent in 2007 due to rising mortgage payments, job losses and other financial pressures.
Ford Motor Co. named Tata Motors Ltd. the top bidder for its Jaguar and Land Rover brands Thursday and entered into "focused negotiations at a more detailed level," meaning Tata was named preferred bidder for the storied British automakers.
Frank P. Louchheim: “Handled creatively, getting fired allows an executive to actually experience a sense of relief that he never wanted the job he has lost.”
Bed Bath & Beyond Inc.reported its fiscal third-quarter profit slipped 3% and warned its full-year profit will fall short of Wall Street's targets. Shares fell more than 7% in late trades. Bed Bath & Beyond pegged earnings for the year ending March 1 between $2.08 and $2.11 a share. Analysts polled by Thomson Financial are targeting $2.20 a share.
Landmark Communications, a privately held company held by the Batten family, is putting its Weather Channel property up for sale, and the winning bidder could end up spending more than $5 billion, according to a report in The New York Times on Thursday.
State Street Corp.said it's taking a fourth-quarter charge of $279 million, or 71 cents a share, to establish a reserve to address legal exposure and other costs associated with the under-performance of certain active fixed-income strategies managed by State Street Global Advisors, its investment arm.
Harrah's Entertainment Inc. extended Chairman, President and Chief Executive Gary Loveman's contract Thursday and said the executive is likely to stay in those roles after its $17.1 billion buyout is complete. Harrah's, which is being taken private by affiliates of Texas Pacific Group and Apollo Management LP, said the acquisition is expected to close early this year.
Federal Reserve policy makers agreed at last month's meeting that they might need to cut interest rates again as turmoil in the credit and housing markets began to crimp consumer spending. Some Fed members even saw the risk of a vicious cycle pulling down both financial markets and the economy, and possibly requiring "substantial further easing of policy," according to minutes of the Federal Open Market Committee's Dec. 11 meeting.
Greg Ip: "U.S. house prices "likely would have to fall considerably" to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly. The study tracks rents and home prices back to 1960.
Beijing says it is plowing $34 billion into building up for the Olympics -- five times what Sydney spent for the 2000 games.
Brett Steenbarger: "This past week, we've seen 10-year Treasury yields fall over 7% and the S&P 500 Index (SPY) drop by nearly 3%. With fears of recession, traders and investors appear to be seeking the safe haven of Treasuries. I went back to 2002 (N = 1488 trading days) and found 51 occasions in which ten-year yields dropped more than 5% in a week during a stock market decline. Interestingly, the following week, the S&P 500 Index averaged a whopping gain of 1.73% (40 up, 11 down)--much stronger than the average five-day gain of .05% (766 up, 671 down) for the remainder of the sample. It appears that the flight to quality may also represent panic selling, something we see more at a short-term market bottom than a top."
A new report by the Organization of Petroleum Exporting Countries (OPEC) indicates the group will be more hard pressed than previously thought to meet the world's surging oil needs and could fail to supply its share of global oil markets by 2037. The report in the December issue of the OPEC Review, published by the organization's Vienna-based Secretariat, also says Kuwait is likely to be an extremely inconsistent and unstable supplier and questions Saudi Arabia's assertion it is capable of meeting world oil demand for the next 50 years.
Two-year Treasury notes rose, with the yield spread against 10-year securities at the widest since January 2005, as traders added to bets the Federal Reserve will cut interest rates to stave off recession.
Companies in the U.S. private sector added 40,000 jobs in December, according to the ADP employment report released Thursday. The report comes a day before the Labor Department reports on nonfarm payroll growth for December. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 65,000, close to the 58,000 now expected. Services industries added 71,000 jobs in December, while goods-producing industries cut 31,000 jobs, including 16,000 in manufacturing.
Homa Bahrami: “Job security is gone. The driving force of a career must come from the individual.”
Big corporations took a breather from cutting jobs in December, with announced layoff plans falling 39% to 44,416, the lowest level of the year, according to the monthly tally from outplacement firm Challenger Gray & Christmas released Thursday. For all of 2007, announced layoffs fell 8.5% to 768,264, the lowest since the recession year of 2001. The financial sector was battered in 2007, with 153,105 announced cuts, more than three times the previous year's total. Automakers eliminated 78,880 jobs in 2007, about half the 158,766 jobs cut in 2006. In December, the retail sector cut the most jobs (7,961), followed by automotive, pharmaceutical and financial.
Seasonally adjusted initial jobless claims fell 21,000 to 336,000 in the week ended Dec. 29, the government reported Thursday. The four-week moving average for initial jobless claims fell 750 to 343,750, according to the Labor Department. The prior week's initial jobless claims level was revised to 357,000 from an earlier estimate of 349,000. Continuing jobless claims gained 46,000, reaching 2.76 million for the week ended Dec. 22 - the highest level since Oct. 22, 2005. The four-week moving average for continuing jobless claims rose 42,000 to 2.69 million - the highest since Nov. 19, 2005. A Labor Department spokesman said states with large increases in claims cited short-term layoffs.
For fiscal 2008, Monsanto projected earnings of $2.50 to $2.60 a share, excluding the impact of former unit Solutia Inc.'s emergence from bankruptcy. Monsanto said it could post a gain of 22 cents to 24 cents a share in the second quarter for the settlement of its claim, in which Monsanto will receive a 17% stake in the reorganized Solutia. The St. Louis genetically modified seed and chemical company expects the fiscal second and third quarters to be the primary drivers for the company's fiscal 2008 earnings.
CVS Caremark narrows 2007 EPS forecast upward to $1.91-$1.92
ConocoPhillips' debt balance is expected to be approximately $21.7 billion at the end of the fourth quarter. The company anticipates fourth-quarter repurchases under the share repurchase program to be approximately $2.5 billion, for a total of approximately $7 billion for the year.
Higher oil prices pushed the value of factory orders up by 1.5% in November, the biggest increase in four months, the Commerce Department reported Thursday. Orders for durable goods were weaker than reported a week ago, falling 0.1% instead rising 0.1% gain as initially reported. Orders for nondurable goods surged 3% on higher oil prices. Excluding the 15.9% rise in petroleum orders, new orders fell 0.2%. Factory shipments rose 1.5%, also the biggest gain since July.
German unemployment fell to a six-year low last month, more than double the fall economists had predicted, underlying the strength of Europe's largest economy ahead of what could be a challenging year. In its monthly report, published yesterday, the Federal Labour Agency said seasonally-adjusted unemployment had dropped by 78,000 to 3.4m, almost twice the average monthly fall in the past year. Altogether, more than half-a-million people came off jobless benefits in the past year.
According to Bloomberg, the risk of companies defaulting rose to the highest in a month on concern the U.S. economy is heading toward recession, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index climbed 2.25 basis points to 83.25 today, according to Deutsche Bank AG. Credit-default swap indexes in Europe and Asia also reached the highest since the start of December. Investors are speculating the worst U.S. housing slump in 27 years is spreading to the wider economy after the Institute of Supply Management reported the biggest fall in manufacturing in five years yesterday.
A total of 179 North American companies have a high risk of default or may need to change details of their debt agreements, Moody's Investors Service said.
India's tourism minister said Thursday that the dollar will no longer be accepted at the Taj Mahal and other national tourist sites.
Crude inventories fell by 700,000 barrels to 297.7 million barrels in the week ending Dec. 28, the American Petroleum Institute reported on Thursday, according to Moody's Economy.com. Distillate stocks rose by 4.7 million barrels to 133.7 million barrels in the same period, while gasoline stocks gained by 6.9 million barrels to 212.9 million barrels, the API said. Also on Thursday, U.S. Energy Information Administration reported crude supplies fell by 4 million barrels to 289.6 million barrels in the latest week. Crude-oil futures broke over $100 a barrel level on Thursday after a government report showed U.S. crude inventories dropped more than expected.
Drugstores reported unusually weak December sales on Thursday, weighed down by a slow flu season, lower-priced generic drugs and sluggish sales of seasonal items.
Since August, asset-backed paper has fallen by $421 billion, or 35%. Total commercial paper rose by $13.2 billion, or 0.7%, last week, as financial paper fell $3.4 billion and non-financial paper dropped $9.6 billion.
“Obviously, the recession risk is rising sharply,” said David Wyss, chief economist at Standard & Poors. “We're getting to near even odds for recession in the first half of the year.”
Gold for February delivery rose $9.10 to end at $869.10 an ounce on the New York Mercantile Exchange, a 28-year high. Crude for February delivery closed down 44 cents, or 0.4%, at $99.18 a barrel on the New York Mercantile Exchange.
Ford Motor Co. reported U.S. December sales fell 9% to 212,094 vehicles from a year ago, with the Lincoln and Land Rover models posting the biggest percentage declines. Ford said 2007 U.S. sales dropped 12% to 2.57 million, with its namesake Ford and Jaguar models posting the biggest declines. In a press release, Ford said it expects the economic environment to "remain challenging" in 2008.
Sales of GM cars and light trucks fell 4.4% to 319,837 in December.
U.S. personal bankruptcy filings jumped 40 percent in 2007 due to rising mortgage payments, job losses and other financial pressures.
Ford Motor Co. named Tata Motors Ltd. the top bidder for its Jaguar and Land Rover brands Thursday and entered into "focused negotiations at a more detailed level," meaning Tata was named preferred bidder for the storied British automakers.
Frank P. Louchheim: “Handled creatively, getting fired allows an executive to actually experience a sense of relief that he never wanted the job he has lost.”
Bed Bath & Beyond Inc.reported its fiscal third-quarter profit slipped 3% and warned its full-year profit will fall short of Wall Street's targets. Shares fell more than 7% in late trades. Bed Bath & Beyond pegged earnings for the year ending March 1 between $2.08 and $2.11 a share. Analysts polled by Thomson Financial are targeting $2.20 a share.
Wednesday, January 02, 2008
Cash As A Performer
1/3/08 Cash As A Perfomer
Most Californians believe the state is in a poor economic condition that will continue through 2008, according to a recent poll. Fifty-two percent said California was in bad economic times, and 20 percent said it was in good economic times. When asked about the next 12 months, 70 percent said they expected the state's economy to worsen or stay the same. The last time a majority of Californians thought the state was in good economic condition was 2001, when 69 percent of the respondents said the state was in good economic times. In the most recent poll, 49 percent of the respondents said they expected no change in their personal situations during the new year. Among those foreseeing a change, more than twice as many expect to be worse off financially. The survey was conducted by The Field Poll, which spoke to 649 registered California voters between December 10 and December 17. The survey's margin of error is +/- 4 percent.
Centro Properties Group, the Australian owner of 700 U.S. shopping malls, put itself up for sale before a Feb. 15 deadline to refinance A$3.9 billion ($3.4 billion) of debt.
A federal judge in California ruled on Monday that wireless chip maker Qualcomm Inc must immediately stop selling third-generation, or 3G, WCDMA cellular chips that infringe on the Broadcom Corp patents. U.S. District Judge James Selna ruled, however, that Qualcomm can keep selling some chips whose designs infringe three patents held by rival Broadcom through January 2009.
Bloomberg writes that GM (GM) and Ford (F) December sales probably dropped ending the slowest year for US car sales since 1998.
Gold futures for February delivery rose $11.60, or 1.4 percent, to $849.60 an ounce at 9:01 a.m. on the Comex division of the New York Mercantile Exchange. The metal earlier reached $852.30, the highest for a most-active contract since Jan. 21, 1980, the day futures reached a record $873. Silver for March delivery gained 17.5 cents, or 1.2 percent, to $15.095 an ounce. The metal rose 15 percent last year.
Crude-oil futures rose as high as $98.29 a barrel, and in Wednesday morning trade rose $2.02 to $98 a barrel, a day before the release of weekly inventory data. More violence in oil-producing Nigeria also contributed to the gains in crude.
Citigroup Inc. may have to reduce the value of holdings by $12 billion in the fourth quarter because of financial-market swings, according to Sanford C. Bernstein & Co. analysts.
Nouriel Roubini: "In 2007 cash (in the form of holdings of short-term Treasuries or money market funds) outperformed the stock market in the US. The year ended with a bearish note as all major indices down on Monday. The broad index of the US stock market, the S&P500, ended the year up a mediocre 3.5%: that is less than the inflation rate for the year (that was above 4%) and that is less than holding a money market fund or a basket of short-term US Treasuries.
Natural gas producer Chesapeake Energy Corp. said Wednesday it sold a non-operating stake in certain producing assets in Kentucky and West Virginia to UBS AG and Deutsche Bank's DB Energy Trading LLC unit for $1.1 billion.
China Petrochemical Corp. will attempt to become a global energy competitor through more acquisitions foreign oil and gas assets, China's No. 2 oil producer, also known as Sinopec, said Wednesday.
Acacia entered a license agreement with Sprint Nextel.
Cameron International Corp.received a $190 million contract to provide subsea equipment and services to the Venezuelan national oil company Petroleos De Venezuela S.A.
Chain-store sales for the week ended Dec. 29 rose 2.3% from the year-ago period, according to a survey released Wednesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales fell 0.2%. "Gift cards once again made up a significant portion of holiday gift expenditures this year and that will propel sales into January," ICSC Chief Economist Michael Niemira said. ICSC forecasts retailers' sales in November and December combined to rise by 2.5% or lower.
National City Mortgage to cut staffing by 900 more positions in mortgage unit. National City cuts quarterly dividend 49% to 21 cents/share.
The Institute of Supply Management said the U.S. factory sector contracted in December. The ISM index fell to 47.7% from 50.8% in November. Seven of 18 industries were expanding in December. The new-orders index fell to 45.7% from 52.6%, and the production index fell to 47.3% from 51.9%. One less widely followed indicator is the ISM Commodities Survey which is released within each month's ISM report. The indicator has generally had a pretty good record at anticipating moves in the CPI. This month's commodity survey showed that 15 commodities were up in price for the month, which is the highest monthly reading since May 2006 and the third straight monthly gain.
The dollar index, which measures the greenback against a basket of six major currencies and finished 2007 trade with a loss of about 9%, was down sharply at 75.96.
Under a new Texas state law that replaces the franchise tax with a margin tax, businesses will pay based on gross revenues. The number of companies paying taxes will rise to 900,000 in May 2008 from 700,000 in 2007. The amount of state business taxes paid is expected to more than double to $11.9 billion during the next two years versus $5.7 billion for the last two-year period under the outgoing franchise tax, according to the Texas Comptroller's Office. And a business could have to pay a margin tax even if it loses money, according to federal tax calculations.
More than nine million individuals in Britain are now believed to be struggling to pay credit card bills and mortgages, with the average owed by problem debtors hitting £30,000. Grant Thornton predicts the total number of personal insolvencies will jump to at least 120,000 this year, almost triple the equivalent figure in 2004, when just under 47,000 people went bankrupt.
Overnight lows in Chicago on Jan. 2 may be 7 degrees Fahrenheit (-14 degrees Celsius), or about 10 degrees lower than typical, AccuWeather.com said in an outlook. Temperatures in New York may be 1 degree lower than seasonal at 26 degrees, the State College, Pennsylvania-based forecaster said. Heating demand on Jan. 2 in the U.S. Midwest, the country's largest home-heating market, may be as much as 23 percent higher than average, forecaster David Salmon of Belton, Missouri-based Weather Derivatives Inc. said in a Dec. 28 note. Demand may also be boosted as businesses and offices reopen after shutting down for New Year's Day.
In mid-morning on Wednesday, natural gas had risen 22 cents to $7.70; however, in New York it jumped $1.56 to $9.14.
Crude-oil futures hit the $100 a barrel mark Wednesday and rallied $3.64, or 3.8%, to close at $99.62 a barrel on the New York Mercantile Exchange, and natural gas closed up 36 cents at $7.85 while in NY it closed at $9.14. Heating oil closed up 9.10 at 274.10. Gold closed up $22 an ounce at $860 and silver rose 37 cents to end at $15.29.
President George W. Bush does not plan to release oil from the Strategic Petroleum Reserve to counter crude oil prices that hit $100 a barrel today, his spokeswoman said.
The first day of trading clearly was a day for commodities.
Byron Wien, the strategist whose New Year's predictions have influenced investors for a quarter century, said the U.S. economy will fall into a recession in 2008 and stocks will tumble before rallying in the second half. The Standard & Poor's 500 Index will post a 10 percent drop during the year, meeting the common definition of a market ``correction,'' Wien, chief investment strategist of Westport, Connecticut-based hedge fund Pequot Capital Management Inc., wrote in his 23rd annual list of 10 ``surprises.'' Democrat Barack Obama will beat Republican Mitt Romney in a ``landslide'' to win the U.S. presidency, he added.
The first trading day of 2008 was the worst for equities since the first trading day in 1932.
Robert Prechter Jr. : “There's nothing wrong with cash. It gives you time to think.”
Most Californians believe the state is in a poor economic condition that will continue through 2008, according to a recent poll. Fifty-two percent said California was in bad economic times, and 20 percent said it was in good economic times. When asked about the next 12 months, 70 percent said they expected the state's economy to worsen or stay the same. The last time a majority of Californians thought the state was in good economic condition was 2001, when 69 percent of the respondents said the state was in good economic times. In the most recent poll, 49 percent of the respondents said they expected no change in their personal situations during the new year. Among those foreseeing a change, more than twice as many expect to be worse off financially. The survey was conducted by The Field Poll, which spoke to 649 registered California voters between December 10 and December 17. The survey's margin of error is +/- 4 percent.
Centro Properties Group, the Australian owner of 700 U.S. shopping malls, put itself up for sale before a Feb. 15 deadline to refinance A$3.9 billion ($3.4 billion) of debt.
A federal judge in California ruled on Monday that wireless chip maker Qualcomm Inc must immediately stop selling third-generation, or 3G, WCDMA cellular chips that infringe on the Broadcom Corp patents. U.S. District Judge James Selna ruled, however, that Qualcomm can keep selling some chips whose designs infringe three patents held by rival Broadcom through January 2009.
Bloomberg writes that GM (GM) and Ford (F) December sales probably dropped ending the slowest year for US car sales since 1998.
Gold futures for February delivery rose $11.60, or 1.4 percent, to $849.60 an ounce at 9:01 a.m. on the Comex division of the New York Mercantile Exchange. The metal earlier reached $852.30, the highest for a most-active contract since Jan. 21, 1980, the day futures reached a record $873. Silver for March delivery gained 17.5 cents, or 1.2 percent, to $15.095 an ounce. The metal rose 15 percent last year.
Crude-oil futures rose as high as $98.29 a barrel, and in Wednesday morning trade rose $2.02 to $98 a barrel, a day before the release of weekly inventory data. More violence in oil-producing Nigeria also contributed to the gains in crude.
Citigroup Inc. may have to reduce the value of holdings by $12 billion in the fourth quarter because of financial-market swings, according to Sanford C. Bernstein & Co. analysts.
Nouriel Roubini: "In 2007 cash (in the form of holdings of short-term Treasuries or money market funds) outperformed the stock market in the US. The year ended with a bearish note as all major indices down on Monday. The broad index of the US stock market, the S&P500, ended the year up a mediocre 3.5%: that is less than the inflation rate for the year (that was above 4%) and that is less than holding a money market fund or a basket of short-term US Treasuries.
Natural gas producer Chesapeake Energy Corp. said Wednesday it sold a non-operating stake in certain producing assets in Kentucky and West Virginia to UBS AG and Deutsche Bank's DB Energy Trading LLC unit for $1.1 billion.
China Petrochemical Corp. will attempt to become a global energy competitor through more acquisitions foreign oil and gas assets, China's No. 2 oil producer, also known as Sinopec, said Wednesday.
Acacia entered a license agreement with Sprint Nextel.
Cameron International Corp.received a $190 million contract to provide subsea equipment and services to the Venezuelan national oil company Petroleos De Venezuela S.A.
Chain-store sales for the week ended Dec. 29 rose 2.3% from the year-ago period, according to a survey released Wednesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales fell 0.2%. "Gift cards once again made up a significant portion of holiday gift expenditures this year and that will propel sales into January," ICSC Chief Economist Michael Niemira said. ICSC forecasts retailers' sales in November and December combined to rise by 2.5% or lower.
National City Mortgage to cut staffing by 900 more positions in mortgage unit. National City cuts quarterly dividend 49% to 21 cents/share.
The Institute of Supply Management said the U.S. factory sector contracted in December. The ISM index fell to 47.7% from 50.8% in November. Seven of 18 industries were expanding in December. The new-orders index fell to 45.7% from 52.6%, and the production index fell to 47.3% from 51.9%. One less widely followed indicator is the ISM Commodities Survey which is released within each month's ISM report. The indicator has generally had a pretty good record at anticipating moves in the CPI. This month's commodity survey showed that 15 commodities were up in price for the month, which is the highest monthly reading since May 2006 and the third straight monthly gain.
The dollar index, which measures the greenback against a basket of six major currencies and finished 2007 trade with a loss of about 9%, was down sharply at 75.96.
Under a new Texas state law that replaces the franchise tax with a margin tax, businesses will pay based on gross revenues. The number of companies paying taxes will rise to 900,000 in May 2008 from 700,000 in 2007. The amount of state business taxes paid is expected to more than double to $11.9 billion during the next two years versus $5.7 billion for the last two-year period under the outgoing franchise tax, according to the Texas Comptroller's Office. And a business could have to pay a margin tax even if it loses money, according to federal tax calculations.
More than nine million individuals in Britain are now believed to be struggling to pay credit card bills and mortgages, with the average owed by problem debtors hitting £30,000. Grant Thornton predicts the total number of personal insolvencies will jump to at least 120,000 this year, almost triple the equivalent figure in 2004, when just under 47,000 people went bankrupt.
Overnight lows in Chicago on Jan. 2 may be 7 degrees Fahrenheit (-14 degrees Celsius), or about 10 degrees lower than typical, AccuWeather.com said in an outlook. Temperatures in New York may be 1 degree lower than seasonal at 26 degrees, the State College, Pennsylvania-based forecaster said. Heating demand on Jan. 2 in the U.S. Midwest, the country's largest home-heating market, may be as much as 23 percent higher than average, forecaster David Salmon of Belton, Missouri-based Weather Derivatives Inc. said in a Dec. 28 note. Demand may also be boosted as businesses and offices reopen after shutting down for New Year's Day.
In mid-morning on Wednesday, natural gas had risen 22 cents to $7.70; however, in New York it jumped $1.56 to $9.14.
Crude-oil futures hit the $100 a barrel mark Wednesday and rallied $3.64, or 3.8%, to close at $99.62 a barrel on the New York Mercantile Exchange, and natural gas closed up 36 cents at $7.85 while in NY it closed at $9.14. Heating oil closed up 9.10 at 274.10. Gold closed up $22 an ounce at $860 and silver rose 37 cents to end at $15.29.
President George W. Bush does not plan to release oil from the Strategic Petroleum Reserve to counter crude oil prices that hit $100 a barrel today, his spokeswoman said.
The first day of trading clearly was a day for commodities.
Byron Wien, the strategist whose New Year's predictions have influenced investors for a quarter century, said the U.S. economy will fall into a recession in 2008 and stocks will tumble before rallying in the second half. The Standard & Poor's 500 Index will post a 10 percent drop during the year, meeting the common definition of a market ``correction,'' Wien, chief investment strategist of Westport, Connecticut-based hedge fund Pequot Capital Management Inc., wrote in his 23rd annual list of 10 ``surprises.'' Democrat Barack Obama will beat Republican Mitt Romney in a ``landslide'' to win the U.S. presidency, he added.
The first trading day of 2008 was the worst for equities since the first trading day in 1932.
Robert Prechter Jr. : “There's nothing wrong with cash. It gives you time to think.”
New Trading Year
1/2/08 New Trading Year
PHH Corp., the Mount Laurel, N.J., provider of residential-mortgage and vehicle-fleet-management services, said it ended its plan to be acquired by General Electric Co.'s GE Capital financing unit. The deal, reached in mid-March, had been valued at $31.50 a share, or $1.69 billion. As a condition of the deal, an affiliate of the New York investment firm Blackstone Group was to acquire PHH's mortgage business from GE Capital. PHH said it had been notified that the Blackstone entity was unable to secure financing for this part of the deal. Thus, PHH said it is seeking a $50 million merger-termination fee from the Blackstone unit.
Projections for S&P 500 companies' fourth-quarter earnings swung to a 6.1 percent drop on Monday from an 11.5 percent rise on October 1, in the biggest quarterly move since Reuters Estimates started compiling analysts' forecasts in 1999.
Martin Hutchinson writes of "The Decade of Deception." It is well worth reading.
http://prudentbear.com/index.php/BearsLairHome
Brett Steenbarger: "Interestingly, simply buying stocks at the close on Tuesday and selling at the close on Wednesday accounted for all of the market's gains for 2007--and then some. My look at the data suggests that this is not because returns were more volatile on Wednesdays. Rather, more of the big point days were winners on Wednesday than on other days."
The Oil Drum: "The energy crisis has started and the world is about to go through a profound and wrenching change. We face an energy crisis never before confronted in human history. Energy for transportation, manufacturing and everyday living will have to come from other sources than the one we use now, most likely less efficient sources. That beautiful black liquid with the fantastic power / mass ratio that was the base building block of our civilization is going to hit its mid point, global peak oil, and then slid into permanent decline and we will be forced to make major changes in our way of living. Population goes up, the oil supply goes down. Year after year, decade after decade, demand and population increase, supplies of oil decrease. Until all the oil is gone."
China today introduces a new labor law that enhances rights for the nation's workers, including open- ended work contracts and severance pay.``The government that is making the most concerted effort to protect workers rights is China,'' said Auret van Heerden, Geneva-based head of Fair Labor Association, which monitors work conditions in 60 countries. That ``goes against the conventional wisdom that China is leading the race to the bottom.''
Nokia Siemens Networks will buy Apertio, a provider of mobile subscriber data platforms and applications, for around 140 million euros ($206 million).
The U.K. CIPS manufacturing purchasing managers index dropped to 52.9 in December from 54.3 in November.
In early Wednesday trading gold futures rose $9.30 to $847.30 an ounce.
Recruitment company Hudson Highland Group Inc. said Wednesday that its Hudson Employment Index fell 4.6 points in December to 87.3 as worker confidence in the U.S. labor market continued to decline. The reading was more than 15 points below the 102.7 level recorded a year ago.
South Korea recorded its first trade deficit in nearly five years last month, as crude-oil prices in the mid-$90-per-barrel-level pushed up import costs while prices for memory chips continued to weaken. Preliminary data showed a trade deficit of $865 million in December, down from a $2.13 billion surplus in November, according to reports which cited data from the Ministry of Commerce, Industry and Energy said Wednesday.
China's tax 2007 revenue climbed to 4.94 trillion yuan ($677.1 billion), up 31.4% from the preceding year, according to media reports which cited a statement by the State Administration of Taxation Tuesday. The tax figure did not include revenue from customs levies, land taxes and contract taxes.
Singapore's economy contracted 3.2% in the fourth quarter on an inflation-adjusted basis, marking the first time the economy has shrunk in 15 quarters, as slumping factory output weighed on growth, the government said in advanced estimates released Wednesday. The contraction follows a 4.4% expansion in the third quarter, Singapore's Ministry of Trade and Industry said.
PHH Corp., the Mount Laurel, N.J., provider of residential-mortgage and vehicle-fleet-management services, said it ended its plan to be acquired by General Electric Co.'s GE Capital financing unit. The deal, reached in mid-March, had been valued at $31.50 a share, or $1.69 billion. As a condition of the deal, an affiliate of the New York investment firm Blackstone Group was to acquire PHH's mortgage business from GE Capital. PHH said it had been notified that the Blackstone entity was unable to secure financing for this part of the deal. Thus, PHH said it is seeking a $50 million merger-termination fee from the Blackstone unit.
Projections for S&P 500 companies' fourth-quarter earnings swung to a 6.1 percent drop on Monday from an 11.5 percent rise on October 1, in the biggest quarterly move since Reuters Estimates started compiling analysts' forecasts in 1999.
Martin Hutchinson writes of "The Decade of Deception." It is well worth reading.
http://prudentbear.com/index.php/BearsLairHome
Brett Steenbarger: "Interestingly, simply buying stocks at the close on Tuesday and selling at the close on Wednesday accounted for all of the market's gains for 2007--and then some. My look at the data suggests that this is not because returns were more volatile on Wednesdays. Rather, more of the big point days were winners on Wednesday than on other days."
The Oil Drum: "The energy crisis has started and the world is about to go through a profound and wrenching change. We face an energy crisis never before confronted in human history. Energy for transportation, manufacturing and everyday living will have to come from other sources than the one we use now, most likely less efficient sources. That beautiful black liquid with the fantastic power / mass ratio that was the base building block of our civilization is going to hit its mid point, global peak oil, and then slid into permanent decline and we will be forced to make major changes in our way of living. Population goes up, the oil supply goes down. Year after year, decade after decade, demand and population increase, supplies of oil decrease. Until all the oil is gone."
China today introduces a new labor law that enhances rights for the nation's workers, including open- ended work contracts and severance pay.``The government that is making the most concerted effort to protect workers rights is China,'' said Auret van Heerden, Geneva-based head of Fair Labor Association, which monitors work conditions in 60 countries. That ``goes against the conventional wisdom that China is leading the race to the bottom.''
Nokia Siemens Networks will buy Apertio, a provider of mobile subscriber data platforms and applications, for around 140 million euros ($206 million).
The U.K. CIPS manufacturing purchasing managers index dropped to 52.9 in December from 54.3 in November.
In early Wednesday trading gold futures rose $9.30 to $847.30 an ounce.
Recruitment company Hudson Highland Group Inc. said Wednesday that its Hudson Employment Index fell 4.6 points in December to 87.3 as worker confidence in the U.S. labor market continued to decline. The reading was more than 15 points below the 102.7 level recorded a year ago.
South Korea recorded its first trade deficit in nearly five years last month, as crude-oil prices in the mid-$90-per-barrel-level pushed up import costs while prices for memory chips continued to weaken. Preliminary data showed a trade deficit of $865 million in December, down from a $2.13 billion surplus in November, according to reports which cited data from the Ministry of Commerce, Industry and Energy said Wednesday.
China's tax 2007 revenue climbed to 4.94 trillion yuan ($677.1 billion), up 31.4% from the preceding year, according to media reports which cited a statement by the State Administration of Taxation Tuesday. The tax figure did not include revenue from customs levies, land taxes and contract taxes.
Singapore's economy contracted 3.2% in the fourth quarter on an inflation-adjusted basis, marking the first time the economy has shrunk in 15 quarters, as slumping factory output weighed on growth, the government said in advanced estimates released Wednesday. The contraction follows a 4.4% expansion in the third quarter, Singapore's Ministry of Trade and Industry said.
Monday, December 31, 2007
Happy New Year
1/1/2008 Happy New Year
Sales of semiconductors rose 0.7% in November compared to October to $22.5 billion, or 2.3% more than last year, the Semiconductor Industry Association said Monday.
Kirk Kerkorian's Tracinda is going to buy 35% of Delta Petroleum for $684 million, or $19 a share, the companies said Monday. The investment is at 23% premium to Friday's close.
New York City Mayor Michael Bloomberg is moving closer to a run for president, as he schedules bipartisan meetings with major U.S. political figures and his aides study how to mount independent campaigns in the 50 states, The New York Times reported.
Republican presidential candidate Ron Paul may lag behind in public-opinion polls. But after raising about $19 million for the final three months of the year, he is now among his party's front-runners in the race for campaign cash.
Online spending from Nov. 1 through Dec. 27 increased 19 percent to almost $28 billion, from $24 billion a year earlier, Reston, Virginia-based ComScore Inc. said.
"The Brazilian economy is probably at its best moment in 25 years," said Paulo Levy, economist at a Rio de Janeiro-based think tank known by its Portuguese initials IPEA, citing four years of good economic growth.
Exports of manufactured goods and services have given Brazil's economy balance and helped foreign reserves climb to $167 billion, double the figure of September 2006. The country has paid down its debt, lowered interest rates and kept a lid on spending. Economic growth will come in at 5.3% this year, lower than the hemisphere's 5.7%, but quite a feat for a country that over the previous 10 years averaged only 2.5% annual expansion.
Count David Seiders, the chief economist of the National Association of Home Builders: "I'm viewing 2008 as another down year," he told reporters in a recent conference call. He sees new-home sales next year slipping even lower than in 2007: His forecast calls for about 741,000, compared to the 1.2 million seen in the glory days of 2005. "One heck of a contraction," he called it.
Brett Steenbarger: "Continued Weakness in Cumulative TICK - My Cumulative TICK line has been showing notable weakness during the recent bounce and the last couple of days of pullback. This leads me to suspect that we're putting in a lower high in ES and could be testing the lows from earlier in the month. My indicators that treat buying and selling interest as separate variables show significantly below average buying interest all four trading days last week. During the last two sessions of the week, selling interest was pretty average relative to the prior 30 trading sessions. In short, buyers have been on strike. Tough to mount a rally when that happens."
China International United Petroleum & Chemical Corp., or Unipec, hired the tanker Hyundai Banner at a rate of 232.5 Worldscale points, according to a report today from Simpson, Spence & Young Ltd. That's 15 percent below a comparable assessment for voyages to Japan, according to data compiled by Bloomberg. Hyundai Banner is fitted with one steel hull. Tankers fitted with double hulls to cut the risk of an oil spill normally cost more to hire. The London-based Baltic Exchange's last assessment was on Dec. 24 and the next will be on Jan. 2.
BHP Billiton is considering submitting an unchanged US$150 billion bid to Rio Tinto's shareholders ahead of the February 6 deadline set by the UK Takeover Panel for BHP to make a formal offer for Rio, the UK's Sunday Times reported at the weekend, without citing sources. This is one of several options being considered by BHP, along with increasing the cash component of any bid, the newspaper said.
John Hussman: "On the subject of employment, it's useful to recall that the non-farm employment figure for November came in at 138,467,000, up by 94,000 (which is very sluggish to begin with), but the figures for the prior two months were simultaneously revised lower by 48,000, so that the net gain over the number reported in October was only 46,000 jobs. The tendency of the jobs numbers to be subject to major revisions introduces noise into their month-to-month interpretation, but figure that the total non-farm employment number reported in November was 138,467,000. If the December figure comes in below about 138,539,000 (a gain of 72,000 jobs, net of any revisions), that would represent year-over-year employment growth of less than 1%, which is about the level where prior recessions have started. Anything less than 138,663,000 (which is nearly certain) would represent 6-month growth less than 0.5%, which is also a slowing that is typically seen as the economy tips into recession. As for the unemployment rate, the start-date of a recession frequently coincides with the point where the rate moves about 0.4% above its 12-month trough. That trough was 4.4% in March, so a move from the current 4.7% to even 4.8% would be consistent with an economy rolling over."
Earthfiles: NASA: “After a 13.6 year absence, Comet 8P/Tuttle is once again traveling through the inner solar system and on January 1 - 2, 2008, it makes its closest approach to Earth at only 24 million miles away. The emerald-colored comet will brighten to a predicted magnitude of 5.8, visible to the unaided eye from dark-sky sites and will be a fine target for backyard telescopes. Look straight up after sunset on January 1, 2008, and north of the big ‘W’ of Cassiopeia to see the emerald green glow of Comet 8P/Tuttle.”
The Pakistani government is likely to delay elections scheduled for next week because of violent unrest in the wake of the assassination of Benazir Bhutto.
Algeria's hydrocarbons' revenues will total $59 billion in 2007, Energy and Mines Minister Chakib Khelil said in a statement. According to Khelil, $2 billion of this year's income was earned from a windfall tax on the profits of foreign energy firms. Under Algerian law, Sonatrach holds at least a 51% share in every oil and gas exploration contract awarded to foreign companies. Windfall taxes range from 5% to 50% on excess profits when Brent crude averages more than $30 per barrel.
It was the year the residential real estate industry slid from sublime to subprime - "and we still haven't hit bottom," said Miami-based real estate analyst Lewis Goodkin of Goodkin Consulting. Never one to pull his punches, Goodkin said the residential industry went from talk to walk. From "build it and they will come" to a fear of how many buyers will walk from their deposits at the closing table.
ConocoPhillips signed a production-sharing contract with Malaysian national oil company Petronas for the exploration and development of natural gas fields offshore Sabah, Malaysia. Petronas will hold a 40% stake under the contract through its unit Petronas Carigali, while Shell and ConocoPhillips will each hold 30%.
M/I Homes Inc. has sold land located primarily in Florida to various buyers for $82 million and that it is exiting the West Palm Beach housing market. The home builder said as a result of the lot sales, it will book pretax land impairment charges of about $80 million in the fourth quarter, and expects to see a $50 million cash tax refund in the second quarter of 2008. M/I Homes said it is "likely" that further impairment charges will be recorded in the fourth quarter. The company said the land sold represented 3,700 lots; at the end of the third quarter, it owned 16,767 lots.
BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. halted more than half of Australia's oil production as the first tropical cyclone of the season struck the northwest coast.
A law taking effect Tuesday makes Missouri just the third state -- behind Minnesota and Hawaii -- to implement a wide-ranging ethanol mandate. Because the corn-based fuel is cheaper than gasoline, most of Missouri's gas stations quietly made the switch months in advance.
Home resales rose to a 5.00 million annual rate, a 0.4% increase from October's revised 4.98 million annual pace, the National Association of Realtors said Monday. October's rate was originally estimated at 4.97 million. The median price of a previously owned home was $210,200 in November, down 3.3% from $217,300 in November 2006. The median price in October this year was $206,900.
United States banks on average borrowed $4.83 billion a day directly from the Federal Reserve in the week ended Dec. 26, up from $4.62 billion a day the previous week, Fed data released Thursday showed.
Chinese iron ore imports in November climbed to 35.5 Mt, the second-highest monthly total, according to preliminary customs data. If confirmed, November imports would be up 5.7 Mt on the previous month, with the year-to-date total of 349.5 Mt running some 17% above last year’s level.
Meanwhile, the preliminary data indicate that soybean imports in November were the highest for 17 months. The YTD total is now 27.9 Mt, up 2 Mt year-on-year.
For the year, the Nasdaq climbed 9.8%, the blue-chip index rose 6.4%, and the broader index gained 3.5%.
The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October.
Beijing said on Monday that a unit of its new $200bn sovereign wealth fund would inject $20bn into China Development Bank in a move intended to smooth the policy lender's transformation into a commercially-oriented institution.
G.K.Chesterton: “The object of a new year is not that we should have a new year. It is that we should have a new soul”
Sales of semiconductors rose 0.7% in November compared to October to $22.5 billion, or 2.3% more than last year, the Semiconductor Industry Association said Monday.
Kirk Kerkorian's Tracinda is going to buy 35% of Delta Petroleum for $684 million, or $19 a share, the companies said Monday. The investment is at 23% premium to Friday's close.
New York City Mayor Michael Bloomberg is moving closer to a run for president, as he schedules bipartisan meetings with major U.S. political figures and his aides study how to mount independent campaigns in the 50 states, The New York Times reported.
Republican presidential candidate Ron Paul may lag behind in public-opinion polls. But after raising about $19 million for the final three months of the year, he is now among his party's front-runners in the race for campaign cash.
Online spending from Nov. 1 through Dec. 27 increased 19 percent to almost $28 billion, from $24 billion a year earlier, Reston, Virginia-based ComScore Inc. said.
"The Brazilian economy is probably at its best moment in 25 years," said Paulo Levy, economist at a Rio de Janeiro-based think tank known by its Portuguese initials IPEA, citing four years of good economic growth.
Exports of manufactured goods and services have given Brazil's economy balance and helped foreign reserves climb to $167 billion, double the figure of September 2006. The country has paid down its debt, lowered interest rates and kept a lid on spending. Economic growth will come in at 5.3% this year, lower than the hemisphere's 5.7%, but quite a feat for a country that over the previous 10 years averaged only 2.5% annual expansion.
Count David Seiders, the chief economist of the National Association of Home Builders: "I'm viewing 2008 as another down year," he told reporters in a recent conference call. He sees new-home sales next year slipping even lower than in 2007: His forecast calls for about 741,000, compared to the 1.2 million seen in the glory days of 2005. "One heck of a contraction," he called it.
Brett Steenbarger: "Continued Weakness in Cumulative TICK - My Cumulative TICK line has been showing notable weakness during the recent bounce and the last couple of days of pullback. This leads me to suspect that we're putting in a lower high in ES and could be testing the lows from earlier in the month. My indicators that treat buying and selling interest as separate variables show significantly below average buying interest all four trading days last week. During the last two sessions of the week, selling interest was pretty average relative to the prior 30 trading sessions. In short, buyers have been on strike. Tough to mount a rally when that happens."
China International United Petroleum & Chemical Corp., or Unipec, hired the tanker Hyundai Banner at a rate of 232.5 Worldscale points, according to a report today from Simpson, Spence & Young Ltd. That's 15 percent below a comparable assessment for voyages to Japan, according to data compiled by Bloomberg. Hyundai Banner is fitted with one steel hull. Tankers fitted with double hulls to cut the risk of an oil spill normally cost more to hire. The London-based Baltic Exchange's last assessment was on Dec. 24 and the next will be on Jan. 2.
BHP Billiton is considering submitting an unchanged US$150 billion bid to Rio Tinto's shareholders ahead of the February 6 deadline set by the UK Takeover Panel for BHP to make a formal offer for Rio, the UK's Sunday Times reported at the weekend, without citing sources. This is one of several options being considered by BHP, along with increasing the cash component of any bid, the newspaper said.
John Hussman: "On the subject of employment, it's useful to recall that the non-farm employment figure for November came in at 138,467,000, up by 94,000 (which is very sluggish to begin with), but the figures for the prior two months were simultaneously revised lower by 48,000, so that the net gain over the number reported in October was only 46,000 jobs. The tendency of the jobs numbers to be subject to major revisions introduces noise into their month-to-month interpretation, but figure that the total non-farm employment number reported in November was 138,467,000. If the December figure comes in below about 138,539,000 (a gain of 72,000 jobs, net of any revisions), that would represent year-over-year employment growth of less than 1%, which is about the level where prior recessions have started. Anything less than 138,663,000 (which is nearly certain) would represent 6-month growth less than 0.5%, which is also a slowing that is typically seen as the economy tips into recession. As for the unemployment rate, the start-date of a recession frequently coincides with the point where the rate moves about 0.4% above its 12-month trough. That trough was 4.4% in March, so a move from the current 4.7% to even 4.8% would be consistent with an economy rolling over."
Earthfiles: NASA: “After a 13.6 year absence, Comet 8P/Tuttle is once again traveling through the inner solar system and on January 1 - 2, 2008, it makes its closest approach to Earth at only 24 million miles away. The emerald-colored comet will brighten to a predicted magnitude of 5.8, visible to the unaided eye from dark-sky sites and will be a fine target for backyard telescopes. Look straight up after sunset on January 1, 2008, and north of the big ‘W’ of Cassiopeia to see the emerald green glow of Comet 8P/Tuttle.”
The Pakistani government is likely to delay elections scheduled for next week because of violent unrest in the wake of the assassination of Benazir Bhutto.
Algeria's hydrocarbons' revenues will total $59 billion in 2007, Energy and Mines Minister Chakib Khelil said in a statement. According to Khelil, $2 billion of this year's income was earned from a windfall tax on the profits of foreign energy firms. Under Algerian law, Sonatrach holds at least a 51% share in every oil and gas exploration contract awarded to foreign companies. Windfall taxes range from 5% to 50% on excess profits when Brent crude averages more than $30 per barrel.
It was the year the residential real estate industry slid from sublime to subprime - "and we still haven't hit bottom," said Miami-based real estate analyst Lewis Goodkin of Goodkin Consulting. Never one to pull his punches, Goodkin said the residential industry went from talk to walk. From "build it and they will come" to a fear of how many buyers will walk from their deposits at the closing table.
ConocoPhillips signed a production-sharing contract with Malaysian national oil company Petronas for the exploration and development of natural gas fields offshore Sabah, Malaysia. Petronas will hold a 40% stake under the contract through its unit Petronas Carigali, while Shell and ConocoPhillips will each hold 30%.
M/I Homes Inc. has sold land located primarily in Florida to various buyers for $82 million and that it is exiting the West Palm Beach housing market. The home builder said as a result of the lot sales, it will book pretax land impairment charges of about $80 million in the fourth quarter, and expects to see a $50 million cash tax refund in the second quarter of 2008. M/I Homes said it is "likely" that further impairment charges will be recorded in the fourth quarter. The company said the land sold represented 3,700 lots; at the end of the third quarter, it owned 16,767 lots.
BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. halted more than half of Australia's oil production as the first tropical cyclone of the season struck the northwest coast.
A law taking effect Tuesday makes Missouri just the third state -- behind Minnesota and Hawaii -- to implement a wide-ranging ethanol mandate. Because the corn-based fuel is cheaper than gasoline, most of Missouri's gas stations quietly made the switch months in advance.
Home resales rose to a 5.00 million annual rate, a 0.4% increase from October's revised 4.98 million annual pace, the National Association of Realtors said Monday. October's rate was originally estimated at 4.97 million. The median price of a previously owned home was $210,200 in November, down 3.3% from $217,300 in November 2006. The median price in October this year was $206,900.
United States banks on average borrowed $4.83 billion a day directly from the Federal Reserve in the week ended Dec. 26, up from $4.62 billion a day the previous week, Fed data released Thursday showed.
Chinese iron ore imports in November climbed to 35.5 Mt, the second-highest monthly total, according to preliminary customs data. If confirmed, November imports would be up 5.7 Mt on the previous month, with the year-to-date total of 349.5 Mt running some 17% above last year’s level.
Meanwhile, the preliminary data indicate that soybean imports in November were the highest for 17 months. The YTD total is now 27.9 Mt, up 2 Mt year-on-year.
For the year, the Nasdaq climbed 9.8%, the blue-chip index rose 6.4%, and the broader index gained 3.5%.
The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October.
Beijing said on Monday that a unit of its new $200bn sovereign wealth fund would inject $20bn into China Development Bank in a move intended to smooth the policy lender's transformation into a commercially-oriented institution.
G.K.Chesterton: “The object of a new year is not that we should have a new year. It is that we should have a new soul”
Sunday, December 30, 2007
2007 Comes To A Close
12/31/07 2007 Comes To A Close
According to Bloomberg, the dollar's share of global foreign-exchange reserves fell to a record low in the third quarter as demand for U.S. assets waned after the subprime- mortgage market collapsed. The dollar accounted for 63.8 percent of reserves at the end of September, down from 65 percent three months earlier, the International Monetary Fund said.
LawyerUCLA.com currently serves as a directory for over 6,000 lawyers across the United States. And when it comes to the 2008 presidential election, the website has decided not to keep quiet -- making a firm case for Ron Paul. Ron Paul, self proclaimed champion of the Constitution, is a 10-term congressman from Texas. According to the statistics provided on their website, 61 percent of the mentions of the Constitution at the 2008 presidential debates were made by Ron Paul himself, despite being a candidate that has not been given a fair amount of time to speak.
Saxo Bank, the Danish online investment bank, issues a cautionary 2008 outlook - warning investors of the end of cheap money, tighter lending conditions, rising inflation and a UK recession ushering in a new mood of "forced savings" for Western consumers.
President Bush on Saturday signed into law legislation that extends a U.S. children's health insurance program after twice vetoing bills to increase funding. The State Children's Health Insurance Program, which covers about 6.6 million children whose families who earn too much to qualify for Medicaid, will maintain coverage at its current funding level through March 31, 2009. The measure, titled the Medicare, Medicaid and SCHIP Extension Act of 2007, also increases Medicare payments to doctors.
Mike Burk: "Historically the 3rd year of the Presidential cycle is the strongest. By the averages 2007 was sub standard...Historically next week has been one of the most volatile. The indices have been up about 2/3 of the time and the average returns are all positive, but the drawdowns have been huge. The largest, 10.4% recorded by the OTC on 1/2/2001...The OTC has been up 68% of the time in January with an average gain of 3.4% making it the strongest month of the year for that index. During the 4th year of the Presidential Cycle it has been up 73% of the time with an average return of 2.5%...Since 1928 SPX has been up 64% of the time in January (second to December at 74%) with an average return of 1.4%, the best of any month. During the 4th year of the Presidential Cycle the SPX has been up 60% of the time with an average gain of 0.5% making it an average month...The secondaries have been underperforming and the breadth indicators have been weak. Seasonally next week has been one of extremes. I expect the major indices to be lower on Friday January 4 than they were on Friday December 28."
"Whether you're shopping for a mortgage or for a home, there probably has not been as challenged a year as this one in years," says Keith Gumbinger, vice president of HSH, a mortgage-information provider. "This year, home is where the anxiety is."
According to Bloomberg, China, the world's biggest grain producer, will tax exports of wheat, corn and rice to increase domestic supply and control rising food prices. Exporters of wheat will start paying a 20 percent tax on Jan. 1, while the tax for corn and rice was set at 5 percent, the Finance Ministry said in a statement on its web site today. The government, concerned that inflation may disrupt social stability, has sought to curb price increases by selling grain from stockpiles and by canceling export tax rebates. Food prices in the world's fastest-growing major economy rose 18.2 percent in November, spurring a jump to an 11-year high of 6.9 percent in the consumer price index.
According to an article in the FT, Qwest Communications in Colorado would like to purchase Sprint’s long distance operations, the only long distance business of scale left in the US. In addition, several weeks ago at a conference, Sprint’s interim CEO Paul Saleh expressed a willingness to spin off or sell spectrum in the 2.3 to 2.5-megahertz range. The first banker said the upcoming government-sponsored 700MHz might erode the spectrum’s value because some consider 700MHZ superior, but the spectrum is the largest of its kind. Tim Horan, analyst at CIBC, noted that Clearwire, with whom Sprint could merge its WiMAX spectrum, is worth USD 2.6bn depsite losses and an annual revenue run-rate of under USD 200m. Horan estimated Sprint has 50% more spectrum than Clearwire.
According to Bloomberg, payrolls rose by 70,000 after increasing 94,000 in November, according to the median forecast in a Bloomberg survey of economists before a Jan. 4 government report. The jobless rate probably rose to 4.8 percent, the highest level in more than a year. The figures may raise concern that wage gains, which have kept American consumers afloat, will weaken in coming months.
Brazil's real advanced the most among major currencies versus the dollar this year.
The Chinese government has said it will allow direct election of Hong Kong's governmental leader, called the chief executive, by 2017, according to a media report.
Iran's first atomic power plant will start operating in mid-2008, Foreign Minister Manouchehr Mottaki said on Sunday, two days after the country received a second delivery of nuclear fuel from Russia.
Oil rose above $96 a barrel on Monday, lifted by mounting political instability in Pakistan and growing tensions between Iran and the United States over Tehran's nuclear ambitions.
According to Bloomberg, the dollar's share of global foreign-exchange reserves fell to a record low in the third quarter as demand for U.S. assets waned after the subprime- mortgage market collapsed. The dollar accounted for 63.8 percent of reserves at the end of September, down from 65 percent three months earlier, the International Monetary Fund said.
LawyerUCLA.com currently serves as a directory for over 6,000 lawyers across the United States. And when it comes to the 2008 presidential election, the website has decided not to keep quiet -- making a firm case for Ron Paul. Ron Paul, self proclaimed champion of the Constitution, is a 10-term congressman from Texas. According to the statistics provided on their website, 61 percent of the mentions of the Constitution at the 2008 presidential debates were made by Ron Paul himself, despite being a candidate that has not been given a fair amount of time to speak.
Saxo Bank, the Danish online investment bank, issues a cautionary 2008 outlook - warning investors of the end of cheap money, tighter lending conditions, rising inflation and a UK recession ushering in a new mood of "forced savings" for Western consumers.
President Bush on Saturday signed into law legislation that extends a U.S. children's health insurance program after twice vetoing bills to increase funding. The State Children's Health Insurance Program, which covers about 6.6 million children whose families who earn too much to qualify for Medicaid, will maintain coverage at its current funding level through March 31, 2009. The measure, titled the Medicare, Medicaid and SCHIP Extension Act of 2007, also increases Medicare payments to doctors.
Mike Burk: "Historically the 3rd year of the Presidential cycle is the strongest. By the averages 2007 was sub standard...Historically next week has been one of the most volatile. The indices have been up about 2/3 of the time and the average returns are all positive, but the drawdowns have been huge. The largest, 10.4% recorded by the OTC on 1/2/2001...The OTC has been up 68% of the time in January with an average gain of 3.4% making it the strongest month of the year for that index. During the 4th year of the Presidential Cycle it has been up 73% of the time with an average return of 2.5%...Since 1928 SPX has been up 64% of the time in January (second to December at 74%) with an average return of 1.4%, the best of any month. During the 4th year of the Presidential Cycle the SPX has been up 60% of the time with an average gain of 0.5% making it an average month...The secondaries have been underperforming and the breadth indicators have been weak. Seasonally next week has been one of extremes. I expect the major indices to be lower on Friday January 4 than they were on Friday December 28."
"Whether you're shopping for a mortgage or for a home, there probably has not been as challenged a year as this one in years," says Keith Gumbinger, vice president of HSH, a mortgage-information provider. "This year, home is where the anxiety is."
According to Bloomberg, China, the world's biggest grain producer, will tax exports of wheat, corn and rice to increase domestic supply and control rising food prices. Exporters of wheat will start paying a 20 percent tax on Jan. 1, while the tax for corn and rice was set at 5 percent, the Finance Ministry said in a statement on its web site today. The government, concerned that inflation may disrupt social stability, has sought to curb price increases by selling grain from stockpiles and by canceling export tax rebates. Food prices in the world's fastest-growing major economy rose 18.2 percent in November, spurring a jump to an 11-year high of 6.9 percent in the consumer price index.
According to an article in the FT, Qwest Communications in Colorado would like to purchase Sprint’s long distance operations, the only long distance business of scale left in the US. In addition, several weeks ago at a conference, Sprint’s interim CEO Paul Saleh expressed a willingness to spin off or sell spectrum in the 2.3 to 2.5-megahertz range. The first banker said the upcoming government-sponsored 700MHz might erode the spectrum’s value because some consider 700MHZ superior, but the spectrum is the largest of its kind. Tim Horan, analyst at CIBC, noted that Clearwire, with whom Sprint could merge its WiMAX spectrum, is worth USD 2.6bn depsite losses and an annual revenue run-rate of under USD 200m. Horan estimated Sprint has 50% more spectrum than Clearwire.
According to Bloomberg, payrolls rose by 70,000 after increasing 94,000 in November, according to the median forecast in a Bloomberg survey of economists before a Jan. 4 government report. The jobless rate probably rose to 4.8 percent, the highest level in more than a year. The figures may raise concern that wage gains, which have kept American consumers afloat, will weaken in coming months.
Brazil's real advanced the most among major currencies versus the dollar this year.
The Chinese government has said it will allow direct election of Hong Kong's governmental leader, called the chief executive, by 2017, according to a media report.
Iran's first atomic power plant will start operating in mid-2008, Foreign Minister Manouchehr Mottaki said on Sunday, two days after the country received a second delivery of nuclear fuel from Russia.
Oil rose above $96 a barrel on Monday, lifted by mounting political instability in Pakistan and growing tensions between Iran and the United States over Tehran's nuclear ambitions.
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