4/9/08 Another Delay
Boeing Co. said Wedneday that it's delaying the first delivery of its 787 Dreamliner by six months with the plane's maiden flight now planned for late this year rather than mid-spring. The schedule change will have no impact on 2008 guidance, and "strong" 2009 earnings growth is still expected, the Chicago-based manufacturer said. Boeing said it expects to deliver 25 Dreamliners in 2009, significantly down from the 109 planes previously targeted. The first delivery will now take place in the third quarter of 2009.
Lehman Brothers disclosed in a 10-K filing that Level 3 assets, or hard-to-value corporate loans, residential and commercial mortgage-backed securities and other instruments, rose to $42.51 billion, or 14% of total assets at fair value at the end of February, from $41.98 billion, or 14.4% of total assets at fair value at the end of November.
Goldman Sachs and Morgan Stanley both disclosed in 10-K filings that Level 3 assets, or hard-to-value corporate loans, residential and commercial mortgage-related securities and other instruments, rose from the last quarter. Goldman Sachs said Level 3 assets rose to $82.3 billion, or 13% of total assets at fair value, at the end of February from $54.7 billion, or 10% of total assets at fair value, at the end of November. Morgan Stanley said Level 3 assets rose to $78.2 billion at the end of February from $73.7 billion at the end of November, in both cases representing about 15% of total assets measured at fair value.
OPEC member countries pumped 110,000 barrels of crude oil a day less in March than they did in February, according to a survey released by Platts. Platts said much of the decline is related more to maintenance work in Nigeria and Venezuela than any shift in philosophy.
The Bank of Japan negatively revised its economic outlook Wednesday, saying the economy was slowing. The central bank thus dropped its view published last month that a moderate expansion remained in place. "Japan's economic growth is slowing mainly due to the effects of high energy and materials prices," the central bank said in its April economic report.
BHP Billiton said Wednesday that 2008 prices for coking coal products are expected to increase by between 206% to 240% over last year.
At least 160 employees at CBS Corp.-owned television stations in 13 cities were let go, including such seasoned broadcasters as prominent Chicago anchor Diann Burns, renowned Boston sportscaster Bob Lobel and longtime Minneapolis meteorologist Paul Douglas.
As of Tuesday, at least 4,025 members of the U.S. military had died since the beginning of the Iraq war in March 2003, according to an Associated Press count.
Mexico's president on Tuesday sent an energy reform bill to the Senate aimed at allowing private contractors a greater role in helping the ailing state oil company boost declining production and build new refineries.
Australian consumer confidence fell in April to the lowest since 1993.
About 1,000 departures were scrubbed today, after 460 yesterday, American spokesman John Hotard said. At Dallas-Fort Worth International Airport, the airline's biggest hub, 251 departures were canceled, airport spokesman Ken Capps said.
The global economy is losing speed and there is a rising risk of a world-wide recession, the IMF said in its latest World Economic Outlook released Wednesday. The U.S. economy will experience a mild recession this year and western Europe economy will also slow. The Federal Reserve may be forced to cut rates for some time and the European Central Bank should end its reluctance to cut interest rates, the IMF said.
The Federal Reserve is mulling further steps to address liquidity problems in financial markets should measures taken to date fail to gain traction, a Fed official confirmed Wednesday. Among steps under review would be for the Treasury to borrow in excess of requirements and deposit the overage at the Fed, according to the central bank official. Other potential actions include issuing debt under the Fed's name and seeking authority to immediately pay interest on commercial bank reserves, the official said.
Bill Bonner writes: "This week Japan's former vice-minister of finance Eisuke Sakakibara predicted that fresh turbulence in the currency markets over the next six months is likely to see the yen 'break 90 to the US dollar.'" writes colleague Manraaj Singh. "Maybe you'll remember Sakakibara from the late 1990's when the financial media dubbed him 'Mr. Yen' for his ability to move global currency markets with his pronouncements. He's predicting that the market turmoil triggered by the U.S. subprime crisis is unlikely to go away for 'a year or two' and that there may be more shocks to come from Europe over subprime exposure."
The average price of regular unleaded rose 1.2 cents to $3.343 a gallon from the $3.331 the day before, according to AAA's Web site. Gas prices are up nearly 20% from what they were last year.
The U.S. dollar index at 72.143 in early Wednesday trading.
With our economy in a recession and imports slowing due to reduced consumer demand, it is interesting that Union Pacific, Burlington Northern, and CSX are all within a smidgen of their 52-week highs.
During the first quarter, BNSF loaded 69 million tons of coal in the Powder River Basin, up 8.6 percent (or 5.4 million tons) compared with first-quarter 2007's total. This month, some mines are planning large-scale construction projects, which might negatively affect April coal train loadings in the PRB and on the joint line, BNSF said.
Petraeus said he has recommended to President Bush that the U.S. complete, by the end of July, the withdrawal of the 20,000 extra troops. Beyond that, the general proposed a 45-day period of "consolidation and evaluation," to be followed by an indefinite period of assessment before he would recommend any further pullouts.
A major shareholder of Bronco Drilling Co. said Tuesday it plans to vote against Allis-Chalmers Energy Inc.'s planned acquisition of the drilling services provider and encouraged other shareholders to do the same. In a letter sent to the Edmond, Okla.-based company and filed with the Securities and Exchange Commission, Third Avenue Management LLC said it believes the proposed acquisition price is "woefully inadequate" and that Bronco should remain an independent company. "We believe that Bronco's shareholders will do better continuing to own Bronco as a standalone company, particularly in light of the improving fundamentals in the natural gas drilling market in the U.S.," said Third Avenue, which owns a 23.5 percent stake in Bronco. Additionally, Third Avenue expressed concern over Allis-Chalmers' "substantial debt load."
U.S. crude inventories fell surprisingly, down 3.2 million barrels to 316 million barrels in the week ending April 4, U.S. Energy Information Administration reported on Wednesday. Analysts surveyed by energy information provider Platts expected an increase of 2.7 million barrels. After the data, crude oil for May delivery rose $2.71, or 2.5 percent, to $111.21 a barrel at 10:50 a.m. on the New York Mercantile Exchange. Prices are up 81 percent from a year ago.Gasoline for May delivery climbed 5.8 cents, or 2.1 percent, to $2.8084 a gallon. Futures reached $2.8228, an intraday record for gasoline to be blended with ethanol, known as RBOB, which began trading in October 2005. Meanwhile, U.S. crude inventories rose by 6 million barrels to 315.5 million barrels in the week ending April 4, the American Petroleum Institute reported on Wednesday. Distillate stocks fell by 177,000 barrels to 112.8 million barrels in the same period, while gasoline stocks rose by 1.8 million barrels to 219.2 million barrels, the API said.
Analysts at Lehman Brothers on Wednesday: "We believe the challenging economic/jobs outlook combined with the oversupply of residential property will put downward pressure on apartment fundamentals," the analysts wrote in a research note.
Chuck Todd: "Seriously, the two Dem gubernatorial candidates in North Carolina are fighting over who supports Obama more. In fact, one candidate (Richard Moore) is using paid advertising to tout his Obama support. Maybe we should stop pretending North Carolina is going to be competitive; it's not. The problem now for Clinton is what will the delegate count and popular vote count look like after May 6 if North Carolina is a blowout for Obama -- and if Clinton wins narrowly in Pennsylvania and Indiana. Will Obama net more delegates out of North Carolina than Clinton nets out of Pennsylvania and Indiana combined (if she wins them both)? Will Obama's popular vote lead actually grow after North Carolina, because his win there is bigger than hypothetical combined Clinton victories in PA and IN?"
According to the latest CNN count, Obama has 1,629 delegates, with 1,414 pledged delegates and 215 superdelegates, according to the latest CNN count. Clinton has 1,486 delegates, with 1,243 pledged delegates and 243 superdelegates.
Business Week: "What everyone agrees on is that Circuit City needs some kind of jolt. Persistent cost cutting helped the beleaguered Richmond (Va.) company report a profit on Apr. 9 of $4.9 million for its fiscal fourth quarter ended Feb. 29. This ended a streak of five consecutive quarterly losses for the company as it battles increased competition from chief rival Best Buy, discount retailer Wal-Mart Stores, and warehouse club operators such as Costco in an environment where consumers are being very selective with their purchases. Even though the slim profit surprised Wall Street, it's clear the company is struggling to grow and revenue fell 8% to $3.65 billion. Sales at stores open at least a year, a key gauge of a retailer's performance, fell 10.4% in the quarter."
The updated forecast by William Gray's team at Colorado State University calls for 15 named storms in the Atlantic in 2008 and says there's a better than average chance that at least one major hurricane will hit the United States. An average of 6 hurricanes form in the Atlantic each year.
Bed Bath and Beyond shares closed 5.7% lower at $27.80 after the company said it expects first-quarter net earnings of 26 cents to 30 cents a share. Analysts surveyed by FactSet Research currently expect earnings of 38 cents a share.
Yahoo Inc. may begin testing the outsourcing of its online search advertising to rival Google Inc., according to a report published Wednesday. The companies would undertake the tests in order to evaluate the potential of a broader outsourcing arrangement, the report said. Such an arrangement could complicate Microsoft Corp.'s unsolicited bid to acquire Yahoo, which was made in order to better compete with Google.
"Any definitive agreement between Yahoo and Google would consolidate over 90% of the search advertising market in Google's hands," Microsoft said in a statement.
Chevron Corp. reported late Wednesday that it expects first-quarter upstream net income from production and exploration to rise from its fourth-quarter results, benefiting from higher oil and natural gas prices despite slightly lower oil production volumes domestically and overseas. At the same time, the second biggest U.S. oil company said earnings from its refining and marketing operations are likely to "remain at the low level" of the previous quarter, when it posted net downstream earnings of $204 million.
Crude oil for May delivery rose $2.37, or 2.2%, to close at $110.87 on New York Mercantile Exchange. Earlier it surged to a new intraday high of $112.21 a barrel.
Gold for June delivery rallied $19.50 to finish at $937.50 an ounce on the New York Mercantile Exchange. Corn rose to a record $6.16 a bushel as stockpiles dropped more than anticipated.
China Petroleum & Chemical Corp., Asia's biggest refiner, is offering to sell crude oil cargoes to cut stockpiles as its refining losses widen because of government orders to sell fuels at below-market prices, traders said. China United International Petroleum & Chemicals Co., China Petroleum's wholly owned trading arm, offered to sell at least 9 million barrels of crude oil from West Africa and the Middle East for loading in May, said five traders with knowledge of the offer. United Petroleum, or Unipec, bought the cargoes in recent months, the traders said.
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Wednesday, April 09, 2008
Tuesday, April 08, 2008
Worsening Conditions
4/8/08 Worsening Conditions
The total potential losses in the United States from the credit crunch could top $945 billion, the International Monetary Fund estimated on Tuesday.
Iran has begun installing 6,000 new centrifuges at its uranium enrichment plant in Natanz, state television quoted President Mahmoud Ahmadinejad as saying Tuesday.
Apple Inc. was downgraded to underperform from market perform at Morgan Keegan, based on "mounting evidence of broad-based weakness in consumer technology spending in the U.S. and Europe," the broker said.
The IMF plan to cut 380 jobs and sell 403.3 tonnes of gold, about an eighth of its reserves, still has to be approved by other authorities.
John Adams: "The only maxim of a free government ought to be to trust no man living with power to endanger the public liberty."
Leon Black's buyout firm Apollo Management is mulling the idea of a "prepackaged" bankruptcy plan for ailing home furnishings retailer Linens 'n Things, the New York Post reported online on Tuesday, citing sources.
Chief Executive Michael Dell: "We are not thinking in a short-term context but a long-term context," Dell said. "Last year growth in EPS (earnings per share) was 15 percent year over year. We have a goal to increase our EPS, and we have the right plans in place to grow EPS on a healthy basis." He reiterated a plan for the company to buy back another $1 billion of its own shares in the current quarter after repurchasing $4 billion in the fourth quarter.
Shares of First Marblehead Corp. plunged in premarket trading Tuesday after the student-loan services provider said it is working to find a new loan guarantor. The Education Resources Institute, which has been the exclusive provider of borrower default guarantees for First Marblehead's clients, filed for bankruptcy protection.
Garmin Ltd. fell after Amsterdam-based rival TomTom NV cut financial estimates for 2008, citing weak demand despite lower prices. Garmin's stock lost $4.20 to $48.50.
Washington Mutual told employees Monday that it will exit the wholesale lending business and close home-loan centers nationwide. WASHINGTON MUTUAL IN PACT TO RAISE $7 BILLION; SEES $1.1 BILLION LOSS, SLASHING DIVIDEND. In order to save cash, it will slash its $0.15 dividend down to $0.01 in an effort to save $490 million annually. WaMu lays off 3,000 at home-loan centers.
Dole Food Co., the world's largest fresh-fruit and vegetable producer, is selling land in Hawaii and California to avoid default on $350 million in bonds.
Rice climbed to a record for a fourth day as the Philippines, the biggest importer, announced plans to buy 1 million tons and some of the world's largest exporters cut sales to ensure they can feed their own people.
Jerry Zeifman, the general counsel and chief of staff of the House Judiciary Committee who supervised Hillary Clinton's work on the Watergate investigation in 1974: "She was an unethical, dishonest lawyer," Zeifman said. "She conspired to violate the Constitution, the rules of the House, the rules of the committee and the rules of confidentiality."
Huge layoffs are coming to The Seattle Times as it deals with a continuing loss of revenue for both the Times and the Seattle Post-Intelligencer. In a company e-mail sent Monday by Times Publisher Frank Blethen and President Carolyn Kelly, it was announced that approximately 200 positions would be cut through a combination of hiring freezes and "a significant number of layoffs." The company has 1,845 employees.
U.K. house prices dropped by the most since 1992 in March as the seizure in credit markets worldwide forced banks to pull mortgage offers, a report by HBOS Plc showed.
Keith Bradsher: "The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries � first Japan and Korea, then China, and now increasingly places like Vietnam and India. But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too. �Inflation is the major threat to Asian countries,� said Jong-Wha Lee, the head of the Asian Development Bank�s office of regional economic integration. It is also a threat to Western consumers because Asian exporters, even in very poor countries, are passing their rising costs on to customers."
The Secret Service is preparing to provide Vice President Cheney with agents, transportation, advance work and other security-related trappings of executive power for six months after the Bush administration packs up and moves out in January, the agency's director, Mark Sullivan, told Congress last week. The expected cost: $4 million. Although presidents and their spouses are entitled to Secret Service protection long after they depart the White House, federal law authorizes protective services for the vice president and his immediate family only during his time in office. Extending Cheney's detail would require a directive from the president or a joint resolution of Congress.
Retail gas prices will peak near $3.60 a gallon in June, but prices at such lofty levels will make many Americans think twice about hitting the road this summer, the Energy Department said Tuesday. Federal energy officials expect oil to average $101 a barrel this year, a sharp upward revision from its earlier forecast that suggests prices will remain above $100 for some time. But the U.S. Energy Information Administration expects American drivers, truckers and airlines to use less fuel this year as the economy softens. That could take some pressure off prices for gasoline and other fuels, and could keep the price of gasoline under a U.S. average of $4 a gallon.
Robert McHugh: "Stocks couldn't do it, couldn't break out north of their 2008 sideways trend-channel. Failed again Monday. Thus, we are looking for a top this week, or early next. The phi mate and Bradley model turn dates this coming week could be indicating either another leg from 12,700 back down to 11,700, or a breakout from this range. We shall see. But even another leg down to support offers an 800 +/- move, which is decent if you are a trader. The trend into these turn dates should be reversed, so that argues for a top this week. On the other hand, tomorrow is Tuesday, a favorite day of the week for the PPT. The last four Tuesdays have gone like this: Up 416 points; up 420 points; up 187 points; up 394 points. Hmmm. We are seeing Bearish Divergences over the past week between the 10 day average Advance/Decline Lines and prices for most major averages, which warrants caution if you are long. Over the past four trading days, prices have hardly budged in the DJIA and the S&P 500, which suggests a sharp breakout is coming. The McClellan Oscillator had a fourth consecutive small change Monday, each of the past four day's small changes getting smaller each day, again suggesting a large price breakout move is coming. This particular analytical tool does not tell us the direction of the sharp price move, unfortunately. I cannot recall four consecutive days of small changes in the M.O."
Nouriel Roubini: "My view is closer to a U-shaped recession as I expect that the economic contraction will last at least 12 months and possibly as long as 18 months through the middle of 2009. This view is based on the fact that the last two recessions � in 1990-91 and 2001 � lasted 8 months each and today the macro and financial conditions are worse � relative to those two previous recessions."
Petraeus said in prepared testimony that he recommends the U.S. military suspend troop drawdowns from Iraq after July for a 45-day pause before assessing when additional reductions can be made.
Growth in U.S. energy consumption will slow down this year as the economy faces a possible recession, a U.S. government forecast showed on Tuesday. Consumption of liquid fuels and other petroleum products is projected to grow by 40,000 barrels a day in 2008, a downward revision of 100,000 barrels a day from the previous monthly forecast, the Energy Information Administration said in its latest report. Gasoline consumption, having increased only 0.4% last year, is projected to increase only 0.3% this year and 0.7% in 2009. WTI crude oil, the underlying product of crude futures on the New York Mercantile Exchange, is projected to average $94.11 and $85.92 per barrel, respectively, in 2008 and 2009.
The National Association of Realtors said February pending sales of existing homes fell about 2% from the previous month. "The slip in pending home sales implies we're not out of the woods yet, though an era of successive deep sales declines appears to be over," said Lawrence Yun, NAR's chief economist, in a statement. The National Association of Realtors said its pending home sales index, which is considered a leading indicator of existing home sales, was down 21.4% from the February 2007 level.
The index of small business optimism fell 3.3 points in March to 89.6, the lowest monthly reading since the surveys began in 1986, the National Federation of Independent Business said. "We are seeing recession readings," said NFIB Chief Economist William Dunkelberg in a statement. Weaker plans to create new jobs accounted for 21 percent of the decline. During the next three months, 3 percent of the owners surveyed plan to create new jobs, down 8 points from February and the lowest reading since March 2003, NFIB said.
Novellus Systems said Tuesday its first-quarter earnings would be lower than expected and its revenue would be at the low end of its forecast range, sending its shares down 5 percent.
According to the WSJ, Capital One will lay off 750 employees at its UK division.
China is in the early stages of trying to secure a bigger chunk of BHP Billiton than the 9% in Rio Tinto than it purchased alongside Alcoa, according to a report on The Australian's Web site, citing sources in Beijing.
Russia currently controls the only gas pipeline out of Central Asia, which runs north from Turkemenistan through Kazakhstan and into Russia. China wants at least one pipeline to run east out of the region through Kazakhstan, while India is considering bringing in gas via pipelines from Iran or Pakistan.
By bailing out Wall Street and applying "band-aids" to the economy, the U.S. Federal Reserve may well be causing its own downfall - even as it hastens the demise of the greenback as a viable global currency, investment guru Jim Rogers told Money Morning during an exclusive interview. Because of such strategic missteps, U.S. consumers could be facing a long and painful economic malaise, similar to the "lost decade" of 1990s Japan, or the stagflation-riddled 1970s in the United States, Rogers said.
Standard & Poor's said late Tuesday that it downgraded four mortgage insurers because house prices are falling more than expected and unemployment in the U.S. is headed higher. The rating agency lowered the counterparty credit rating on MGIC Investment Corp.to 'BBB' from 'A-' and the counterparty credit and financial strength ratings of its mortgage insurance subsidiaries to 'A' from 'AA-'. PMI Group, Old Republic and Radian Group were also downgraded, S&P said.
Citigroup Inc.is close to selling $12 billion of leveraged loans and bonds to a group of private-equity firms including Apollo Group, Texas Pacific Group and Blackstone Group, the Wall Street Journal reported late Tuesday.
Odds are fully pricing in the chance of a quarter-point cut to the fed funds target rate, to 2%, and a 44% chance of a half-point cut.
Crude oil for May delivery fell 59 cents, or 0.5%, to settle at $108.5 a barrel on the New York Mercantile Exchange. Gold for June delivery fell $8.80 to end at $918 an ounce on the New York Mercantile Exchange.
United Parcel Service Inc. has cut its first-quarter earnings guidance to 86 cents or 87 cents a share, down from its previously expected range of 94-cents to 98 cents. The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products, UPS said late Tuesday. Significantly increased fuel costs in the quarter also contributed to the lower-than-expected results. In late trading the shares fell about 3 points to 70+.
Members of the Federal Reserve's policy-setting committee worried at their most recent meeting that housing and financial market stress could trigger a nasty slide in the economy, even as inflation pushed higher, minutes of the meeting released on Tuesday show.
China, the world's biggest copper consumer, may increase imports of ore used to make the metal by 20 percent to a record this year, said Trafigura Beheer BV, the country's top supplier.
EMC will acquire San Diego-based Iomega for a purchase price of $3.85 per share in a deal valued at some $213 million.
American Airlines said it was canceling up to 500 flights today, perhaps one-fifth of its schedule, to check the bundling of wires in some planes, the same issue that caused the airline to scrap more than 400 flights last month.
Marathon Oil, the largest refiner in the U.S. Midwest, said first-quarter refining and marketing operations had a loss amid higher costs. Margins will be "slightly negative" compared with 12.46 cents a gallon in the first quarter of 2007, the Houston-based company said today in a statement. The company said it had "substantially" weaker refining margins in the Midwest and Gulf Coast markets. The results were "much worse than expected," Credit Suisse Group analyst Mark Flannery said in a note to clients.
The Environmental Protection Agency says utilities will need to invest more than $277 billion over the next two decades on repairs and improvements to drinking water systems. Water industry engineers put the figure drastically higher, at about $480 billion.
A new Quinnipiac University poll of Pennsylvania Democrats released today found that Hillary Clinton’s lead over Barack Obama continues to decrease. Clinton now leads Obama 50%-44% in the state. This is a three point drop from the previous poll done last week, and a six point drop from two weeks ago.
The total potential losses in the United States from the credit crunch could top $945 billion, the International Monetary Fund estimated on Tuesday.
Iran has begun installing 6,000 new centrifuges at its uranium enrichment plant in Natanz, state television quoted President Mahmoud Ahmadinejad as saying Tuesday.
Apple Inc. was downgraded to underperform from market perform at Morgan Keegan, based on "mounting evidence of broad-based weakness in consumer technology spending in the U.S. and Europe," the broker said.
The IMF plan to cut 380 jobs and sell 403.3 tonnes of gold, about an eighth of its reserves, still has to be approved by other authorities.
John Adams: "The only maxim of a free government ought to be to trust no man living with power to endanger the public liberty."
Leon Black's buyout firm Apollo Management is mulling the idea of a "prepackaged" bankruptcy plan for ailing home furnishings retailer Linens 'n Things, the New York Post reported online on Tuesday, citing sources.
Chief Executive Michael Dell: "We are not thinking in a short-term context but a long-term context," Dell said. "Last year growth in EPS (earnings per share) was 15 percent year over year. We have a goal to increase our EPS, and we have the right plans in place to grow EPS on a healthy basis." He reiterated a plan for the company to buy back another $1 billion of its own shares in the current quarter after repurchasing $4 billion in the fourth quarter.
Shares of First Marblehead Corp. plunged in premarket trading Tuesday after the student-loan services provider said it is working to find a new loan guarantor. The Education Resources Institute, which has been the exclusive provider of borrower default guarantees for First Marblehead's clients, filed for bankruptcy protection.
Garmin Ltd. fell after Amsterdam-based rival TomTom NV cut financial estimates for 2008, citing weak demand despite lower prices. Garmin's stock lost $4.20 to $48.50.
Washington Mutual told employees Monday that it will exit the wholesale lending business and close home-loan centers nationwide. WASHINGTON MUTUAL IN PACT TO RAISE $7 BILLION; SEES $1.1 BILLION LOSS, SLASHING DIVIDEND. In order to save cash, it will slash its $0.15 dividend down to $0.01 in an effort to save $490 million annually. WaMu lays off 3,000 at home-loan centers.
Dole Food Co., the world's largest fresh-fruit and vegetable producer, is selling land in Hawaii and California to avoid default on $350 million in bonds.
Rice climbed to a record for a fourth day as the Philippines, the biggest importer, announced plans to buy 1 million tons and some of the world's largest exporters cut sales to ensure they can feed their own people.
Jerry Zeifman, the general counsel and chief of staff of the House Judiciary Committee who supervised Hillary Clinton's work on the Watergate investigation in 1974: "She was an unethical, dishonest lawyer," Zeifman said. "She conspired to violate the Constitution, the rules of the House, the rules of the committee and the rules of confidentiality."
Huge layoffs are coming to The Seattle Times as it deals with a continuing loss of revenue for both the Times and the Seattle Post-Intelligencer. In a company e-mail sent Monday by Times Publisher Frank Blethen and President Carolyn Kelly, it was announced that approximately 200 positions would be cut through a combination of hiring freezes and "a significant number of layoffs." The company has 1,845 employees.
U.K. house prices dropped by the most since 1992 in March as the seizure in credit markets worldwide forced banks to pull mortgage offers, a report by HBOS Plc showed.
Keith Bradsher: "The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries � first Japan and Korea, then China, and now increasingly places like Vietnam and India. But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too. �Inflation is the major threat to Asian countries,� said Jong-Wha Lee, the head of the Asian Development Bank�s office of regional economic integration. It is also a threat to Western consumers because Asian exporters, even in very poor countries, are passing their rising costs on to customers."
The Secret Service is preparing to provide Vice President Cheney with agents, transportation, advance work and other security-related trappings of executive power for six months after the Bush administration packs up and moves out in January, the agency's director, Mark Sullivan, told Congress last week. The expected cost: $4 million. Although presidents and their spouses are entitled to Secret Service protection long after they depart the White House, federal law authorizes protective services for the vice president and his immediate family only during his time in office. Extending Cheney's detail would require a directive from the president or a joint resolution of Congress.
Retail gas prices will peak near $3.60 a gallon in June, but prices at such lofty levels will make many Americans think twice about hitting the road this summer, the Energy Department said Tuesday. Federal energy officials expect oil to average $101 a barrel this year, a sharp upward revision from its earlier forecast that suggests prices will remain above $100 for some time. But the U.S. Energy Information Administration expects American drivers, truckers and airlines to use less fuel this year as the economy softens. That could take some pressure off prices for gasoline and other fuels, and could keep the price of gasoline under a U.S. average of $4 a gallon.
Robert McHugh: "Stocks couldn't do it, couldn't break out north of their 2008 sideways trend-channel. Failed again Monday. Thus, we are looking for a top this week, or early next. The phi mate and Bradley model turn dates this coming week could be indicating either another leg from 12,700 back down to 11,700, or a breakout from this range. We shall see. But even another leg down to support offers an 800 +/- move, which is decent if you are a trader. The trend into these turn dates should be reversed, so that argues for a top this week. On the other hand, tomorrow is Tuesday, a favorite day of the week for the PPT. The last four Tuesdays have gone like this: Up 416 points; up 420 points; up 187 points; up 394 points. Hmmm. We are seeing Bearish Divergences over the past week between the 10 day average Advance/Decline Lines and prices for most major averages, which warrants caution if you are long. Over the past four trading days, prices have hardly budged in the DJIA and the S&P 500, which suggests a sharp breakout is coming. The McClellan Oscillator had a fourth consecutive small change Monday, each of the past four day's small changes getting smaller each day, again suggesting a large price breakout move is coming. This particular analytical tool does not tell us the direction of the sharp price move, unfortunately. I cannot recall four consecutive days of small changes in the M.O."
Nouriel Roubini: "My view is closer to a U-shaped recession as I expect that the economic contraction will last at least 12 months and possibly as long as 18 months through the middle of 2009. This view is based on the fact that the last two recessions � in 1990-91 and 2001 � lasted 8 months each and today the macro and financial conditions are worse � relative to those two previous recessions."
Petraeus said in prepared testimony that he recommends the U.S. military suspend troop drawdowns from Iraq after July for a 45-day pause before assessing when additional reductions can be made.
Growth in U.S. energy consumption will slow down this year as the economy faces a possible recession, a U.S. government forecast showed on Tuesday. Consumption of liquid fuels and other petroleum products is projected to grow by 40,000 barrels a day in 2008, a downward revision of 100,000 barrels a day from the previous monthly forecast, the Energy Information Administration said in its latest report. Gasoline consumption, having increased only 0.4% last year, is projected to increase only 0.3% this year and 0.7% in 2009. WTI crude oil, the underlying product of crude futures on the New York Mercantile Exchange, is projected to average $94.11 and $85.92 per barrel, respectively, in 2008 and 2009.
The National Association of Realtors said February pending sales of existing homes fell about 2% from the previous month. "The slip in pending home sales implies we're not out of the woods yet, though an era of successive deep sales declines appears to be over," said Lawrence Yun, NAR's chief economist, in a statement. The National Association of Realtors said its pending home sales index, which is considered a leading indicator of existing home sales, was down 21.4% from the February 2007 level.
The index of small business optimism fell 3.3 points in March to 89.6, the lowest monthly reading since the surveys began in 1986, the National Federation of Independent Business said. "We are seeing recession readings," said NFIB Chief Economist William Dunkelberg in a statement. Weaker plans to create new jobs accounted for 21 percent of the decline. During the next three months, 3 percent of the owners surveyed plan to create new jobs, down 8 points from February and the lowest reading since March 2003, NFIB said.
Novellus Systems said Tuesday its first-quarter earnings would be lower than expected and its revenue would be at the low end of its forecast range, sending its shares down 5 percent.
According to the WSJ, Capital One will lay off 750 employees at its UK division.
China is in the early stages of trying to secure a bigger chunk of BHP Billiton than the 9% in Rio Tinto than it purchased alongside Alcoa, according to a report on The Australian's Web site, citing sources in Beijing.
Russia currently controls the only gas pipeline out of Central Asia, which runs north from Turkemenistan through Kazakhstan and into Russia. China wants at least one pipeline to run east out of the region through Kazakhstan, while India is considering bringing in gas via pipelines from Iran or Pakistan.
By bailing out Wall Street and applying "band-aids" to the economy, the U.S. Federal Reserve may well be causing its own downfall - even as it hastens the demise of the greenback as a viable global currency, investment guru Jim Rogers told Money Morning during an exclusive interview. Because of such strategic missteps, U.S. consumers could be facing a long and painful economic malaise, similar to the "lost decade" of 1990s Japan, or the stagflation-riddled 1970s in the United States, Rogers said.
Standard & Poor's said late Tuesday that it downgraded four mortgage insurers because house prices are falling more than expected and unemployment in the U.S. is headed higher. The rating agency lowered the counterparty credit rating on MGIC Investment Corp.to 'BBB' from 'A-' and the counterparty credit and financial strength ratings of its mortgage insurance subsidiaries to 'A' from 'AA-'. PMI Group, Old Republic and Radian Group were also downgraded, S&P said.
Citigroup Inc.is close to selling $12 billion of leveraged loans and bonds to a group of private-equity firms including Apollo Group, Texas Pacific Group and Blackstone Group, the Wall Street Journal reported late Tuesday.
Odds are fully pricing in the chance of a quarter-point cut to the fed funds target rate, to 2%, and a 44% chance of a half-point cut.
Crude oil for May delivery fell 59 cents, or 0.5%, to settle at $108.5 a barrel on the New York Mercantile Exchange. Gold for June delivery fell $8.80 to end at $918 an ounce on the New York Mercantile Exchange.
United Parcel Service Inc. has cut its first-quarter earnings guidance to 86 cents or 87 cents a share, down from its previously expected range of 94-cents to 98 cents. The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products, UPS said late Tuesday. Significantly increased fuel costs in the quarter also contributed to the lower-than-expected results. In late trading the shares fell about 3 points to 70+.
Members of the Federal Reserve's policy-setting committee worried at their most recent meeting that housing and financial market stress could trigger a nasty slide in the economy, even as inflation pushed higher, minutes of the meeting released on Tuesday show.
China, the world's biggest copper consumer, may increase imports of ore used to make the metal by 20 percent to a record this year, said Trafigura Beheer BV, the country's top supplier.
EMC will acquire San Diego-based Iomega for a purchase price of $3.85 per share in a deal valued at some $213 million.
American Airlines said it was canceling up to 500 flights today, perhaps one-fifth of its schedule, to check the bundling of wires in some planes, the same issue that caused the airline to scrap more than 400 flights last month.
Marathon Oil, the largest refiner in the U.S. Midwest, said first-quarter refining and marketing operations had a loss amid higher costs. Margins will be "slightly negative" compared with 12.46 cents a gallon in the first quarter of 2007, the Houston-based company said today in a statement. The company said it had "substantially" weaker refining margins in the Midwest and Gulf Coast markets. The results were "much worse than expected," Credit Suisse Group analyst Mark Flannery said in a note to clients.
The Environmental Protection Agency says utilities will need to invest more than $277 billion over the next two decades on repairs and improvements to drinking water systems. Water industry engineers put the figure drastically higher, at about $480 billion.
A new Quinnipiac University poll of Pennsylvania Democrats released today found that Hillary Clinton’s lead over Barack Obama continues to decrease. Clinton now leads Obama 50%-44% in the state. This is a three point drop from the previous poll done last week, and a six point drop from two weeks ago.
Bankruptcies
4/7/08 Bankruptcies
The more than 90,000 bankruptcy filings in March were the highest since insolvency laws became more restrictive in October 2005, according to statistics compiled from court records by Jupiter eSources LLC. At a daily rate, filings in March were 30 percent above the pace in 2007. In the first quarter, the number of consumers filing for bankruptcy rose to a staggering 228,335, surpassing the 187,361 filings during the same period last year.
"Households are living on such thin budgets, there's a vulnerability that middle-class families, in particular, are having to deal with more and more," said Samuel Gerdano, executive director of the American Bankruptcy Institute. The institute relies on data collected by the National Bankruptcy Research Center. Gerdano expects "vulnerability" to push the number of consumer bankruptcy filings to more than a million before the year is over. Consumers aren't the only ones facing financial stress. The number of bankruptcies being filed by businesses also is expected to increase sharply as a result of tighter credit and a tougher business environment. "There is a wave coming because the financial markets have changed so dramatically," Gerdano said Friday during a telephone call from Washington, D.C., where the institute is hosting its annual meeting.
In early Monday trading, June gold up $6.10 at $919.30 an ounce on Nymex.
Borders Group Inc.said it reached an improved financing pact with Pershing Square Capital Management L.P. "The process of reviewing alternative financing proposals over the past two weeks was beneficial as it yielded an outcome that is better for our company and our shareholders," the Ann Arbor, Mich.-based company said. "Borders is now turning its focus to the broader strategic alternatives process."
The average U.S. retail gasoline prices edged up to $3.34 a gallon on Monday, up a penny from the day before and well ahead of the month-ago price of $3.20 a gallon, according to the AAA Daily Fuel Gauge Report.
The Financial Times writes that Delta and Northwest have restarted merger talks.
The yield on the benchmark 2 year note has risen 6 basis points to 1.88 percent. I continue to believe the yield has just begun to rise.
AK Steel Holding Corp.said Monday that it plans to increase spot market prices for its carbon steel products by $150 a ton for all new orders, effective immediately.
Kinetic Concepts will buy tissue repair company LifeCell for $1.7 billion to expand and diversify its product line. The $51 per share offer from KCI, which specializes in advanced wound care and therapeutic support systems, represents an 18 percent premium over LifeCell's closing price on Friday.The two companies said the combined entity would generate revenue of about $2 billion in 2008 and employ more than 7,000 people.
Goldman Sachs raised 2008 aluminum targets from $1.12/pound to $1.31/pound, and 2009 aluminum targets from $1.21/pound to $1.33/pound.
Cisco has scheduled a live webcast of its press conference on Tuesday, April 8, 2008 at 12:00 PM (PT), from the annual Cisco Partner Summit conference in Honolulu, Hawaii. The news conference will highlight important technology and channel go-to-market innovation.
Meanwhile, Oppenheimer cut its earnings estimate for Cisco.
"I think that December/January was the peak and that we have been sliding into recession ever since then," Feldstein, the president of the National Bureau of Economic Research, said on CNBC television. Feldstein said he believes that the recession will linger. "I think it could go on longer" than the "last two recessions (which) lasted eight months peak to trough," he said, adding the current recession could last about twice as long. He also said the first quarter U.S. gross domestic product number will be a "misleading" number in that it may not reflect the economy was in a recession in the first three months of the year.
Xstrata, the world's largest thermal coal exporter, has settled thermal coal contracts with Japan's Chubu Electric for the business year starting this month at $125 a ton, up 125 percent, a source close to the deal said on Monday. The settlement price compares with last year's $55.65, based on Xstrata's final settlement price with a group of Japanese utilities. The contracts are for coal with gross calorific value of 6,322 (GAR) kilocalories per kilo.
Gold for June delivery rose $13.60 to end at $926.80 an ounce on the New York Mercantile Exchange. The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 1.4 percent to 1472.364 Monday. It's up 32 percent from a year ago. Crude rose to the $109 level and natural gas jumped 46 cents to $9.79. The Midwest and Northeast will have below-normal temperatures by April 12, said Rockville, Maryland-based MDA Federal Inc.'s EarthSat Energy Weather. Inventories finished the heating season last month at their lowest since 2005.
Margaret Campbell, a Montana state legislator, plans to declare her support for Senator Obama, of Illinois. She becomes the 69th superdelegate he has picked up since the Feb. 5 coast-to-coast string of primary elections and caucus votes. In the same period, Senator Clinton, of New York, has seen a net loss of two superdelegates, according to figures from the Obama campaign that Clinton aides do not dispute.
Advanced Micro Devices Inc. will cut 10% of its work force, saying its first-quarter revenue would be lower than expected. Under the chipmaker's new forecast, first-quarter revenue will come in around $1.5 billion, up 22% from the year-earlier period but down 15% from the fourth quarter.
Alcoa Inc's first-quarter profit fell to $303 million, or 37 cents a share, from $662 million, or 75 cents a share, a year ago. Excluding one time items, the company would have reported a profit from continuing operations of 44 cents a share. Revenue fell to $7.38 billion from $7.91 billion in the year ago period. Analysts polled by Thomson Financial estimated a profit of 48 cents a share on $7.2 billion in revenue.
In February, total consumer credit increased by $5.2 billion, or a 2.4% annual rate, to $2.54 trillion, the Federal Reserve reported Monday. Of the total increase, credit card debt rose by 6% and accounted for $4.7 billion. Non-revolving credit like student and auto loans climbed by 0.4%, or $496 million, the Fed said.
The Education Resources Institute, the largest non-profit guarantor of student loans made outside of government programs, filed for bankruptcy protection, saying its liquidity had been hurt by a rise in delinquencies and defaults and "mounting difficulties" in financing loan securitizations.
New Zealand business confidence fell to the lowest level in 33 years, with companies saying a slumping housing market and slowing consumer spending may cause the economy to contract.
Online spending is expected to rise a robust 17 percent this year, despite a sluggish economy that has bruised many brick-based retailers, according to an annual survey to be released Tuesday. Retail sales online, excluding travel purchases, are set to grow to $204 billion in 2008 from $174.5 billion last year, fueled by sales of apparel, computers and autos, according to a survey conducted by Internet analysis firm Forrester Research for Shop.org, the online arm of the National Retail Federation trade group. That projection is below the 21 percent increase seen in the prior year, but industry officials attribute it to the maturing of the business, not the sluggish economy.
The more than 90,000 bankruptcy filings in March were the highest since insolvency laws became more restrictive in October 2005, according to statistics compiled from court records by Jupiter eSources LLC. At a daily rate, filings in March were 30 percent above the pace in 2007. In the first quarter, the number of consumers filing for bankruptcy rose to a staggering 228,335, surpassing the 187,361 filings during the same period last year.
"Households are living on such thin budgets, there's a vulnerability that middle-class families, in particular, are having to deal with more and more," said Samuel Gerdano, executive director of the American Bankruptcy Institute. The institute relies on data collected by the National Bankruptcy Research Center. Gerdano expects "vulnerability" to push the number of consumer bankruptcy filings to more than a million before the year is over. Consumers aren't the only ones facing financial stress. The number of bankruptcies being filed by businesses also is expected to increase sharply as a result of tighter credit and a tougher business environment. "There is a wave coming because the financial markets have changed so dramatically," Gerdano said Friday during a telephone call from Washington, D.C., where the institute is hosting its annual meeting.
In early Monday trading, June gold up $6.10 at $919.30 an ounce on Nymex.
Borders Group Inc.said it reached an improved financing pact with Pershing Square Capital Management L.P. "The process of reviewing alternative financing proposals over the past two weeks was beneficial as it yielded an outcome that is better for our company and our shareholders," the Ann Arbor, Mich.-based company said. "Borders is now turning its focus to the broader strategic alternatives process."
The average U.S. retail gasoline prices edged up to $3.34 a gallon on Monday, up a penny from the day before and well ahead of the month-ago price of $3.20 a gallon, according to the AAA Daily Fuel Gauge Report.
The Financial Times writes that Delta and Northwest have restarted merger talks.
The yield on the benchmark 2 year note has risen 6 basis points to 1.88 percent. I continue to believe the yield has just begun to rise.
AK Steel Holding Corp.said Monday that it plans to increase spot market prices for its carbon steel products by $150 a ton for all new orders, effective immediately.
Kinetic Concepts will buy tissue repair company LifeCell for $1.7 billion to expand and diversify its product line. The $51 per share offer from KCI, which specializes in advanced wound care and therapeutic support systems, represents an 18 percent premium over LifeCell's closing price on Friday.The two companies said the combined entity would generate revenue of about $2 billion in 2008 and employ more than 7,000 people.
Goldman Sachs raised 2008 aluminum targets from $1.12/pound to $1.31/pound, and 2009 aluminum targets from $1.21/pound to $1.33/pound.
Cisco has scheduled a live webcast of its press conference on Tuesday, April 8, 2008 at 12:00 PM (PT), from the annual Cisco Partner Summit conference in Honolulu, Hawaii. The news conference will highlight important technology and channel go-to-market innovation.
Meanwhile, Oppenheimer cut its earnings estimate for Cisco.
"I think that December/January was the peak and that we have been sliding into recession ever since then," Feldstein, the president of the National Bureau of Economic Research, said on CNBC television. Feldstein said he believes that the recession will linger. "I think it could go on longer" than the "last two recessions (which) lasted eight months peak to trough," he said, adding the current recession could last about twice as long. He also said the first quarter U.S. gross domestic product number will be a "misleading" number in that it may not reflect the economy was in a recession in the first three months of the year.
Xstrata, the world's largest thermal coal exporter, has settled thermal coal contracts with Japan's Chubu Electric for the business year starting this month at $125 a ton, up 125 percent, a source close to the deal said on Monday. The settlement price compares with last year's $55.65, based on Xstrata's final settlement price with a group of Japanese utilities. The contracts are for coal with gross calorific value of 6,322 (GAR) kilocalories per kilo.
Gold for June delivery rose $13.60 to end at $926.80 an ounce on the New York Mercantile Exchange. The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 1.4 percent to 1472.364 Monday. It's up 32 percent from a year ago. Crude rose to the $109 level and natural gas jumped 46 cents to $9.79. The Midwest and Northeast will have below-normal temperatures by April 12, said Rockville, Maryland-based MDA Federal Inc.'s EarthSat Energy Weather. Inventories finished the heating season last month at their lowest since 2005.
Margaret Campbell, a Montana state legislator, plans to declare her support for Senator Obama, of Illinois. She becomes the 69th superdelegate he has picked up since the Feb. 5 coast-to-coast string of primary elections and caucus votes. In the same period, Senator Clinton, of New York, has seen a net loss of two superdelegates, according to figures from the Obama campaign that Clinton aides do not dispute.
Advanced Micro Devices Inc. will cut 10% of its work force, saying its first-quarter revenue would be lower than expected. Under the chipmaker's new forecast, first-quarter revenue will come in around $1.5 billion, up 22% from the year-earlier period but down 15% from the fourth quarter.
Alcoa Inc's first-quarter profit fell to $303 million, or 37 cents a share, from $662 million, or 75 cents a share, a year ago. Excluding one time items, the company would have reported a profit from continuing operations of 44 cents a share. Revenue fell to $7.38 billion from $7.91 billion in the year ago period. Analysts polled by Thomson Financial estimated a profit of 48 cents a share on $7.2 billion in revenue.
In February, total consumer credit increased by $5.2 billion, or a 2.4% annual rate, to $2.54 trillion, the Federal Reserve reported Monday. Of the total increase, credit card debt rose by 6% and accounted for $4.7 billion. Non-revolving credit like student and auto loans climbed by 0.4%, or $496 million, the Fed said.
The Education Resources Institute, the largest non-profit guarantor of student loans made outside of government programs, filed for bankruptcy protection, saying its liquidity had been hurt by a rise in delinquencies and defaults and "mounting difficulties" in financing loan securitizations.
New Zealand business confidence fell to the lowest level in 33 years, with companies saying a slumping housing market and slowing consumer spending may cause the economy to contract.
Online spending is expected to rise a robust 17 percent this year, despite a sluggish economy that has bruised many brick-based retailers, according to an annual survey to be released Tuesday. Retail sales online, excluding travel purchases, are set to grow to $204 billion in 2008 from $174.5 billion last year, fueled by sales of apparel, computers and autos, according to a survey conducted by Internet analysis firm Forrester Research for Shop.org, the online arm of the National Retail Federation trade group. That projection is below the 21 percent increase seen in the prior year, but industry officials attribute it to the maturing of the business, not the sluggish economy.
Monday, April 07, 2008
Rice
4/6/08 Rice
"The assumption is that all farmers are better off when prices go up," said Robert Zeigler, director general of the International Rice Research Institute in the Philippines. "The problem is that a large proportion of rice producers in the world are actually net rice buyers - they produce less than their actual needs." Rice prices have been creeping upward since the beginning of this decade, but it was not until February that they spiked sharply. Thai B grade rice, a widely traded variety, sold for $546 per ton in March, up 68 percent from a year earlier. "Nobody has ever seen such a jump in the price of rice, certainly not in my lifetime, and that's a long time," said Kwanchai Gomez, the executive director of the Thai Rice Foundation, a research center financed by the Thai royal family. She is 68 years old. Many consumers around the globe rely on Thai rice, including African and Middle Eastern countries. Hong Kong imports 90 percent of its rice from Thailand. Thai farmers harvest an average of 2.63 tons per hectare, or about a ton per acre, compared with 6.22 tons per hectare in China, 4.22 in Indonesia, 3.03 in India and 7.55 in the United States. These yields are a measure not only of efficiency but reflect the strains of rice produced. Yields for jasmine rice in Thailand, for example, are much lower than plain white rice, but the fragrant rice fetches double or triple on world markets.
According to Reuters, shares in Petrohawk Energy Corp hit all-time highs on Friday and its option volume soared on speculation that the oil and natural gas producer was a takeover target.
On Friday Allegheny Tech rose 8+ points with huge option buying, and this despite Cowen opining that "Street Ests. Too High; Sentiment Too Positive."
Mark Penn quit as Hillary Clinton's chief strategist.
Futures traders doubled bets against the greenback in the past two months, data from the Commodity Futures Trading Commission in Washington show. Citigroup Inc., Deutsche Bank AG and Royal Bank of Scotland Group Plc, which handle almost 40 percent of global foreign exchange trading, say the currency may slump to $1.65 per euro by October, from $1.57 on April 4.
Yahoo, under pressure from Microsoft to accept its $41 billion buyout offer, said Monday it doesn't oppose a deal with the huge software maker but wants a better deal. Jerry Yang, chief executive of Sunnyvale, Calif.-based Yahoo Inc., and Chairman Roy Bostock sent a letter Monday to Microsoft CEO Steve Ballmer. "We are open to all alternatives that maximize stockholder value," Yang and Bostock said in the letter. "To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing." In the letter, Yang and Bostock assert that Microsoft has mischaracterized the companies' discussions, and say the company's threat to begin a hostile takeover is "counterproductive."
Baker Hughes said Monday that the worldwide rig count for March was 3,259, down 158 from the 3,417 it reported in February. The international rig count was up 22 from February and the U.S. rig count was up 32, while the Canadian rig count fell 212 to 408 in March.
Novartis AG has agreed to buy Nestle AG's 77 percent stake in U.S. company Alcon in a deal worth up to $39 billion to boost its eye care business, the Swiss drugmaker said on Monday. Novartis will acquire a first, 25 percent stake in Alcon for $11 billion and is set to buy Nestle's remaining 52 percent for a fixed price of $28 billion between January 2010 and July 2011.
U.S. private equity firm TPG and other investors are near a deal to invest $5 billion in Washington Mutual Inc , the Wall Street Journal reported on its Web site.
Light sweet crude for May delivery rose $1.31 cents to $107.54 a barrel by 1035 GMT (6:35 a.m. EDT) after leaping $2.40 a barrel on Friday, recouping all of the week's earlier losses.
A deal to allow delegates from Florida and Michigan to participate at the Democratic National Convention is unlikely before summer, party chairman Howard Dean said yesterday.
John Hussman: "There was never a point where Bear's customers and counterparties were at risk...As for actions that might have prevented Bear's sudden collapse, Timothy Geithner, the president of the Federal Reserve Bank of New York, indicated that the Fed had not made funds available to Bear earlier in the week, saying “I would not have been comfortable lending to Bear at that time. We only lend to sound institutions. Lending freely to Bear would not have been a prudent act.” Evidently it was prudent to commit $30 billion in public funds without the assurance of being made whole."
China and New Zealand have signed a groundbreaking free trade agreement.
"The assumption is that all farmers are better off when prices go up," said Robert Zeigler, director general of the International Rice Research Institute in the Philippines. "The problem is that a large proportion of rice producers in the world are actually net rice buyers - they produce less than their actual needs." Rice prices have been creeping upward since the beginning of this decade, but it was not until February that they spiked sharply. Thai B grade rice, a widely traded variety, sold for $546 per ton in March, up 68 percent from a year earlier. "Nobody has ever seen such a jump in the price of rice, certainly not in my lifetime, and that's a long time," said Kwanchai Gomez, the executive director of the Thai Rice Foundation, a research center financed by the Thai royal family. She is 68 years old. Many consumers around the globe rely on Thai rice, including African and Middle Eastern countries. Hong Kong imports 90 percent of its rice from Thailand. Thai farmers harvest an average of 2.63 tons per hectare, or about a ton per acre, compared with 6.22 tons per hectare in China, 4.22 in Indonesia, 3.03 in India and 7.55 in the United States. These yields are a measure not only of efficiency but reflect the strains of rice produced. Yields for jasmine rice in Thailand, for example, are much lower than plain white rice, but the fragrant rice fetches double or triple on world markets.
According to Reuters, shares in Petrohawk Energy Corp hit all-time highs on Friday and its option volume soared on speculation that the oil and natural gas producer was a takeover target.
On Friday Allegheny Tech rose 8+ points with huge option buying, and this despite Cowen opining that "Street Ests. Too High; Sentiment Too Positive."
Mark Penn quit as Hillary Clinton's chief strategist.
Futures traders doubled bets against the greenback in the past two months, data from the Commodity Futures Trading Commission in Washington show. Citigroup Inc., Deutsche Bank AG and Royal Bank of Scotland Group Plc, which handle almost 40 percent of global foreign exchange trading, say the currency may slump to $1.65 per euro by October, from $1.57 on April 4.
Yahoo, under pressure from Microsoft to accept its $41 billion buyout offer, said Monday it doesn't oppose a deal with the huge software maker but wants a better deal. Jerry Yang, chief executive of Sunnyvale, Calif.-based Yahoo Inc., and Chairman Roy Bostock sent a letter Monday to Microsoft CEO Steve Ballmer. "We are open to all alternatives that maximize stockholder value," Yang and Bostock said in the letter. "To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing." In the letter, Yang and Bostock assert that Microsoft has mischaracterized the companies' discussions, and say the company's threat to begin a hostile takeover is "counterproductive."
Baker Hughes said Monday that the worldwide rig count for March was 3,259, down 158 from the 3,417 it reported in February. The international rig count was up 22 from February and the U.S. rig count was up 32, while the Canadian rig count fell 212 to 408 in March.
Novartis AG has agreed to buy Nestle AG's 77 percent stake in U.S. company Alcon in a deal worth up to $39 billion to boost its eye care business, the Swiss drugmaker said on Monday. Novartis will acquire a first, 25 percent stake in Alcon for $11 billion and is set to buy Nestle's remaining 52 percent for a fixed price of $28 billion between January 2010 and July 2011.
U.S. private equity firm TPG and other investors are near a deal to invest $5 billion in Washington Mutual Inc , the Wall Street Journal reported on its Web site.
Light sweet crude for May delivery rose $1.31 cents to $107.54 a barrel by 1035 GMT (6:35 a.m. EDT) after leaping $2.40 a barrel on Friday, recouping all of the week's earlier losses.
A deal to allow delegates from Florida and Michigan to participate at the Democratic National Convention is unlikely before summer, party chairman Howard Dean said yesterday.
John Hussman: "There was never a point where Bear's customers and counterparties were at risk...As for actions that might have prevented Bear's sudden collapse, Timothy Geithner, the president of the Federal Reserve Bank of New York, indicated that the Fed had not made funds available to Bear earlier in the week, saying “I would not have been comfortable lending to Bear at that time. We only lend to sound institutions. Lending freely to Bear would not have been a prudent act.” Evidently it was prudent to commit $30 billion in public funds without the assurance of being made whole."
China and New Zealand have signed a groundbreaking free trade agreement.
Sunday, April 06, 2008
Monthly Employment Data
4/5/08 Monthly Employment Data
The economy lost 80,000 nonfarm payroll jobs last month, according to a survey of business establishments, about the same as the 76,000 lost in February and more than the 60,000 expected to be lost by economists surveyed by MarketWatch. Payroll growth in February and January was revised lower by a total of 67,000. The separate survey of households showed a rise in unemployment of 434,000. As a result, the unemployment rate popped to 5.1% from 4.8% in the prior month. This is the highest unemployment rate since September 2005.
Robert McHugh: " The Department of Labor reported that Non-Farm Payroll Jobs FELL 80,000 for the month of March, 2008. The truth is, it is much worse. Looking deep behind that number, this figure is after they goosed it higher by 142,000 "make believe" new jobs that do not exist. The Labor Department adjusts the non-farm payroll figure every month by a guess of new jobs created by new businesses, that are not confirmed, are not counted, are not in actuality real. It is called the Birth/Death adjustment, and I wouldn't be surprised if this number will soon go the way of the M-3 figure, hidden from our view, so they can artificially report any number they feel like.
The truth is, the U.S. labor market actually lost 222,000 jobs in March. Now think about this: We need to create approximately 150,000 jobs every month just to keep up with legal population growth. That means the labor market fell 377,000 jobs short of breakeven in March. This a huge added blow for the American household. As long as Wall Street is okay, the Master Planners believe the economy is okay. The American household is in serious trouble, and the bailouts are only going to Wall Street at this time. However, if the American consumer dies, Wall Street will too. More effort needs to be placed at the source of the problem."
Microsoft set the clock ticking for Yahoo to accept its $41 billion buyout offer in a letter to the Internet pioneer's board Saturday, warning that if a deal wasn't reached by April 26 the software maker would launch a hostile takeover at a less attractive price. In the letter, Ballmer said Yahoo's search share and page views, two measures of the strength of the Web portal company's business, appear to have fallen since the offer was made at the end of January. At the time, Microsoft's cash-and-stock offer was valued at $44.6 billion, or 62 percent above Yahoo's market value. Judging by Friday's closing share prices, the deal is now worth just under $41 billion.
Several members of the six-nation Gulf Cooperation Council (GCC) that includes Saudi Arabia are determined to meet a 2010 target to introduce single currency, the council's secretary general said on Sunday. "There is determination from a number of countries to complete monetary union by 2010," Abdul-Rahman al-Attiyah said at a central bank governors' meeting in Qatar's capital, Doha.
Doug Noland: " Regrettably, all the best efforts by the Federal Reserve and Washington politicians to sustain the U.S. Bubble Economy are doomed to failure. It’s not that they are necessarily the wrong policies. More to the point, the basic premise that our economy is sound and growth sustainable is misguided. We’ve experienced a protracted and historic Credit inflation and it will simply be impossible to keep asset prices, incomes, corporate cash flows, and spending levitated at current levels. The type and scope of Credit growth required today has become infeasible. The risk intermediation requirements are too daunting. Sustaining housing inflation and consumption levels has become unachievable. And the underpinnings of our currency have turned too fragile...Basically, the strategy is to substitute government-backed debt for the now discredited Wall Street-backed finance. I’m the first one to admit that this desperate undertaking stopped financial implosion in its tracks. However, the problem with this whole approach – because of our “societal,” financial, and policymaking biases – is that our Credit system will just be throwing greater amounts of (government-supported) debt on top of already fragile Credit Structures underpinned largely by home mortgages. Wall Street-backed finance buckled specifically because this (“Ponzi Finance”) debt structure was untenable the day increasing amounts of speculative Credit were no longer forthcoming. The underlying inventory of houses doesn’t have the capacity to generate debt service – only the mortgagees taking on greater amounts of debt... It is my view that our economy will require a massive reallocation of resources. We will be forced to create much less non-productive (especially mortgage and asset-based) Credit in the Financial Sphere, while producing huge additional quantities of tradable goods in the Economic Sphere. In our expansive “services” sector, there will no choice but to “liquidate” labor and redirect its efforts. Throughout finance, there will be no alternative than to “liquidate” bad debt, labor and insolvent institutions – again in the name of a necessary redirecting of resources. After an unnecessarily protracted boom, there will be scores of enterprises that will prove uneconomic in the new financial and economic backdrop. “Liquidation” will be unavoidable, policymaker hopes and dreams notwithstanding."
Mike Burk: "The market is over bought; many of the indicators are at or near extremes...Historically, by most measures, next week has been weak. In April 2000 it was one of the worst weeks ever...The market took off in the summer of 2006 when the banks were giving away money, now the fed is doing it. Short term the market is overbought, but with money supply exploding any pull back should be modest.I expect the major indices to be lower on Friday April 11 than they were on Friday April 4."
Honeywell International said Friday that it would buy Norcross Safety Products for $1.2 billion to expand its line of personal protective gear.Norcross, based in Oak Brook, Ill., makes protective and safety equipment for the fire service, utility and general industrial worker segments. Honeywell is buying the company from its majority owner, Odyssey Investment Partners.
Microsoft plans to release its new version of the Windows OS next year.
According to Business Week, in most housing downturns, rental markets thrive. This time, a glut of properties has put the brakes on rent hikes in many cities. For many Americans, as property values sink and mortgage interest payments rise, the dream of homeownership has turned into a nightmare. In the past, however, one group of people who have tended to ride out real estate downturns are landlords, who can raise rents while potential buyers sit on the sidelines waiting for conditions to settle. But not this year. Rent growth in 2007 actually went flat in some metro areas hardest hit by the housing meltdown. "What we will see is more of a return to where we were before the huge boom in homeownership," says Rob Massey, vice-president of industry development for Rentals.com. "In cases where you don't see the rental market rebounding, it's because of an oversupply of properties."
Manraaj Singh:"Since the beginning of the decade, the S&P 500 Index has actually fallen by five percent. In China, the benchmark Shanghai A-shares Index is up by 124 per cent - and that's after falling 43 per cent from its peak in October. They were up 296 per cent at their peak. I think that Chinese investors have seen an "adequate" return on their savings. U.S. investors, on the other hand, probably wouldn't think so…and neither would the average British investor… the FTSE is down 11 per cent over the same period."
"Until now, we are not experiencing any dramatic changes worldwide for our products, not even at home in the United States," Intel CEO Paul Otellini told Germany's Spiegel magazine in an interview released on Saturday ahead of publication on Monday.In fact, Otellini said, Intel has actually benefited to some degree from the U.S. slowdown because the weak U.S. dollar has helped its exports.
Michelle Leder: "In the proxy, which was filed shortly after the company announced that its CFO was stepping down, Qwest listed “other perquisites” for CEO Ed Mueller of $1.9 million and goes on to explain that the bulk of the amount as being related to the sale of Mueller’s house in the Bay Area
The amount also includes the incremental cost to us of our purchase of Mr. Mueller’s former house in California. We purchased the house in September 2007 for $8,900,000 (including closing costs), which was its then-prevailing value as determined by the average of two independent appraisals. We sold the house in December 2007 for proceeds of $7,112,606 (net of closing costs and commissions). We paid an additional $43,644 to maintain the house while we owned it, resulting in a total incremental cost to us of $1,831,038.
So in less than three months, Mueller’s house lost around 20% of its value and Qwest shareholders footnoted the bill? Looks like Qwest may in the running for the worst footnote of 2008, too!"
At least one UBS AG investor might back a plan to break up and sell the Swiss bank, the U.K. Independent On Sunday said. Ethos, a Swiss corporate governance foundation which owns a small stake in UBS, is reported to be willing to back a breakup, the newspaper said without citing sources. Last week, former UBS President Luqman Arnold wrote a letter to the bank suggesting a possible sale.
The economy lost 80,000 nonfarm payroll jobs last month, according to a survey of business establishments, about the same as the 76,000 lost in February and more than the 60,000 expected to be lost by economists surveyed by MarketWatch. Payroll growth in February and January was revised lower by a total of 67,000. The separate survey of households showed a rise in unemployment of 434,000. As a result, the unemployment rate popped to 5.1% from 4.8% in the prior month. This is the highest unemployment rate since September 2005.
Robert McHugh: " The Department of Labor reported that Non-Farm Payroll Jobs FELL 80,000 for the month of March, 2008. The truth is, it is much worse. Looking deep behind that number, this figure is after they goosed it higher by 142,000 "make believe" new jobs that do not exist. The Labor Department adjusts the non-farm payroll figure every month by a guess of new jobs created by new businesses, that are not confirmed, are not counted, are not in actuality real. It is called the Birth/Death adjustment, and I wouldn't be surprised if this number will soon go the way of the M-3 figure, hidden from our view, so they can artificially report any number they feel like.
The truth is, the U.S. labor market actually lost 222,000 jobs in March. Now think about this: We need to create approximately 150,000 jobs every month just to keep up with legal population growth. That means the labor market fell 377,000 jobs short of breakeven in March. This a huge added blow for the American household. As long as Wall Street is okay, the Master Planners believe the economy is okay. The American household is in serious trouble, and the bailouts are only going to Wall Street at this time. However, if the American consumer dies, Wall Street will too. More effort needs to be placed at the source of the problem."
Microsoft set the clock ticking for Yahoo to accept its $41 billion buyout offer in a letter to the Internet pioneer's board Saturday, warning that if a deal wasn't reached by April 26 the software maker would launch a hostile takeover at a less attractive price. In the letter, Ballmer said Yahoo's search share and page views, two measures of the strength of the Web portal company's business, appear to have fallen since the offer was made at the end of January. At the time, Microsoft's cash-and-stock offer was valued at $44.6 billion, or 62 percent above Yahoo's market value. Judging by Friday's closing share prices, the deal is now worth just under $41 billion.
Several members of the six-nation Gulf Cooperation Council (GCC) that includes Saudi Arabia are determined to meet a 2010 target to introduce single currency, the council's secretary general said on Sunday. "There is determination from a number of countries to complete monetary union by 2010," Abdul-Rahman al-Attiyah said at a central bank governors' meeting in Qatar's capital, Doha.
Doug Noland: " Regrettably, all the best efforts by the Federal Reserve and Washington politicians to sustain the U.S. Bubble Economy are doomed to failure. It’s not that they are necessarily the wrong policies. More to the point, the basic premise that our economy is sound and growth sustainable is misguided. We’ve experienced a protracted and historic Credit inflation and it will simply be impossible to keep asset prices, incomes, corporate cash flows, and spending levitated at current levels. The type and scope of Credit growth required today has become infeasible. The risk intermediation requirements are too daunting. Sustaining housing inflation and consumption levels has become unachievable. And the underpinnings of our currency have turned too fragile...Basically, the strategy is to substitute government-backed debt for the now discredited Wall Street-backed finance. I’m the first one to admit that this desperate undertaking stopped financial implosion in its tracks. However, the problem with this whole approach – because of our “societal,” financial, and policymaking biases – is that our Credit system will just be throwing greater amounts of (government-supported) debt on top of already fragile Credit Structures underpinned largely by home mortgages. Wall Street-backed finance buckled specifically because this (“Ponzi Finance”) debt structure was untenable the day increasing amounts of speculative Credit were no longer forthcoming. The underlying inventory of houses doesn’t have the capacity to generate debt service – only the mortgagees taking on greater amounts of debt... It is my view that our economy will require a massive reallocation of resources. We will be forced to create much less non-productive (especially mortgage and asset-based) Credit in the Financial Sphere, while producing huge additional quantities of tradable goods in the Economic Sphere. In our expansive “services” sector, there will no choice but to “liquidate” labor and redirect its efforts. Throughout finance, there will be no alternative than to “liquidate” bad debt, labor and insolvent institutions – again in the name of a necessary redirecting of resources. After an unnecessarily protracted boom, there will be scores of enterprises that will prove uneconomic in the new financial and economic backdrop. “Liquidation” will be unavoidable, policymaker hopes and dreams notwithstanding."
Mike Burk: "The market is over bought; many of the indicators are at or near extremes...Historically, by most measures, next week has been weak. In April 2000 it was one of the worst weeks ever...The market took off in the summer of 2006 when the banks were giving away money, now the fed is doing it. Short term the market is overbought, but with money supply exploding any pull back should be modest.I expect the major indices to be lower on Friday April 11 than they were on Friday April 4."
Honeywell International said Friday that it would buy Norcross Safety Products for $1.2 billion to expand its line of personal protective gear.Norcross, based in Oak Brook, Ill., makes protective and safety equipment for the fire service, utility and general industrial worker segments. Honeywell is buying the company from its majority owner, Odyssey Investment Partners.
Microsoft plans to release its new version of the Windows OS next year.
According to Business Week, in most housing downturns, rental markets thrive. This time, a glut of properties has put the brakes on rent hikes in many cities. For many Americans, as property values sink and mortgage interest payments rise, the dream of homeownership has turned into a nightmare. In the past, however, one group of people who have tended to ride out real estate downturns are landlords, who can raise rents while potential buyers sit on the sidelines waiting for conditions to settle. But not this year. Rent growth in 2007 actually went flat in some metro areas hardest hit by the housing meltdown. "What we will see is more of a return to where we were before the huge boom in homeownership," says Rob Massey, vice-president of industry development for Rentals.com. "In cases where you don't see the rental market rebounding, it's because of an oversupply of properties."
Manraaj Singh:"Since the beginning of the decade, the S&P 500 Index has actually fallen by five percent. In China, the benchmark Shanghai A-shares Index is up by 124 per cent - and that's after falling 43 per cent from its peak in October. They were up 296 per cent at their peak. I think that Chinese investors have seen an "adequate" return on their savings. U.S. investors, on the other hand, probably wouldn't think so…and neither would the average British investor… the FTSE is down 11 per cent over the same period."
"Until now, we are not experiencing any dramatic changes worldwide for our products, not even at home in the United States," Intel CEO Paul Otellini told Germany's Spiegel magazine in an interview released on Saturday ahead of publication on Monday.In fact, Otellini said, Intel has actually benefited to some degree from the U.S. slowdown because the weak U.S. dollar has helped its exports.
Michelle Leder: "In the proxy, which was filed shortly after the company announced that its CFO was stepping down, Qwest listed “other perquisites” for CEO Ed Mueller of $1.9 million and goes on to explain that the bulk of the amount as being related to the sale of Mueller’s house in the Bay Area
The amount also includes the incremental cost to us of our purchase of Mr. Mueller’s former house in California. We purchased the house in September 2007 for $8,900,000 (including closing costs), which was its then-prevailing value as determined by the average of two independent appraisals. We sold the house in December 2007 for proceeds of $7,112,606 (net of closing costs and commissions). We paid an additional $43,644 to maintain the house while we owned it, resulting in a total incremental cost to us of $1,831,038.
So in less than three months, Mueller’s house lost around 20% of its value and Qwest shareholders footnoted the bill? Looks like Qwest may in the running for the worst footnote of 2008, too!"
At least one UBS AG investor might back a plan to break up and sell the Swiss bank, the U.K. Independent On Sunday said. Ethos, a Swiss corporate governance foundation which owns a small stake in UBS, is reported to be willing to back a breakup, the newspaper said without citing sources. Last week, former UBS President Luqman Arnold wrote a letter to the bank suggesting a possible sale.
Thursday, April 03, 2008
Employment Data
4/4/08 Employment Data
Despite increased weakness in the economy, planned job cuts announced by employers fell by 26 percent in March to 53,579, down from 72,091 cuts in February, according to a report on monthly job cuts released Wednesday by global outplacement consultancy Challenger, Gray & Christmas Inc. The drop in March is similar to a decline in March 2007, when announced job cuts plunged 42 percent to an eight-month low of 48,997 from 84,014 in February, which turned out to be the largest job-cut month of the year. Last month’s job cuts were 9.4 percent higher than a year ago. Through the first quarter, job cuts totaling 200,656 are just 2.4 percent higher than the 195,986 cuts in the same period in 2007.
The number of U.S. workers applying for unemployment benefit soared by 38,000 last week, posting the highest reading since September 2005. The four-week average for jobless claims also rose by 15,750 to 374,500, the highest since the beginning of October 2005. For the week ending March 22, continuing jobless claims rose by 97,000 to 2.94 million.
Nato has confirmed it will not offer membership to Georgia or Ukraine but agreed to review the decision on the ex-Soviet republics in December.
The World Bank estimates ``that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices,'' Robert Zoellick, the bank's president, said on the organization's Web site. For these countries ``there is no margin for survival,'' he said.
Rough rice for May delivery advanced to $20.26 per 100 pounds on the Chicago Board of Trade today as the United Nations' Food and Agriculture Organization said global exports will drop 3.5 percent this year as nations curb sales.
Edward Kane, a finance professor at Boston College:"On the grounds that they were helping innovative U.S. firms to compete effectively in global markets, federal supervisors refused to take on the political and practical challenge of establishing and maintaining their ability to see and to discipline complicated risk exposures."
Google is cutting about 300 jobs from the American operations of DoubleClick in the first sizable layoffs in its history. The cuts would represent about a quarter of DoubleClick’s American work force of about 1,200.
ATA Airlines canceled all flights Thursday after filing for bankruptcy as it posted advisories at ticket counters in the handful of cities it still served and sought assistance for stranded passengers. The Indianapolis-based airline, once the nation's 10th-largest, entered bankruptcy for the second time in just over three years Wednesday, this time citing the loss of a key military charter business.
Italy's Stock Exchange says it suspended Alitalia's shares after Air France-KLM quit talks with Italian unions and Alitalia's chairman Maurizio Prato resigned.
Rob Hanna:"I ran some numbers tonight looking at action immediately following up days of 3.5% or more in the S&P 500. Of the 35 instances since 1960 that my scan found, 31 of them traded lower than their thrust day close at some point in the next 5 days. (Make that 32 for 36 after Wednesday.) 18 of the 35 traded lower by 1.75% or more. What’s this tell me? The pullback today was normal. In fact, continued pullback would be normal. The last two big thrust days (3/11 and 3/18) the market fell hard and fast almost immediately. If the market can get through tomorrow without a sharp selloff, that could be a positive. It would be a change in character."
Martin Feldstein: The US has a “let the market determine the value of the dollar” policy and a “let the Fed set interest rates to reflect US economic conditions policy” and a “strong RMB” policy not a "strong dollar policy."
The U.S. office market showed the first indication of a slowdown in the first quarter as tenants occupied less space for the first time in more than four years, according to real estate research firm Reis.
ConocoPhillips says it likely produced the equivalent of 1.8 million barrels of oil every day during the first three months of the year and made more money on each than in the past; however, the company believes it made much less profit on refined products like gasoline as its refining margins got squeezed, according to a preliminary first-quarter outlook. ConocoPhillips' results from its chemical and midstream operations are also expected to be lower.
"The Great Depression," says the headline. "Food stamps are the symbol of poverty in the U.S. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive - a sure sign the world's richest country faces economic crisis."
For at least 16 months after the Sept. 11 terror attacks in 2001, the Bush administration believed that the Constitution's protection against unreasonable searches and seizures on U.S. soil didn't apply to its efforts to protect against terrorism. That view was expressed in a secret Justice Department legal memo dated Oct. 23, 2001. The administration on Wednesday stressed that it now disavows that view.The October 2001 memo was written at the request of the White House by John Yoo, then the deputy assistant attorney general, and addressed to Alberto Gonzales, the White House counsel at the time. The administration had asked the department for an opinion on the legality of potential responses to terrorist activity.The 37-page memo is classified and has not been released. Its existence was disclosed Tuesday in a footnote of a separate secret memo, dated March 14, 2003, released by the Pentagon in response to a Freedom of Information Act lawsuit by the American Civil Liberties Union.
Intelligence centers run by states across the country have access to personal information about millions of Americans, including unlisted cellphone numbers, insurance claims, driver's license photographs and credit reports, according to a document obtained by The Washington Post.
Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years during the fourth quarter, another sign the U.S. economy is slowing, according to an American Bankers Association survey. Payments at least 30 days past due increased across all eight categories of loans tracked, the Washington-based group said today in a statement. Late loans climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.
After two straight weeks of declines, fixed mortgage rates rebounded, with the average conforming 30-year fixed mortgage rate moving up to 6.12%, according to Bankrate.com's weekly national survey of large lenders, released Thursday.
In the Seattle metro area, the restaurant sales tax is now 9.5% as of 4/1/08.
Michael Dell He said the company "will go past" its previously stated target of reducing headcount by 8,800 workers. "To be very clear, we are not satisfied with the current state of affairs," Dell told the gathering. "There are no fixed costs at Dell. Everything is being looked at."
CIT Group Inc., a troubled commercial lender which announced late last year it would stop originating private student loans, said it will stop originating government-guaranteed student loans, effective immediately.
Economic activity in the services sector improved in March but remained at a level that indicates a contraction, said the Institute for Supply Management Thursday. Its non-manufacturing index rose to 49.6%, under the level that indicates an industry is expanding, but slightly higher than February's 49.3% reading.
U.S. natural gas inventories fell for a 19th week, down 29 Billion cubic feet in the week ended March 28, Energy Information Administration reported on Thursday. At 1,248 Bcf, stocks were 304 Bcf less than last year at this time and 6 Bcf above the five-year average of 1,242 Bcf, EIA said.
New York Federal Reserve Bank President Timothy Geithner said capital markets are still ``substantially impaired'' and policy makers and financial industry leaders must ``act forcefully'' to stem the crisis.
Sen. Barack Obama's campaign just announced it raised more than $40 million last month from 442,000 contributors. The Obama campaign says it added more than 218,000 new contributors to its rolls last month and that it has now received money from 1.3 million people. By comparison, Clinton raised approximately $20 million in March.
Crude oil for May delivery fell $1, or 1%, to settle at $103.83 a barrel on the New York Mercantile Exchange. Gold for June delivery rose $9.40 to end at $909.60 an ounce on the New York Mercantile Exchange.
Borrowers fell behind on their car, home equity and home improvement loans in last three months of 2007 at a delinquency rate not hit since the early 1990s. The American Bankers Association reported Thursday that late payments on a group of consumer loans increased to 2.65 percent in the October-December quarter, up from 2.44 percent in the July-September quarter. It was the highest level since the first quarter of 1992, when the economy had just emerged from a recession.
Despite increased weakness in the economy, planned job cuts announced by employers fell by 26 percent in March to 53,579, down from 72,091 cuts in February, according to a report on monthly job cuts released Wednesday by global outplacement consultancy Challenger, Gray & Christmas Inc. The drop in March is similar to a decline in March 2007, when announced job cuts plunged 42 percent to an eight-month low of 48,997 from 84,014 in February, which turned out to be the largest job-cut month of the year. Last month’s job cuts were 9.4 percent higher than a year ago. Through the first quarter, job cuts totaling 200,656 are just 2.4 percent higher than the 195,986 cuts in the same period in 2007.
The number of U.S. workers applying for unemployment benefit soared by 38,000 last week, posting the highest reading since September 2005. The four-week average for jobless claims also rose by 15,750 to 374,500, the highest since the beginning of October 2005. For the week ending March 22, continuing jobless claims rose by 97,000 to 2.94 million.
Nato has confirmed it will not offer membership to Georgia or Ukraine but agreed to review the decision on the ex-Soviet republics in December.
The World Bank estimates ``that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices,'' Robert Zoellick, the bank's president, said on the organization's Web site. For these countries ``there is no margin for survival,'' he said.
Rough rice for May delivery advanced to $20.26 per 100 pounds on the Chicago Board of Trade today as the United Nations' Food and Agriculture Organization said global exports will drop 3.5 percent this year as nations curb sales.
Edward Kane, a finance professor at Boston College:"On the grounds that they were helping innovative U.S. firms to compete effectively in global markets, federal supervisors refused to take on the political and practical challenge of establishing and maintaining their ability to see and to discipline complicated risk exposures."
Google is cutting about 300 jobs from the American operations of DoubleClick in the first sizable layoffs in its history. The cuts would represent about a quarter of DoubleClick’s American work force of about 1,200.
ATA Airlines canceled all flights Thursday after filing for bankruptcy as it posted advisories at ticket counters in the handful of cities it still served and sought assistance for stranded passengers. The Indianapolis-based airline, once the nation's 10th-largest, entered bankruptcy for the second time in just over three years Wednesday, this time citing the loss of a key military charter business.
Italy's Stock Exchange says it suspended Alitalia's shares after Air France-KLM quit talks with Italian unions and Alitalia's chairman Maurizio Prato resigned.
Rob Hanna:"I ran some numbers tonight looking at action immediately following up days of 3.5% or more in the S&P 500. Of the 35 instances since 1960 that my scan found, 31 of them traded lower than their thrust day close at some point in the next 5 days. (Make that 32 for 36 after Wednesday.) 18 of the 35 traded lower by 1.75% or more. What’s this tell me? The pullback today was normal. In fact, continued pullback would be normal. The last two big thrust days (3/11 and 3/18) the market fell hard and fast almost immediately. If the market can get through tomorrow without a sharp selloff, that could be a positive. It would be a change in character."
Martin Feldstein: The US has a “let the market determine the value of the dollar” policy and a “let the Fed set interest rates to reflect US economic conditions policy” and a “strong RMB” policy not a "strong dollar policy."
The U.S. office market showed the first indication of a slowdown in the first quarter as tenants occupied less space for the first time in more than four years, according to real estate research firm Reis.
ConocoPhillips says it likely produced the equivalent of 1.8 million barrels of oil every day during the first three months of the year and made more money on each than in the past; however, the company believes it made much less profit on refined products like gasoline as its refining margins got squeezed, according to a preliminary first-quarter outlook. ConocoPhillips' results from its chemical and midstream operations are also expected to be lower.
"The Great Depression," says the headline. "Food stamps are the symbol of poverty in the U.S. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive - a sure sign the world's richest country faces economic crisis."
For at least 16 months after the Sept. 11 terror attacks in 2001, the Bush administration believed that the Constitution's protection against unreasonable searches and seizures on U.S. soil didn't apply to its efforts to protect against terrorism. That view was expressed in a secret Justice Department legal memo dated Oct. 23, 2001. The administration on Wednesday stressed that it now disavows that view.The October 2001 memo was written at the request of the White House by John Yoo, then the deputy assistant attorney general, and addressed to Alberto Gonzales, the White House counsel at the time. The administration had asked the department for an opinion on the legality of potential responses to terrorist activity.The 37-page memo is classified and has not been released. Its existence was disclosed Tuesday in a footnote of a separate secret memo, dated March 14, 2003, released by the Pentagon in response to a Freedom of Information Act lawsuit by the American Civil Liberties Union.
Intelligence centers run by states across the country have access to personal information about millions of Americans, including unlisted cellphone numbers, insurance claims, driver's license photographs and credit reports, according to a document obtained by The Washington Post.
Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years during the fourth quarter, another sign the U.S. economy is slowing, according to an American Bankers Association survey. Payments at least 30 days past due increased across all eight categories of loans tracked, the Washington-based group said today in a statement. Late loans climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.
After two straight weeks of declines, fixed mortgage rates rebounded, with the average conforming 30-year fixed mortgage rate moving up to 6.12%, according to Bankrate.com's weekly national survey of large lenders, released Thursday.
In the Seattle metro area, the restaurant sales tax is now 9.5% as of 4/1/08.
Michael Dell He said the company "will go past" its previously stated target of reducing headcount by 8,800 workers. "To be very clear, we are not satisfied with the current state of affairs," Dell told the gathering. "There are no fixed costs at Dell. Everything is being looked at."
CIT Group Inc., a troubled commercial lender which announced late last year it would stop originating private student loans, said it will stop originating government-guaranteed student loans, effective immediately.
Economic activity in the services sector improved in March but remained at a level that indicates a contraction, said the Institute for Supply Management Thursday. Its non-manufacturing index rose to 49.6%, under the level that indicates an industry is expanding, but slightly higher than February's 49.3% reading.
U.S. natural gas inventories fell for a 19th week, down 29 Billion cubic feet in the week ended March 28, Energy Information Administration reported on Thursday. At 1,248 Bcf, stocks were 304 Bcf less than last year at this time and 6 Bcf above the five-year average of 1,242 Bcf, EIA said.
New York Federal Reserve Bank President Timothy Geithner said capital markets are still ``substantially impaired'' and policy makers and financial industry leaders must ``act forcefully'' to stem the crisis.
Sen. Barack Obama's campaign just announced it raised more than $40 million last month from 442,000 contributors. The Obama campaign says it added more than 218,000 new contributors to its rolls last month and that it has now received money from 1.3 million people. By comparison, Clinton raised approximately $20 million in March.
Crude oil for May delivery fell $1, or 1%, to settle at $103.83 a barrel on the New York Mercantile Exchange. Gold for June delivery rose $9.40 to end at $909.60 an ounce on the New York Mercantile Exchange.
Borrowers fell behind on their car, home equity and home improvement loans in last three months of 2007 at a delinquency rate not hit since the early 1990s. The American Bankers Association reported Thursday that late payments on a group of consumer loans increased to 2.65 percent in the October-December quarter, up from 2.44 percent in the July-September quarter. It was the highest level since the first quarter of 1992, when the economy had just emerged from a recession.
Employment
4/3/08 Employment
United Airlines, the world's second-biggest carrier, grounded its fleet of 52 Boeing Co. 777 long-haul aircraft after missing maintenance checks. A review of maintenance records showed a test of the fire- suppression system on its 777s hadn't been performed, the Chicago-based airline said in a statement today. The equipment is now being scrutinized and the U.S. Federal Aviation Administration has been informed.
The ADP employment report indicates there is ``upside risk'' to HSBC Securities USA Inc.'s forecast that payrolls would fall by 100,000 in March, Ryan Wang, an economist at HSBC said in a note to clients.
Buyers snap up 41 units at Oakland's Eight Orchids development for up to 34 percent below asking price.
As many as 2,300 people, most of them contractors, could lose their jobs at Johnson Space Center as the shuttle fleet nears retirement in two years, NASA officials predicted Tuesday.
Monsanto earned $1.13 billion, or $2.02 per share, in the three months ended Feb. 29 from $543 million, or 98 cents per share, in the prior year. Its revenue jumped 45 percent to $3.8 billion from $2.6 billion in the prior-year period. The company said corn seed sales were a standout during the quarter, jumping to $1.7 billion from $1.2 billion during the same period a year before.
Alternative asset managers continue to hold a negative view on the S&P 500, the U.S. dollar, and the 10-year Treasury Note, according to market sentiment indicators released yesterday by Greenwich Alternative Investments. According to the indicators, 58% of hedge fund managers hold a bearish view on the S&P 500, 17% hold a neutral view, and 25% are bullish. Meanwhile, the dollar continued its slide lower in March and the majority of the hedge fund managers expect this trend to continue. In total, 58% are bearish about the U.S. currency, 17% are neutral and 25% are bullish.
In Rhode Island, the segment of the population on food stamps has risen by 18 per cent in two years. The US Department of Agriculture says the cost of feeding a low-income family of four has risen 6 per cent in 12 months. "The amount of food stamps per household hasn't gone up with the food costs," says Dayna Ballantyne, who runs a food bank in Des Moines, Iowa. "Our clients are finding they aren't able to purchase food like they used to." Join the crowd.
Cisco Systems Inc said sales of its high-end routers accelerated in the past several months despite worries that a slower U.S. economy was hurting technology spending.
Manhattan apartment sales plunged the most in 18 years last quarter as buyers faced the prospect of a recession and job cuts at Wall Street securities firms. First-quarter sales fell 34 percent from a year earlier and inventory rose 4.6 percent to 6,194 units, New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said.
The outlook for U.S. growth has worsened since January and the possibility of a recession can't be ruled out, Federal Reserve Chairman Ben Bernanke said Wednesday. "It not appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke said in testimony prepared for the Joint Economic Committee of Congress. "Clearly, the U.S. economy is going through a very difficult period."
Bernanke: "Surveys indicate that employers have scaled back hiring plans and that jobseekers are experiencing greater difficulties finding work. The unemployment rate edged down in February and remains at a relatively low level; however, in light of the sluggishness of economic activity and other indicators of a softer labor market, I expect it to move somewhat higher in coming months."
According to the Financial Times, "China has offered export guarantee facilities worth up to $50bn to encourage investment in Nigeria in a bold strategy to woo Africa’s biggest oil producer."
Rising inflation, high gas prices and a tightening home mortgage market have driven up auto-loan delinquencies, according to Fitch Ratings, the credit-rating agency. The number of Americans who are more than 60 days late on their car loan payments rose to a 10-year high in January, Fitch recently reported, attributing the rise in late payments to “increasing pressure on the consumer” in a weakening economy.
The Commerce Department reported Wednesday that factory orders dropped by 1.3 percent in February, about double the downturn that economists had been expecting. Orders had fallen an even bigger 2.3 percent in January, the largest decline in five months. Shipments dropped by 2.1%, the most since falling 3.8% in September 2006.
Barack Obama received the endorsement of Lee Hamilton, who besides being a former Congressman from Indiana — a state with an important primary still to be held — was also the top Democrat on the 9/11 Commission and a co-chairman of the Iraq Study Group. In a statement released this morning, Mr. Hamilton said he viewed Mr. Obama, from neighboring Illinois, as a champion of ‘’the politics of consensus and not of partisan division.”
Hillary Clinton holds a 9-point lead over rival Barack Obama among likely Pennsylvania Democratic primary voters ahead of the state's April 22 primary, according to a Quinnipiac University poll.
U.S. crude inventories rose by 1.9 million barrels to 309.4 million barrels in the week ending March 28, the American Petroleum Institute reported on Wednesday. Distillate stocks fell by 96,000 barrels to 113 million barrels in the same period, while gasoline stocks dropped by 1.5 million barrels to 217.4 million barrels, the API said. Meanwhile, U.S. crude inventories rose more than expected, up 7.4 million barrels to 319.2 million barrels in the week ending March 28, U.S. Energy Information Administration reported on Wednesday. Gasoline supplies fell by 4.5 million barrels in the latest week, while distillate stocks fell by 1.6 million barrels, EIA reported.
Schering Plough plans to reduce headcount by 10 percent and the goal is to make 80 percent of the cuts by the end of 2010.
Research In Motion Ltd. said Wednesday its fiscal fourth-quarter profit and sales more than doubled as the BlackBerry maker beat expectations. For the quarter ended March 1, the Canadian company earned $412.5 million, or 72 cents per share, up from a profit of $187.4 million, or 33 cents per share, in the same period a year earlier. Revenue more than doubled to $1.88 billion from $930 million.
The Federal Reserve announced Wednesday that it will auction an additional $25 billion in super-safe Treasury securities to big investment firms, part of an effort to ease problems in credit markets.
Crude for May delivery gained $3.85, or 3.8%, to settle at $104.83 a barrel on the New York Mercantile Exchange. Gold futures for June delivery rose $12.40, or 1.4 percent, to $900.20 an ounce on the Comex division of the New York Mercantile Exchange.
Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, with soybeans in second place at $26.8 billion, government figures show.
Homebuilders and the mortgage industry are emerging as big victors in a bipartisan agreement reached by Senate leaders on legislation designed to limit the housing crisis. The $15 billion measure, announced Wednesday by Majority Leader Harry Reid, D-Nev., and GOP leader Mitch McConnell of Kentucky, contains a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe.
Cisco Systems was downgraded to neutral from buy at UBS, though the broker kept its price target at $27.
The first quarter of 2008 saw widespread tightening of U.K. credit conditions, the Bank of England said in its quarterly credit conditions survey released Thursday. Lenders see further tightening over the next three months, the survey found.
The Monster Employment Index, developed by the New York online-recruitment firm, rose 2 points in March to 167 from 165 in March. The index is 10% below the year-earlier level of 185.
United Airlines, the world's second-biggest carrier, grounded its fleet of 52 Boeing Co. 777 long-haul aircraft after missing maintenance checks. A review of maintenance records showed a test of the fire- suppression system on its 777s hadn't been performed, the Chicago-based airline said in a statement today. The equipment is now being scrutinized and the U.S. Federal Aviation Administration has been informed.
The ADP employment report indicates there is ``upside risk'' to HSBC Securities USA Inc.'s forecast that payrolls would fall by 100,000 in March, Ryan Wang, an economist at HSBC said in a note to clients.
Buyers snap up 41 units at Oakland's Eight Orchids development for up to 34 percent below asking price.
As many as 2,300 people, most of them contractors, could lose their jobs at Johnson Space Center as the shuttle fleet nears retirement in two years, NASA officials predicted Tuesday.
Monsanto earned $1.13 billion, or $2.02 per share, in the three months ended Feb. 29 from $543 million, or 98 cents per share, in the prior year. Its revenue jumped 45 percent to $3.8 billion from $2.6 billion in the prior-year period. The company said corn seed sales were a standout during the quarter, jumping to $1.7 billion from $1.2 billion during the same period a year before.
Alternative asset managers continue to hold a negative view on the S&P 500, the U.S. dollar, and the 10-year Treasury Note, according to market sentiment indicators released yesterday by Greenwich Alternative Investments. According to the indicators, 58% of hedge fund managers hold a bearish view on the S&P 500, 17% hold a neutral view, and 25% are bullish. Meanwhile, the dollar continued its slide lower in March and the majority of the hedge fund managers expect this trend to continue. In total, 58% are bearish about the U.S. currency, 17% are neutral and 25% are bullish.
In Rhode Island, the segment of the population on food stamps has risen by 18 per cent in two years. The US Department of Agriculture says the cost of feeding a low-income family of four has risen 6 per cent in 12 months. "The amount of food stamps per household hasn't gone up with the food costs," says Dayna Ballantyne, who runs a food bank in Des Moines, Iowa. "Our clients are finding they aren't able to purchase food like they used to." Join the crowd.
Cisco Systems Inc said sales of its high-end routers accelerated in the past several months despite worries that a slower U.S. economy was hurting technology spending.
Manhattan apartment sales plunged the most in 18 years last quarter as buyers faced the prospect of a recession and job cuts at Wall Street securities firms. First-quarter sales fell 34 percent from a year earlier and inventory rose 4.6 percent to 6,194 units, New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said.
The outlook for U.S. growth has worsened since January and the possibility of a recession can't be ruled out, Federal Reserve Chairman Ben Bernanke said Wednesday. "It not appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke said in testimony prepared for the Joint Economic Committee of Congress. "Clearly, the U.S. economy is going through a very difficult period."
Bernanke: "Surveys indicate that employers have scaled back hiring plans and that jobseekers are experiencing greater difficulties finding work. The unemployment rate edged down in February and remains at a relatively low level; however, in light of the sluggishness of economic activity and other indicators of a softer labor market, I expect it to move somewhat higher in coming months."
According to the Financial Times, "China has offered export guarantee facilities worth up to $50bn to encourage investment in Nigeria in a bold strategy to woo Africa’s biggest oil producer."
Rising inflation, high gas prices and a tightening home mortgage market have driven up auto-loan delinquencies, according to Fitch Ratings, the credit-rating agency. The number of Americans who are more than 60 days late on their car loan payments rose to a 10-year high in January, Fitch recently reported, attributing the rise in late payments to “increasing pressure on the consumer” in a weakening economy.
The Commerce Department reported Wednesday that factory orders dropped by 1.3 percent in February, about double the downturn that economists had been expecting. Orders had fallen an even bigger 2.3 percent in January, the largest decline in five months. Shipments dropped by 2.1%, the most since falling 3.8% in September 2006.
Barack Obama received the endorsement of Lee Hamilton, who besides being a former Congressman from Indiana — a state with an important primary still to be held — was also the top Democrat on the 9/11 Commission and a co-chairman of the Iraq Study Group. In a statement released this morning, Mr. Hamilton said he viewed Mr. Obama, from neighboring Illinois, as a champion of ‘’the politics of consensus and not of partisan division.”
Hillary Clinton holds a 9-point lead over rival Barack Obama among likely Pennsylvania Democratic primary voters ahead of the state's April 22 primary, according to a Quinnipiac University poll.
U.S. crude inventories rose by 1.9 million barrels to 309.4 million barrels in the week ending March 28, the American Petroleum Institute reported on Wednesday. Distillate stocks fell by 96,000 barrels to 113 million barrels in the same period, while gasoline stocks dropped by 1.5 million barrels to 217.4 million barrels, the API said. Meanwhile, U.S. crude inventories rose more than expected, up 7.4 million barrels to 319.2 million barrels in the week ending March 28, U.S. Energy Information Administration reported on Wednesday. Gasoline supplies fell by 4.5 million barrels in the latest week, while distillate stocks fell by 1.6 million barrels, EIA reported.
Schering Plough plans to reduce headcount by 10 percent and the goal is to make 80 percent of the cuts by the end of 2010.
Research In Motion Ltd. said Wednesday its fiscal fourth-quarter profit and sales more than doubled as the BlackBerry maker beat expectations. For the quarter ended March 1, the Canadian company earned $412.5 million, or 72 cents per share, up from a profit of $187.4 million, or 33 cents per share, in the same period a year earlier. Revenue more than doubled to $1.88 billion from $930 million.
The Federal Reserve announced Wednesday that it will auction an additional $25 billion in super-safe Treasury securities to big investment firms, part of an effort to ease problems in credit markets.
Crude for May delivery gained $3.85, or 3.8%, to settle at $104.83 a barrel on the New York Mercantile Exchange. Gold futures for June delivery rose $12.40, or 1.4 percent, to $900.20 an ounce on the Comex division of the New York Mercantile Exchange.
Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, with soybeans in second place at $26.8 billion, government figures show.
Homebuilders and the mortgage industry are emerging as big victors in a bipartisan agreement reached by Senate leaders on legislation designed to limit the housing crisis. The $15 billion measure, announced Wednesday by Majority Leader Harry Reid, D-Nev., and GOP leader Mitch McConnell of Kentucky, contains a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe.
Cisco Systems was downgraded to neutral from buy at UBS, though the broker kept its price target at $27.
The first quarter of 2008 saw widespread tightening of U.K. credit conditions, the Bank of England said in its quarterly credit conditions survey released Thursday. Lenders see further tightening over the next three months, the survey found.
The Monster Employment Index, developed by the New York online-recruitment firm, rose 2 points in March to 167 from 165 in March. The index is 10% below the year-earlier level of 185.
Wednesday, April 02, 2008
Financials
4/2/08 Financials
Lehman priced a $4 billion offering of 4 million shares of 7.25% convertible preferred stock."Lehman's raise-up is unique in that it was not driven by the need to replenish capital as a result of large write-downs," Citigroup analyst Prashant Bhatia wrote. "Therefore, Lehman can be more opportunistic in putting its new capital to work in the near term."
On a conference call from a Morgan Stanley-sponsored financial services conference in London, the CFO said his firm cut its ABS CDO/subprime exposure to $1.8 billion from $10.4 billion, it cut CMBS exposure to $11.6 billion from $36.2 billion, and it cut other mortgage related exposure to $6.7 billion from $13.9 billion. Kelleher also said the the ongoing credit crisis will remain a serious problem "at least" through the end of 2008.
The financial services industry "is facing the most severe investment banking crisis in 30 years," according to a report by analysts at Morgan Stanley on Tuesday, which added earnings in the sector may take close to two years to recover.
Swiss bank UBS intends to raise 15 billion Swiss francs ($15.1 billion) in an underwriten rights issue and that its chairman Marcel Ospel will step down. UBS said that it will post a loss of around 12 billion francs in the first quarter, after taking losses and writedowns of around $19 billion related to U.S real estate and related structured credit positions. UBS also said that it will form a new unit to hold certain currently illiquid U.S. real estate assets. UBS said that it's confident that these measures will deal effectively with real estate exposure.
Deutsche Bank AG said Tuesday that it expects first-quarter write-downs of $4 billion due to "significantly more challenging" market conditions triggered by the U.S. subprime collapse.
Thornburg Mortgage, a jumbo mortgage provider that has been trying to avoid bankruptcy, raised $1.35 billion from a sale of debt and warrants to buy common stock.The Santa Fe, New Mexico-based company said it has received $1.15 billion of the proceeds, and that the other $200 million will be held in escrow until the completion of a tender offer for preferred stock. It said the new subordinated notes carry an initial interest rate of 18 percent.
Analysts at financial research firm Celent say the U.S. banking industry will lose 200,000 jobs over the next 12 to 18 months.
O'Reilly Automotive Inc.said it'll buy CSK Auto in a deal valued at $1 billion, including $500 million in debt. CSK shareholders will receive $11 of O'Reilly common stock, subject to a collar, plus $1 in cash for each share of CSK common stock.
Microsoft Corp. is standing firm and won't raise its $44.6 billion bid for Yahoo Inc., people close to the Redmond, Wash., software giant told The Wall Street Journal.
Construction spending fell again in February as home building tumbled for a record 24th straight month.The Commerce Department reported Tuesday that overall construction activity dropped 0.3 percent in February, reflecting weakness not only in home building but also in nonresidential activity. Only government building projects showed a gain in February.
Rep. Ron Paul: "These past few weeks have provided an unfortunate opportunity to discuss inflation. The dollar index has reached new all-time lows. The total money supply, M3, as calculated by private sources, is growing at a disturbing 17% rate. The Fed is pumping dollars into the economy at an alarming rate. Just recently the Fed announced new loan auctions totaling $100 billion. That is new money created from thin air. If these money auctions, combined with the bailout of Bear Stearns, continue to be the trend, we are in for some economic stormy weather. The explanation lies in understanding the basics of money, and why it is dangerous to give government and big banks control over it."
According to Washington Post, auditors say 95 major systems have exceeded their original budgets by a total of $295 billion and are generally delivered almost two years late.
The World Bank trims its 2008 growth forecast to 9.4 percent from 9.6 percent but said it should be robust enough to help drive the global economy.
With the exception of cocoa and corn, commodities were in the red across the board.
A group of investors including RSF Partners, Farallon Capital Management and Greenfield Partners said they've created a land-development joint venture to purchase properties from a unit of home builder Centex Corp.The agreement encompasses a group of 27 projects and about 8,500 residential lots in 11 states, with most of the properties located in California and Nevada. The deal price for the portfolio was $161 million, according to a press release. Centex has a 5% ownership interest in the venture, and has the option to purchase a "limited number of the lots from certain neighborhoods."
Gold for June delivery tumbled $33.70, or 3.6%, to close at $887.80 an ounce on the New York Mercantile Exchange.
Jim Farley, head of Ford Motor Co.'s marketing division, warned Tuesday that the tough climate to sell cars and trucks in the U.S. could get even worse in the coming months. "I'd like to be able to tell you that the worst behind us, but I really can't give you that assurance," he said in a conference call. "Our sense is that the next quarter, the second quarter of the year, may be our most difficult of the year." Earlier, Ford reported a 14% decline in March U.S. sales.
In the final analysis in Texas, Obama had 99 delegates to 94 for Clinton.
The Dow Jones Industrial Average climbed 391.47 points, or 3.2%, to 12,654.36. The S&P 500 climbed 47.47 points, or 3.6%, to 1,370.17, while the Nasdaq Composite rallied 83.65, or 3.7%, points to 2,362.75. In sum, it was the best beginning for the second quarter in the equity market in the last 70 years.
Crude for May delivery rose 17 cents, or 0.2%, to $101.75 a barrel in early afternooon trading. It fell to an intraday low of $99.55 earlier. Gold for June delivery tumbled $33.70, or 3.6%, to close at $887.80 an ounce on the New York Mercantile Exchange.
Jim Farley, head of Ford Motor Co.'s marketing division, warned Tuesday that the tough climate to sell cars and trucks in the U.S. could get even worse in the coming months. "I'd like to be able to tell you that the worst behind us, but I really can't give you that assurance," he said in a conference call. "Our sense is that the next quarter, the second quarter of the year, may be our most difficult of the year." Earlier, Ford reported a 14% decline in March U.S. sales.
Fannie Mae has told lenders it will require a credit score of at least 580 for most individual loans as part of the latest move to make its standards more stringent for mortgages it buys or guarantees, according to a report Wednesday in The Wall Street Journal.
Instability in financial markets does not appear to have impacted trade flows in the crude oil business to any noticeable extent, Nordic American Tanker Shipping said. Strong demand from Far Eastern and South America economies is balancing out challenges in the U.S. and elsewhere, the shipping firm said. Spot market tanker rates in January were $45,000 per day per vessel, compared to $27,000 per day per vessel in the fourth quarter. First-quarter earnings and dividends will be "appreciably" higher than the fourth quarter, with the dividend above $1 a share.
The ADP report suggests nonfarm payrolls grew by about 33,000 in March, much better that the drop of 60,000 expected by Wall Street economists. Analysts note that the ADP has overshot the employment report in each of the past four months. Joel Prakken, chairman of Macroeconomic Advisors, the firm that produces the report, said.
Best Buy said Wednesday its profit fell 3 percent to $737 million, or $1.71 per share, in the quarter ended March 1, from $763 million, or $1.55 per share last year. There were fewer shares outstanding in the most recent quarter.
Lehman priced a $4 billion offering of 4 million shares of 7.25% convertible preferred stock."Lehman's raise-up is unique in that it was not driven by the need to replenish capital as a result of large write-downs," Citigroup analyst Prashant Bhatia wrote. "Therefore, Lehman can be more opportunistic in putting its new capital to work in the near term."
On a conference call from a Morgan Stanley-sponsored financial services conference in London, the CFO said his firm cut its ABS CDO/subprime exposure to $1.8 billion from $10.4 billion, it cut CMBS exposure to $11.6 billion from $36.2 billion, and it cut other mortgage related exposure to $6.7 billion from $13.9 billion. Kelleher also said the the ongoing credit crisis will remain a serious problem "at least" through the end of 2008.
The financial services industry "is facing the most severe investment banking crisis in 30 years," according to a report by analysts at Morgan Stanley on Tuesday, which added earnings in the sector may take close to two years to recover.
Swiss bank UBS intends to raise 15 billion Swiss francs ($15.1 billion) in an underwriten rights issue and that its chairman Marcel Ospel will step down. UBS said that it will post a loss of around 12 billion francs in the first quarter, after taking losses and writedowns of around $19 billion related to U.S real estate and related structured credit positions. UBS also said that it will form a new unit to hold certain currently illiquid U.S. real estate assets. UBS said that it's confident that these measures will deal effectively with real estate exposure.
Deutsche Bank AG said Tuesday that it expects first-quarter write-downs of $4 billion due to "significantly more challenging" market conditions triggered by the U.S. subprime collapse.
Thornburg Mortgage, a jumbo mortgage provider that has been trying to avoid bankruptcy, raised $1.35 billion from a sale of debt and warrants to buy common stock.The Santa Fe, New Mexico-based company said it has received $1.15 billion of the proceeds, and that the other $200 million will be held in escrow until the completion of a tender offer for preferred stock. It said the new subordinated notes carry an initial interest rate of 18 percent.
Analysts at financial research firm Celent say the U.S. banking industry will lose 200,000 jobs over the next 12 to 18 months.
O'Reilly Automotive Inc.said it'll buy CSK Auto in a deal valued at $1 billion, including $500 million in debt. CSK shareholders will receive $11 of O'Reilly common stock, subject to a collar, plus $1 in cash for each share of CSK common stock.
Microsoft Corp. is standing firm and won't raise its $44.6 billion bid for Yahoo Inc., people close to the Redmond, Wash., software giant told The Wall Street Journal.
Construction spending fell again in February as home building tumbled for a record 24th straight month.The Commerce Department reported Tuesday that overall construction activity dropped 0.3 percent in February, reflecting weakness not only in home building but also in nonresidential activity. Only government building projects showed a gain in February.
Rep. Ron Paul: "These past few weeks have provided an unfortunate opportunity to discuss inflation. The dollar index has reached new all-time lows. The total money supply, M3, as calculated by private sources, is growing at a disturbing 17% rate. The Fed is pumping dollars into the economy at an alarming rate. Just recently the Fed announced new loan auctions totaling $100 billion. That is new money created from thin air. If these money auctions, combined with the bailout of Bear Stearns, continue to be the trend, we are in for some economic stormy weather. The explanation lies in understanding the basics of money, and why it is dangerous to give government and big banks control over it."
According to Washington Post, auditors say 95 major systems have exceeded their original budgets by a total of $295 billion and are generally delivered almost two years late.
The World Bank trims its 2008 growth forecast to 9.4 percent from 9.6 percent but said it should be robust enough to help drive the global economy.
With the exception of cocoa and corn, commodities were in the red across the board.
A group of investors including RSF Partners, Farallon Capital Management and Greenfield Partners said they've created a land-development joint venture to purchase properties from a unit of home builder Centex Corp.The agreement encompasses a group of 27 projects and about 8,500 residential lots in 11 states, with most of the properties located in California and Nevada. The deal price for the portfolio was $161 million, according to a press release. Centex has a 5% ownership interest in the venture, and has the option to purchase a "limited number of the lots from certain neighborhoods."
Gold for June delivery tumbled $33.70, or 3.6%, to close at $887.80 an ounce on the New York Mercantile Exchange.
Jim Farley, head of Ford Motor Co.'s marketing division, warned Tuesday that the tough climate to sell cars and trucks in the U.S. could get even worse in the coming months. "I'd like to be able to tell you that the worst behind us, but I really can't give you that assurance," he said in a conference call. "Our sense is that the next quarter, the second quarter of the year, may be our most difficult of the year." Earlier, Ford reported a 14% decline in March U.S. sales.
In the final analysis in Texas, Obama had 99 delegates to 94 for Clinton.
The Dow Jones Industrial Average climbed 391.47 points, or 3.2%, to 12,654.36. The S&P 500 climbed 47.47 points, or 3.6%, to 1,370.17, while the Nasdaq Composite rallied 83.65, or 3.7%, points to 2,362.75. In sum, it was the best beginning for the second quarter in the equity market in the last 70 years.
Crude for May delivery rose 17 cents, or 0.2%, to $101.75 a barrel in early afternooon trading. It fell to an intraday low of $99.55 earlier. Gold for June delivery tumbled $33.70, or 3.6%, to close at $887.80 an ounce on the New York Mercantile Exchange.
Jim Farley, head of Ford Motor Co.'s marketing division, warned Tuesday that the tough climate to sell cars and trucks in the U.S. could get even worse in the coming months. "I'd like to be able to tell you that the worst behind us, but I really can't give you that assurance," he said in a conference call. "Our sense is that the next quarter, the second quarter of the year, may be our most difficult of the year." Earlier, Ford reported a 14% decline in March U.S. sales.
Fannie Mae has told lenders it will require a credit score of at least 580 for most individual loans as part of the latest move to make its standards more stringent for mortgages it buys or guarantees, according to a report Wednesday in The Wall Street Journal.
Instability in financial markets does not appear to have impacted trade flows in the crude oil business to any noticeable extent, Nordic American Tanker Shipping said. Strong demand from Far Eastern and South America economies is balancing out challenges in the U.S. and elsewhere, the shipping firm said. Spot market tanker rates in January were $45,000 per day per vessel, compared to $27,000 per day per vessel in the fourth quarter. First-quarter earnings and dividends will be "appreciably" higher than the fourth quarter, with the dividend above $1 a share.
The ADP report suggests nonfarm payrolls grew by about 33,000 in March, much better that the drop of 60,000 expected by Wall Street economists. Analysts note that the ADP has overshot the employment report in each of the past four months. Joel Prakken, chairman of Macroeconomic Advisors, the firm that produces the report, said.
Best Buy said Wednesday its profit fell 3 percent to $737 million, or $1.71 per share, in the quarter ended March 1, from $763 million, or $1.55 per share last year. There were fewer shares outstanding in the most recent quarter.
Tuesday, April 01, 2008
Weapons Of Mass Misinformation
4/1/08 Weapons Of Mass Misinformation
The average diversified stock mutual fund has fallen 10.3 percent so far this year — the worst quarterly showing in five years, according to analysts at Morningstar in Chicago.
“A year ago, we were told the problems were in subprime, ” said David Rosenberg, chief North American economist at Merrill Lynch, “and what is becoming increasingly apparent is that the participation in the credit bubble was far greater than just that.”
Prashant A. Bhatia of Citigroup: “It’s tough to have a liquidity-driven meltdown when you’re being backed by government entities that have the ability to print money.”
Pernod Ricard, the French liquor company, announced Monday that it had agreed to acquire the parent of Absolut vodka for 5.63 billion euros ($8.87 billion).
The International Monetary Fund will pare its forecast for 2008 economic growth in the euro area to below 1.4% next month, citing Luc Everaert, who heads the IMF’s regional studies unit in Europe.
Brett Steenbarger: "If selling does not pick up early in the week, particularly in the NYSE TICK, I would expect the market to look for a short-term bottom and enter a range mode, with last week's highs as the upper end of the range. As long as Supply exceeds Demand and stocks making new lows continue to expand, however, I will be defensive on this market. Any pickup of selling would target an important test of the mid-March lows."
Yahoo! introduced Shine, a site for women.
The Financial Times reported that investors pulled almost $100 billion out of equity funds in the first quarter.
In mid-Monday trading, the dollar index traded at 71.387.
George Ure: "I've demonstrated that we're already in a Second Depression now; see the Aggregate Index chart here. The key thing is that unlike the Great Depression, which was marked with high unemployment and massive deflation, this Second Depression has been [human] capitalized, such that a single person working can no longer support a family at a 1950's standard of living. Husbands and wives both work just to make rent, and judging by foreclosures, even that's not enough lately...Today, the proposals which will be put forth by the Treasury Secretary will make it clear: Given the abuses, lying, cheating, misrepresentations, and other morally bankrupt practices that have accompanied the Housing Bubble's collapse, this administration, along with the political duopoly (republicorps/democorps), will attempt to prop up the financial system so that America can continue its 'business as usual' and pass on a continuously higher mountain of debt to future generations, and thus ensure servitude to holders of debt and government in perpetuity."
"The latest military intelligence data point to heightened U.S. military preparations for both an air and ground operation against Iran," the official said, adding that the Pentagon has probably not yet made a final decision as to when an attack will be launched. He said the Pentagon is looking for a way to deliver a strike against Iran "that would enable the Americans to bring the country to its knees at minimal cost." He also said the U.S. Naval presence in the Persian Gulf has for the first time in the past four years reached the level that existed shortly before the invasion of Iraq in March 2003. Col.-Gen. Leonid Ivashov, vice president of the Academy of Geopolitical Sciences, said last week that the Pentagon is planning to deliver a massive air strike on Iran's military infrastructure in the near future. A new U.S. carrier battle group has been dispatched to the Gulf. The USS John C. Stennis, with a crew of 3,200 and around 80 fixed-wing aircraft, including F/A-18 Hornet and Superhornet fighter-bombers, eight support ships and four nuclear submarines are heading for the Gulf, where a similar group led by the USS Dwight D. Eisenhower has been deployed since December 2006. The U.S. is also sending Patriot anti-missile systems to the region.
CIA Director Michael V. Hayden said Sunday that he believes Iran is still pursuing a nuclear bomb, even though the U.S. intelligence community, including his own agency, reached a consensus judgment last year that the Islamic Republic had halted its nuclear weapons work in 2003.
Dick Cheney alleged that Iran was "heavily involved in trying to develop nuclear weapons enrichment, the enrichment of uranium to weapons-grade levels." International inspectors have not found evidence of such an effort.
Philip Morris International Inc. begins trading Monday on the NYSE Euronext after its spin-off from Altria Group Inc., which remains listed on the New York Stock Exchange.
Farmers are expected to plant 86 million acres of corn this year, the government predicted Monday, down 8 percent from 2007, when the amount of corn planted was the highest since World War II.
U.S. farmers will plant 18 percent more acres with soybeans this year, more than expected, after price gains made the oilseed more profitable than corn, the Department of Agriculture said.
Growers will seed 74.793 million acres with soybeans, up from 63.631 million last year, after prices rose 67 percent in the past year, partly because of increased demand and reduced supplies, the USDA said today in a report. Acreage may also increase because soybeans are less expensive to grow than corn since they produce their own nitrogen fertilizer.
Palladium production will fall 65,000 ounces short of demand next year, the first deficit in at least five years, partly because jewelers and automakers will switch from more expensive platinum, Societe Generale SA said.
The Chicago Purchasing Managers Index showed the pace of contraction of the region's manufacturing business improved slightly in March, to 48.2 compared with 44.5 the previous month.
Production at Pemex, the world's third-largest oil producer began to fall in 2005 and in 2007 averaged 3.08 million barrels a day. Mexico may have to import light crude -- less viscous oil used to make gasoline -- for its refineries by 2011 if Pemex is left unchanged, Energy Minister Georgina Kessel said in a Dec. 11 report. Without new production, daily oil exports may plummet to 289,000 barrels in 2016 from 1.67 million last year, the report says.
India, Asia's third-largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.
Gulf central bank governors will hold the first of two meetings this year in Doha, Qatar, on April 6-7 to discuss monetary and currency policy.
"VMware Lifecycle Manager allows customers to fully automate the provisioning, charging back and decommissioning of virtual machines," said Raghu Raghuram, vice president of products and solutions at VMware. "VMware Lifecycle Manager is integral to the many new products VMware is bringing to market to offer unprecedented levels of automation and control across datacenters."
Aloha Airlines is ending passenger service after 60 years of operation.
The Dow Jones Industrial Average rose 46.49 points Monday, up 0.4%, at 12262.89, down 7.6% for the quarter, which ended at the closing bell. The Nasdaq Composite Index gained 0.8%, or 17.92 points, to 2279.10, down 14.1% for the quarter. And the Standard & Poor's 500 gained 0.6%, or 7.48 points, at 1322.70, helped by a 0.9% rise in its financial sector; however, the S&P 500 index finished down 0.6 percent for the month, and 9.9 percent for the quarter, the worst decline since the second quarter of 2003.
Monsanto Co. agreed to acquire the Netherlands' De Ruiter Seeds Group BV for €546 million, or $863 million, in a deal expected to build on the agriculture giant's vegetable-seed business. The deal is intended to enhance Monsanto's growth in the protected-culture segment, where seeds are germinated in controlled settings like greenhouses.
Lehman, the fourth-biggest U.S. securities firm, will offer 3 million convertible preferred shares, the New York-based firm said in a statement today.``We still maintain that we don't need capital, but we've realized that perception is the dominant issue in today's markets,'' Chief Financial Officer Erin Callan said in an interview. ``This is an endorsement of our balance sheet by investors.'' The convertible preferred shares are seen having a dividend of 7 percent to 7.5 percent and a conversion premium of 30 percent to 35 percent ... The deal is expected to be sold by Tuesday before market close.
Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. will earn less and face higher borrowing costs because of increased regulation of investment banks, Pacific Investment Management Co.'s Bill Gross said.
Legg Mason Inc. said costs to bail out a money-market fund will cut profit by $195 million, or $1.38 a share, in the three months ending March 31.The company agreed to provide as much as $400 million to the fund.
Defaults on privately insured U.S. mortgages rose 38.1 percent in February, as a growing number of homeowners failed to keep up with their loan payments. The Mortgage Insurance Cos. of America Monday said 60,911 insured borrowers were at least 60 days late on payments in February.That is up from 44,111 a year earlier, but down 11.7 percent from January's record 68,950. Defaults have topped 60,000 for four straight months, a level not previously reached since data were first tabulated in 2001.
Earnings for financial companies are expected to have dropped 49 percent during the quarter, and forecasts point to another 30 percent drop in the second quarter.
Light, sweet crude for May delivery dropped $4.04 to settle at $101.58 a barrel on the New York Mercantile Exchange, adding to a decline of nearly $2 a barrel on Friday. Even so, prices finished the first three months of the year 5.8 percent higher than where they started; crude set a record of $111.80 in March before giving up ground. The price of gold, for instance, sank $14.40 to settle at $916.20 on the Nymex. Natural gas jumped 30.1 cents to settle at $10.101 per 1,000 cubic feet on the Nymex.
The Fed will stop cutting its target rate for overnight lending between banks once it reaches 1.5%, Paul McCulley, a portfolio manager at PIMCO, said.
Dell Inc. will close its desktop manufacturing plant in Austin, Texas , and consider selling its Dell Financial Services unit, valued at about $1 billion , all in an effort to save $3 billion a year.
Ansys announced it would buy Ansoft for $16.25 per share in cash and 0.431882 shares of Ansys.
ABC News: "The $8.7 million in debts owed by Sen. Hillary Clinton's campaign as of her last Federal Election Commission filing deadline are staggering for their breadth and range.The debts date back to last Fall, to states long ago decided...
The Politico reports that "word is getting around that Clinton’s campaign does not promptly pay those who labor to make her events look good, said an employee of the event production company Forty Two of Youngstown, Ohio. 'I feel insulted by the way that the campaign treated this company and treated us personally,' said the employee, who did not want to be named talking about a client. ...the employee said the campaign has stopped returning phone calls, e-mails and didn’t respond to a certified letter. 'We worked very hard to put together these events on a moment’s notice and do absolutely everything to a ‘t’ to make it look perfect on television for her and for her campaign,' said the employee. 'Sen. Clinton talks about helping working families, people in unions and small businesses. But when it comes down to actually doing something that shows that she can back up her words with action, she fails.'"
The ISM index inched higher to 48.6% in March from 48.3% in February.
The average diversified stock mutual fund has fallen 10.3 percent so far this year — the worst quarterly showing in five years, according to analysts at Morningstar in Chicago.
“A year ago, we were told the problems were in subprime, ” said David Rosenberg, chief North American economist at Merrill Lynch, “and what is becoming increasingly apparent is that the participation in the credit bubble was far greater than just that.”
Prashant A. Bhatia of Citigroup: “It’s tough to have a liquidity-driven meltdown when you’re being backed by government entities that have the ability to print money.”
Pernod Ricard, the French liquor company, announced Monday that it had agreed to acquire the parent of Absolut vodka for 5.63 billion euros ($8.87 billion).
The International Monetary Fund will pare its forecast for 2008 economic growth in the euro area to below 1.4% next month, citing Luc Everaert, who heads the IMF’s regional studies unit in Europe.
Brett Steenbarger: "If selling does not pick up early in the week, particularly in the NYSE TICK, I would expect the market to look for a short-term bottom and enter a range mode, with last week's highs as the upper end of the range. As long as Supply exceeds Demand and stocks making new lows continue to expand, however, I will be defensive on this market. Any pickup of selling would target an important test of the mid-March lows."
Yahoo! introduced Shine, a site for women.
The Financial Times reported that investors pulled almost $100 billion out of equity funds in the first quarter.
In mid-Monday trading, the dollar index traded at 71.387.
George Ure: "I've demonstrated that we're already in a Second Depression now; see the Aggregate Index chart here. The key thing is that unlike the Great Depression, which was marked with high unemployment and massive deflation, this Second Depression has been [human] capitalized, such that a single person working can no longer support a family at a 1950's standard of living. Husbands and wives both work just to make rent, and judging by foreclosures, even that's not enough lately...Today, the proposals which will be put forth by the Treasury Secretary will make it clear: Given the abuses, lying, cheating, misrepresentations, and other morally bankrupt practices that have accompanied the Housing Bubble's collapse, this administration, along with the political duopoly (republicorps/democorps), will attempt to prop up the financial system so that America can continue its 'business as usual' and pass on a continuously higher mountain of debt to future generations, and thus ensure servitude to holders of debt and government in perpetuity."
"The latest military intelligence data point to heightened U.S. military preparations for both an air and ground operation against Iran," the official said, adding that the Pentagon has probably not yet made a final decision as to when an attack will be launched. He said the Pentagon is looking for a way to deliver a strike against Iran "that would enable the Americans to bring the country to its knees at minimal cost." He also said the U.S. Naval presence in the Persian Gulf has for the first time in the past four years reached the level that existed shortly before the invasion of Iraq in March 2003. Col.-Gen. Leonid Ivashov, vice president of the Academy of Geopolitical Sciences, said last week that the Pentagon is planning to deliver a massive air strike on Iran's military infrastructure in the near future. A new U.S. carrier battle group has been dispatched to the Gulf. The USS John C. Stennis, with a crew of 3,200 and around 80 fixed-wing aircraft, including F/A-18 Hornet and Superhornet fighter-bombers, eight support ships and four nuclear submarines are heading for the Gulf, where a similar group led by the USS Dwight D. Eisenhower has been deployed since December 2006. The U.S. is also sending Patriot anti-missile systems to the region.
CIA Director Michael V. Hayden said Sunday that he believes Iran is still pursuing a nuclear bomb, even though the U.S. intelligence community, including his own agency, reached a consensus judgment last year that the Islamic Republic had halted its nuclear weapons work in 2003.
Dick Cheney alleged that Iran was "heavily involved in trying to develop nuclear weapons enrichment, the enrichment of uranium to weapons-grade levels." International inspectors have not found evidence of such an effort.
Philip Morris International Inc. begins trading Monday on the NYSE Euronext after its spin-off from Altria Group Inc., which remains listed on the New York Stock Exchange.
Farmers are expected to plant 86 million acres of corn this year, the government predicted Monday, down 8 percent from 2007, when the amount of corn planted was the highest since World War II.
U.S. farmers will plant 18 percent more acres with soybeans this year, more than expected, after price gains made the oilseed more profitable than corn, the Department of Agriculture said.
Growers will seed 74.793 million acres with soybeans, up from 63.631 million last year, after prices rose 67 percent in the past year, partly because of increased demand and reduced supplies, the USDA said today in a report. Acreage may also increase because soybeans are less expensive to grow than corn since they produce their own nitrogen fertilizer.
Palladium production will fall 65,000 ounces short of demand next year, the first deficit in at least five years, partly because jewelers and automakers will switch from more expensive platinum, Societe Generale SA said.
The Chicago Purchasing Managers Index showed the pace of contraction of the region's manufacturing business improved slightly in March, to 48.2 compared with 44.5 the previous month.
Production at Pemex, the world's third-largest oil producer began to fall in 2005 and in 2007 averaged 3.08 million barrels a day. Mexico may have to import light crude -- less viscous oil used to make gasoline -- for its refineries by 2011 if Pemex is left unchanged, Energy Minister Georgina Kessel said in a Dec. 11 report. Without new production, daily oil exports may plummet to 289,000 barrels in 2016 from 1.67 million last year, the report says.
India, Asia's third-largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.
Gulf central bank governors will hold the first of two meetings this year in Doha, Qatar, on April 6-7 to discuss monetary and currency policy.
"VMware Lifecycle Manager allows customers to fully automate the provisioning, charging back and decommissioning of virtual machines," said Raghu Raghuram, vice president of products and solutions at VMware. "VMware Lifecycle Manager is integral to the many new products VMware is bringing to market to offer unprecedented levels of automation and control across datacenters."
Aloha Airlines is ending passenger service after 60 years of operation.
The Dow Jones Industrial Average rose 46.49 points Monday, up 0.4%, at 12262.89, down 7.6% for the quarter, which ended at the closing bell. The Nasdaq Composite Index gained 0.8%, or 17.92 points, to 2279.10, down 14.1% for the quarter. And the Standard & Poor's 500 gained 0.6%, or 7.48 points, at 1322.70, helped by a 0.9% rise in its financial sector; however, the S&P 500 index finished down 0.6 percent for the month, and 9.9 percent for the quarter, the worst decline since the second quarter of 2003.
Monsanto Co. agreed to acquire the Netherlands' De Ruiter Seeds Group BV for €546 million, or $863 million, in a deal expected to build on the agriculture giant's vegetable-seed business. The deal is intended to enhance Monsanto's growth in the protected-culture segment, where seeds are germinated in controlled settings like greenhouses.
Lehman, the fourth-biggest U.S. securities firm, will offer 3 million convertible preferred shares, the New York-based firm said in a statement today.``We still maintain that we don't need capital, but we've realized that perception is the dominant issue in today's markets,'' Chief Financial Officer Erin Callan said in an interview. ``This is an endorsement of our balance sheet by investors.'' The convertible preferred shares are seen having a dividend of 7 percent to 7.5 percent and a conversion premium of 30 percent to 35 percent ... The deal is expected to be sold by Tuesday before market close.
Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. will earn less and face higher borrowing costs because of increased regulation of investment banks, Pacific Investment Management Co.'s Bill Gross said.
Legg Mason Inc. said costs to bail out a money-market fund will cut profit by $195 million, or $1.38 a share, in the three months ending March 31.The company agreed to provide as much as $400 million to the fund.
Defaults on privately insured U.S. mortgages rose 38.1 percent in February, as a growing number of homeowners failed to keep up with their loan payments. The Mortgage Insurance Cos. of America Monday said 60,911 insured borrowers were at least 60 days late on payments in February.That is up from 44,111 a year earlier, but down 11.7 percent from January's record 68,950. Defaults have topped 60,000 for four straight months, a level not previously reached since data were first tabulated in 2001.
Earnings for financial companies are expected to have dropped 49 percent during the quarter, and forecasts point to another 30 percent drop in the second quarter.
Light, sweet crude for May delivery dropped $4.04 to settle at $101.58 a barrel on the New York Mercantile Exchange, adding to a decline of nearly $2 a barrel on Friday. Even so, prices finished the first three months of the year 5.8 percent higher than where they started; crude set a record of $111.80 in March before giving up ground. The price of gold, for instance, sank $14.40 to settle at $916.20 on the Nymex. Natural gas jumped 30.1 cents to settle at $10.101 per 1,000 cubic feet on the Nymex.
The Fed will stop cutting its target rate for overnight lending between banks once it reaches 1.5%, Paul McCulley, a portfolio manager at PIMCO, said.
Dell Inc. will close its desktop manufacturing plant in Austin, Texas , and consider selling its Dell Financial Services unit, valued at about $1 billion , all in an effort to save $3 billion a year.
Ansys announced it would buy Ansoft for $16.25 per share in cash and 0.431882 shares of Ansys.
ABC News: "The $8.7 million in debts owed by Sen. Hillary Clinton's campaign as of her last Federal Election Commission filing deadline are staggering for their breadth and range.The debts date back to last Fall, to states long ago decided...
The Politico reports that "word is getting around that Clinton’s campaign does not promptly pay those who labor to make her events look good, said an employee of the event production company Forty Two of Youngstown, Ohio. 'I feel insulted by the way that the campaign treated this company and treated us personally,' said the employee, who did not want to be named talking about a client. ...the employee said the campaign has stopped returning phone calls, e-mails and didn’t respond to a certified letter. 'We worked very hard to put together these events on a moment’s notice and do absolutely everything to a ‘t’ to make it look perfect on television for her and for her campaign,' said the employee. 'Sen. Clinton talks about helping working families, people in unions and small businesses. But when it comes down to actually doing something that shows that she can back up her words with action, she fails.'"
The ISM index inched higher to 48.6% in March from 48.3% in February.
Monday, March 31, 2008
The End Of The First Quarter
3/31/08 The End Of The First Quarter
Robert McHugh: "We got a new sell signal Friday in our 14 Day Stochastic indicator. Signals by this indicator have done a pretty good job in identifying several hundred point trend turns...While there are no guarantees, the fact we got a new "sell" signal Friday suggests we are likely to see a several hundred point move lower over the next week to 10 days. At least that is where the odds lie right now.
The same can pretty much be said for the Purchasing Power Indicator, which also has generated a new "sell" signal Friday. Correlation with new trends has been good for this indicator, also ignoring "noise" well. When it gives a new signal, we usually see a 2 percent or more trend from the S&P 500."
Shiite cleric Muqtada al-Sadr is offering to pull his fighters off the streets of Basra and other cities if the government halts raids against his followers and releases prisoners held without charge.
According to Business Week, BNSF Railway Co., the nation's top hauler of container rail freight, is parking miles of railcars in Montana and elsewhere because there isn't enough freight to keep them rolling. Cars that often carry 40-foot containers of goods shipped from Asia stand like an iron fence between the Missouri River and this Montana burg known for world-class fly fishing. They stretch as far as Sandee Cardinal can see when she stands outside her home on the river's west bank between Helena and Great Falls...The cars parked are the type that haul cargo from ships on the coast to points inland, mainly imported goods -- an area that's starting to slow down due to the weak economy. Analysts say transportation usually is among the first sectors to show signs of a downturn in the economy and with Americans feeling pinched -- employers eliminated 63,000 jobs last month amid declining consumer confidence -- it could be a while before the idle cars move. "If you take a look at transportation, both trucking and rail, you will see that things started softening last summer," said Arnold Maltz, associate professor of supply-chain management at Arizona State University. "The reason you are seeing all those cars parked is that the consumer economy translates into slower imports." Texas-based BNSF Railway, a division of Burlington Northern Santa Fe Corp., has parked upward of 1,000 cars in Montana alone, spokesman Gus Melonas said. More are parked in other parts of the company's 32,000-mile system, which operates in 28 states and two Canadian provinces.
One might ponder whether railroad shares and the Dow Jones Transportation Index truly reflect the weakness associated with imports.
Brett Steenbarger: "With Friday's weakness, we continue to see deterioration in the Technical Strength measure, which quantifies short-term trending behavior among individual stocks...We once again see Financials as the weakest sector, disappointing given the recent Fed attempts at stablization. The strongest sector by far is Consumer Staples, which suggests a flight to relatively recession-resistant, defensive names. The more growth-oriented technology issues are weak...Defensiveness appears to be the watchword of the day, with investors continuing to shun the Financials and preferring the safety of companies that sell Staples over those relying upon Discretionary spending."
"We're the underdog in Pennsylvania," Mr. Obama told a Johnstown audience yesterday. "It is a short window of time, so we've got to be realistic about whether it's possible to make up that gap," Sen. Bob Casey, his chief Pennsylvania ally, said. "I think we can cut into it, but that's about the most I'll say."
"My attitude is that Sen. Clinton can run as long as she wants," Obama said yesterday. "Her name's on the ballot, and she is a fierce and formidable competitor, and she obviously believes that she would make the best nominee and the best president, and I think that, you know, she should be able to compete and her supporters should be able to support her, for as long as they are willing or able." But he stopped short of the view of many Clinton supporters that their battle should be allowed to go all the way to the convention in Denver. After the completion of the final primary contests in June, he said, "I think it is important to pivot as completely as possible, for the superdelegates or others, to make a decision as quickly as possible so that we can settle on a nominee and give that nominee some time before the convention to select a vice president, or presidential nominee, to start thinking about how the convention should be conducted ... at that point I think people should have more than enough information to make a decision."
Sen. Amy Klobuchar of Minnesota is expected to endorse Sen. Obama Monday, according to a Democrat familiar with her plans. Meanwhile, North Carolina's seven Democratic House members are poised to endorse Sen. Obama as a group -- just one has so far -- before that state's May 6 primary, several Democrats say.
Research in Motion is expected to more than double its bottom line when it reports its quarterly results next week. The company said net subscriber additions are expected to be 15% to 20% higher than the 1.82 million it had originally forecast for the period.
Wednesday morning Best Buy reports their quarterly numbers. It will be interesting see how the numbers reflect weak consumer spending.
Schering-Plough dropped 17% in pre-open trade. A study published in the New England Journal of Medicine concluded that doctors should cut their use of cholesterol drugs Vytorin and Zetia. Vytroin is a combination of Merck's Zocor and Schering-Plough's Zetia. Merck shares dropped 10%.
Teva Pharmaceutical Industries Ltd., seeking to expand its operations in the fast-growing Spanish market, agreed to acquire Bentley Pharmaceuticals Inc. for $15.02 a share, or $360 million.
Consumer price inflation in the euro-zone rose at 3.5% annual pace in March, Eurostat reported Monday, accelerating from the 3.2% rate seen in February and exceeding market expectations for a reading of 3.3%.
Gilat Satellite Networks Ltd., the Petach Tikva, Israel, provider of products and services for satellite-based communications networks, agreed to be acquired for $11.40 a share, or $475 million, by a group of private-equity firms
Allan Sloan: "The problem is that vital markets that most people never see - the constant borrowing and lending and trading among huge institutions - have been paralyzed by losses, fear, and uncertainty. And you can't get rid of losses, fear, and uncertainty by cutting rates."
John Hussman: "The effect of the Fed's guarantee is not to protect the public, but to protect Bear Stearns' bondholders. During the upcoming hearings, Congress can improve public confidence about the U.S. financial system by clarifying the distinction between “failure” of a company's obligations to customers, and the “failure” of a company's own securities...Congress has the Constitutional right, by the representative will of the people, to commit public funds. The Bear Stearns deal is a dangerous precedent and a dilution of Congressional prerogative...In short, investors should have confidence in the ability of the capital markets to function without the need for government bailouts at public expense."
Robert McHugh: "We got a new sell signal Friday in our 14 Day Stochastic indicator. Signals by this indicator have done a pretty good job in identifying several hundred point trend turns...While there are no guarantees, the fact we got a new "sell" signal Friday suggests we are likely to see a several hundred point move lower over the next week to 10 days. At least that is where the odds lie right now.
The same can pretty much be said for the Purchasing Power Indicator, which also has generated a new "sell" signal Friday. Correlation with new trends has been good for this indicator, also ignoring "noise" well. When it gives a new signal, we usually see a 2 percent or more trend from the S&P 500."
Shiite cleric Muqtada al-Sadr is offering to pull his fighters off the streets of Basra and other cities if the government halts raids against his followers and releases prisoners held without charge.
According to Business Week, BNSF Railway Co., the nation's top hauler of container rail freight, is parking miles of railcars in Montana and elsewhere because there isn't enough freight to keep them rolling. Cars that often carry 40-foot containers of goods shipped from Asia stand like an iron fence between the Missouri River and this Montana burg known for world-class fly fishing. They stretch as far as Sandee Cardinal can see when she stands outside her home on the river's west bank between Helena and Great Falls...The cars parked are the type that haul cargo from ships on the coast to points inland, mainly imported goods -- an area that's starting to slow down due to the weak economy. Analysts say transportation usually is among the first sectors to show signs of a downturn in the economy and with Americans feeling pinched -- employers eliminated 63,000 jobs last month amid declining consumer confidence -- it could be a while before the idle cars move. "If you take a look at transportation, both trucking and rail, you will see that things started softening last summer," said Arnold Maltz, associate professor of supply-chain management at Arizona State University. "The reason you are seeing all those cars parked is that the consumer economy translates into slower imports." Texas-based BNSF Railway, a division of Burlington Northern Santa Fe Corp., has parked upward of 1,000 cars in Montana alone, spokesman Gus Melonas said. More are parked in other parts of the company's 32,000-mile system, which operates in 28 states and two Canadian provinces.
One might ponder whether railroad shares and the Dow Jones Transportation Index truly reflect the weakness associated with imports.
Brett Steenbarger: "With Friday's weakness, we continue to see deterioration in the Technical Strength measure, which quantifies short-term trending behavior among individual stocks...We once again see Financials as the weakest sector, disappointing given the recent Fed attempts at stablization. The strongest sector by far is Consumer Staples, which suggests a flight to relatively recession-resistant, defensive names. The more growth-oriented technology issues are weak...Defensiveness appears to be the watchword of the day, with investors continuing to shun the Financials and preferring the safety of companies that sell Staples over those relying upon Discretionary spending."
"We're the underdog in Pennsylvania," Mr. Obama told a Johnstown audience yesterday. "It is a short window of time, so we've got to be realistic about whether it's possible to make up that gap," Sen. Bob Casey, his chief Pennsylvania ally, said. "I think we can cut into it, but that's about the most I'll say."
"My attitude is that Sen. Clinton can run as long as she wants," Obama said yesterday. "Her name's on the ballot, and she is a fierce and formidable competitor, and she obviously believes that she would make the best nominee and the best president, and I think that, you know, she should be able to compete and her supporters should be able to support her, for as long as they are willing or able." But he stopped short of the view of many Clinton supporters that their battle should be allowed to go all the way to the convention in Denver. After the completion of the final primary contests in June, he said, "I think it is important to pivot as completely as possible, for the superdelegates or others, to make a decision as quickly as possible so that we can settle on a nominee and give that nominee some time before the convention to select a vice president, or presidential nominee, to start thinking about how the convention should be conducted ... at that point I think people should have more than enough information to make a decision."
Sen. Amy Klobuchar of Minnesota is expected to endorse Sen. Obama Monday, according to a Democrat familiar with her plans. Meanwhile, North Carolina's seven Democratic House members are poised to endorse Sen. Obama as a group -- just one has so far -- before that state's May 6 primary, several Democrats say.
Research in Motion is expected to more than double its bottom line when it reports its quarterly results next week. The company said net subscriber additions are expected to be 15% to 20% higher than the 1.82 million it had originally forecast for the period.
Wednesday morning Best Buy reports their quarterly numbers. It will be interesting see how the numbers reflect weak consumer spending.
Schering-Plough dropped 17% in pre-open trade. A study published in the New England Journal of Medicine concluded that doctors should cut their use of cholesterol drugs Vytorin and Zetia. Vytroin is a combination of Merck's Zocor and Schering-Plough's Zetia. Merck shares dropped 10%.
Teva Pharmaceutical Industries Ltd., seeking to expand its operations in the fast-growing Spanish market, agreed to acquire Bentley Pharmaceuticals Inc. for $15.02 a share, or $360 million.
Consumer price inflation in the euro-zone rose at 3.5% annual pace in March, Eurostat reported Monday, accelerating from the 3.2% rate seen in February and exceeding market expectations for a reading of 3.3%.
Gilat Satellite Networks Ltd., the Petach Tikva, Israel, provider of products and services for satellite-based communications networks, agreed to be acquired for $11.40 a share, or $475 million, by a group of private-equity firms
Allan Sloan: "The problem is that vital markets that most people never see - the constant borrowing and lending and trading among huge institutions - have been paralyzed by losses, fear, and uncertainty. And you can't get rid of losses, fear, and uncertainty by cutting rates."
John Hussman: "The effect of the Fed's guarantee is not to protect the public, but to protect Bear Stearns' bondholders. During the upcoming hearings, Congress can improve public confidence about the U.S. financial system by clarifying the distinction between “failure” of a company's obligations to customers, and the “failure” of a company's own securities...Congress has the Constitutional right, by the representative will of the people, to commit public funds. The Bear Stearns deal is a dangerous precedent and a dilution of Congressional prerogative...In short, investors should have confidence in the ability of the capital markets to function without the need for government bailouts at public expense."
Sunday, March 30, 2008
Leveraged Speculation
3/30/08 Leveraged Speculation
Doug Noland: "I would argue forcefully that the leveraged speculating community for some years now has assumed the key role of unappreciated marginal source of demand for risk assets – risky debt instruments financing asset inflation, in particular. Over time, Wall Street “alchemy” mastered the process of transforming virtually unlimited risky loans into perceived safe and liquid securities. A sizable – and growing - chunk of these securities were then purchased on leverage by the rapidly expanding speculator community, in the process fueling an increasingly maladjusted U.S. Bubble Economy. We’re now witnessing it all beginning to wind down. End of an Era...Debt problems are accelerating and expanding from mortgages to home equity, auto, Credit card, student loans, small business finance, munis and corporate Credits. At the same time, Wall Street has been significantly tightening lending requirements for the leveraging of all types of debt instruments. While the focus has been on mortgage Credit, recent deterioration in other types of loans – and, importantly, the leveraged holders of large amounts of this debt – have major consequences for Credit Availability throughout the Economic Sphere. Housing markets and foreclosures are obviously major issues. Not commonly recognized is the now virtually across the board tightening in Credit throughout the securitization markets (consumer, student, muni, corporate, etc.), exerting more expansive headwinds upon the U.S. economy than even the tightening in mortgages (that predominantly impacted transactions and home prices)...To be sure, our Credit system continues to provide sufficient Credit to finance massive Current Account Deficits. And it is this ongoing outflow of dollar liquidity that stokes both indomitable dollar devaluation and global Credit excess. Many contend that inflationary pressures are poised to wane as the U.S. economy weakens. I’ll suggest that inflation dynamics will prove much more complex and uncooperative. There is further confirmation of this view - that the bursting of the Wall Street finance Bubble will have a significantly greater impact on asset prices than on general consumer pricing pressures...When it comes to Ending of Eras, I am increasingly fearful that we are falling deeper into a precarious period devoid of a functioning global currency regime necessary to discipline Credit excess and restrain mounting inflationary pressures. And as long as dollar liquidity inundates the world economy, domestic Credit systems across the globe enjoy the extraordinary capacity to inflate domestic Credit and use this new purchasing power for the benefit of their citizens and economies. And, in particular because of their enormous populations, as long as the Chinese and Indian Credit system enjoy the freedom to inflate at will there will remain significant upside pricing pressure for energy, food, and various goods and commodities in limited supply – hedge fund speculative excess and/or bust notwithstanding...Similarly, I believe general inflationary pressures may likely prove more significantly influenced by runaway global Credit excesses than by the Wall Street and U.S. asset price busts. If this proves to be the case, perhaps the greater risk is a bursting of the Treasury Market Bubble. It may take some time, but an enormous supply of government debt is in the offing and – let’s face it – these instruments will become only less appealing over time. It also begs the question as to the advisability of aggressive Fed rate cuts. They are having little influence on the bursting Wall Street Bubbles but possibly huge effects on global inflationary forces. Little wonder the ECB is so hesitant to lower rates."
Doug Noland is, in my view, along with Nouriel Roubini, one of the most astute global financial observers. He raises the point of the possible Treasury Market Bubble. This is an area I have discussed in recent weeks with much less eloquence. It is a subject worth serious consideration, and the implication for our financial system has immense implications. In effect, it could mean a rupturing in any future debt build up and, ultimately, the U.S. cash flow.
One of Mr. Obama’s most prominent supporters, Senator Patrick J. Leahy of Vermont, said Mrs. Clinton should quit the race because she hurt Mr. Obama “more than anything John McCain has said.”
Venezuela is rerouting oil to China that had previously been sent to a U.S. refinery co-owned by its state oil company and Exxon Mobil Corp., Venezuela's oil minister said Friday. Rafael Ramirez said Exxon has stopped ordering crude for a refinery in the New Orleans suburb of Chalmette as legal wrangling between the Irving, Texas-based company and Petroleos de Venezuela S.A., or PDVSA, continues. "Everything went to China," Ramirez told reporters. In my view, this will prove to be commonplace in the months to come.
George Ure: "Having seized control of the currency in 1913, and having sold the notion that prices somehow mysteriously levitate in the general economy independent of the supply of goods, market demand, and supply of money, the bankers club - the not-really Federal Reserve will begin its push Monday to control much more than banking. It's about to seize Wall Street.
In doing so, the Treasury is expected to promote the merging of the Securities and Exchange Commission and the Commodities Futures Trading Commission that oversees the commodities markets.
Oh, and in dabbling their toes in owning (as securities pledge against loans) CMO's and such, the Fed may also have tipped its hat that it's getting into real estate ownership...So, Monday the Revolution begins. Bankers will promote their socialist / price fixing, total government control of markets under the guise of 'saving us' from misdeeds by people who have made what are called 'errors in investment judgments'. In an earlier time, it would have been called fraud or rampant speculations and people would be fired, bankrupted, jailed, or hung for such breach of the public trust.
"Market Stability" is like pregnancy: You're either price fixing, or your not."
Barry Ritholtz: "The data point we are always interested in are the year over year, NSA, sales. In 2006, 1.07 million vacation homes were sold -- a record number. In 2007, second home sales had fallen 31% to 740,000, according to NAR data. The median price of a vacation home was $195,000 in 2007, down 2.5% from $200,000 in 2006. 2007 also saw speculators exiting the housing market: Homes bought purely for investment dropped 18% to 1.35 million last year, compared with 1.65 million in 2006. That is versus a 10% decline in primary-residence sales, (2007 = 4.34 million, down from 2006 = 4.82 million)"
According to The Wall Street Journal, UBS "began on Friday to lower the values of so-called auction-rate securities held by its clients, a move that will be a jolt to customers who had been told they were investing in a "cash alternative."
Roger Ehrenberg: "The issue with today's financial meltdown is clearly one of liquidity and leverage. If the banks and investment banks thought the paper they held was good and felt the value was there, then ok. Except for one key point. By being leveraged to the eyeballs and practicing exceedingly poor gap management (the spread between the duration of assets and liabilities, where most money is made investing in long-term assets and funding them on a short-term basis), they've put themselves in the position of having to mark-to-market their troubled portfolios pursuant to the guidelines above. Because the magnitude of these portfolios are such that they can't assure the markets that they can be carried indefinitely. They can't. And it has put banks globally into a painful Catch-22. Sell the assets, lock-in their losses, substantially shrink their businesses and raise billions in new capital to reload. Or try and hold on to their assets, and play a game of chicken with governments and the financial markets. Neither picture is particularly pretty, but this is where we are."
Ester Faia: "Both phenomena we are looking at, financial crises and raising in inflation, can be seen as long term implications of expansionary monetary policies and, in particular, of the lack of a well defined nominal anchor in the policy strategies conducted by most central banks. How about the future orientation of monetary policies? Apart from the ECB, which is rightly keeping nominal interest rate stable, The Fed and the Bank of England attempt to contain the financial crises by providing credit to illiquid banks, and to this aim have expanded the range of collateral they are willing to accept. The classic theory of ‘’lender of last resort’’ tells us that monetary authorities should lend to illiquid banks to avoid panics, but against sound collateral. To avoid moral hazard, lending should be given to illiquid banks not to insolvent ones. Now, shall we consider a security containing dubious asset-backed components as sound collaterals? And, how can a bank in a world with so much liquidity be unable to obtain credit in the interbank market, unless the market judges it to be an insolvent bank? Overall recent interventions by the Fed and the Bank of England might amplify moral hazard problems. Most of all those same interventions are harming central bank credibility which is the main pillar of inflation targeting/price stability strategies."
This weekend's conventions in Texas will elect 7,298 delegates to the June 5-7 Texas Democratic Convention in Austin. Those delegates in turn will select the 67 at-large delegates who go to the national nominating convention in August in Denver. Clinton won the March 4 primaries and collected a 65-61 lead in delegates awarded based on popular vote. In Texas Democrats' two-tiered delegate selection system, the 67 at-large delegates are still at stake. After about a million people turned out for precinct caucuses, the state party estimated that Obama, a senator from Illinois, held a 37-30 lead among the at-large delegates. That would leave Obama with 98 delegates to 95 for Clinton. However, fine tuning of the delegates from the caucuses could provide an additional advantage for Obama because he led Clinton 59-41% in results reported from conventions held across the state before counting stopped for the night on Saturday.
Dubai International Capital and private-equity firm Bridgepoint plan to bid jointly for healthcare group Euromedic International for about 700 million pounds ($1.4 billion), the London Times said on Sunday.
Oil markets are well-supplied with inventories of crude oil and refined products over their five-year average, the OPEC governor of the United Arab Emirates said on Sunday.The weakness of the U.S. dollar has amplified the rise in oil prices, which was partly due to speculation, Ali al-Yabhouni told an energy conference in Dubai.
Markets may be stabilizing, but the news on the economy is getting worse. The coming week will see more dismal headlines on employment, construction and manufacturing, economists said. "The indicators on the economy will point in the direction of pronounced weakness in domestic demand," wrote Global Insight economists Nigel Gault and Brian Bethune.
Mike Burk: "The number of new lows declined sharply last week. For the week most of the indices went nowhere and Friday ended the week with 3 consecutive down days. New lows hit their high point for the week on Friday, but, even on Friday they were substantially lower than they were on any day of the previous week. Two weeks ago next Monday there were 477 new lows on the NASDAQ and 759 on the NYSE. Those numbers are large enough to imply a high likelihood of another retest of the recent lows in the next few months...The rapid decline in new lows suggest that risk is receding. I expect the major indices to be higher on Friday April 4 than they were on Friday March 28."
Doug Noland: "I would argue forcefully that the leveraged speculating community for some years now has assumed the key role of unappreciated marginal source of demand for risk assets – risky debt instruments financing asset inflation, in particular. Over time, Wall Street “alchemy” mastered the process of transforming virtually unlimited risky loans into perceived safe and liquid securities. A sizable – and growing - chunk of these securities were then purchased on leverage by the rapidly expanding speculator community, in the process fueling an increasingly maladjusted U.S. Bubble Economy. We’re now witnessing it all beginning to wind down. End of an Era...Debt problems are accelerating and expanding from mortgages to home equity, auto, Credit card, student loans, small business finance, munis and corporate Credits. At the same time, Wall Street has been significantly tightening lending requirements for the leveraging of all types of debt instruments. While the focus has been on mortgage Credit, recent deterioration in other types of loans – and, importantly, the leveraged holders of large amounts of this debt – have major consequences for Credit Availability throughout the Economic Sphere. Housing markets and foreclosures are obviously major issues. Not commonly recognized is the now virtually across the board tightening in Credit throughout the securitization markets (consumer, student, muni, corporate, etc.), exerting more expansive headwinds upon the U.S. economy than even the tightening in mortgages (that predominantly impacted transactions and home prices)...To be sure, our Credit system continues to provide sufficient Credit to finance massive Current Account Deficits. And it is this ongoing outflow of dollar liquidity that stokes both indomitable dollar devaluation and global Credit excess. Many contend that inflationary pressures are poised to wane as the U.S. economy weakens. I’ll suggest that inflation dynamics will prove much more complex and uncooperative. There is further confirmation of this view - that the bursting of the Wall Street finance Bubble will have a significantly greater impact on asset prices than on general consumer pricing pressures...When it comes to Ending of Eras, I am increasingly fearful that we are falling deeper into a precarious period devoid of a functioning global currency regime necessary to discipline Credit excess and restrain mounting inflationary pressures. And as long as dollar liquidity inundates the world economy, domestic Credit systems across the globe enjoy the extraordinary capacity to inflate domestic Credit and use this new purchasing power for the benefit of their citizens and economies. And, in particular because of their enormous populations, as long as the Chinese and Indian Credit system enjoy the freedom to inflate at will there will remain significant upside pricing pressure for energy, food, and various goods and commodities in limited supply – hedge fund speculative excess and/or bust notwithstanding...Similarly, I believe general inflationary pressures may likely prove more significantly influenced by runaway global Credit excesses than by the Wall Street and U.S. asset price busts. If this proves to be the case, perhaps the greater risk is a bursting of the Treasury Market Bubble. It may take some time, but an enormous supply of government debt is in the offing and – let’s face it – these instruments will become only less appealing over time. It also begs the question as to the advisability of aggressive Fed rate cuts. They are having little influence on the bursting Wall Street Bubbles but possibly huge effects on global inflationary forces. Little wonder the ECB is so hesitant to lower rates."
Doug Noland is, in my view, along with Nouriel Roubini, one of the most astute global financial observers. He raises the point of the possible Treasury Market Bubble. This is an area I have discussed in recent weeks with much less eloquence. It is a subject worth serious consideration, and the implication for our financial system has immense implications. In effect, it could mean a rupturing in any future debt build up and, ultimately, the U.S. cash flow.
One of Mr. Obama’s most prominent supporters, Senator Patrick J. Leahy of Vermont, said Mrs. Clinton should quit the race because she hurt Mr. Obama “more than anything John McCain has said.”
Venezuela is rerouting oil to China that had previously been sent to a U.S. refinery co-owned by its state oil company and Exxon Mobil Corp., Venezuela's oil minister said Friday. Rafael Ramirez said Exxon has stopped ordering crude for a refinery in the New Orleans suburb of Chalmette as legal wrangling between the Irving, Texas-based company and Petroleos de Venezuela S.A., or PDVSA, continues. "Everything went to China," Ramirez told reporters. In my view, this will prove to be commonplace in the months to come.
George Ure: "Having seized control of the currency in 1913, and having sold the notion that prices somehow mysteriously levitate in the general economy independent of the supply of goods, market demand, and supply of money, the bankers club - the not-really Federal Reserve will begin its push Monday to control much more than banking. It's about to seize Wall Street.
In doing so, the Treasury is expected to promote the merging of the Securities and Exchange Commission and the Commodities Futures Trading Commission that oversees the commodities markets.
Oh, and in dabbling their toes in owning (as securities pledge against loans) CMO's and such, the Fed may also have tipped its hat that it's getting into real estate ownership...So, Monday the Revolution begins. Bankers will promote their socialist / price fixing, total government control of markets under the guise of 'saving us' from misdeeds by people who have made what are called 'errors in investment judgments'. In an earlier time, it would have been called fraud or rampant speculations and people would be fired, bankrupted, jailed, or hung for such breach of the public trust.
"Market Stability" is like pregnancy: You're either price fixing, or your not."
Barry Ritholtz: "The data point we are always interested in are the year over year, NSA, sales. In 2006, 1.07 million vacation homes were sold -- a record number. In 2007, second home sales had fallen 31% to 740,000, according to NAR data. The median price of a vacation home was $195,000 in 2007, down 2.5% from $200,000 in 2006. 2007 also saw speculators exiting the housing market: Homes bought purely for investment dropped 18% to 1.35 million last year, compared with 1.65 million in 2006. That is versus a 10% decline in primary-residence sales, (2007 = 4.34 million, down from 2006 = 4.82 million)"
According to The Wall Street Journal, UBS "began on Friday to lower the values of so-called auction-rate securities held by its clients, a move that will be a jolt to customers who had been told they were investing in a "cash alternative."
Roger Ehrenberg: "The issue with today's financial meltdown is clearly one of liquidity and leverage. If the banks and investment banks thought the paper they held was good and felt the value was there, then ok. Except for one key point. By being leveraged to the eyeballs and practicing exceedingly poor gap management (the spread between the duration of assets and liabilities, where most money is made investing in long-term assets and funding them on a short-term basis), they've put themselves in the position of having to mark-to-market their troubled portfolios pursuant to the guidelines above. Because the magnitude of these portfolios are such that they can't assure the markets that they can be carried indefinitely. They can't. And it has put banks globally into a painful Catch-22. Sell the assets, lock-in their losses, substantially shrink their businesses and raise billions in new capital to reload. Or try and hold on to their assets, and play a game of chicken with governments and the financial markets. Neither picture is particularly pretty, but this is where we are."
Ester Faia: "Both phenomena we are looking at, financial crises and raising in inflation, can be seen as long term implications of expansionary monetary policies and, in particular, of the lack of a well defined nominal anchor in the policy strategies conducted by most central banks. How about the future orientation of monetary policies? Apart from the ECB, which is rightly keeping nominal interest rate stable, The Fed and the Bank of England attempt to contain the financial crises by providing credit to illiquid banks, and to this aim have expanded the range of collateral they are willing to accept. The classic theory of ‘’lender of last resort’’ tells us that monetary authorities should lend to illiquid banks to avoid panics, but against sound collateral. To avoid moral hazard, lending should be given to illiquid banks not to insolvent ones. Now, shall we consider a security containing dubious asset-backed components as sound collaterals? And, how can a bank in a world with so much liquidity be unable to obtain credit in the interbank market, unless the market judges it to be an insolvent bank? Overall recent interventions by the Fed and the Bank of England might amplify moral hazard problems. Most of all those same interventions are harming central bank credibility which is the main pillar of inflation targeting/price stability strategies."
This weekend's conventions in Texas will elect 7,298 delegates to the June 5-7 Texas Democratic Convention in Austin. Those delegates in turn will select the 67 at-large delegates who go to the national nominating convention in August in Denver. Clinton won the March 4 primaries and collected a 65-61 lead in delegates awarded based on popular vote. In Texas Democrats' two-tiered delegate selection system, the 67 at-large delegates are still at stake. After about a million people turned out for precinct caucuses, the state party estimated that Obama, a senator from Illinois, held a 37-30 lead among the at-large delegates. That would leave Obama with 98 delegates to 95 for Clinton. However, fine tuning of the delegates from the caucuses could provide an additional advantage for Obama because he led Clinton 59-41% in results reported from conventions held across the state before counting stopped for the night on Saturday.
Dubai International Capital and private-equity firm Bridgepoint plan to bid jointly for healthcare group Euromedic International for about 700 million pounds ($1.4 billion), the London Times said on Sunday.
Oil markets are well-supplied with inventories of crude oil and refined products over their five-year average, the OPEC governor of the United Arab Emirates said on Sunday.The weakness of the U.S. dollar has amplified the rise in oil prices, which was partly due to speculation, Ali al-Yabhouni told an energy conference in Dubai.
Markets may be stabilizing, but the news on the economy is getting worse. The coming week will see more dismal headlines on employment, construction and manufacturing, economists said. "The indicators on the economy will point in the direction of pronounced weakness in domestic demand," wrote Global Insight economists Nigel Gault and Brian Bethune.
Mike Burk: "The number of new lows declined sharply last week. For the week most of the indices went nowhere and Friday ended the week with 3 consecutive down days. New lows hit their high point for the week on Friday, but, even on Friday they were substantially lower than they were on any day of the previous week. Two weeks ago next Monday there were 477 new lows on the NASDAQ and 759 on the NYSE. Those numbers are large enough to imply a high likelihood of another retest of the recent lows in the next few months...The rapid decline in new lows suggest that risk is receding. I expect the major indices to be higher on Friday April 4 than they were on Friday March 28."
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