4/23/08 Foreclosures
Tens of thousands of Californians lost their homes during the first three months of the year as foreclosures soared more than 300 percent across the Bay Area and the state. Many experts expect those numbers to climb higher this year and beyond. "The problem isn't going away anytime soon," said Andrew LePage, an analyst with DataQuick Information Systems. "We're still looking for some sign of a peak in foreclosure activity." Lenders took back 6,579 homes in the nine-county Bay Area during the first quarter, up from 1,493 a year ago and 4,573 in the fourth quarter, according to a report released by DataQuick on Tuesday. Throughout California, 47,171 homes were foreclosed on, up from 11,032 a year ago. The regional and state figures are now at their highest level in more than 15 years.
Rice climbed to a record after World Bank officials said Thailand, the largest exporter, may restrict shipments, worsening a global food crisis. ``If a key exporter like this limits foreign sales, it would be very much like Saudi Arabia reducing oil exports,'' said James Adams, vice president of the bank's East Asia and Pacific department. China, Vietnam, India and Egypt have curbed sales abroad to safeguard domestic supplies and cool inflation.
Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.
The Architecture Billings Index dropped to 39.7 last month from 41.8 in February, the Washington-based institute said today in a statement. The score was the lowest since the survey's inception in November 1995. Any score below 50 indicates a decrease in billings from the previous month.
The biggest threat to the future security of oil supplies is the lack of spare production capacity worldwide, Saudi Arabia warned on Tuesday. In unusually frank remarks, Ali Naimi, the kingdom's oil minister, said: "Limited capacity along the entire supply chain is the real source of current global supply tightness and represents the greatest threat to ensuring adequate energy to fuel future economic growth."
The federal deficit hit an all-time high of $311 billion for the first half of this budget year, reports the Treasury Department, up from $162 billion in the prior year!
More than 100 million people are being driven deeper into poverty by a "silent tsunami" of sharply rising food prices, which have sparked riots around the world and threaten U.N.-backed feeding programs for 20 million children, the top U.N. food official said Tuesday.
Apple has acquired PA Semi for what an unnamed source suggested was $278 million in cash. Apple’s move suggests that the company may be considering a move away from Intel, which provided the chips for successful offerings like the iPhone and the MacBook series of notebook computers.
The Bush administration is proposing that Congress authorize it to buy billions of dollars in federal student loans to make sure the nation’s credit crunch does not block borrowing for higher education.
EMC said it remains "on target" to achieve its 2008 financial targets. The company in January projected earnings of 78 cents a share and earnings excluding items of $1.04 a share for the year. EMC also projected revenue growth of 13% to $15 billion in 2008.
WellPoint Inc.'s first-quarter profit fell 25 percent, badly missing Wall Street expectations, as the health insurer cut its full-year outlook again. Indianapolis-based WellPoint said Wednesday its earnings dropped to $588.1 million, or $1.07 per share, from $783.1 million, or $1.26 per share, a year earlier. Investment losses of 6 cents per share hurt results. Revenue rose 3 percent to $15.55 billion from $15.09 billion, as medical enrollment climbed by 564,000 members. Analysts polled by Thomson Financial forecast earnings of $1.19 per share including the investment losses on $15.4 billion in revenue. The company's benefit expense — or medical loss — ratio rose to 85.1 percent, up from 83.1 percent the previous year. The company cut its 2008 earnings per share outlook to between $5.42 to $5.67, including 6 cents of investment losses, from a revised range of $5.76 to $6.01. Analysts currently forecast $5.73 per share.
Nouriel Roubini: "I expect a longer and deeper U-shaped recession, lasting at least 12 months and possibly as long as 18 months –- one of the most severe US recessions in decades – because today’s macroeconomic and financial conditions are far worse."
JP Morgan assumed coverage of Alliance Data Systems Corp with an "overweight" rating, compared with its prior "neutral" rating, saying the current price offered an attractive entry for value-conscious investors. "We think fiscal 2008 consensus estimates are safe (if not conservative)," analyst Reginald Smith said, while adding that the stock trades at about 12 times his 2008 estimates.
General Dynamics Corp. said Wednesday its first quarter earnings rose nearly 32 percent, led by big sales increases in the division that makes armored vehicles, tanks and combat tools.
Australia's inflation rate accelerated to more than 4 percent for the first time in seven years, driving the nation's currency to the highest against the dollar since 1984 on speculation the central bank may raise interest rates next month.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended April 18 fell 14.2 percent to 637.6.
Liberty Mutual to acquire Safeco for $68.25/share in cash.
Freeport-McMoRan Copper & Gold Inc.'s first-quarter net income more than doubled amid near-record prices for gold and other metals as year-earlier results were weighed down by costs associated with the company's Phelps Dodge purchase. Freeport also raised its 2008 cash-flow forecast. The mining giant reported net income of $1.1 billion, or $2.64 a share, up from $476 million, or $2.02 a share, a year earlier. Revenue rose to $5.67 billion from $2.25 billion. Analysts' mean estimates were for per-share earnings of $2.12 on revenue of $4.69 billion, according to a poll by Thomson Reuters.
Norfolk Southern earned 76 cents per share in the first quarter, 2 cents off Wall Street estimates, according to a poll of analysts by Thomson Financial.
China cut a tax on share trading to support the stock market after the benchmark index plunged 35 percent this year. Stamp duty will be lowered to 0.1 percent from 0.3 percent effective tomorrow, the government said in a statement on its official Web site after the close of trading today.
U.S. crude inventories rose by 2.4 million barrels to 316.1 million barrels in the week ending April 18, U.S. Energy Information Administration reported on Wednesday. Analysts surveyed by energy information provider Platts expected an increase of 2 million barrels. After the data, crude-oil futures for June delivery fell 47 cents to $117.60 a barrel on the New York Mercantile Exchange. Gasoline supplies fell by 3.2 million barrels in the latest week, while distillate stocks fell by 1.4 million barrels, EIA reported. U.S. refineries operated at 85.6% of their operable capacity in the week ending April 18, up more than 4% from previous week's 81.4%, the Energy Information Administration reported.
Gold for June delivery dropped $16.20 to end at $909 an ounce on the New York Mercantile Exchange.
AK Steel Holding Corp. increased spot market prices for its carbon steel products by $50 a ton for all new orders. The move follows a $150-a-ton increase earlier in the month.
Microsoft Corp is prepared to walk away from its $43.6 billion bid for Yahoo Inc if the two sides can't agree on a price, Chief Executive Steve Ballmer said on Wednesday.
Amazon posted a rise in 1Q earnings to $143 million, or 34 cents a share, up 29% from $111 million, or 26 cents a share a year ago. Revenue rose 37 percent to $4.14 billion from $3.02 billion. Profit margin concerns may weigh on the stock.
Apple reported fiscal 2Q earnings of $1.05 billion, or $1.16 per share, up 36% from $770 million, or 87 cents a share a year ago. Revenue jumped 43 percent in the period to $7.51 billion, beating expectations of $6.96 billion. Shares traded lower on a lower-than-expected profit forecast, though many will note Apple has traditionally been conservative with these.
Credit Suisse took additional writedowns of $5.26 billion yesterday related to credit.
Motorola reported a 1Q loss of $194 million, or 9 cents a share, wider than the loss a year ago of $181 million, or 8 cents a share. Net sales fell to $7.45 billion from $9.43 billion. Reuters reports that the company has seen weakness in its mobile devices business which sold 27.4 million phones in the quarter compared with 45.4 million in the year ago quarter.
Starbucks warned that its estimates for fiscal 2Q earnings, scheduled for April 30, were lower than expected. According to The Wall Street Journal, the company expects to report earnings of 15 cents a share, compared with 19 cents for the same period a year ago. Slow sales in the US, particularly in places hit hard by the subprime crisis like California and Florida, have hurt the company.
Thursday, April 24, 2008
Wednesday, April 23, 2008
New Records
4/22/08 New Records
The U.S. housing market weakened slightly in March, as resales of U.S. homes fell, inventories climbed and prices continued to decline, the National Association of Realtors reported Tuesday. Resales of U.S. homes and condos dropped 2% to a seasonally adjusted annualized rate of 4.93 million from 5.03 million in February, matching economists' expectations. Resales have sunk 19.3% in the past year. Inventories of homes for sale rose 1% to 4.06 million, representing a 9.9-month supply at the March sales pace. The median sales price fell 7.7% in the past year to $207,000.
U.S. home prices rose 0.6% in February from the prior month, the Office of Federal Housing Enterprise Oversight reported Tuesday. For the 12 months ending in February, prices fell 2.4%. For February, prices rose a seasonally adjusted 2.2% in New England, and 0.3% in the Pacific region. In the Mountain region, prices fell 0.6%. The OFHEO index is based on repeat sales of homes mortgaged through Fannie Mae and Freddie Mac.
The central Bank of Canada cut its target for the overnight rate by 50 basis points to 3%, with the bank projecting a "deeper and more protracted slowdown in the U.S. economy."
The Federal Reserve has auctioned another $50 billion in short-term loans to squeezed banks. It is part of an ongoing effort to relieve stressed credit markets. Counting the latest results, the central bank now has provided a total of $360 billion in the short-term loans to commercial banks through 10 auctions conducted since December. The latest auction was held on Monday, with the results announced on Tuesday.
European Central Bank council members Christian Noyer and Yves Mersch signaled the bank may have to raise interest rates to contain inflation. The ECB will ``move rates'' if needed to push inflation below 2 percent in 2009, Noyer, who heads France's central bank, told RTL radio today. Luxembourg central banker Mersch said the question of whether the ECB should raise rates is a valid one, the Financial Times Deutschland reported, citing an interview.
Costco is now posting signs limiting how much rice you can buy based on your previous purchases. They are trying to combat hoarding. In addition, Costco is placing purchasing limits on flour and cooking oil.
Rice futures had their biggest weekly gain in at least seven years last week on concerns export curbs by China and Vietnam will spread as importing nations struggle to feed their people. The Philippines, the biggest rice importer, received offers for only two-thirds of the grain it sought to buy on April 17.
Rob Hanna: "It appears buying interest is drying up. In the past the market has not fared well under these conditions."
McDonald's had net income of $946.1 million, or 81 cents per share, in the first quarter, compared with its year-earlier net income of $762.4 million, or 62 cents per share.
The Oil Drum: "In March world production of total liquids decreased by 100,000 barrels per day from February according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.34 million b/d, which is the all time maximum liquids production. Average global production in 2007 was 85.41 million b/d according to the IEA. In the first three months of 2008 an average of 87.34 million b/d was produced. The EIA in their International Petroleum Monthly puts the average global 2007 production at 84.60 million b/d and January 2008 production at 85.80 million b/d."
For the quarter ended March 31, 2008, AT&T’s revenues totaled $30.7 billion, up 6.1 percent versus reported results in the year-earlier quarter. The company reported first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent from $2.8 billion in the year-earlier first quarter, and reported earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in the first quarter of 2007.
UPS reported increased revenue in all segments with double-digit gains in both international package and supply chain and freight operations. A sharp decline in U.S. economic activity, however, led to a 9.4% drop in diluted earnings per share to $0.87 compared to a prior-year adjusted $0.96. The slowing U.S. economy not only reduced average daily volume in the U.S. by 0.3% for the quarter but also contributed to a shift away from premium products. Volume declined 3.8% for Next Day Air® and 2.9% for Deferred, while increasing 0.3% for Ground. Revenue per piece remained stable for all service levels, with consolidated revenue per piece increasing 2.7%. The volume decrease, shift away from premium products and increased fuel costs during the quarter contributed to the declines in operating profit and margin. The company expects earnings for the quarter in a range of $0.97 to $1.04 per diluted share compared to $1.04 for the second quarter of 2007. Commenting on annual earnings guidance, Kuehn said, “Most forecasters are projecting that current anemic conditions will prevail for the remainder of the year. Therefore, we are reducing our 2008 earnings expectations to a range of $3.90 to $4.20 per diluted share.
BJ Services Company reported net income of $127.3 million for the fiscal 2008 second quarter ended March 31, 2008, or $0.43 per diluted share, a 26% decrease from the $0.58 per diluted share reported in the previous quarter and a 33% decrease compared to the $0.64 per diluted share reported in the fiscal 2007 second quarter. Revenue in the second quarter of fiscal 2008 was $1,283.2 million, slightly below the $1,285.1 million reported in the previous quarter and up 8% compared to $1,186.6 million reported in the prior year's March quarter. Operating income for the quarter was $186.5 million, a 26% decrease compared to $252.6 million for the previous quarter and a 36% decrease compared to $290.2 million reported in the second quarter of fiscal 2007. Commenting on the results, Chairman and CEO Bill Stewart said, "During the quarter, the Company experienced significant pricing pressure in North America. Most of the price loss occurred in January as we completed a number of pricing agreements with our customers. I am, however, encouraged that pricing was relatively stable in February and March. The fundamental outlook is quite positive in the U.S. with natural gas prices at levels that should lay the foundation for higher drilling levels. This is supported by a number of our customers announcing budget increases for the second half of the calendar year. "Looking at our third fiscal quarter, we expect drilling activity in the U.S. to be up modestly compared to the second fiscal quarter. Pricing is expected to continue to be under pressure; however, we are forecasting the rate of price declines experienced in previous quarters to moderate in the third fiscal quarter. Canada is in full Spring break-up and drilling activity for the quarter is not expected to be significantly different than the same quarter last year. In the International Pressure Pumping segment, we are anticipating modest revenue improvement with slightly improved margins in the third fiscal quarter. The largest sequential improvement is expected to be in the Asia Pacific region, as business is expected to improve after experiencing weather disruptions and project delays in the second fiscal quarter.
"We anticipate sequential revenue and margin improvement for our Oilfield Services group. We are projecting our Tubular Services business to recover from delays experienced during the second fiscal quarter. We are also expecting seasonal improvement from our Process & Pipeline Services business. Based on these assumptions, we are currently projecting diluted earnings for the third fiscal quarter to be in the range of $0.39 to $0.43 per share."
Baker Hughes Inc, the Houston oil-services provider, reported that first-quarter net income rose 5.4% on 8% higher revenue. Earnings reached $395 million, or $1.27 a share, from $374.7 million, or $1.17, in the year-earlier period. The latest share figure reflects a gain of 6 cents a share from the sale of BHI's surface-safety-systems product line. Revenue reached $2.67 billion from $2.47 billion. A survey of analysts by FactSet Research produced a consensus estimate of $1.21 a share for the quarter.
Nabors Industries Ltd. reported first-quarter net income of $230.5 million, or 81 cents a share, down from $262.2 million, or 92 cents a share, a year earlier. Net income from continuing operations before taxes came in at $287.1 million, down from $341.8 million a year ago. Revenue at the oil drilling company rose to $1.32 billion from $1.28 billion. Analysts polled by FactSet Research were looking for a profit, on average, of 77 cents a share, with revenue of $1.29 billion. The company said its international business fell from the fourth-quarter due primarily to downtime on rigs operating in Mexico.
Oil field services company Weatherford International said its first-quarter profit fell 6.2 percent because of costs related to exiting some countries and a government investigation. Net income dropped to $264.2 million, or 76 cents a share, from $281.6 million, or 81 cents, a year earlier, the Houston-based company said Monday. Revenue increased 19 percent to a quarterly record of $2.2 billion. Half of that was from North America, where sales rose 8.3 percent to $1.09 billion.
Royal Bank of Scotland said Tuesday it had suffered $11.7 billion in additional losses and was forced to raise $23.9 billion in new capital to cover exposure to toxic U.S. loans.
Light, sweet crude for May delivery rose as high as $118.05 a barrel in electronic trading on the New York Mercantile Exchange, eclipsing Monday's all-time high of $117.83.
Lockheed Martin Corp said on Tuesday quarterly profit rose 6 percent, helped by higher sales of its electronic, information and space systems. Lockheed also raised its full-year earnings outlook to the range of $7.15 to $7.35 a share from a range of $7.05 to $7.25 a share.
UnitedHealth reduced its 2008 outlook by 40 cents per share to a range of $3.55 to $3.60 per share. Analysts expect $3.86 per share.
DuPont still sees adjusted 2008 earnings between $3.40 and $3.55 a share and first-half earnings per share growth of about 10%. For the remainder of 2008, the company expects that slowing demand in U.S. markets, including construction and motor vehicle, will offset growth in agriculture and other markets outside the United States.
Tribune Co. has reached an agreement in principle to sell Newsday to News Corp for $580 million, The Wall Street Journal and Reuters reported, citing unnamed sources.
The yield on the benchmark two-year Treasury rose 4 basis points to 2.21 percent by 7:06 a.m. in New York, according to bond broker BGCantor Market Data.
The yield on the benchmark two-year Treasury rose 4 basis points to 2.21 percent by 7:06 a.m. in New York, according to bond broker BGCantor Market Data. The price of the 1.75 percent security due in March 2010 fell 2/32, or 63 cents per $1,000 face amount, to 99 4/32. Ten-year yields rose 2 basis points to 3.75 percent. The yield on the two-year note, most sensitive to the outlook for interest rates, also climbed to within 5 basis points of the highest since Jan. 30 as traders raised bets the Federal Reserve will keep its benchmark rate on hold, or limit a reduction to a quarter-percentage point on April 30.
Global trade growth is expected to slow to a six-year low of 4.5 per cent this year but China has overtaken the US as the world's second-biggest exporter, the World Trade Organisation (WTO) said yesterday. Germany continues in first place.
Mike Burk: "As of Friday most of the blue chip indices had been up for 4 consecutive days, an event we have not seen since late December when it marked a short term high...The recent strength in the market was probably caused by the dramatic increase in money supply.The market is a bit overbought right now and volume on last weeks advance left a little to be desired, but, aside from volume, the breadth indicators look pretty good. I expect the major indices to be lower on Friday April 25 than they were on Friday April 18."
Mike Shedlock: "Office vacancies rose sharply in the first quarter, a trend that is expected to continue as a result of layoffs and new construction adding to supply. According to the real estate services firm Grubb & Ellis, first-quarter office vacancies rose to an average 13.6% nationally, up from 13% in the previous three quarters."With demand turning negative at the same time that the construction pipeline will deliver the 94 million square feet still underway, vacancy is expected to peak at 18% by the end of 2009," Grubb & Ellis economist Robert Bach wrote in a research note today."
Mortgage lender and real estate investment trust Thornburg Mortgage said Friday that a unit has defaulted on $300 million of short-term notes due under a commercial paper program.
According to the Washington Post, the freight railway industry is enjoying its biggest building boom in nearly a century, a turnaround as abrupt as it is ambitious. It is largely fueled by growing global trade and rising fuel costs for 18-wheelers. In 2002, the major railroads laid off 4,700 workers; in 2006, they hired more than 5,000. Profit has doubled industrywide since 2003, and stock prices have soared. This year alone, the railroads will spend nearly $10 billion to add track, build switchyards and terminals, and open tunnels to handle the coming flood of traffic. Freight rail tonnage will rise nearly 90 percent by 2035, according to the Transportation Department.
UAL Corp , parent of United Airlines, posted a wider quarterly loss on Tuesday as the carrier grappled with soaring fuel costs. UAL said it lost $537 million, or $4.45 per share in the first quarter, compared with $152 million, or $1.32 per share, a year earlier.
Coal producer Peabody Energy Corp. on Tuesday raised its 2008 profit guidance based on recent and pricing of contracts beginning April 1.The company now expects income from continuing operations to be between $2.20 and $3 per share. Previously, the company forecast full-year earnings between $1 and $1.85 per share.
Yahoo's results due later on Tuesday will not affect the company's value to Microsoft , which has offered to buy it for $44.6 billion, Microsoft Chief Executive Steve Ballmer said. "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders," Ballmer said. "I wish Yahoo all the success with its results, but it doesn't affect the value of Yahoo to Microsoft."
Al-Maliki is looking for relief from Iraq's $67 billion debt-- most of it owed to Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar.
Union Pacific's automotive volume fell 13 percent and lumber is down 27 percent for the first 14 weeks of this year.
Seadrill Ltd, the Oslo-based oil services group, has taken a 9.9 percent in Pride Int'l, and options traders are buying calls on speculation this could possibly be the start of a takeover bid.
On an adjusted basis, Yahoo earned 11 cents per share.Revenue rose to $1.82 billion from $1.67 billion. Excluding traffic acquisition costs, revenue rose to $1.35 billion from $1.18 billion. Analysts polled by Thomson Financial had expected adjusted earnings of 9 cents per share on $1.32 billion in revenue, excluding traffic acquisition costs.
Excluding one-time items, VMware, the virtualization software developer would have earned $88 million, or 22 cents a share, to meet the estimates of analysts surveyed by FactSet Research, who forecast a profit of 22 cents a share on revenue of $422.7 million. The company said it expects its second-quarter sales to rise about 55% over the $297 million it reported in the same period a year ago.
Crude closed up $1.89, or 1.6%, at $119.37, also a record closing price. Gold for June delivery rose $7.60 to end at $925.20 an ounce on the New York Mercantile Exchange.
The euro rose to a new record high against the dollar of $1.6007 Tuesday.
GlaxoSmithKline Plc agreed to buy biotechnology company Sirtris Pharmaceuticals Inc for $720 million in cash, in hopes its medicines that modulate an aging-related family of enzymes will be effective against a wide range of diseases. Glaxo said it will commence a cash tender offer for all outstanding shares of Sirtris, at $22.50 per share. That reflects a 84 percent premium to their closing price of $12.23 on Tuesday.
Foundation Coal said coal exports will increase 27% to 35% in 2008 to a range of 75 to 80 million tons. Foundation Coal touched a fresh 52-week high on of $66.42 on Tuesday.
Bond insurer Ambac Financial Group Inc. swung to a first-quarter loss of $1.66 billion, or $11.69 a share, from a profit of $213.3 million, or $2.02 a share, a year earlier. The group attributed the loss to a pretax $1.73 billion mark-to-market loss on its exposure to credit derivatives and a $1.04 billion loss provision on its financial guarantee direct exposure to mortgage-related securities. Ambac said its operating loss per share was $6.93.
Japan's merchandise trade surplus in March contracted 30.2% from the same month a year earlier, according to provisional data released by the Finance Ministry Wednesday. The trade surplus totaled 1.12 trillion yen ($10.87 billion) during the month, down from 1.60 trillion yen in the year-earlier period, the data showed. The decline in the size of the trade surplus exceeded consensus estimates among economists for a 15% contraction, according to poll by Dow Jones Newswire.
Boeing reported quarterly profit of $1.2 billion, or $1.62 per share, compared with $877 million, or $1.13 per share, in the year-ago quarter.
The U.S. housing market weakened slightly in March, as resales of U.S. homes fell, inventories climbed and prices continued to decline, the National Association of Realtors reported Tuesday. Resales of U.S. homes and condos dropped 2% to a seasonally adjusted annualized rate of 4.93 million from 5.03 million in February, matching economists' expectations. Resales have sunk 19.3% in the past year. Inventories of homes for sale rose 1% to 4.06 million, representing a 9.9-month supply at the March sales pace. The median sales price fell 7.7% in the past year to $207,000.
U.S. home prices rose 0.6% in February from the prior month, the Office of Federal Housing Enterprise Oversight reported Tuesday. For the 12 months ending in February, prices fell 2.4%. For February, prices rose a seasonally adjusted 2.2% in New England, and 0.3% in the Pacific region. In the Mountain region, prices fell 0.6%. The OFHEO index is based on repeat sales of homes mortgaged through Fannie Mae and Freddie Mac.
The central Bank of Canada cut its target for the overnight rate by 50 basis points to 3%, with the bank projecting a "deeper and more protracted slowdown in the U.S. economy."
The Federal Reserve has auctioned another $50 billion in short-term loans to squeezed banks. It is part of an ongoing effort to relieve stressed credit markets. Counting the latest results, the central bank now has provided a total of $360 billion in the short-term loans to commercial banks through 10 auctions conducted since December. The latest auction was held on Monday, with the results announced on Tuesday.
European Central Bank council members Christian Noyer and Yves Mersch signaled the bank may have to raise interest rates to contain inflation. The ECB will ``move rates'' if needed to push inflation below 2 percent in 2009, Noyer, who heads France's central bank, told RTL radio today. Luxembourg central banker Mersch said the question of whether the ECB should raise rates is a valid one, the Financial Times Deutschland reported, citing an interview.
Costco is now posting signs limiting how much rice you can buy based on your previous purchases. They are trying to combat hoarding. In addition, Costco is placing purchasing limits on flour and cooking oil.
Rice futures had their biggest weekly gain in at least seven years last week on concerns export curbs by China and Vietnam will spread as importing nations struggle to feed their people. The Philippines, the biggest rice importer, received offers for only two-thirds of the grain it sought to buy on April 17.
Rob Hanna: "It appears buying interest is drying up. In the past the market has not fared well under these conditions."
McDonald's had net income of $946.1 million, or 81 cents per share, in the first quarter, compared with its year-earlier net income of $762.4 million, or 62 cents per share.
The Oil Drum: "In March world production of total liquids decreased by 100,000 barrels per day from February according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.34 million b/d, which is the all time maximum liquids production. Average global production in 2007 was 85.41 million b/d according to the IEA. In the first three months of 2008 an average of 87.34 million b/d was produced. The EIA in their International Petroleum Monthly puts the average global 2007 production at 84.60 million b/d and January 2008 production at 85.80 million b/d."
For the quarter ended March 31, 2008, AT&T’s revenues totaled $30.7 billion, up 6.1 percent versus reported results in the year-earlier quarter. The company reported first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent from $2.8 billion in the year-earlier first quarter, and reported earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in the first quarter of 2007.
UPS reported increased revenue in all segments with double-digit gains in both international package and supply chain and freight operations. A sharp decline in U.S. economic activity, however, led to a 9.4% drop in diluted earnings per share to $0.87 compared to a prior-year adjusted $0.96. The slowing U.S. economy not only reduced average daily volume in the U.S. by 0.3% for the quarter but also contributed to a shift away from premium products. Volume declined 3.8% for Next Day Air® and 2.9% for Deferred, while increasing 0.3% for Ground. Revenue per piece remained stable for all service levels, with consolidated revenue per piece increasing 2.7%. The volume decrease, shift away from premium products and increased fuel costs during the quarter contributed to the declines in operating profit and margin. The company expects earnings for the quarter in a range of $0.97 to $1.04 per diluted share compared to $1.04 for the second quarter of 2007. Commenting on annual earnings guidance, Kuehn said, “Most forecasters are projecting that current anemic conditions will prevail for the remainder of the year. Therefore, we are reducing our 2008 earnings expectations to a range of $3.90 to $4.20 per diluted share.
BJ Services Company reported net income of $127.3 million for the fiscal 2008 second quarter ended March 31, 2008, or $0.43 per diluted share, a 26% decrease from the $0.58 per diluted share reported in the previous quarter and a 33% decrease compared to the $0.64 per diluted share reported in the fiscal 2007 second quarter. Revenue in the second quarter of fiscal 2008 was $1,283.2 million, slightly below the $1,285.1 million reported in the previous quarter and up 8% compared to $1,186.6 million reported in the prior year's March quarter. Operating income for the quarter was $186.5 million, a 26% decrease compared to $252.6 million for the previous quarter and a 36% decrease compared to $290.2 million reported in the second quarter of fiscal 2007. Commenting on the results, Chairman and CEO Bill Stewart said, "During the quarter, the Company experienced significant pricing pressure in North America. Most of the price loss occurred in January as we completed a number of pricing agreements with our customers. I am, however, encouraged that pricing was relatively stable in February and March. The fundamental outlook is quite positive in the U.S. with natural gas prices at levels that should lay the foundation for higher drilling levels. This is supported by a number of our customers announcing budget increases for the second half of the calendar year. "Looking at our third fiscal quarter, we expect drilling activity in the U.S. to be up modestly compared to the second fiscal quarter. Pricing is expected to continue to be under pressure; however, we are forecasting the rate of price declines experienced in previous quarters to moderate in the third fiscal quarter. Canada is in full Spring break-up and drilling activity for the quarter is not expected to be significantly different than the same quarter last year. In the International Pressure Pumping segment, we are anticipating modest revenue improvement with slightly improved margins in the third fiscal quarter. The largest sequential improvement is expected to be in the Asia Pacific region, as business is expected to improve after experiencing weather disruptions and project delays in the second fiscal quarter.
"We anticipate sequential revenue and margin improvement for our Oilfield Services group. We are projecting our Tubular Services business to recover from delays experienced during the second fiscal quarter. We are also expecting seasonal improvement from our Process & Pipeline Services business. Based on these assumptions, we are currently projecting diluted earnings for the third fiscal quarter to be in the range of $0.39 to $0.43 per share."
Baker Hughes Inc, the Houston oil-services provider, reported that first-quarter net income rose 5.4% on 8% higher revenue. Earnings reached $395 million, or $1.27 a share, from $374.7 million, or $1.17, in the year-earlier period. The latest share figure reflects a gain of 6 cents a share from the sale of BHI's surface-safety-systems product line. Revenue reached $2.67 billion from $2.47 billion. A survey of analysts by FactSet Research produced a consensus estimate of $1.21 a share for the quarter.
Nabors Industries Ltd. reported first-quarter net income of $230.5 million, or 81 cents a share, down from $262.2 million, or 92 cents a share, a year earlier. Net income from continuing operations before taxes came in at $287.1 million, down from $341.8 million a year ago. Revenue at the oil drilling company rose to $1.32 billion from $1.28 billion. Analysts polled by FactSet Research were looking for a profit, on average, of 77 cents a share, with revenue of $1.29 billion. The company said its international business fell from the fourth-quarter due primarily to downtime on rigs operating in Mexico.
Oil field services company Weatherford International said its first-quarter profit fell 6.2 percent because of costs related to exiting some countries and a government investigation. Net income dropped to $264.2 million, or 76 cents a share, from $281.6 million, or 81 cents, a year earlier, the Houston-based company said Monday. Revenue increased 19 percent to a quarterly record of $2.2 billion. Half of that was from North America, where sales rose 8.3 percent to $1.09 billion.
Royal Bank of Scotland said Tuesday it had suffered $11.7 billion in additional losses and was forced to raise $23.9 billion in new capital to cover exposure to toxic U.S. loans.
Light, sweet crude for May delivery rose as high as $118.05 a barrel in electronic trading on the New York Mercantile Exchange, eclipsing Monday's all-time high of $117.83.
Lockheed Martin Corp said on Tuesday quarterly profit rose 6 percent, helped by higher sales of its electronic, information and space systems. Lockheed also raised its full-year earnings outlook to the range of $7.15 to $7.35 a share from a range of $7.05 to $7.25 a share.
UnitedHealth reduced its 2008 outlook by 40 cents per share to a range of $3.55 to $3.60 per share. Analysts expect $3.86 per share.
DuPont still sees adjusted 2008 earnings between $3.40 and $3.55 a share and first-half earnings per share growth of about 10%. For the remainder of 2008, the company expects that slowing demand in U.S. markets, including construction and motor vehicle, will offset growth in agriculture and other markets outside the United States.
Tribune Co. has reached an agreement in principle to sell Newsday to News Corp for $580 million, The Wall Street Journal and Reuters reported, citing unnamed sources.
The yield on the benchmark two-year Treasury rose 4 basis points to 2.21 percent by 7:06 a.m. in New York, according to bond broker BGCantor Market Data.
The yield on the benchmark two-year Treasury rose 4 basis points to 2.21 percent by 7:06 a.m. in New York, according to bond broker BGCantor Market Data. The price of the 1.75 percent security due in March 2010 fell 2/32, or 63 cents per $1,000 face amount, to 99 4/32. Ten-year yields rose 2 basis points to 3.75 percent. The yield on the two-year note, most sensitive to the outlook for interest rates, also climbed to within 5 basis points of the highest since Jan. 30 as traders raised bets the Federal Reserve will keep its benchmark rate on hold, or limit a reduction to a quarter-percentage point on April 30.
Global trade growth is expected to slow to a six-year low of 4.5 per cent this year but China has overtaken the US as the world's second-biggest exporter, the World Trade Organisation (WTO) said yesterday. Germany continues in first place.
Mike Burk: "As of Friday most of the blue chip indices had been up for 4 consecutive days, an event we have not seen since late December when it marked a short term high...The recent strength in the market was probably caused by the dramatic increase in money supply.The market is a bit overbought right now and volume on last weeks advance left a little to be desired, but, aside from volume, the breadth indicators look pretty good. I expect the major indices to be lower on Friday April 25 than they were on Friday April 18."
Mike Shedlock: "Office vacancies rose sharply in the first quarter, a trend that is expected to continue as a result of layoffs and new construction adding to supply. According to the real estate services firm Grubb & Ellis, first-quarter office vacancies rose to an average 13.6% nationally, up from 13% in the previous three quarters."With demand turning negative at the same time that the construction pipeline will deliver the 94 million square feet still underway, vacancy is expected to peak at 18% by the end of 2009," Grubb & Ellis economist Robert Bach wrote in a research note today."
Mortgage lender and real estate investment trust Thornburg Mortgage said Friday that a unit has defaulted on $300 million of short-term notes due under a commercial paper program.
According to the Washington Post, the freight railway industry is enjoying its biggest building boom in nearly a century, a turnaround as abrupt as it is ambitious. It is largely fueled by growing global trade and rising fuel costs for 18-wheelers. In 2002, the major railroads laid off 4,700 workers; in 2006, they hired more than 5,000. Profit has doubled industrywide since 2003, and stock prices have soared. This year alone, the railroads will spend nearly $10 billion to add track, build switchyards and terminals, and open tunnels to handle the coming flood of traffic. Freight rail tonnage will rise nearly 90 percent by 2035, according to the Transportation Department.
UAL Corp , parent of United Airlines, posted a wider quarterly loss on Tuesday as the carrier grappled with soaring fuel costs. UAL said it lost $537 million, or $4.45 per share in the first quarter, compared with $152 million, or $1.32 per share, a year earlier.
Coal producer Peabody Energy Corp. on Tuesday raised its 2008 profit guidance based on recent and pricing of contracts beginning April 1.The company now expects income from continuing operations to be between $2.20 and $3 per share. Previously, the company forecast full-year earnings between $1 and $1.85 per share.
Yahoo's results due later on Tuesday will not affect the company's value to Microsoft , which has offered to buy it for $44.6 billion, Microsoft Chief Executive Steve Ballmer said. "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders," Ballmer said. "I wish Yahoo all the success with its results, but it doesn't affect the value of Yahoo to Microsoft."
Al-Maliki is looking for relief from Iraq's $67 billion debt-- most of it owed to Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar.
Union Pacific's automotive volume fell 13 percent and lumber is down 27 percent for the first 14 weeks of this year.
Seadrill Ltd, the Oslo-based oil services group, has taken a 9.9 percent in Pride Int'l, and options traders are buying calls on speculation this could possibly be the start of a takeover bid.
On an adjusted basis, Yahoo earned 11 cents per share.Revenue rose to $1.82 billion from $1.67 billion. Excluding traffic acquisition costs, revenue rose to $1.35 billion from $1.18 billion. Analysts polled by Thomson Financial had expected adjusted earnings of 9 cents per share on $1.32 billion in revenue, excluding traffic acquisition costs.
Excluding one-time items, VMware, the virtualization software developer would have earned $88 million, or 22 cents a share, to meet the estimates of analysts surveyed by FactSet Research, who forecast a profit of 22 cents a share on revenue of $422.7 million. The company said it expects its second-quarter sales to rise about 55% over the $297 million it reported in the same period a year ago.
Crude closed up $1.89, or 1.6%, at $119.37, also a record closing price. Gold for June delivery rose $7.60 to end at $925.20 an ounce on the New York Mercantile Exchange.
The euro rose to a new record high against the dollar of $1.6007 Tuesday.
GlaxoSmithKline Plc agreed to buy biotechnology company Sirtris Pharmaceuticals Inc for $720 million in cash, in hopes its medicines that modulate an aging-related family of enzymes will be effective against a wide range of diseases. Glaxo said it will commence a cash tender offer for all outstanding shares of Sirtris, at $22.50 per share. That reflects a 84 percent premium to their closing price of $12.23 on Tuesday.
Foundation Coal said coal exports will increase 27% to 35% in 2008 to a range of 75 to 80 million tons. Foundation Coal touched a fresh 52-week high on of $66.42 on Tuesday.
Bond insurer Ambac Financial Group Inc. swung to a first-quarter loss of $1.66 billion, or $11.69 a share, from a profit of $213.3 million, or $2.02 a share, a year earlier. The group attributed the loss to a pretax $1.73 billion mark-to-market loss on its exposure to credit derivatives and a $1.04 billion loss provision on its financial guarantee direct exposure to mortgage-related securities. Ambac said its operating loss per share was $6.93.
Japan's merchandise trade surplus in March contracted 30.2% from the same month a year earlier, according to provisional data released by the Finance Ministry Wednesday. The trade surplus totaled 1.12 trillion yen ($10.87 billion) during the month, down from 1.60 trillion yen in the year-earlier period, the data showed. The decline in the size of the trade surplus exceeded consensus estimates among economists for a 15% contraction, according to poll by Dow Jones Newswire.
Boeing reported quarterly profit of $1.2 billion, or $1.62 per share, compared with $877 million, or $1.13 per share, in the year-ago quarter.
Monday, April 21, 2008
Risk Is In The Wind
4/20/08 Risk Is In The Wind
Win Without War, a coalition of 42 groups, is circulating a letter declaring that "it is past time to bring the Iraq war to an end" and that "the best course of action in the upcoming defense supplemental appropriations bill is to provide funding only for the safe and timely redeployment of U.S. troops out of Iraq." Antiwar Democrats are girding for a two-front battle. First, they want to beat back efforts to add popular domestic spending to any war funding, which would bolster support for the underlying bill. Then they want to stop any funding for the continuation of combat in Iraq. "We have two examples of what can happen when the caucus is unified enough to say no," said Rep. Barbara Lee (D-Calif.), a founder of the Out of Iraq Caucus.
R.W. McNeal, a market analyst writing in 1929: "Some pretty intelligent people are now buying stocks… Unless we are to have a panic - which no one seriously believes - stocks have hit bottom."
Venture capital investment fell nationally last quarter for the first time in nearly three years, but the Bay Area bucked the trend, according to numbers released today by Dow Jones. In the United States, venture investments fell 7 percent from the same period a year ago to $6.84 billion invested in 603 deals. Locally, however, investments rose 10 percent to $2.56 billion, which was invested in 213 deals, up four from a year ago.
The Organization of Petroleum Exporting Countries doesn't need to raise oil production and any increase will not affect prices, officials including the group's president, Chakib Khelil, said. ``Any increase in production now will not have an impact on prices because there is a balance between supply and demand,'' Khelil said during a visit to the Kuwait Chamber of Commerce and Industry, Kuwait's state news agency reported today. ``We in OPEC raised production last year and prices remained high. If we increase production we will not find people to buy the increment.''
President George W. Bush said that a free trade agreement with Colombia is ``dead'' unless House Speaker Nancy Pelosi revives it by allowing a vote on the measure.
Royal Bank of Scotland Group Plc will announce writedowns of between 5 billion pounds ($10 billion) and 7 billion pounds this week as it prepares a share sale, the Sunday Times reported, without saying where it got the information. The U.K.'s second-biggest lender, whose board meets today, also plans to announce a stock offering of between 10 billion and 12 billion pounds, and is looking to raise as much as 5 billion pounds by the end of this financial year through asset disposals, the newspaper said.
Former Bank of England policy maker Willem Buiter said the central bank will need to offer loan swaps to financial institutions of at least 100 billion pounds ($200 billion) to kick-start the U.K. mortgage market.
Philip K. Dick: "Reality is that which, when you stop believing in it, doesn't go away."
Pennsylvania, with 15.6 percent of its citizens over 65, is second only to retirement retreat Florida in the percentage of residents who are elderly. Among registered Democratic voters, 26 percent are under 34 and 38 percent are older than 55.
Oil prices spiked to a record $117.40 a barrel after a Japanese oil tanker was hit by a rocket near Yemen and militants in Nigeria claimed two attacks on pipelines. The 150,000-ton tanker Takayama was attacked about 270 miles off the east coast Yemen coast in the Gulf of Aden while it was heading for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said in a statement.
Bank of America Corp. said Monday that its first-quarter profit fell 77% as credit-loss provisions jumped $4.78 billion, driven by weakness in home-equity loans as well as credit extended to small businesses and homebuilders.
According to the Financial Times, a group of mutual funds and hedge funds led by Corsair Capital, a little-known private equity firm, prepared to invest $7bn (£3.5bn) to $8bn in National City, the 10th-biggest US bank. The deal is expected to be announced on Monday, according to people familiar with the matter.
“There’s been a lot of discussion over the last several days about how this campaign gets so negative, how we get distracted, how we exploit divisions,” Mr. Obama told voters in Reading on Sunday afternoon. “Look, our campaign’s not perfect. There’ve been times where, you know, if you get elbowed enough, eventually you start elbowing back.”
John Hussman: "We are intentionally avoiding such risk sectors on the expectation of further financial sector weakness, and because materials and cyclical stocks currently rely on sustained commodity price strength and “decoupling” between the U.S. and foreign countries. I continue to view commodities as cyclical, and decoupling as implausible – indeed, my impression is that the commodity surge will likely be turned on its head within a few months, about the point where 10-year Treasury yields move above the year-over-year CPI inflation rate...Indeed, to the extent that we can take any information signal from developing market action, it is that we should revise our expectations to allow for a much more significant slowdown in consumer spending than we have anticipated thus far. If anything, the evidence suggests revising our expectations about consumer spending and economic prospects downward....Given that the market is once again overbought in an unfavorable Market Climate, my impression is that the risk of a free-fall is significant. Aside from short-term speculative pressures (largely driven by relief about Bear Stearns), nothing in recent data suggests a material abatement of recession risk, mortgage risk, profit margin risk, or dollar risk."
Win Without War, a coalition of 42 groups, is circulating a letter declaring that "it is past time to bring the Iraq war to an end" and that "the best course of action in the upcoming defense supplemental appropriations bill is to provide funding only for the safe and timely redeployment of U.S. troops out of Iraq." Antiwar Democrats are girding for a two-front battle. First, they want to beat back efforts to add popular domestic spending to any war funding, which would bolster support for the underlying bill. Then they want to stop any funding for the continuation of combat in Iraq. "We have two examples of what can happen when the caucus is unified enough to say no," said Rep. Barbara Lee (D-Calif.), a founder of the Out of Iraq Caucus.
R.W. McNeal, a market analyst writing in 1929: "Some pretty intelligent people are now buying stocks… Unless we are to have a panic - which no one seriously believes - stocks have hit bottom."
Venture capital investment fell nationally last quarter for the first time in nearly three years, but the Bay Area bucked the trend, according to numbers released today by Dow Jones. In the United States, venture investments fell 7 percent from the same period a year ago to $6.84 billion invested in 603 deals. Locally, however, investments rose 10 percent to $2.56 billion, which was invested in 213 deals, up four from a year ago.
The Organization of Petroleum Exporting Countries doesn't need to raise oil production and any increase will not affect prices, officials including the group's president, Chakib Khelil, said. ``Any increase in production now will not have an impact on prices because there is a balance between supply and demand,'' Khelil said during a visit to the Kuwait Chamber of Commerce and Industry, Kuwait's state news agency reported today. ``We in OPEC raised production last year and prices remained high. If we increase production we will not find people to buy the increment.''
President George W. Bush said that a free trade agreement with Colombia is ``dead'' unless House Speaker Nancy Pelosi revives it by allowing a vote on the measure.
Royal Bank of Scotland Group Plc will announce writedowns of between 5 billion pounds ($10 billion) and 7 billion pounds this week as it prepares a share sale, the Sunday Times reported, without saying where it got the information. The U.K.'s second-biggest lender, whose board meets today, also plans to announce a stock offering of between 10 billion and 12 billion pounds, and is looking to raise as much as 5 billion pounds by the end of this financial year through asset disposals, the newspaper said.
Former Bank of England policy maker Willem Buiter said the central bank will need to offer loan swaps to financial institutions of at least 100 billion pounds ($200 billion) to kick-start the U.K. mortgage market.
Philip K. Dick: "Reality is that which, when you stop believing in it, doesn't go away."
Pennsylvania, with 15.6 percent of its citizens over 65, is second only to retirement retreat Florida in the percentage of residents who are elderly. Among registered Democratic voters, 26 percent are under 34 and 38 percent are older than 55.
Oil prices spiked to a record $117.40 a barrel after a Japanese oil tanker was hit by a rocket near Yemen and militants in Nigeria claimed two attacks on pipelines. The 150,000-ton tanker Takayama was attacked about 270 miles off the east coast Yemen coast in the Gulf of Aden while it was heading for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said in a statement.
Bank of America Corp. said Monday that its first-quarter profit fell 77% as credit-loss provisions jumped $4.78 billion, driven by weakness in home-equity loans as well as credit extended to small businesses and homebuilders.
According to the Financial Times, a group of mutual funds and hedge funds led by Corsair Capital, a little-known private equity firm, prepared to invest $7bn (£3.5bn) to $8bn in National City, the 10th-biggest US bank. The deal is expected to be announced on Monday, according to people familiar with the matter.
“There’s been a lot of discussion over the last several days about how this campaign gets so negative, how we get distracted, how we exploit divisions,” Mr. Obama told voters in Reading on Sunday afternoon. “Look, our campaign’s not perfect. There’ve been times where, you know, if you get elbowed enough, eventually you start elbowing back.”
John Hussman: "We are intentionally avoiding such risk sectors on the expectation of further financial sector weakness, and because materials and cyclical stocks currently rely on sustained commodity price strength and “decoupling” between the U.S. and foreign countries. I continue to view commodities as cyclical, and decoupling as implausible – indeed, my impression is that the commodity surge will likely be turned on its head within a few months, about the point where 10-year Treasury yields move above the year-over-year CPI inflation rate...Indeed, to the extent that we can take any information signal from developing market action, it is that we should revise our expectations to allow for a much more significant slowdown in consumer spending than we have anticipated thus far. If anything, the evidence suggests revising our expectations about consumer spending and economic prospects downward....Given that the market is once again overbought in an unfavorable Market Climate, my impression is that the risk of a free-fall is significant. Aside from short-term speculative pressures (largely driven by relief about Bear Stearns), nothing in recent data suggests a material abatement of recession risk, mortgage risk, profit margin risk, or dollar risk."
Sunday, April 20, 2008
Another Bailiut Plan
4/19/08 Another Bailout Plan
According to the Financial Times, The Bank of England will announce Monday a scheme which will see it lend money to banks in return for collateral in a bid to help the troubled U.K. mortgage market, U.K. Chancellor of the Exchequer Alistair Darling said Sunday."The Bank of England will be making an announcement tomorrow in which what it will do is effectively lend banks money to unfreeze the [mortgage market] situation we've got at the moment," Mr. Darling said in a television interview on the British Broadcasting Corporation.
Alliance Data Systems Corp said on Friday it terminated a $6.76 billion sale to Blackstone Group LP affiliates and has sued to win a $170 million business interruption payment. Alliance said the Blackstone affiliates tried to cancel the contract on Friday. That attempt at cancellation was void because Blackstone was already in breach of the contract, Alliance said.
Wage and fiscal policy in the euro zone could buoy inflation and the European Central Bank may need to act, ECB Governing Council member Axel Weber said in a newspaper interview released on Saturday. "I am concerned that, with regard to the conduct of wage and fiscal policy, the recent temporary heightened inflation rate could be consolidated for longer than is necessary above the tolerance level of the Eurosystem," Weber said. "Should indications of this increase, we must react with interest rate policy," he added.
According to the WSJ, Libor's unexpected rise threatens to add billions to the bills of borrowers around the world. The London interbank offered rate jumped 0.09 percentage point Friday, its highest in nearly six weeks.
Incomes are down, prices are up, and Americans are feeling increasingly grim. That’s not unusual during a recession. What is remarkable is that these patterns have persisted for years — starting long before the current economic woes set in. An article in today’s Wall Street Journal examines the growing angst of the American middle class at a time when incomes of the top 1% of earners have expanded considerably.
Doug Noland: "The “recycling” of our “Bubble dollars” (in the process inflating local Credit systems, asset markets, commodities and economies across the globe) directly back into our securities markets rests at the epicenter of Global Monetary Dysfunction... Destabilizing price movements and myriad inflationary effects are poised to worsen. The specter of yet another year of near-$800bn Current Account Deficits coupled with huge speculative flows out of dollars is just too much for an acutely overheated and unstable global currency and economic “system” to cope with...Together, the Fed and Washington have effectively nationalized a large portion of both mortgage and market liquidity risk. It is, as well, worth noting that JPMorgan Chase expanded assets by $80.7bn during the first quarter (20.7% annualized) to $1.642 TN, with six-month growth of $163.3bn (22.1% annualized). Goldman Sachs expanded its balance sheets by $69.2bn during Q1 (24.7% annualized) to $1.189 TN, with half-year growth of $143.2bn (27.4%). Even Wells Fargo grew assets at an almost 14% pace this past quarter. And we know that Bank Credit overall has expanded at a 12.6% rate over the past 38 weeks. Meanwhile, GSE MBS issuance has been ramped up to a record pace. And let’s not forget the Credit intermediation function now being carried out by the money fund complex – with assets having increased an unprecedented $371bn y-t-d (41.3% annualized) and $900bn over the past 38 weeks (47.7% annualized). It is also worth noting the $184bn y-t-d increase (29% annualized) in foreign “custody” holdings held at the Fed. Sure, the Credit system remains under significant stress, with additional mortgage and corporate Credit deterioration in the offing. But, at least for now, policymakers have successfully stemmed systemic deleveraging. The Credit system is simply not in deflationary collapse mode. I could not be more pessimistic with regard to our economy’s prognosis. And certainly much more severe Credit problems lay ahead. I could argue further that recent Credit system developments are indeed consistent with the unfolding “worst-case scenario”. Yet I tend this evening to see benefits from analyzing the current backdrop in terms of the conclusion of the first Stage of the Crisis. The key aspect of this “first Stage” was a breakdown in Wall Street’s highly leveraged risk intermediation and securities speculation markets. The speed and force of the unwind was extraordinary and in notable contrast to traditional banking crises that track real economy developments. “Resolution” came only through the Federal Reserve and federal government assuming unprecedented risk – and at a cost of a policymaking mix of interest-rate cuts, marketplace interventions, and government guarantees...Fed funds are today ridiculously priced in comparison both to the inflationary backdrop and to global rates... When the Fed and Washington radically altered the rules of U.S. finance last month, they placed in jeopardy huge positions that had been put in place to hedge against and profit from systemic crisis. With the end of “Stage one” arises a major short squeeze in the Credit, equities, and derivatives markets. And when it comes to contemplating the scope and ramifications of today’s “hedging” activities, we’re clearly in Uncharted Waters. It is not beyond reason that a disorderly unwind of “bearish” Credit market positions could incite a mini bout of liquidity, speculation, and Credit excess that exacerbates Global Monetary Instability - while Setting the Backdrop for Stage Two of the Crisis."
Former Labor Secretary Robert Reich on Friday became the fifth former Clinton Cabinet member to endorse Barack Obama, saying that loyalty to his old friends the Clintons had been overwhelmed by unhappiness with the tone of Hillary Rodham Clinton's presidential campaign. "I did not plan to endorse. I wanted to stay out of the whole endorsement racket. But my conscience wouldn't let me stay silent after this latest round of mudslinging," Reich, a UC Berkeley professor of public policy, said in a telephone interview from his campus office. "When millions of Americans are losing their homes and jobs, when the economy is facing its worst crisis in 60 years, when the Iraq war is still causing chaos in the Middle East, to focus on whether Obama should have used the word 'bitter' when he talked about the plight of many in Pennsylvania, and to resurrect the old Republican themes of guns and religion, and to call Obama 'elitist' . . . just put me over the edge."
Soon, S.F. is expected to become America's first major city to pay an average of $4 for a gallon of regular gas.
Iran's president declared that crude oil prices, now above $115 a barrel, are too low, state media reported Saturday. President Mahmoud Ahmadinejad told an oil and gas exhibition in Tehran on Friday that he thought the commodity still had to "discover its real value," according to the Web site of Iran's state-run television.
The chief executive of Eni SpA said Sunday that the share of profits taken by governments of oil-rich countries is cutting international oil companies' profits, in some cases below their capital costs. "The average government take is now moving to overcome the critical barrier of 90 percent, which means that oil companies' profitability is decreasing," Paolo Scaroni, the CEO of Italy's largest oil and gas company by revenue, said in a speech at the International Energy Forum.
According to the Financial Times, The Bank of England will announce Monday a scheme which will see it lend money to banks in return for collateral in a bid to help the troubled U.K. mortgage market, U.K. Chancellor of the Exchequer Alistair Darling said Sunday."The Bank of England will be making an announcement tomorrow in which what it will do is effectively lend banks money to unfreeze the [mortgage market] situation we've got at the moment," Mr. Darling said in a television interview on the British Broadcasting Corporation.
Alliance Data Systems Corp said on Friday it terminated a $6.76 billion sale to Blackstone Group LP affiliates and has sued to win a $170 million business interruption payment. Alliance said the Blackstone affiliates tried to cancel the contract on Friday. That attempt at cancellation was void because Blackstone was already in breach of the contract, Alliance said.
Wage and fiscal policy in the euro zone could buoy inflation and the European Central Bank may need to act, ECB Governing Council member Axel Weber said in a newspaper interview released on Saturday. "I am concerned that, with regard to the conduct of wage and fiscal policy, the recent temporary heightened inflation rate could be consolidated for longer than is necessary above the tolerance level of the Eurosystem," Weber said. "Should indications of this increase, we must react with interest rate policy," he added.
According to the WSJ, Libor's unexpected rise threatens to add billions to the bills of borrowers around the world. The London interbank offered rate jumped 0.09 percentage point Friday, its highest in nearly six weeks.
Incomes are down, prices are up, and Americans are feeling increasingly grim. That’s not unusual during a recession. What is remarkable is that these patterns have persisted for years — starting long before the current economic woes set in. An article in today’s Wall Street Journal examines the growing angst of the American middle class at a time when incomes of the top 1% of earners have expanded considerably.
Doug Noland: "The “recycling” of our “Bubble dollars” (in the process inflating local Credit systems, asset markets, commodities and economies across the globe) directly back into our securities markets rests at the epicenter of Global Monetary Dysfunction... Destabilizing price movements and myriad inflationary effects are poised to worsen. The specter of yet another year of near-$800bn Current Account Deficits coupled with huge speculative flows out of dollars is just too much for an acutely overheated and unstable global currency and economic “system” to cope with...Together, the Fed and Washington have effectively nationalized a large portion of both mortgage and market liquidity risk. It is, as well, worth noting that JPMorgan Chase expanded assets by $80.7bn during the first quarter (20.7% annualized) to $1.642 TN, with six-month growth of $163.3bn (22.1% annualized). Goldman Sachs expanded its balance sheets by $69.2bn during Q1 (24.7% annualized) to $1.189 TN, with half-year growth of $143.2bn (27.4%). Even Wells Fargo grew assets at an almost 14% pace this past quarter. And we know that Bank Credit overall has expanded at a 12.6% rate over the past 38 weeks. Meanwhile, GSE MBS issuance has been ramped up to a record pace. And let’s not forget the Credit intermediation function now being carried out by the money fund complex – with assets having increased an unprecedented $371bn y-t-d (41.3% annualized) and $900bn over the past 38 weeks (47.7% annualized). It is also worth noting the $184bn y-t-d increase (29% annualized) in foreign “custody” holdings held at the Fed. Sure, the Credit system remains under significant stress, with additional mortgage and corporate Credit deterioration in the offing. But, at least for now, policymakers have successfully stemmed systemic deleveraging. The Credit system is simply not in deflationary collapse mode. I could not be more pessimistic with regard to our economy’s prognosis. And certainly much more severe Credit problems lay ahead. I could argue further that recent Credit system developments are indeed consistent with the unfolding “worst-case scenario”. Yet I tend this evening to see benefits from analyzing the current backdrop in terms of the conclusion of the first Stage of the Crisis. The key aspect of this “first Stage” was a breakdown in Wall Street’s highly leveraged risk intermediation and securities speculation markets. The speed and force of the unwind was extraordinary and in notable contrast to traditional banking crises that track real economy developments. “Resolution” came only through the Federal Reserve and federal government assuming unprecedented risk – and at a cost of a policymaking mix of interest-rate cuts, marketplace interventions, and government guarantees...Fed funds are today ridiculously priced in comparison both to the inflationary backdrop and to global rates... When the Fed and Washington radically altered the rules of U.S. finance last month, they placed in jeopardy huge positions that had been put in place to hedge against and profit from systemic crisis. With the end of “Stage one” arises a major short squeeze in the Credit, equities, and derivatives markets. And when it comes to contemplating the scope and ramifications of today’s “hedging” activities, we’re clearly in Uncharted Waters. It is not beyond reason that a disorderly unwind of “bearish” Credit market positions could incite a mini bout of liquidity, speculation, and Credit excess that exacerbates Global Monetary Instability - while Setting the Backdrop for Stage Two of the Crisis."
Former Labor Secretary Robert Reich on Friday became the fifth former Clinton Cabinet member to endorse Barack Obama, saying that loyalty to his old friends the Clintons had been overwhelmed by unhappiness with the tone of Hillary Rodham Clinton's presidential campaign. "I did not plan to endorse. I wanted to stay out of the whole endorsement racket. But my conscience wouldn't let me stay silent after this latest round of mudslinging," Reich, a UC Berkeley professor of public policy, said in a telephone interview from his campus office. "When millions of Americans are losing their homes and jobs, when the economy is facing its worst crisis in 60 years, when the Iraq war is still causing chaos in the Middle East, to focus on whether Obama should have used the word 'bitter' when he talked about the plight of many in Pennsylvania, and to resurrect the old Republican themes of guns and religion, and to call Obama 'elitist' . . . just put me over the edge."
Soon, S.F. is expected to become America's first major city to pay an average of $4 for a gallon of regular gas.
Iran's president declared that crude oil prices, now above $115 a barrel, are too low, state media reported Saturday. President Mahmoud Ahmadinejad told an oil and gas exhibition in Tehran on Friday that he thought the commodity still had to "discover its real value," according to the Web site of Iran's state-run television.
The chief executive of Eni SpA said Sunday that the share of profits taken by governments of oil-rich countries is cutting international oil companies' profits, in some cases below their capital costs. "The average government take is now moving to overcome the critical barrier of 90 percent, which means that oil companies' profitability is decreasing," Paolo Scaroni, the CEO of Italy's largest oil and gas company by revenue, said in a speech at the International Energy Forum.
Saturday, April 19, 2008
Two-Year U.S. Treasury
4/18/08 U.S.Treasury Two-Year Notes
U.S. Treasury two-year notes fell, headed for their biggest weekly decline in more than seven years, as traders trimmed bets on how far the Federal Reserve will cut interest rates. Two-year yields have risen 45 basis points this week, the most since November 2001, on speculation the Fed will reduce its target rate by a quarter percentage-point on April 30, instead of the half-point traders expected a month ago. In early Friday trading, the 2-year note lost 0.1% to 99.04, yielding 2.2%.
According to AMG Data Services, Including ETF activity, Equity funds report net cash outflows totaling -$9.927 billion in the week ended 4/16/08 with Domestic funds reporting net outflows of -$9.275 billion and Non-domestic funds reporting net outflows of -$652 million; Excluding ETF activity, Equity funds report net cash inflows totaling $46 million with Domestic funds reporting net inflows of $657 million and Non-domestic funds reporting net outflows totaling -$611 million; Excluding ETF activity, Real Estate funds report inflows ($108 Mil) for the third consecutive week and for the ninth of the last twelve weeks;Excluding ETF activity, Financial/Banking funds report inflows ($6 Mil) for the fourth consecutive week.
In a dramatic reversal, an Associated Press-Yahoo! News poll found that a clear majority of Democratic voters now say Sen. Barack Obama has a better chance of defeating Republican Sen. John McCain in November than Sen. Hillary Rodham Clinton. An Obama spokesman, Hari Sevugan, said Thursday: “Since Feb. 5, Senator Obama has garnered the support of 80 superdelegates to Senator Clinton’s 5. We’ll let the results of Senator Clinton’s ‘kitchen sink’ strategy speak for themselves.”
Mark Zandi of Moody's Economy.com estimates that 10.6 million homeowners will have zero or negative equity by the end of June, or 21 percent of first mortgage holders.
Citigroup Inc. said Friday it lost $5.1 billion during the first quarter as poor bets on mortgages and leveraged loans lopped billions of dollars from its investment portfolio. Citigroup trimmed its credit exposure to direct subprime securities in the first quarter to just over $29.1 billion from $37.3 billion at the end of 2007. The company had $6 billion of pre-tax write-downs and credit costs on sub-prime related direct exposures. The firm also announced write-downs of $3.1 billion on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of $1.5 billion related to exposure to monoline insurers, write-downs of $1.5 billion on auction rate securities inventory, and a $3.1 billion increase in credit costs in its global consumer business. The company is cutting 9,000+ jobs.
Schlumberger Ltd. said Friday its first-quarter net income rose nearly 14 percent from a year ago, but the oilfield services provider missed the Wall Street forecast.
Schlumberger chairman and chief executive Andrew Gould said seasonal factors and weather-related events hurt the most-recent results but noted longer-term prospects are positive. "We remain convinced that current investment levels are insufficient to both stem decline and to explore and develop new reserves and, as a result, we anticipate the current cycle of exploration and production spending will remain stronger for a longer period than we originally anticipated," Gould said.
Caterpillar Inc reported stronger-than-expected quarterly profit on Friday as strong international sales offset weakness in the residential construction and on-highway truck markets in North America. The company, the world's largest maker of construction and mining equipment, reported a first-quarter profit of $922 million, or $1.45 a share, compared with $816 million, or $1.23 a share, a year earlier. Sales rose 18 percent to $11.8 billion.
Honeywell International Inc. reported that first-quarter profit rose 22 percent on higher sales, and contracts from Embraer, Gulfstream and Airbus. The results beat Wall Street forecasts and Honeywell raised its annual sales forecast and the lower end of its earnings forecast for the year, sending its shares up more than 4 percent in premarket trading.
According to the WSJ, natural-gas prices in the U.S. have risen 93% since August as power-hungry nations compete in a global market that scarcely existed five years ago. The trend has profound implications for the troubled U.S. economy.
A glut of foreclosed homes helped prompt a 26 percent plunge in California home prices in March. Bay Area home sales clocked another record low, according to a real estate report released Thursday. One-quarter of all homes sold in the nine-county area last month were foreclosures.
According to Peter Goodman of the NY Times, throughout the country, businesses grappling with declining fortunes are cutting hours for those on their payrolls. Self-employed people are suffering a drop in demand for their services, like music lessons, catering and management consulting. Growing numbers of people are settling for part-time work out of a failure to secure a full-time position. The gradual erosion of the paycheck has become a stealth force driving the American economic downturn. Most of the attention has focused on the loss of jobs and the risk of layoffs. But the less-noticeable shrinking of hours and pay for millions of workers around the country appears to be a bigger contributor to the decline, which has already spread from housing and finance to other important areas of the economy.
David Woo, currency chief at Barclays Capital, said the Europeans and Americans are talking past each other. Whatever the G7 wording, Washington is happy to watch the dollar slide. "They are not going to worry unless there is a knock-on effect on US equity or bond prices. So far that hasn't happened. There are no signs that the dollar decline has turned disorderly," he said.
The NY Times reported Linens ‘n Things has hired Financo, an investment bank specializing in retail companies, to find a buyer for the troubled housewares and bedding chain while it tries to avoid filing for bankruptcy.
The public's ratings of the national economy continue to sour, with assessments deteriorating faster than at any point in Washington Post-ABC News polling. Views on the Iraq war have also turned more negative, with six in 10 now rejecting the notion that the United States needs to win there to effectively battle terrorism.
Colin Carter, Ph.D., UC-Davis: “Achieving the American goal to replace 15% of gasoline demand with ethanol in ten years would require the entire current U.S. corn crop, which represents a whopping 40% of the world's corn supply.”
Barry Ritholtz: "First M3 reporting stopped, and shortly thereafter, M3 skyrocketed. Next was the attempt to stop aggregating general economic information, and then we learned that GDP fell off the cliff. Now comes the attempt to reduce the reporting of hours and earnings data. Gee, can you guess what coincidence is about to happen? Let me end your suspense: Workers Get Fewer Hours, Deepening the Downturn...While official unemployment has risen only modestly, to 5.1 percent, the reduction of wages and working hours for those still employed has become a primary cause of distress, pushing many more Americans into a downward spiral, economists say. Moreover, this slippage is a critical indicator that the nation may well be on the verge of a recession, if not already in one. Last month, the hours worked by those on American payrolls dropped, compared with six months earlier, according to an index maintained by the Labor Department. The last time the index moved into negative territory was February 2001, when the economy was on the doorstep of recession. A similar slide emerged in August 1990, one month into what proved an even more severe downturn."
Alliance Data Systems raised to Buy From Neutral at Piper Jaffray.Cisco Systems started as Buy at Lazard. Google raised to Buy at Jefferies; Merrill Lynch raised price target to $600.
Brett Steenbarger: "What we are seeing is that markets are closing near their day's highs or lows more frequently than we would expect by chance....It appears that traders segment their performance day by day, perhaps jumping aboard trends in an effort to finish their days on winning notes. By the close of the next day, however, any such bandwagon effect has been erased."
According to the BLS, median weekly earnings of the nation's 106.5 million full-time wage and salary workers were $719 in the first quarter of 2008. This was 3.8 percent higher than a year earlier, compared with a gain of 4.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.
Halliburton Co.may offer to buy Expro International Group Plc to counter a 1.61 billion-pound ($3.2 billion) bid from Candover Partners Ltd., three people with knowledge of the talks said.
AT&T Inc. on Friday said it plans to cut about 4,600 jobs, or 1.5 percent of its work force, to shift resources to growing parts of its business.The nation's largest telecommunications provider said most of the layoffs will be among managers.
The main militant group in Nigeria's oil- rich region said it sabotaged a pipeline operated by a unit of Royal Dutch Shell PlC on Friday.
Tyson Foods Inc .is shutting down its meat processing plant in York, Neb. as part of its effort to consolidate some of its prepared foods business. The closure of the facility will result in the elimination of 110 jobs.
The Dow Jones Industrial Average gained 228 points, or 1.8%, to 12,849, topping its February 1 intraday high of 12,841. For the week, the Dow advanced 4.3%. The S&P 500 index gained 24 points, or 1.8%, to end at 1,390, adding to a 4.3% advance for the week. The Nasdaq Composite rose 61 points, or 2.6%, to 2,402, putting in a whopping 4.9% advance on the week.
Crude oil for May delivery gained $1.83, or 1.6%, to settle at $116.69 a barrel on the New York Mercantile Exchange. Gold for June delivery dropped $27.70 to end at $915.20 an ounce on the New York Mercantile Exchange.
The dollar index was at 72.307, up from 71.588 in late Thursday's trading.
U.S. Treasury two-year notes fell, headed for their biggest weekly decline in more than seven years, as traders trimmed bets on how far the Federal Reserve will cut interest rates. Two-year yields have risen 45 basis points this week, the most since November 2001, on speculation the Fed will reduce its target rate by a quarter percentage-point on April 30, instead of the half-point traders expected a month ago. In early Friday trading, the 2-year note lost 0.1% to 99.04, yielding 2.2%.
According to AMG Data Services, Including ETF activity, Equity funds report net cash outflows totaling -$9.927 billion in the week ended 4/16/08 with Domestic funds reporting net outflows of -$9.275 billion and Non-domestic funds reporting net outflows of -$652 million; Excluding ETF activity, Equity funds report net cash inflows totaling $46 million with Domestic funds reporting net inflows of $657 million and Non-domestic funds reporting net outflows totaling -$611 million; Excluding ETF activity, Real Estate funds report inflows ($108 Mil) for the third consecutive week and for the ninth of the last twelve weeks;Excluding ETF activity, Financial/Banking funds report inflows ($6 Mil) for the fourth consecutive week.
In a dramatic reversal, an Associated Press-Yahoo! News poll found that a clear majority of Democratic voters now say Sen. Barack Obama has a better chance of defeating Republican Sen. John McCain in November than Sen. Hillary Rodham Clinton. An Obama spokesman, Hari Sevugan, said Thursday: “Since Feb. 5, Senator Obama has garnered the support of 80 superdelegates to Senator Clinton’s 5. We’ll let the results of Senator Clinton’s ‘kitchen sink’ strategy speak for themselves.”
Mark Zandi of Moody's Economy.com estimates that 10.6 million homeowners will have zero or negative equity by the end of June, or 21 percent of first mortgage holders.
Citigroup Inc. said Friday it lost $5.1 billion during the first quarter as poor bets on mortgages and leveraged loans lopped billions of dollars from its investment portfolio. Citigroup trimmed its credit exposure to direct subprime securities in the first quarter to just over $29.1 billion from $37.3 billion at the end of 2007. The company had $6 billion of pre-tax write-downs and credit costs on sub-prime related direct exposures. The firm also announced write-downs of $3.1 billion on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of $1.5 billion related to exposure to monoline insurers, write-downs of $1.5 billion on auction rate securities inventory, and a $3.1 billion increase in credit costs in its global consumer business. The company is cutting 9,000+ jobs.
Schlumberger Ltd. said Friday its first-quarter net income rose nearly 14 percent from a year ago, but the oilfield services provider missed the Wall Street forecast.
Schlumberger chairman and chief executive Andrew Gould said seasonal factors and weather-related events hurt the most-recent results but noted longer-term prospects are positive. "We remain convinced that current investment levels are insufficient to both stem decline and to explore and develop new reserves and, as a result, we anticipate the current cycle of exploration and production spending will remain stronger for a longer period than we originally anticipated," Gould said.
Caterpillar Inc reported stronger-than-expected quarterly profit on Friday as strong international sales offset weakness in the residential construction and on-highway truck markets in North America. The company, the world's largest maker of construction and mining equipment, reported a first-quarter profit of $922 million, or $1.45 a share, compared with $816 million, or $1.23 a share, a year earlier. Sales rose 18 percent to $11.8 billion.
Honeywell International Inc. reported that first-quarter profit rose 22 percent on higher sales, and contracts from Embraer, Gulfstream and Airbus. The results beat Wall Street forecasts and Honeywell raised its annual sales forecast and the lower end of its earnings forecast for the year, sending its shares up more than 4 percent in premarket trading.
According to the WSJ, natural-gas prices in the U.S. have risen 93% since August as power-hungry nations compete in a global market that scarcely existed five years ago. The trend has profound implications for the troubled U.S. economy.
A glut of foreclosed homes helped prompt a 26 percent plunge in California home prices in March. Bay Area home sales clocked another record low, according to a real estate report released Thursday. One-quarter of all homes sold in the nine-county area last month were foreclosures.
According to Peter Goodman of the NY Times, throughout the country, businesses grappling with declining fortunes are cutting hours for those on their payrolls. Self-employed people are suffering a drop in demand for their services, like music lessons, catering and management consulting. Growing numbers of people are settling for part-time work out of a failure to secure a full-time position. The gradual erosion of the paycheck has become a stealth force driving the American economic downturn. Most of the attention has focused on the loss of jobs and the risk of layoffs. But the less-noticeable shrinking of hours and pay for millions of workers around the country appears to be a bigger contributor to the decline, which has already spread from housing and finance to other important areas of the economy.
David Woo, currency chief at Barclays Capital, said the Europeans and Americans are talking past each other. Whatever the G7 wording, Washington is happy to watch the dollar slide. "They are not going to worry unless there is a knock-on effect on US equity or bond prices. So far that hasn't happened. There are no signs that the dollar decline has turned disorderly," he said.
The NY Times reported Linens ‘n Things has hired Financo, an investment bank specializing in retail companies, to find a buyer for the troubled housewares and bedding chain while it tries to avoid filing for bankruptcy.
The public's ratings of the national economy continue to sour, with assessments deteriorating faster than at any point in Washington Post-ABC News polling. Views on the Iraq war have also turned more negative, with six in 10 now rejecting the notion that the United States needs to win there to effectively battle terrorism.
Colin Carter, Ph.D., UC-Davis: “Achieving the American goal to replace 15% of gasoline demand with ethanol in ten years would require the entire current U.S. corn crop, which represents a whopping 40% of the world's corn supply.”
Barry Ritholtz: "First M3 reporting stopped, and shortly thereafter, M3 skyrocketed. Next was the attempt to stop aggregating general economic information, and then we learned that GDP fell off the cliff. Now comes the attempt to reduce the reporting of hours and earnings data. Gee, can you guess what coincidence is about to happen? Let me end your suspense: Workers Get Fewer Hours, Deepening the Downturn...While official unemployment has risen only modestly, to 5.1 percent, the reduction of wages and working hours for those still employed has become a primary cause of distress, pushing many more Americans into a downward spiral, economists say. Moreover, this slippage is a critical indicator that the nation may well be on the verge of a recession, if not already in one. Last month, the hours worked by those on American payrolls dropped, compared with six months earlier, according to an index maintained by the Labor Department. The last time the index moved into negative territory was February 2001, when the economy was on the doorstep of recession. A similar slide emerged in August 1990, one month into what proved an even more severe downturn."
Alliance Data Systems raised to Buy From Neutral at Piper Jaffray.Cisco Systems started as Buy at Lazard. Google raised to Buy at Jefferies; Merrill Lynch raised price target to $600.
Brett Steenbarger: "What we are seeing is that markets are closing near their day's highs or lows more frequently than we would expect by chance....It appears that traders segment their performance day by day, perhaps jumping aboard trends in an effort to finish their days on winning notes. By the close of the next day, however, any such bandwagon effect has been erased."
According to the BLS, median weekly earnings of the nation's 106.5 million full-time wage and salary workers were $719 in the first quarter of 2008. This was 3.8 percent higher than a year earlier, compared with a gain of 4.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.
Halliburton Co.may offer to buy Expro International Group Plc to counter a 1.61 billion-pound ($3.2 billion) bid from Candover Partners Ltd., three people with knowledge of the talks said.
AT&T Inc. on Friday said it plans to cut about 4,600 jobs, or 1.5 percent of its work force, to shift resources to growing parts of its business.The nation's largest telecommunications provider said most of the layoffs will be among managers.
The main militant group in Nigeria's oil- rich region said it sabotaged a pipeline operated by a unit of Royal Dutch Shell PlC on Friday.
Tyson Foods Inc .is shutting down its meat processing plant in York, Neb. as part of its effort to consolidate some of its prepared foods business. The closure of the facility will result in the elimination of 110 jobs.
The Dow Jones Industrial Average gained 228 points, or 1.8%, to 12,849, topping its February 1 intraday high of 12,841. For the week, the Dow advanced 4.3%. The S&P 500 index gained 24 points, or 1.8%, to end at 1,390, adding to a 4.3% advance for the week. The Nasdaq Composite rose 61 points, or 2.6%, to 2,402, putting in a whopping 4.9% advance on the week.
Crude oil for May delivery gained $1.83, or 1.6%, to settle at $116.69 a barrel on the New York Mercantile Exchange. Gold for June delivery dropped $27.70 to end at $915.20 an ounce on the New York Mercantile Exchange.
The dollar index was at 72.307, up from 71.588 in late Thursday's trading.
Thursday, April 17, 2008
The New Frontier
4/17/08 The New Frontier
Early Thursday light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents. The euro hit a new all-time high of $1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at $1.5966 by midday in Europe.
Merrill Lynch has reported a steep first-quarter loss after more write-downs related to the troubled credit markets. New York-based Merrill says it wrote down $1.5 billion related to troubled debt instruments and took a $3 billion adjustment related to protection on certain kinds of debt. Merrill Lynch wrote down the value of it hedges on exposure to monoline insurance on certain credit positions to 40 cents on the dollar. Merrill Lynch will cut 4,000 jobs.
The average selling price of a Nokia phone fell to 79 euros from 83 euros in the fourth quarter. Nokia cut its outlook on the mobile device market, saying it now expects it to decline in value in euro terms in 2008 on weakness in the U.S. dollar, the economic slowdown in the U.S. and possibly a slowdown in Europe.
Yahoo Inc.has moved closer to outsourcing search advertising to Google Inc. after an initial test produced positive results, The Wall Street Journal reported, citing people familiar with the matter. Google reports earnings later today.
According to the Financial Times, more companies than ever are in the weakest of liquidity positions and struggling to cover their bills, according to a Moody's Investors Service Inc. report on public debt. There are now 47 companies with public debt that Moody's rates as having the weakest of liquidity levels, a number that has more than doubled since June. These 47 companies have combined rated debt of $34.7 billion.
Fred Sheehan: "Treasury Secretary Hank Paulson has proposed the Federal Reserve be given broad powers to regulate the financial industry. He could not have nominated a more incompetent body. The Coast Guard would do a better job. Financial upheaval owes homage to derivatives that shrouded the massive growth in debt and leverage. This murky world inflated the incentives of those who ran the machinery over the cliff — bankers, mortgage brokers, law firms, appraisers, rating agencies, politicians, and on it goes. This is well known. Despite protestations, the parties knew they were behaving either recklessly or criminally at the time. The Federal Reserve encouraged them. With a straight face, Hank Paulson proposes that the Fed quash future imbroglios. Yet the terracotta soldiers of Xian would bring more initiative to the assignment.
Credit derivatives outstanding surged 37% in the second half of last year alone and covered roughly $62 trillion of debt at year end, according to the International Swaps and Derivatives Association, or Isda.
The yield on two-year notes rose to 2.10%. My second biggest position continues to be short the 2-year note at 1.5%. As has been the case for several years, my biggest position is short the dollar.
Don't look now but the market is raising short-term rates in spite of the Fed's efforts to lower rates. The ECB may raise rates again. Brazil just raised rates. China continues to raise rates. Iceland raised rates etc etc. Unfortunately, food and energy inflation will more than offset the rise in short-term rates. In essence, the final straw will occur when the U.S. Treasury note loses its AAA rating. It will happen-- sooner rather than later. In my view, the largest bubble over the last 12 months has been in the U.S. Treasury market.
Arthur Conan Doyle: "Whenever you have eliminated the impossible, whatever remains, however improbable, must be the truth."
"When I was Secretary of the Treasury I was not supposed to say anything but 'strong dollar, strong dollar,''' Paul O'Neill said today. "I argued then and would argue now that the idea of a strong dollar policy is a vacuous notion.''
The U.S. currency today fell to a record low against the euro, and has declined 15 percent against its European counterpart in the past year.
The average conforming 30-year fixed mortgage rate increased to 6.03% from 5.96% a week ago, while the average 15-year fixed mortgage rose to 5.65% from 5.56%.
SLM Corp., the largest U.S. student- loan provider, recorded its third consecutive quarterly loss as gains from selling loans to investors dried up. The company said its new loans are unprofitable.
India's inflation held near a three-year high, buttressing expectations the government may announce more measures this month to tame runaway prices. Wholesale prices rose 7.14 percent in the week ended April 5 from a year earlier, after gaining 7.41 percent in the previous week, the Ministry of Commerce and Industry said in a release issued in New Delhi today.
European Central Bank council member Axel Weber said the bank will assess whether current interest rates are high enough to contain ``intolerably'' high inflation.
``Recent wage dynamics in conjuncture with elevated and persistent energy and food price pressures have increased the risk of a prolonged period of intolerably high inflation,'' Weber said in a speech today in Frankfurt. ``We will have to continuously monitor closely all incoming data and evaluate whether the current level of interest rates in fact ensures'' price stability."
Brazil's central bank Governor Henrique Meirelles, who yesterday lifted interest rates for the first time in three years, is betting he can contain inflation by tightening monetary policy more aggressively than economists anticipated. Policy makers raised the overnight rate by half a percentage point to 11.75 percent from a record-low 11.25 percent.
Nigeria risks losing a third of its oil output by 2015 unless it finds ways to boost investment in joint ventures with foreign energy companies, an internal report by President Umaru Yar’Adua’s energy advisers warns.
Australia's Deniliquin mill, the largest rice mill in the Southern Hemisphere, once processed enough grain to meet the needs of 20 million people around the world. But six long years of drought have taken a toll, reducing Australia’s rice crop by 98 percent and leading to the mothballing of the mill last December. According to the NY Times, the collapse of Australia’s rice production is one of several factors contributing to a doubling of rice prices in the last three months — increases that have led the world’s largest exporters to restrict exports severely, spurred panicked hoarding in Hong Kong and the Philippines, and set off violent protests in countries including Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Italy, Ivory Coast, Mauritania, the Philippines, Thailand, Uzbekistan and Yemen...Even in normal times, little of the world’s rice is actually exported — more than 90 percent is consumed in the countries where it is grown. In the last quarter-century, rice consumption has outpaced production, with global reserves plunging by half just since 2000. A plant disease is hurting harvests in Vietnam, reducing supply. And economic uncertainty has led producers to hoard rice and speculators and investors to see it as a lucrative or at least safe bet. All these factors have made countries that buy rice on the global market vulnerable to extreme price swings.
Mark Twain: "Truth is mighty and will prevail. There is nothing the matter with this, except that it ain't so."
The NY Times points out J.C. Penney says the tumultuous economy is making it impossible to predict earnings over the next year. Macy’s asserts that providing monthly sales information is too distracting and confusing. And Starbucks argues that annual profit estimates are unnecessary.
Continental Airlines Inc. swung to a first-quarter net loss amid a 53% surge in fuel costs and announced plans to take additional planes out of service and cut back on capacity. U.S. Airways will charge more for a window and an aisle seat.
The questions remains--- is there a need for U.S. Airways to be in business?
President of S.F's Fed Reserve Bank says mortgage, financial services issues to hurt U.S. economy through '09.
Pfizer says its first-quarter profit fell 18 percent on lower sales of blood-pressure drug Norvasc and the allergy drug Zyrtec, but topped Wall Street forecasts after excluding acquisition charges.
China announced a 100 percent tax on fertilizer exports Thursday in yet another move to cool surging inflation by increasing domestic supplies of raw materials. The new tax, which takes effect Sunday, comes after consumer prices in March rose 8.3 percent, driven by a 21 percent jump in food costs due to shortages of pork, grain and other items.
Harley-Davidson Inc warned on Thursday that it would report full-year earnings well below previous forecast, slash production of its iconic motorcycles and lay off hundreds of workers as the U.S. economic slowdown crimps demand for its pricey products.
JPMorgan Chase & Co is to sell $6 billion in non-cumulative perpetual preferred shares, according to a report in International Financing Review, a Thomson publication. Pricing could be decided on Wednesday. The shares are expected to pay a fixed 7.9 percent dividend for 10 years and a floating rate after that date.
First-time filings for state unemployment benefits rose by 17,000 to 372,000 in the week ending April 12, the Labor Department reported Thursday. The four-week moving average of those claims fell by 750 to 376,000. For the week ending April 5, continuing jobless claims came in at 2.98 million, their highest level since mid-June 2004. The number of continuing claims rose by 26,000. The four-week average of continuing claims, meanwhile, rose by 29,750 to 2.94 million. Wall Street layoffs will continue to add to these numbers.
Your tax money at work: The government plans to begin collecting DNA samples from anyone arrested by a federal law enforcement agency -- a move intended to prevent violent crime but which also is raising concerns about the privacy of innocent people.Using authority granted by Congress, the government also plans to collect DNA samples from foreigners who are detained, whether they have been charged or not. The DNA would be collected through a cheek swab, Justice Department spokesman Erik Ablin said Wednesday.
Elisa Parisi-Capone: "Banks are unwilling to lend to each other beyond the shortest maturities. As emerges from the definitions below, LIBOR is the base rate for the vast majority of variable rate loans to households and corporates and for interest rate derivatives. If LIBOR stays high, troubles in the financial sector are likely to spill over into the real economy via higher borrowing costs. In addition, banks’ need to restore balance sheets may lead to lending restrictions."
Thursday's sudden jump in the dollar-denominated London interbank offered rate, or Libor, came after a decision Wednesday by the British Bankers' Association to speed up an inquiry into the daily borrowing rates that banks provide to establish the Libor.
Brett Steenbarger: "Price movement early and late in the day is easily 50-70% greater than midday. This suggests that uniform rules for placement of stops and price targets are bound to fail: the market is not uniform intraday."
CIT dropped after reporting a loss and cut its dividend.
"There is a commodities bubble still in the growth phase while other bubbles are being deflated," Soros said.
United Technologies Corp. posted a 22% rise in first-quarter net income, helped by broad strength across its major units.
"There's been no job growth over the past three months, and overall profits have declined," said Ken Goldstein, labor economist at the Conference Board. "Whatever is ahead - whether it's weak or no growth - it certainly is a tough environment, and it could get worse."
Excluding special items, earnings per share from continuing operations for the NY Times fell to 4 cents from 17 cents in the first quarter of 2007. Revenue dropped 4.9 percent to $747.9 million.
Factories in the Philadelphia region reported weaker conditions in early April, as the Philly Fed index remained negative for the fifth straight month. The index fell to negative 24.9 in April from negative 17.4 in March. It's the lowest since February 2001.The new order index fell to negative 18.8 from negative 9.3. The shipments index fell to negative 8 from negative 6.3.
The price for copper and for rice jumped to record levels on Thursday.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states grew by 27 billion cubic feet to about 1.26 trillion cubic feet for the week ending April 11. The inventory level was below the five-year average of more than 1.26 trillion cubic feet in underground storage, and well below last year's storage level of 1.56 trillion cubic feet, according to the government data.
"We must worry about excessive leverage and susceptibility to runs not only at banks but also at securities firms," Donald Kohn, vice chairman of the central bank, said in remarks to a credit forum in Charlotte, N.C.
Google said first-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, in the year-earlier quarter. Excluding one-time items and stock option expenses, profit was $4.84 a share, ahead of the average Wall Street forecast of $4.53 per share as compiled by Reuters Estimates. Gross revenue rose 42 percent to $5.19 billion. By contrast, Google's revenue grew at a 63 percent rate in the same quarter a year ago. Revenue had been expected, on average, to grow 40 percent to $5.13 billion, according to Reuters Estimates. In after hours trading, the stock jumped 75 points to $525.
Intuitive Surgical Inc's first-quarter net income rose to $44.8 million, or $1.12 a share, compared with $23.8 million, or 62 cents a share, in the year-earlier period.
Advanced Micro Devices Inc.reported a first-quarter net loss of $358 million, or 59 cents a share, compared to a net loss of of $611 million, or $1.11 a share, for the year-earlier period. The results included acquistion-related charges of 8 cents a share, related to the company's merger with ATI Technologies.
E-Trade Financial Corp. reported a quarterly net loss late Thursday as the discount broker continued to struggle with exposure to mortgage securities. The company swung to a net loss of $91.2 million, or 20 cents a share, compared to net income of $169.4 million, or 39 cents a share, a year earlier. Credit market losses and re-organization costs took $35 million, or five cents a share, off results in the latest period, E-Trade noted.
Crude for May delivery fell 7 cents to settle at $114.86 a barrel on the New York Mercantile Exchange. Gold for June delivery fell $5.40 to end at $942.90 an ounce on the New York Mercantile Exchange.
The Reserve Bank of India said the so-called cash reserve ratio would be raised to 8 percent from 7.5 percent in two phases by May 10.
Roughly one in every five U.S. troops who have survived the bombs and other dangers of Iraq and Afghanistan now suffers from major depression or post-traumatic stress, an independent study said Thursday. It estimated the toll at 300,000 or more. Army Surgeon General Eric Schoomaker said the report, from the Rand Corp., was welcome.
Heraklietos of Ephesos:
"Whosoever wishes to know about the world must learn about it in its particular details.
Knowledge is not intelligence.
In searching for the truth be ready for the unexpected.
Change alone is unchanging.
The same road goes both up and down.
The beginning of a circle is also its end.
Not I, but the world says it: all is one.
And yet everything comes in season."
Early Thursday light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents. The euro hit a new all-time high of $1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at $1.5966 by midday in Europe.
Merrill Lynch has reported a steep first-quarter loss after more write-downs related to the troubled credit markets. New York-based Merrill says it wrote down $1.5 billion related to troubled debt instruments and took a $3 billion adjustment related to protection on certain kinds of debt. Merrill Lynch wrote down the value of it hedges on exposure to monoline insurance on certain credit positions to 40 cents on the dollar. Merrill Lynch will cut 4,000 jobs.
The average selling price of a Nokia phone fell to 79 euros from 83 euros in the fourth quarter. Nokia cut its outlook on the mobile device market, saying it now expects it to decline in value in euro terms in 2008 on weakness in the U.S. dollar, the economic slowdown in the U.S. and possibly a slowdown in Europe.
Yahoo Inc.has moved closer to outsourcing search advertising to Google Inc. after an initial test produced positive results, The Wall Street Journal reported, citing people familiar with the matter. Google reports earnings later today.
According to the Financial Times, more companies than ever are in the weakest of liquidity positions and struggling to cover their bills, according to a Moody's Investors Service Inc. report on public debt. There are now 47 companies with public debt that Moody's rates as having the weakest of liquidity levels, a number that has more than doubled since June. These 47 companies have combined rated debt of $34.7 billion.
Fred Sheehan: "Treasury Secretary Hank Paulson has proposed the Federal Reserve be given broad powers to regulate the financial industry. He could not have nominated a more incompetent body. The Coast Guard would do a better job. Financial upheaval owes homage to derivatives that shrouded the massive growth in debt and leverage. This murky world inflated the incentives of those who ran the machinery over the cliff — bankers, mortgage brokers, law firms, appraisers, rating agencies, politicians, and on it goes. This is well known. Despite protestations, the parties knew they were behaving either recklessly or criminally at the time. The Federal Reserve encouraged them. With a straight face, Hank Paulson proposes that the Fed quash future imbroglios. Yet the terracotta soldiers of Xian would bring more initiative to the assignment.
Credit derivatives outstanding surged 37% in the second half of last year alone and covered roughly $62 trillion of debt at year end, according to the International Swaps and Derivatives Association, or Isda.
The yield on two-year notes rose to 2.10%. My second biggest position continues to be short the 2-year note at 1.5%. As has been the case for several years, my biggest position is short the dollar.
Don't look now but the market is raising short-term rates in spite of the Fed's efforts to lower rates. The ECB may raise rates again. Brazil just raised rates. China continues to raise rates. Iceland raised rates etc etc. Unfortunately, food and energy inflation will more than offset the rise in short-term rates. In essence, the final straw will occur when the U.S. Treasury note loses its AAA rating. It will happen-- sooner rather than later. In my view, the largest bubble over the last 12 months has been in the U.S. Treasury market.
Arthur Conan Doyle: "Whenever you have eliminated the impossible, whatever remains, however improbable, must be the truth."
"When I was Secretary of the Treasury I was not supposed to say anything but 'strong dollar, strong dollar,''' Paul O'Neill said today. "I argued then and would argue now that the idea of a strong dollar policy is a vacuous notion.''
The U.S. currency today fell to a record low against the euro, and has declined 15 percent against its European counterpart in the past year.
The average conforming 30-year fixed mortgage rate increased to 6.03% from 5.96% a week ago, while the average 15-year fixed mortgage rose to 5.65% from 5.56%.
SLM Corp., the largest U.S. student- loan provider, recorded its third consecutive quarterly loss as gains from selling loans to investors dried up. The company said its new loans are unprofitable.
India's inflation held near a three-year high, buttressing expectations the government may announce more measures this month to tame runaway prices. Wholesale prices rose 7.14 percent in the week ended April 5 from a year earlier, after gaining 7.41 percent in the previous week, the Ministry of Commerce and Industry said in a release issued in New Delhi today.
European Central Bank council member Axel Weber said the bank will assess whether current interest rates are high enough to contain ``intolerably'' high inflation.
``Recent wage dynamics in conjuncture with elevated and persistent energy and food price pressures have increased the risk of a prolonged period of intolerably high inflation,'' Weber said in a speech today in Frankfurt. ``We will have to continuously monitor closely all incoming data and evaluate whether the current level of interest rates in fact ensures'' price stability."
Brazil's central bank Governor Henrique Meirelles, who yesterday lifted interest rates for the first time in three years, is betting he can contain inflation by tightening monetary policy more aggressively than economists anticipated. Policy makers raised the overnight rate by half a percentage point to 11.75 percent from a record-low 11.25 percent.
Nigeria risks losing a third of its oil output by 2015 unless it finds ways to boost investment in joint ventures with foreign energy companies, an internal report by President Umaru Yar’Adua’s energy advisers warns.
Australia's Deniliquin mill, the largest rice mill in the Southern Hemisphere, once processed enough grain to meet the needs of 20 million people around the world. But six long years of drought have taken a toll, reducing Australia’s rice crop by 98 percent and leading to the mothballing of the mill last December. According to the NY Times, the collapse of Australia’s rice production is one of several factors contributing to a doubling of rice prices in the last three months — increases that have led the world’s largest exporters to restrict exports severely, spurred panicked hoarding in Hong Kong and the Philippines, and set off violent protests in countries including Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Italy, Ivory Coast, Mauritania, the Philippines, Thailand, Uzbekistan and Yemen...Even in normal times, little of the world’s rice is actually exported — more than 90 percent is consumed in the countries where it is grown. In the last quarter-century, rice consumption has outpaced production, with global reserves plunging by half just since 2000. A plant disease is hurting harvests in Vietnam, reducing supply. And economic uncertainty has led producers to hoard rice and speculators and investors to see it as a lucrative or at least safe bet. All these factors have made countries that buy rice on the global market vulnerable to extreme price swings.
Mark Twain: "Truth is mighty and will prevail. There is nothing the matter with this, except that it ain't so."
The NY Times points out J.C. Penney says the tumultuous economy is making it impossible to predict earnings over the next year. Macy’s asserts that providing monthly sales information is too distracting and confusing. And Starbucks argues that annual profit estimates are unnecessary.
Continental Airlines Inc. swung to a first-quarter net loss amid a 53% surge in fuel costs and announced plans to take additional planes out of service and cut back on capacity. U.S. Airways will charge more for a window and an aisle seat.
The questions remains--- is there a need for U.S. Airways to be in business?
President of S.F's Fed Reserve Bank says mortgage, financial services issues to hurt U.S. economy through '09.
Pfizer says its first-quarter profit fell 18 percent on lower sales of blood-pressure drug Norvasc and the allergy drug Zyrtec, but topped Wall Street forecasts after excluding acquisition charges.
China announced a 100 percent tax on fertilizer exports Thursday in yet another move to cool surging inflation by increasing domestic supplies of raw materials. The new tax, which takes effect Sunday, comes after consumer prices in March rose 8.3 percent, driven by a 21 percent jump in food costs due to shortages of pork, grain and other items.
Harley-Davidson Inc warned on Thursday that it would report full-year earnings well below previous forecast, slash production of its iconic motorcycles and lay off hundreds of workers as the U.S. economic slowdown crimps demand for its pricey products.
JPMorgan Chase & Co is to sell $6 billion in non-cumulative perpetual preferred shares, according to a report in International Financing Review, a Thomson publication. Pricing could be decided on Wednesday. The shares are expected to pay a fixed 7.9 percent dividend for 10 years and a floating rate after that date.
First-time filings for state unemployment benefits rose by 17,000 to 372,000 in the week ending April 12, the Labor Department reported Thursday. The four-week moving average of those claims fell by 750 to 376,000. For the week ending April 5, continuing jobless claims came in at 2.98 million, their highest level since mid-June 2004. The number of continuing claims rose by 26,000. The four-week average of continuing claims, meanwhile, rose by 29,750 to 2.94 million. Wall Street layoffs will continue to add to these numbers.
Your tax money at work: The government plans to begin collecting DNA samples from anyone arrested by a federal law enforcement agency -- a move intended to prevent violent crime but which also is raising concerns about the privacy of innocent people.Using authority granted by Congress, the government also plans to collect DNA samples from foreigners who are detained, whether they have been charged or not. The DNA would be collected through a cheek swab, Justice Department spokesman Erik Ablin said Wednesday.
Elisa Parisi-Capone: "Banks are unwilling to lend to each other beyond the shortest maturities. As emerges from the definitions below, LIBOR is the base rate for the vast majority of variable rate loans to households and corporates and for interest rate derivatives. If LIBOR stays high, troubles in the financial sector are likely to spill over into the real economy via higher borrowing costs. In addition, banks’ need to restore balance sheets may lead to lending restrictions."
Thursday's sudden jump in the dollar-denominated London interbank offered rate, or Libor, came after a decision Wednesday by the British Bankers' Association to speed up an inquiry into the daily borrowing rates that banks provide to establish the Libor.
Brett Steenbarger: "Price movement early and late in the day is easily 50-70% greater than midday. This suggests that uniform rules for placement of stops and price targets are bound to fail: the market is not uniform intraday."
CIT dropped after reporting a loss and cut its dividend.
"There is a commodities bubble still in the growth phase while other bubbles are being deflated," Soros said.
United Technologies Corp. posted a 22% rise in first-quarter net income, helped by broad strength across its major units.
"There's been no job growth over the past three months, and overall profits have declined," said Ken Goldstein, labor economist at the Conference Board. "Whatever is ahead - whether it's weak or no growth - it certainly is a tough environment, and it could get worse."
Excluding special items, earnings per share from continuing operations for the NY Times fell to 4 cents from 17 cents in the first quarter of 2007. Revenue dropped 4.9 percent to $747.9 million.
Factories in the Philadelphia region reported weaker conditions in early April, as the Philly Fed index remained negative for the fifth straight month. The index fell to negative 24.9 in April from negative 17.4 in March. It's the lowest since February 2001.The new order index fell to negative 18.8 from negative 9.3. The shipments index fell to negative 8 from negative 6.3.
The price for copper and for rice jumped to record levels on Thursday.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states grew by 27 billion cubic feet to about 1.26 trillion cubic feet for the week ending April 11. The inventory level was below the five-year average of more than 1.26 trillion cubic feet in underground storage, and well below last year's storage level of 1.56 trillion cubic feet, according to the government data.
"We must worry about excessive leverage and susceptibility to runs not only at banks but also at securities firms," Donald Kohn, vice chairman of the central bank, said in remarks to a credit forum in Charlotte, N.C.
Google said first-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, in the year-earlier quarter. Excluding one-time items and stock option expenses, profit was $4.84 a share, ahead of the average Wall Street forecast of $4.53 per share as compiled by Reuters Estimates. Gross revenue rose 42 percent to $5.19 billion. By contrast, Google's revenue grew at a 63 percent rate in the same quarter a year ago. Revenue had been expected, on average, to grow 40 percent to $5.13 billion, according to Reuters Estimates. In after hours trading, the stock jumped 75 points to $525.
Intuitive Surgical Inc's first-quarter net income rose to $44.8 million, or $1.12 a share, compared with $23.8 million, or 62 cents a share, in the year-earlier period.
Advanced Micro Devices Inc.reported a first-quarter net loss of $358 million, or 59 cents a share, compared to a net loss of of $611 million, or $1.11 a share, for the year-earlier period. The results included acquistion-related charges of 8 cents a share, related to the company's merger with ATI Technologies.
E-Trade Financial Corp. reported a quarterly net loss late Thursday as the discount broker continued to struggle with exposure to mortgage securities. The company swung to a net loss of $91.2 million, or 20 cents a share, compared to net income of $169.4 million, or 39 cents a share, a year earlier. Credit market losses and re-organization costs took $35 million, or five cents a share, off results in the latest period, E-Trade noted.
Crude for May delivery fell 7 cents to settle at $114.86 a barrel on the New York Mercantile Exchange. Gold for June delivery fell $5.40 to end at $942.90 an ounce on the New York Mercantile Exchange.
The Reserve Bank of India said the so-called cash reserve ratio would be raised to 8 percent from 7.5 percent in two phases by May 10.
Roughly one in every five U.S. troops who have survived the bombs and other dangers of Iraq and Afghanistan now suffers from major depression or post-traumatic stress, an independent study said Thursday. It estimated the toll at 300,000 or more. Army Surgeon General Eric Schoomaker said the report, from the Rand Corp., was welcome.
Heraklietos of Ephesos:
"Whosoever wishes to know about the world must learn about it in its particular details.
Knowledge is not intelligence.
In searching for the truth be ready for the unexpected.
Change alone is unchanging.
The same road goes both up and down.
The beginning of a circle is also its end.
Not I, but the world says it: all is one.
And yet everything comes in season."
Wednesday, April 16, 2008
Inflation
4/16/08 Inflation
Ron Paul: "Inflating is immoral in a sense because it steals. It steals value if you double the money supply and your prices go up twice as much…it's an invisible hidden tax. But the real immorality here is that some people pay higher prices then others. So if you're in the middle class, or especially low middle income, your prices might be going up fifteen percent a year. Somebody on Wall Street working leverage buyouts doesn't have to worry about the rising cost of living. This to me is a immoral act, that is prohibited by the Constitution, and the outcome is always tragic."
Robert McHugh: "We got the first new Hindenburg Omen observation since October 2007 on Tuesday, April 15th."
"As the second quarter begins, markets remain highly unstable and continue to be a challenge for investors worldwide," BlackRock's Chief Executive Laurence Fink said.
J.P. Morgan Chase & Co. Chairman and CEO Jamie Dimon said Wednesday the financial giant expects the environment to continue to be weak and for capital markets to remain under stress. "These factors have affected, and are likely to continue to negatively impact, our firm's credit losses, overall business volumes and earnings -- possibly through the remainder of the year, or longer," Dimon said. The company added $2.5 billion to its allowance for credit losses. J.P. Morgan's investment banking unit took markdowns of $2.6 billion, including markdowns on leveraged lending and prime and subprime mortgages. "Our earnings this quarter were down significantly as market conditions and the credit environment remained challenging," said Chairman and CEO Jamie Dimon. He said prime mortgages "are getting worse."
Canpotex Ltd., the offshore marketing company for Saskatchewan potash producers, and Sinofert Holdings Ltd. agreed to a $400-a-ton increase in 2008 potash prices over 2007 levels, Potash Corp. of Saskatchewan Inc.said on Wednesday. Sinofert is a major potash producer in China. Potash Corp., the Saskatoon fertilizer giant, reiterated that Canpotex has prorated China's 2008 volumes, "and as a result of the timing of this settlement and unprecedented demand in other markets, [Canpotex] has only 1 million tons that it can commit to Sinofert through the remainder of this year."
The euro soared to another all-time high against the U.S. dollar Wednesday, propelled by a surprise rise in March euro-zone consumer inflation to an annual rate of 3.6%. The euro pushed through resistance at the previous high of $1.5915 after the data, touching a new high of $1.5965, according to data from FactSet.
The People's Bank of China lifted the ratio banks must hold in reserves by half a percentage point Wednesday, its third such hike this year, as the central bank steps up efforts to curb excess liquidity and cool lending growth. From April 25 banks will be required to hold 16% of their deposits on reserve with the central bank, up from 15.5% currently.
China's economic growth slowed to 10.6% in the first quarter of 2008 from the year-ago period, reflecting the impact from adverse weather conditions in the first two months of the year, data released by the National Bureau of Statistics showed Wednesday. The Chinese economy accelerated 11.2% year-on-year in the fourth quarter of 2007. Data released separately by the government showed the country's consumer price index rose 8.3% in March from the same month a year-earlier, in line with expectations, according to wire reports.
The notional value of over-the-counter derivatives totaled $454.5 trillion, according to a year-end survey released by the International Swaps and Derivatives Association here. Gross credit exposure after netting is estimated to be $2.3 trillion.
Merrill Lynch & Co. will report $6 billion to $8 billion in fresh writedowns of bad loans when it releases its quarterly financials on Thursday, the Wall Street Journal reported Wednesday, citing a person familiar with the matter.
Coca-Cola Co reported a higher quarterly profit on Wednesday as strong international sales helped the world's largest soft drink maker offset sluggish sales at home. Excluding 3 cents per share in restructuring charges and asset write-downs, Coke said it earned 67 cents per share.
According to the Financial Times, in a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable. Libor plays a crucial role in the global financial system. Calculated every morning in London from information supplied by banks all over the world, it's a measure of the average interest rate at which banks make short-term loans to one another.
Kazakhstan, the world’s fifth biggest wheat exporter, halted foreign sales and rice prices shot to a record high after Indonesia stopped its farmers from selling the grain abroad. In another sign of turmoil, a big food company in Japan, Nihon Shokuhin Kako, said high corn prices had forced it to buy cheaper genetically modified corn for the first time, breaking a social, though not legal, taboo and signalling that opposition to GM foods could weaken in the face of record food prices. Indonesia – which joins Vietnam, Egypt, China, Cambodia and India in banning foreign sales – was expected to export the grain this year due to a bumper crop. Corn futures prices in Chicago last week hit a record $6.16 a bushel, up 30 per cent in the past three months. Indonesia’s export ban boosted the price of rice futures in Chicago to a all-time high of $22.17 per 100 pounds, up 63 per cent since January. Wheat prices moved higher to $9.11 a bushel and traders warned prices could rise further as the Kazakhstan ban together with restrictions in Russia, Ukraine and Argentina have closed a third of the global wheat market.
Bankruptcy filings by American consumers and businesses soared 38% in 2007 to a total of 850,912, the Administrative Office of the U.S. Courts said Tuesday.
London may lose 40,000 City jobs as a result of the sub-prime crisis and global credit crunch, according to analysts at JP Morgan Chase.
Venezuela moved Tuesday to take a greater cut of windfall oil profits, approving a 50 percent tax on foreign oil companies when crude tops US$70 a barrel.
The tax rate would rise to 60 percent when the average monthly price for benchmark Brent crude exceeds US$100, according to the bill approved by Venezuela's National Assembly. The legislation will take effect as soon as it is published in the official gazette.
U.S. retail gasoline prices for unleaded regular rose by a penny to $3.40 a gallon in the last day, according to the Daily Fuel Gauge Report from AAA. A month ago the price was $3.28 and a year ago the price was $2.87.
New construction of U.S. houses plunged to the lowest level in 17 years in March, the Commerce Department estimated Wednesday. Starts fell 11.9% in March to a seasonally adjusted 947,000 annualized units weaker than the 988,000 pace expected by economists surveyed by MarketWatch. This is the lowest level of starts since March 1991. Starts are dpwn 36.5% year-on-year. Starts of new single-family homes fell by 5.7% to 680,000 in March, while starts of large apartment units fell 24.6% to 267,000. Building permits, a leading indicator of housing construction, fell 5.8% to a seasonally adjusted annual rate of 927,000. This is the lowest level of permits since April 1991.
The 12-month unadjusted rate at 4.0% in the March CPI report compares with a six-month's ago figure of 2.8% in September and a March 2007 increase of 2.8%.
Wells Fargo says its first-quarter profit fell 11 percent because of increasing loss reserves.
North Korea, which suffered from a famine in the 1990s that may have killed three million, faces a ``potential humanitarian crisis'' after harvests fell on poor weather and food prices surged, the World Food Program said. The country has a grain shortfall of 1.66 million metric tons this year, the United Nations agency said in a statement today, citing figures from the Food and Agriculture Organization. The shortfall was the highest since 2001, it said.
The U.S. Geological Survey has released an assessment of the Bakken Formation, which stretches across 25,000 square miles from northeastern Montana across northwestern North Dakota and up into the southern region of Saskatchewan. The last USGS study, completed in 1995, estimated the Bakken Formation had 150 million barrels of undiscovered technically recoverable oil. Thirteen years later, the new assessment estimates 3.65 billion barrels of undiscovered technically recoverable oil, 25 times greater than the 1995 assessment.
The output of the nation's factories, mines and utilities rose 0.3% in March, the Federal Reserve said Wednesday. Factory output rose 0.1%. Output of business equipment rose 0.6%. Capacity utilization - a gauge of inflationary pressures -- rose to 80.5% from 80.3%. The figures were stronger than forecast by economists surveyed by MarketWatch, who were looking for a 0.1% fall in output. Industrial output is up 1.6% in the past year. Utility output jumped 1.9% in March. Auto production fell a sharp 5.4%, impacted in part by a strike at a major auto-part supplier. Excluding autos, industrial production was up 0.6%.
Illinois Tool Works Inc.'s earnings from continuing operations fell to $301.4 million, or 57 cents per share, from $385, or 68 cents per share, in the year-ago period. The recent quarter's results included $129 million in pretax impairment and European tax charges. Excluding those charges, the company posted an adjusted profit from continuing operations of 79 cents per share.
According to the BLS, real earnings were down 1.0 percent from a year earlier.
IBM raised its full-year earnings-per-share forecast to at least $8.50 per share from at least $8.25 in February.
"While we are raising our full-year outlook, we still remain cautious about the economic environment," EBay's Chief Financial Officer Bob Swan told investors.
"We saw a slowing in terms of buyers' propensity to buy toward the end of the first quarter," Swan said.
Con-way cut its 2008 outlook range to between $3.00 and $3.40 a share, down from $3.40 to $3.80 a share.
U.S. crude inventories rose by 2.5 million barrels to 317.9 million barrels in the week ending April 11, the American Petroleum Institute reported on Wednesday. Distillate stocks fell by 939,000 barrels to 111.9 million barrels in the same period, while gasoline stocks dropped by 2.4 million barrels to 216.8 million barrels. In a separate report, the U.S. Energy Information Administration said crude inventories fell 2.3 million barrels to 313.7 million barrels in the same period. Refinery utilization fell 1.63% to 81.4% in the past week.
The Federal Reserve's Beige Book of economic conditions found the economy has weakened further since mid-March.
Gold for June delivery rose $16.30 to end at $948.30 an ounce on the New York Mercantile Exchange. Crude oil climbed to $115.21 a barrel in New York, the highest since futures began trading in 1983.
The dollar index was at 71.312, down from 72.00 late Tuesday.
Today's equity scorecard:
* Dow 12,619.27 +256.80
* Nasdaq 2,350.11 +64.07
* S&P 1,364.71 +30.28
Ron Paul: "Inflating is immoral in a sense because it steals. It steals value if you double the money supply and your prices go up twice as much…it's an invisible hidden tax. But the real immorality here is that some people pay higher prices then others. So if you're in the middle class, or especially low middle income, your prices might be going up fifteen percent a year. Somebody on Wall Street working leverage buyouts doesn't have to worry about the rising cost of living. This to me is a immoral act, that is prohibited by the Constitution, and the outcome is always tragic."
Robert McHugh: "We got the first new Hindenburg Omen observation since October 2007 on Tuesday, April 15th."
"As the second quarter begins, markets remain highly unstable and continue to be a challenge for investors worldwide," BlackRock's Chief Executive Laurence Fink said.
J.P. Morgan Chase & Co. Chairman and CEO Jamie Dimon said Wednesday the financial giant expects the environment to continue to be weak and for capital markets to remain under stress. "These factors have affected, and are likely to continue to negatively impact, our firm's credit losses, overall business volumes and earnings -- possibly through the remainder of the year, or longer," Dimon said. The company added $2.5 billion to its allowance for credit losses. J.P. Morgan's investment banking unit took markdowns of $2.6 billion, including markdowns on leveraged lending and prime and subprime mortgages. "Our earnings this quarter were down significantly as market conditions and the credit environment remained challenging," said Chairman and CEO Jamie Dimon. He said prime mortgages "are getting worse."
Canpotex Ltd., the offshore marketing company for Saskatchewan potash producers, and Sinofert Holdings Ltd. agreed to a $400-a-ton increase in 2008 potash prices over 2007 levels, Potash Corp. of Saskatchewan Inc.said on Wednesday. Sinofert is a major potash producer in China. Potash Corp., the Saskatoon fertilizer giant, reiterated that Canpotex has prorated China's 2008 volumes, "and as a result of the timing of this settlement and unprecedented demand in other markets, [Canpotex] has only 1 million tons that it can commit to Sinofert through the remainder of this year."
The euro soared to another all-time high against the U.S. dollar Wednesday, propelled by a surprise rise in March euro-zone consumer inflation to an annual rate of 3.6%. The euro pushed through resistance at the previous high of $1.5915 after the data, touching a new high of $1.5965, according to data from FactSet.
The People's Bank of China lifted the ratio banks must hold in reserves by half a percentage point Wednesday, its third such hike this year, as the central bank steps up efforts to curb excess liquidity and cool lending growth. From April 25 banks will be required to hold 16% of their deposits on reserve with the central bank, up from 15.5% currently.
China's economic growth slowed to 10.6% in the first quarter of 2008 from the year-ago period, reflecting the impact from adverse weather conditions in the first two months of the year, data released by the National Bureau of Statistics showed Wednesday. The Chinese economy accelerated 11.2% year-on-year in the fourth quarter of 2007. Data released separately by the government showed the country's consumer price index rose 8.3% in March from the same month a year-earlier, in line with expectations, according to wire reports.
The notional value of over-the-counter derivatives totaled $454.5 trillion, according to a year-end survey released by the International Swaps and Derivatives Association here. Gross credit exposure after netting is estimated to be $2.3 trillion.
Merrill Lynch & Co. will report $6 billion to $8 billion in fresh writedowns of bad loans when it releases its quarterly financials on Thursday, the Wall Street Journal reported Wednesday, citing a person familiar with the matter.
Coca-Cola Co reported a higher quarterly profit on Wednesday as strong international sales helped the world's largest soft drink maker offset sluggish sales at home. Excluding 3 cents per share in restructuring charges and asset write-downs, Coke said it earned 67 cents per share.
According to the Financial Times, in a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable. Libor plays a crucial role in the global financial system. Calculated every morning in London from information supplied by banks all over the world, it's a measure of the average interest rate at which banks make short-term loans to one another.
Kazakhstan, the world’s fifth biggest wheat exporter, halted foreign sales and rice prices shot to a record high after Indonesia stopped its farmers from selling the grain abroad. In another sign of turmoil, a big food company in Japan, Nihon Shokuhin Kako, said high corn prices had forced it to buy cheaper genetically modified corn for the first time, breaking a social, though not legal, taboo and signalling that opposition to GM foods could weaken in the face of record food prices. Indonesia – which joins Vietnam, Egypt, China, Cambodia and India in banning foreign sales – was expected to export the grain this year due to a bumper crop. Corn futures prices in Chicago last week hit a record $6.16 a bushel, up 30 per cent in the past three months. Indonesia’s export ban boosted the price of rice futures in Chicago to a all-time high of $22.17 per 100 pounds, up 63 per cent since January. Wheat prices moved higher to $9.11 a bushel and traders warned prices could rise further as the Kazakhstan ban together with restrictions in Russia, Ukraine and Argentina have closed a third of the global wheat market.
Bankruptcy filings by American consumers and businesses soared 38% in 2007 to a total of 850,912, the Administrative Office of the U.S. Courts said Tuesday.
London may lose 40,000 City jobs as a result of the sub-prime crisis and global credit crunch, according to analysts at JP Morgan Chase.
Venezuela moved Tuesday to take a greater cut of windfall oil profits, approving a 50 percent tax on foreign oil companies when crude tops US$70 a barrel.
The tax rate would rise to 60 percent when the average monthly price for benchmark Brent crude exceeds US$100, according to the bill approved by Venezuela's National Assembly. The legislation will take effect as soon as it is published in the official gazette.
U.S. retail gasoline prices for unleaded regular rose by a penny to $3.40 a gallon in the last day, according to the Daily Fuel Gauge Report from AAA. A month ago the price was $3.28 and a year ago the price was $2.87.
New construction of U.S. houses plunged to the lowest level in 17 years in March, the Commerce Department estimated Wednesday. Starts fell 11.9% in March to a seasonally adjusted 947,000 annualized units weaker than the 988,000 pace expected by economists surveyed by MarketWatch. This is the lowest level of starts since March 1991. Starts are dpwn 36.5% year-on-year. Starts of new single-family homes fell by 5.7% to 680,000 in March, while starts of large apartment units fell 24.6% to 267,000. Building permits, a leading indicator of housing construction, fell 5.8% to a seasonally adjusted annual rate of 927,000. This is the lowest level of permits since April 1991.
The 12-month unadjusted rate at 4.0% in the March CPI report compares with a six-month's ago figure of 2.8% in September and a March 2007 increase of 2.8%.
Wells Fargo says its first-quarter profit fell 11 percent because of increasing loss reserves.
North Korea, which suffered from a famine in the 1990s that may have killed three million, faces a ``potential humanitarian crisis'' after harvests fell on poor weather and food prices surged, the World Food Program said. The country has a grain shortfall of 1.66 million metric tons this year, the United Nations agency said in a statement today, citing figures from the Food and Agriculture Organization. The shortfall was the highest since 2001, it said.
The U.S. Geological Survey has released an assessment of the Bakken Formation, which stretches across 25,000 square miles from northeastern Montana across northwestern North Dakota and up into the southern region of Saskatchewan. The last USGS study, completed in 1995, estimated the Bakken Formation had 150 million barrels of undiscovered technically recoverable oil. Thirteen years later, the new assessment estimates 3.65 billion barrels of undiscovered technically recoverable oil, 25 times greater than the 1995 assessment.
The output of the nation's factories, mines and utilities rose 0.3% in March, the Federal Reserve said Wednesday. Factory output rose 0.1%. Output of business equipment rose 0.6%. Capacity utilization - a gauge of inflationary pressures -- rose to 80.5% from 80.3%. The figures were stronger than forecast by economists surveyed by MarketWatch, who were looking for a 0.1% fall in output. Industrial output is up 1.6% in the past year. Utility output jumped 1.9% in March. Auto production fell a sharp 5.4%, impacted in part by a strike at a major auto-part supplier. Excluding autos, industrial production was up 0.6%.
Illinois Tool Works Inc.'s earnings from continuing operations fell to $301.4 million, or 57 cents per share, from $385, or 68 cents per share, in the year-ago period. The recent quarter's results included $129 million in pretax impairment and European tax charges. Excluding those charges, the company posted an adjusted profit from continuing operations of 79 cents per share.
According to the BLS, real earnings were down 1.0 percent from a year earlier.
IBM raised its full-year earnings-per-share forecast to at least $8.50 per share from at least $8.25 in February.
"While we are raising our full-year outlook, we still remain cautious about the economic environment," EBay's Chief Financial Officer Bob Swan told investors.
"We saw a slowing in terms of buyers' propensity to buy toward the end of the first quarter," Swan said.
Con-way cut its 2008 outlook range to between $3.00 and $3.40 a share, down from $3.40 to $3.80 a share.
U.S. crude inventories rose by 2.5 million barrels to 317.9 million barrels in the week ending April 11, the American Petroleum Institute reported on Wednesday. Distillate stocks fell by 939,000 barrels to 111.9 million barrels in the same period, while gasoline stocks dropped by 2.4 million barrels to 216.8 million barrels. In a separate report, the U.S. Energy Information Administration said crude inventories fell 2.3 million barrels to 313.7 million barrels in the same period. Refinery utilization fell 1.63% to 81.4% in the past week.
The Federal Reserve's Beige Book of economic conditions found the economy has weakened further since mid-March.
Gold for June delivery rose $16.30 to end at $948.30 an ounce on the New York Mercantile Exchange. Crude oil climbed to $115.21 a barrel in New York, the highest since futures began trading in 1983.
The dollar index was at 71.312, down from 72.00 late Tuesday.
Today's equity scorecard:
* Dow 12,619.27 +256.80
* Nasdaq 2,350.11 +64.07
* S&P 1,364.71 +30.28
Tuesday, April 15, 2008
Taxes
4/15/08 Taxes
Chief Justice Marshall in 1819: "The power to tax is the power to destroy."
Jim Jubak: "The taxes you paid on your recently filed 1040 included roughly $4,300 to cover your household's annual share of the interest payments on the $9.4 trillion in public debt owed by the U.S. government. That $9.4 trillion is just part of what we as a nation owe collectively. There's also the $700 billion trade deficit we ran up in 2007 as a result of importing more than we exported. And then there's what we owe individually. Like the $950 billion in credit card debt we owed as of the end of March. And the $1.6 trillion in auto loans and other non-revolving debt. Face it: We live in a debt-addicted culture."
Home foreclosure filings surged 57 percent in the 12 month-period ended in March and bank repossessions soared 129 percent from a year ago, as homeowners struggled to make mortgage payments, real estate data firm RealtyTrac said on Tuesday. For the month of March, foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent, led by Nevada, California and Florida, RealtyTrac said.
Wholesale prices surged 1.1% in March, led by rising energy and food prices, the Labor Department reported Tuesday. Energy prices rose 2.9% in March, while food prices gained 1.2%. The core producer price index, which excludes volatile food and energy, rose 0.2%.Year-over-year, the PPI is up 6.9%. It is the second largest increase in the past 33 years, exceeded only by a 2.6 percent rise last November. The core PPI is up 2.7% over the same time period. U.S. March crude goods PPI up 8.0%. Outside of food and energy, the price of soap and detergents jumped 2 percent, the biggest gain in more than two years, while pet food increased by 1.3 percent.
Forest Labs sees 2009 EPS at $3.10-$3.20 vs $3.06 in 2008.
Crude-oil futures accelerated their gains Tuesday and surged to a new record of $113.93 a barrel on the New York Mercantile Exchange. Crude oil for May delivery was last up $2.02 at $113.78 a barrel on the Nymex. China said diesel imports surged 49 percent in March. The Organization of Petroleum Exporting Countries left its forecast for 2008 oil demand at 86.97 million barrels a day, a 1.2 million barrel-a-day gain over 2007, according to the group's monthly demand report today. OPEC's 13 members produce more than 40 percent of the world's oil.
Britain's Tesco's Fresh & Easy chain that it's opened in the U.S. will lose around 100 million pounds ($200 million) this fiscal year, after trading losses of 62 million pounds in the year to Feb. 23. Tesco said it had previously forecast 65 million pounds for the past fiscal year.
MGM Mirage is cutting about 440 managers, a move reflecting a broader downturn within the gambling industry and the national economy.
India's Infosys Technologies said its net profit for the fourth quarter ended March 31 rose 9.2% from a year ago to 12.49 billion rupees ($314 million). Revenue from outsourced orders climbed 20.4% to 45.42 billion rupees.
Gold for immediate delivery advanced $8.82, or 1 percent, to $933.27 an ounce as of 11:49 a.m. in London. Earlier it rose as much as 1.3 percent to $936.17. Gold for June delivery added $6.90, or 0.7 percent, to $935.60 in electronic trading on the Comex division of the New York Mercantile Exchange. The euro's 8.6 percent gain against the dollar this year contributed to a rally in gold, platinum and copper. The UBS Bloomberg Constant Maturity Commodity Index tracking 26 raw materials has risen 18 percent this year.``We are, we have been, and we fully expect to be in the future, bullish of gold,'' Dennis Gartman, an economist and editor of the Gartman Letter, said today in his publication. ``It's both a bet on a weakening U.S. dollar and a bet generally on rising commodity prices.'' If bullion closes above $941 an ounce in New York, he plans to buy more of the metal, Gartman said. Platinum rose $36, or 1.8 percent, to $1,999 an ounce.
"We face an impending crisis as the growing number of older patients, who are living longer with more complex health needs, increasingly outpaces the number of health care providers with the knowledge and skills to care for them capably," said John W. Rowe, professor of health policy and management at Columbia University. Rowe headed an Institute of Medicine committee that released a report Monday on the health care outlook for the 78 million baby boomers about to begin turning 65. The report from the institute, an arm of the National Academy of Sciences, said:
_There aren't enough specialists in geriatric medicine.
_Insufficient training is available.
_The specialists that do exist are underpaid.
_Medicare fails to provide for team care that many elderly patients need.
The study said Medicare may even hinder seniors from getting the best care because of its low reimbursement rates, a focus on treating short-term health problems rather than managing chronic conditions and lack of coverage for preventive services or for health care providers' time spent collaborating with a patient's other providers.The American Medical Association responded that seniors' access to Medicare in coming years "is threatened by looming Medicare physician payment cuts."
Crocs Inc. will fire its 600 Canadian plant workers after lowering annual earnings and sales forecasts as consumer spending slowed.
The Empire State index jumped by nearly 23 points in April to 0.6 from negative 22.2 in March.
Nouriel Roubini: "The French Finance Minister Lagarde compared the G7 statement on the US dollar to the 1985 Plaza Accord to weaken the US dollar; but the forex market pretty much ignored the statement pushing the dollar further down. The statement certainly signals that the G7 are getting closer to the point where the dollar weakness bothers both the US and Europe and where coordinated forex intervention may be considered; but as the saying goes “talk is cheap”. Verbal intervention – of the sort used even by Trichet in the last few weeks and used by the G7 in their weekend statement – almost never works (as the Japanese learned a few years ago). Also sterilized fx intervention usually does not work – unless such intervention goes with the wind rather than against the wind, is seriously coordinated and aggressive and signals future changes in actual monetary policies (i.e. unsterilized intervention). What works in affecting exchange rates is unsterilized intervention – or equivalently – changes in relative monetary policies, i.e. changes in policy rates. Currency movements are driven – apart from market noise and momentum – by economic fundamentals. Several fundamentals are driving the dollar south relative to euro and other floating currencies."
Johnson and Johnson's net earnings and diluted earnings per share for the first quarter of 2008 were $3.6 billion and $1.26, respectively. The first quarter of 2007 included an after-tax in-process research and development charge of $807 million associated with the acquisition of Conor Medsystems, Inc. Excluding this charge, net earnings for the current quarter and diluted earnings per share represent increases of 6.4% and 8.6%, respectively, as compared to the same period in 2007. * The Company raised its earnings guidance for full-year 2008 to $4.40 - $4.45 per share, which does not include the impact of any in- process research and development charges or other special items. Global sales of prescription drugs rose 3.3 percent to $6.4 billion but would have slipped 0.6 percent if not for the favorable impact of the weak dollar.
Brett Steenbarger: "Until January of this year, much of the drop in stock prices since mid-2007 occurred during the day session. Similarly, much of the fall in interest rates (flight to quality) also occurred during the day. Since January, however, the day behavior of stocks has been relatively muted--as has been the day behavior of rates. Instead, we've seen pronounced overnight weakness in both stocks and rates since January."
The dollar index was at 71.976, up from 71.862 late Monday.
UBS AG told the leaders of its investment-banking unit to ready job cuts of 10 percent ``across the board,'' CNBC reported, without citing anyone.
Petroleos Mexicanos, the third-largest supplier of crude oil to the U.S., shut its crude oil export terminal on the Pacific coast, the fourth terminal to close because of bad weather since April 13. The terminal at the port of Salina Cruz closed yesterday, Mexico's Merchant Marine reported in a weather bulletin posted on its Web site. The three Gulf of Mexico terminals at the ports of Pajaritos, Dos Bocas and Cayo Arcas are still closed.
Washington Mutual Inc , the largest U.S. savings and loan, posted a $1.14 billion first-quarter loss on Tuesday, hurt by mounting credit losses as more mortgage borrowers fall behind on payments.
Intel reported a fall in first-quarter net income to $1.44 billion, or 25 cents per share, from $1.64 billion, or 28 cents a share, a year ago. Revenue rose to $9.67 billion from $8.85 billion, slightly better than Wall Street expectations. The company said it expected second-quarter revenue in a range of $9.0 billion to $9.6 billion and a gross margin of 56 percent, plus or minus a couple of points.
CSX Corp. reported a first-quarter profit of $351 million, or 85 cents a share, up from $240 million, or 52 cents a share, a year earlier. The Jacksonville, Fla.-based railroad posted revenue of $2.7 billion, up 12% from the same quarter last year. Analysts polled by FactSet Research were looking for a profit, on average, of 71 cents a share with sales of $2.6 billion. The company said it overcame housing and auto sector woes through "yield management, fuel recovery and market drivers including growth in ethanol and grain shipments, increased demand for export coal, and a stable industrial economy."
Crude oil for May delivery rallied more than $2 to the new high before closing up $2.03, or 1.8%, at $113.79 on the New York Mercantile Exchange. At the pump, the average U.S. retail gasoline prices rose to a new high of $3.386 a gallon, up 1.3 cent from the day before and well ahead of the month-ago price of $3.285 a gallon, according to the AAA Daily Fuel Gauge Report.
Gold for June delivery closed up $3.30, or 0.4%, at $932 an ounce on the New York Mercantile Exchange.
A new Bloomberg/Los Angeles Times poll of likely Democratic voters gives Clinton a 46 percent to 41 percent edge in Pennsylvania, and a similar 40 percent to 35 percent lead for Obama in Indiana. In North Carolina, Obama has a larger, 13- point advantage. Obama currently has 1,640 -- 150 more than Clinton -- of the 2,025 delegates needed to clinch the nomination, according to the Associated Press. So far, Obama has gotten 800,000 more votes in Democratic primaries.
A reading of U.S. homebuilders' sentiment remained unchanged in April, just shy of its record low for the third consecutive month as the housing market failed to recover. The National Association of Home Builders said Tuesday its housing market index came in at 20 this month, the third-lowest reading on record.
Chief Justice Marshall in 1819: "The power to tax is the power to destroy."
Jim Jubak: "The taxes you paid on your recently filed 1040 included roughly $4,300 to cover your household's annual share of the interest payments on the $9.4 trillion in public debt owed by the U.S. government. That $9.4 trillion is just part of what we as a nation owe collectively. There's also the $700 billion trade deficit we ran up in 2007 as a result of importing more than we exported. And then there's what we owe individually. Like the $950 billion in credit card debt we owed as of the end of March. And the $1.6 trillion in auto loans and other non-revolving debt. Face it: We live in a debt-addicted culture."
Home foreclosure filings surged 57 percent in the 12 month-period ended in March and bank repossessions soared 129 percent from a year ago, as homeowners struggled to make mortgage payments, real estate data firm RealtyTrac said on Tuesday. For the month of March, foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent, led by Nevada, California and Florida, RealtyTrac said.
Wholesale prices surged 1.1% in March, led by rising energy and food prices, the Labor Department reported Tuesday. Energy prices rose 2.9% in March, while food prices gained 1.2%. The core producer price index, which excludes volatile food and energy, rose 0.2%.Year-over-year, the PPI is up 6.9%. It is the second largest increase in the past 33 years, exceeded only by a 2.6 percent rise last November. The core PPI is up 2.7% over the same time period. U.S. March crude goods PPI up 8.0%. Outside of food and energy, the price of soap and detergents jumped 2 percent, the biggest gain in more than two years, while pet food increased by 1.3 percent.
Forest Labs sees 2009 EPS at $3.10-$3.20 vs $3.06 in 2008.
Crude-oil futures accelerated their gains Tuesday and surged to a new record of $113.93 a barrel on the New York Mercantile Exchange. Crude oil for May delivery was last up $2.02 at $113.78 a barrel on the Nymex. China said diesel imports surged 49 percent in March. The Organization of Petroleum Exporting Countries left its forecast for 2008 oil demand at 86.97 million barrels a day, a 1.2 million barrel-a-day gain over 2007, according to the group's monthly demand report today. OPEC's 13 members produce more than 40 percent of the world's oil.
Britain's Tesco's Fresh & Easy chain that it's opened in the U.S. will lose around 100 million pounds ($200 million) this fiscal year, after trading losses of 62 million pounds in the year to Feb. 23. Tesco said it had previously forecast 65 million pounds for the past fiscal year.
MGM Mirage is cutting about 440 managers, a move reflecting a broader downturn within the gambling industry and the national economy.
India's Infosys Technologies said its net profit for the fourth quarter ended March 31 rose 9.2% from a year ago to 12.49 billion rupees ($314 million). Revenue from outsourced orders climbed 20.4% to 45.42 billion rupees.
Gold for immediate delivery advanced $8.82, or 1 percent, to $933.27 an ounce as of 11:49 a.m. in London. Earlier it rose as much as 1.3 percent to $936.17. Gold for June delivery added $6.90, or 0.7 percent, to $935.60 in electronic trading on the Comex division of the New York Mercantile Exchange. The euro's 8.6 percent gain against the dollar this year contributed to a rally in gold, platinum and copper. The UBS Bloomberg Constant Maturity Commodity Index tracking 26 raw materials has risen 18 percent this year.``We are, we have been, and we fully expect to be in the future, bullish of gold,'' Dennis Gartman, an economist and editor of the Gartman Letter, said today in his publication. ``It's both a bet on a weakening U.S. dollar and a bet generally on rising commodity prices.'' If bullion closes above $941 an ounce in New York, he plans to buy more of the metal, Gartman said. Platinum rose $36, or 1.8 percent, to $1,999 an ounce.
"We face an impending crisis as the growing number of older patients, who are living longer with more complex health needs, increasingly outpaces the number of health care providers with the knowledge and skills to care for them capably," said John W. Rowe, professor of health policy and management at Columbia University. Rowe headed an Institute of Medicine committee that released a report Monday on the health care outlook for the 78 million baby boomers about to begin turning 65. The report from the institute, an arm of the National Academy of Sciences, said:
_There aren't enough specialists in geriatric medicine.
_Insufficient training is available.
_The specialists that do exist are underpaid.
_Medicare fails to provide for team care that many elderly patients need.
The study said Medicare may even hinder seniors from getting the best care because of its low reimbursement rates, a focus on treating short-term health problems rather than managing chronic conditions and lack of coverage for preventive services or for health care providers' time spent collaborating with a patient's other providers.The American Medical Association responded that seniors' access to Medicare in coming years "is threatened by looming Medicare physician payment cuts."
Crocs Inc. will fire its 600 Canadian plant workers after lowering annual earnings and sales forecasts as consumer spending slowed.
The Empire State index jumped by nearly 23 points in April to 0.6 from negative 22.2 in March.
Nouriel Roubini: "The French Finance Minister Lagarde compared the G7 statement on the US dollar to the 1985 Plaza Accord to weaken the US dollar; but the forex market pretty much ignored the statement pushing the dollar further down. The statement certainly signals that the G7 are getting closer to the point where the dollar weakness bothers both the US and Europe and where coordinated forex intervention may be considered; but as the saying goes “talk is cheap”. Verbal intervention – of the sort used even by Trichet in the last few weeks and used by the G7 in their weekend statement – almost never works (as the Japanese learned a few years ago). Also sterilized fx intervention usually does not work – unless such intervention goes with the wind rather than against the wind, is seriously coordinated and aggressive and signals future changes in actual monetary policies (i.e. unsterilized intervention). What works in affecting exchange rates is unsterilized intervention – or equivalently – changes in relative monetary policies, i.e. changes in policy rates. Currency movements are driven – apart from market noise and momentum – by economic fundamentals. Several fundamentals are driving the dollar south relative to euro and other floating currencies."
Johnson and Johnson's net earnings and diluted earnings per share for the first quarter of 2008 were $3.6 billion and $1.26, respectively. The first quarter of 2007 included an after-tax in-process research and development charge of $807 million associated with the acquisition of Conor Medsystems, Inc. Excluding this charge, net earnings for the current quarter and diluted earnings per share represent increases of 6.4% and 8.6%, respectively, as compared to the same period in 2007. * The Company raised its earnings guidance for full-year 2008 to $4.40 - $4.45 per share, which does not include the impact of any in- process research and development charges or other special items. Global sales of prescription drugs rose 3.3 percent to $6.4 billion but would have slipped 0.6 percent if not for the favorable impact of the weak dollar.
Brett Steenbarger: "Until January of this year, much of the drop in stock prices since mid-2007 occurred during the day session. Similarly, much of the fall in interest rates (flight to quality) also occurred during the day. Since January, however, the day behavior of stocks has been relatively muted--as has been the day behavior of rates. Instead, we've seen pronounced overnight weakness in both stocks and rates since January."
The dollar index was at 71.976, up from 71.862 late Monday.
UBS AG told the leaders of its investment-banking unit to ready job cuts of 10 percent ``across the board,'' CNBC reported, without citing anyone.
Petroleos Mexicanos, the third-largest supplier of crude oil to the U.S., shut its crude oil export terminal on the Pacific coast, the fourth terminal to close because of bad weather since April 13. The terminal at the port of Salina Cruz closed yesterday, Mexico's Merchant Marine reported in a weather bulletin posted on its Web site. The three Gulf of Mexico terminals at the ports of Pajaritos, Dos Bocas and Cayo Arcas are still closed.
Washington Mutual Inc , the largest U.S. savings and loan, posted a $1.14 billion first-quarter loss on Tuesday, hurt by mounting credit losses as more mortgage borrowers fall behind on payments.
Intel reported a fall in first-quarter net income to $1.44 billion, or 25 cents per share, from $1.64 billion, or 28 cents a share, a year ago. Revenue rose to $9.67 billion from $8.85 billion, slightly better than Wall Street expectations. The company said it expected second-quarter revenue in a range of $9.0 billion to $9.6 billion and a gross margin of 56 percent, plus or minus a couple of points.
CSX Corp. reported a first-quarter profit of $351 million, or 85 cents a share, up from $240 million, or 52 cents a share, a year earlier. The Jacksonville, Fla.-based railroad posted revenue of $2.7 billion, up 12% from the same quarter last year. Analysts polled by FactSet Research were looking for a profit, on average, of 71 cents a share with sales of $2.6 billion. The company said it overcame housing and auto sector woes through "yield management, fuel recovery and market drivers including growth in ethanol and grain shipments, increased demand for export coal, and a stable industrial economy."
Crude oil for May delivery rallied more than $2 to the new high before closing up $2.03, or 1.8%, at $113.79 on the New York Mercantile Exchange. At the pump, the average U.S. retail gasoline prices rose to a new high of $3.386 a gallon, up 1.3 cent from the day before and well ahead of the month-ago price of $3.285 a gallon, according to the AAA Daily Fuel Gauge Report.
Gold for June delivery closed up $3.30, or 0.4%, at $932 an ounce on the New York Mercantile Exchange.
A new Bloomberg/Los Angeles Times poll of likely Democratic voters gives Clinton a 46 percent to 41 percent edge in Pennsylvania, and a similar 40 percent to 35 percent lead for Obama in Indiana. In North Carolina, Obama has a larger, 13- point advantage. Obama currently has 1,640 -- 150 more than Clinton -- of the 2,025 delegates needed to clinch the nomination, according to the Associated Press. So far, Obama has gotten 800,000 more votes in Democratic primaries.
A reading of U.S. homebuilders' sentiment remained unchanged in April, just shy of its record low for the third consecutive month as the housing market failed to recover. The National Association of Home Builders said Tuesday its housing market index came in at 20 this month, the third-lowest reading on record.
Monday, April 14, 2008
More Angst
4/14/08 More Angst
John Hussman: "Clearly, as we enter April 2008, we appear to be quite early in the mortgage crisis, with only about a quarter of the cumulative resets having occurred. That places us near the start of the third inning, where we can expect each of the nine “innings” to be about three months in duration. Unfortunately, the next three innings (quarters) are when the heavy hitters on the opposing team will come up to the plate, as the cumulative amount of resets will surge. With that surge, loan losses and foreclosures will also predictably spike higher. Moreover, because of the bundling, securitization*, and slicing and dicing of mortgage obligations, financial companies have little ability to take the required writedowns in advance, because they don't know yet which ones will go into default. To opine that we are in some late “inning” of the mortgage problem, without reference to the reset data, is just naïve. If anything, the probable rate of foreclosure on later resets will be higher, not lower, than the earlier resets, because those later resets represent the mortgages initiated at the peak of home prices and the trough of lending standards."
Rob Hanna: "Strong pullback in consolidations, on the other hand, have historically led to more downside. Based on this study, caution seems warranted."
Wachovia Corp. will slash its dividend and raise $7 billion in a share sale after reporting a surprising first-quarter loss on Monday of $393 million. The first-quarter loss for the Charlotte-based bank works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier.
Lenders repossessed 210,280 homes in the first quarter, about 0.3% of U.S. households, according to data released Monday by Foreclosures.com. Foreclosures increased 70.6% compared with a year ago, the foreclosure information company said. An additional 0.7% of homes were in some stage of default, potentially leading to repossession, the Sacramento, Calif.-based company said. Foreclosures increased more than fourfold in Arizona in the first quarter to 0.9% of homes. California had the most foreclosures, 51,097, followed by Florida with 18,055. In Nevada, more than 3% of homes were either foreclosed or in pre-foreclosure in the first quarter.
The Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won't be able to make their monthly payments on time over the next six months.
An ``awful'' start to the first- quarter U.S. earnings season is a ``harbinger of things to come'' that will push stocks lower, according to Goldman Sachs Group Inc.``Early signs are awful,'' a team led by New York-based David Kostin, Goldman's U.S. investment strategist, wrote in a note today. ``We expect generally disappointing results and a swath of lowered profit guidance that will drive the Standard & Poor's 500 Index lower in coming weeks.''
Goldman Sachs sold 100 million euros ($158.2 million) worth of senior debt tied to Bain Capital's 1.4 billion euro buyout of yacht maker Bavaria Yachtbau GmbH at 65 cents in the euro in the largest discount offered by an investment bank in the credit crunch, the Times of London reported Monday.
According to the Financial Times, Deutsche Bank AG is seeking to sell as much as $20 billion of debt related to leveraged buyouts to a collection of investors that include private-equity firms, people familiar with the matter said.
Blockbuster Inc. said Monday it will take an unsolicited $1 billion-plus bid for Circuit City Stores Inc. directly to its shareholders, saying the consumer electronics chain has not responded to repeated offers. The movie rental chain operator said it has been in talks with Richmond, Va.-based Circuit City for months regarding an acquisition, and on Feb. 17th sent a letter to Circuit City Chairman and Chief Executive Philip Schoonover offering $6 to $8 per share in cash for the company.
Scotts said its fiscal 2008 financial statements will include $15 million to $20 million in unexpected costs due to a voluntary retail recall of wild bird food. A "significant" portion of this cost will be included in the second-quarter financial statements.
Eaton raised its full-year forecast by 5 cents a share, due to stronger first-quarter results, to $7.30 to $7.80 a share, and operating earnings of $7.80 to $8.30 a share. The company expects full year global automative markets flat, domestic output down 5%. Eaton is maintaining its previously issued full-year forecast that global electrical markets will grow 5% to 6%.
Industrial output held up better than expected in February across the 15 nations that make up the euro single currency. Eurostat reported a 0.3% monthly rise in industrial output for a year-on-year increase of 3.1%.
The U.S. dollar index traded at 71.60 in the early Monday hours.
Prices of items leaving British factory gates rose 0.9% in March, for an increase of 6.2% on the same month last year, the Office for National Statistics reported Monday.
The Dubai government and a Hong Kong investment firm are raising $1 billion to bring Middle East oil money into Chinese deals, The Wall Street Journal reported. Dubai International Capital has committed $500 million and First Eastern Investment Group has put in $30 million to the new China Dubai Capital fund, with the rest to come from outside investors, the Journal reported.
Iraq will seek parliamentary approval for a strategic agreement being negotiated with the United States even though it expects heated debate over the deal, Foreign Minister Hoshiyar Zebari said. U.S. and Iraqi officials began talks last month on a strategic framework agreement that defines long-term bilateral ties and a separate "status of forces" deal outlining rules and protections governing U.S. military activity in Iraq.
Delta and Northwest could announce a deal this week that would create the world's largest airline, provided they can resolve a handful of issues, including maintaining labor peace with their powerful pilot unions, people familiar with the talks said Sunday. That would free Continental to pursue a merger with United to create an even larger airline because Northwest, by striking a deal of its own, would forfeit special stock that gives it effective veto power over a Continental transaction.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose $1.09 to $111.23 a barrel in electronic trading by midday in Europe. The contract rose 3 cents to settle at $110.14 a barrel Friday. The Capline crude oil pipeline, which brings crude from the Gulf of Mexico to the U.S. Midwest, remained shut on Sunday afternoon as work continued to repair a leak, operator Shell Oil U.S. unit of Royal Dutch Shell said. It could not estimate when the 667-mile (1,073 kilometer) line would return to service. Gold for June delivery gained $3 at $930 an ounce on the New York Mercantile Exchange.
The Commerce Department reported Monday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. The March gain primarily reflected higher costs for gasoline, which climbed to record highs. Excluding a big 1.1 percent rise in sales at gasoline service stations, retail sales would have been flat last month.
Brett Steenbarger: "As long as the indicators continue to weaken, I remain defensive. I think it's fair to say that I'm cautiously bearish on a day-to-day basis and cautiously bullish on a longer-term basis."
New York state plans to refinance $483 million of insured variable-rate bonds after concern about the financial strength of guarantors backing the debt sent interest costs up more than fivefold since February.
The state paid a top rate of 9 percent on a $74.7 million variable-rate issue backed by CIFG Assurance North America Inc. last week, up from 1.65 percent Feb. 6, before investors began avoiding municipal debt linked to bond insurers. New York will sell uninsured debt to replace all variable-rate bonds guaranteed by CIFG and FGIC Corp. after the companies' credit ratings were lowered last month.
Credit Suisse could announce further writedowns of up to 5 billion Swiss francs ($4.99 billion) when it posts its first-quarter results later this month, Swiss media reported over the weekend.
The financial crisis will affect market structure and pricing for at least a decade and lead to greater regulatory powers for central banks in areas at the centre of the turmoil, analysts at JP Morgan said."Market participants and regulators will focus intensely on controlling the risks that were at the core of the crisis," analysts led by Jan Loeys and Margaret Cannella wrote in a note on Monday.These risks include lending standards in mortgages, leverage in the funding of securitized products, and the use of short-term financing for illiquid long-term assets outside of the regulated banking sector. This will change behavior for market participants "for at least a decade," they wrote, in line with fallout from previous crises.
Douglas A. McIntyre: "One of the factors lost in the debate over the value of Yahoo! (NASDAQ: YHOO) is the amount of time that consumers spend on the site. For advertisers, especially those running display ads, the hours that users spend per month could be critical to the value of the dollars that they invest to spread their messages. According to Nielsen numbers for March, the average time spent on Yahoo! was 3 hours and 12 minutes. The figure for Google (NASDAQ: GOOG) was only 1 hour and 15 minutes. For MSN, the number was 2 hours and 13 minutes and for AOL the figure was four hours. The numbers allow marketers to calculate a 24/7 Wall St. "Advertising Audience Power Rating" based on time spent multiplied by total unique visitors. Google's rating would be 149. Yahoo!'s would be much higher at 367. MSN would weigh in at 213, and AOL's would be 360. If consumer loyalty can be measured in time spent, Yahoo! and AOL may be more valuable than they seem at first blush."
European Central Bank council member Yves Mersch said the bank can't afford to cut interest rates this year with inflation likely to breach its 2 percent limit in 2009.
Crude oil for May delivery gained $1.62, or 1.5%, to settle at $111.76 a barrel on the New York Mercantile Exchange. Gold for June delivery gained $1.70 to end at $928.70 an ounce on the New York Mercantile Exchange.
Bear Stearns Cos.' first-quarter net income slumped to $115 million, or 86 cents a share, from $554 million or $3.82 a share a year ago, according to a 10-Q report filed by the company late Monday.
Delta and Northwest's boards approved a merger that would create the world's largest airline by traffic if the deal wins over regulators and employees. The combined carrier would keep Delta's name and Atlanta headquarters.
According to Bloomberg, the $6.3 trillion-a-day repurchase agreement, or repo, market is a barometer of sentiment because it's where firms finance trades. A narrowing of the spread between the so-called general-collateral and federal-funds rates may suggest declining demand for U.S. government debt. Treasuries have lost 0.8 percent on average since March 20, when the central bank expanded the type of debt it would take in return for the securities to include mortgage and commercial real estate bonds.
Russian oil production has peaked and may never return to current levels, one of the country’s top energy executives has warned, fueling concerns that the world’s biggest oil producers cannot keep up with rampant Asian demand.
John Hussman: "Clearly, as we enter April 2008, we appear to be quite early in the mortgage crisis, with only about a quarter of the cumulative resets having occurred. That places us near the start of the third inning, where we can expect each of the nine “innings” to be about three months in duration. Unfortunately, the next three innings (quarters) are when the heavy hitters on the opposing team will come up to the plate, as the cumulative amount of resets will surge. With that surge, loan losses and foreclosures will also predictably spike higher. Moreover, because of the bundling, securitization*, and slicing and dicing of mortgage obligations, financial companies have little ability to take the required writedowns in advance, because they don't know yet which ones will go into default. To opine that we are in some late “inning” of the mortgage problem, without reference to the reset data, is just naïve. If anything, the probable rate of foreclosure on later resets will be higher, not lower, than the earlier resets, because those later resets represent the mortgages initiated at the peak of home prices and the trough of lending standards."
Rob Hanna: "Strong pullback in consolidations, on the other hand, have historically led to more downside. Based on this study, caution seems warranted."
Wachovia Corp. will slash its dividend and raise $7 billion in a share sale after reporting a surprising first-quarter loss on Monday of $393 million. The first-quarter loss for the Charlotte-based bank works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier.
Lenders repossessed 210,280 homes in the first quarter, about 0.3% of U.S. households, according to data released Monday by Foreclosures.com. Foreclosures increased 70.6% compared with a year ago, the foreclosure information company said. An additional 0.7% of homes were in some stage of default, potentially leading to repossession, the Sacramento, Calif.-based company said. Foreclosures increased more than fourfold in Arizona in the first quarter to 0.9% of homes. California had the most foreclosures, 51,097, followed by Florida with 18,055. In Nevada, more than 3% of homes were either foreclosed or in pre-foreclosure in the first quarter.
The Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won't be able to make their monthly payments on time over the next six months.
An ``awful'' start to the first- quarter U.S. earnings season is a ``harbinger of things to come'' that will push stocks lower, according to Goldman Sachs Group Inc.``Early signs are awful,'' a team led by New York-based David Kostin, Goldman's U.S. investment strategist, wrote in a note today. ``We expect generally disappointing results and a swath of lowered profit guidance that will drive the Standard & Poor's 500 Index lower in coming weeks.''
Goldman Sachs sold 100 million euros ($158.2 million) worth of senior debt tied to Bain Capital's 1.4 billion euro buyout of yacht maker Bavaria Yachtbau GmbH at 65 cents in the euro in the largest discount offered by an investment bank in the credit crunch, the Times of London reported Monday.
According to the Financial Times, Deutsche Bank AG is seeking to sell as much as $20 billion of debt related to leveraged buyouts to a collection of investors that include private-equity firms, people familiar with the matter said.
Blockbuster Inc. said Monday it will take an unsolicited $1 billion-plus bid for Circuit City Stores Inc. directly to its shareholders, saying the consumer electronics chain has not responded to repeated offers. The movie rental chain operator said it has been in talks with Richmond, Va.-based Circuit City for months regarding an acquisition, and on Feb. 17th sent a letter to Circuit City Chairman and Chief Executive Philip Schoonover offering $6 to $8 per share in cash for the company.
Scotts said its fiscal 2008 financial statements will include $15 million to $20 million in unexpected costs due to a voluntary retail recall of wild bird food. A "significant" portion of this cost will be included in the second-quarter financial statements.
Eaton raised its full-year forecast by 5 cents a share, due to stronger first-quarter results, to $7.30 to $7.80 a share, and operating earnings of $7.80 to $8.30 a share. The company expects full year global automative markets flat, domestic output down 5%. Eaton is maintaining its previously issued full-year forecast that global electrical markets will grow 5% to 6%.
Industrial output held up better than expected in February across the 15 nations that make up the euro single currency. Eurostat reported a 0.3% monthly rise in industrial output for a year-on-year increase of 3.1%.
The U.S. dollar index traded at 71.60 in the early Monday hours.
Prices of items leaving British factory gates rose 0.9% in March, for an increase of 6.2% on the same month last year, the Office for National Statistics reported Monday.
The Dubai government and a Hong Kong investment firm are raising $1 billion to bring Middle East oil money into Chinese deals, The Wall Street Journal reported. Dubai International Capital has committed $500 million and First Eastern Investment Group has put in $30 million to the new China Dubai Capital fund, with the rest to come from outside investors, the Journal reported.
Iraq will seek parliamentary approval for a strategic agreement being negotiated with the United States even though it expects heated debate over the deal, Foreign Minister Hoshiyar Zebari said. U.S. and Iraqi officials began talks last month on a strategic framework agreement that defines long-term bilateral ties and a separate "status of forces" deal outlining rules and protections governing U.S. military activity in Iraq.
Delta and Northwest could announce a deal this week that would create the world's largest airline, provided they can resolve a handful of issues, including maintaining labor peace with their powerful pilot unions, people familiar with the talks said Sunday. That would free Continental to pursue a merger with United to create an even larger airline because Northwest, by striking a deal of its own, would forfeit special stock that gives it effective veto power over a Continental transaction.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose $1.09 to $111.23 a barrel in electronic trading by midday in Europe. The contract rose 3 cents to settle at $110.14 a barrel Friday. The Capline crude oil pipeline, which brings crude from the Gulf of Mexico to the U.S. Midwest, remained shut on Sunday afternoon as work continued to repair a leak, operator Shell Oil U.S. unit of Royal Dutch Shell said. It could not estimate when the 667-mile (1,073 kilometer) line would return to service. Gold for June delivery gained $3 at $930 an ounce on the New York Mercantile Exchange.
The Commerce Department reported Monday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. The March gain primarily reflected higher costs for gasoline, which climbed to record highs. Excluding a big 1.1 percent rise in sales at gasoline service stations, retail sales would have been flat last month.
Brett Steenbarger: "As long as the indicators continue to weaken, I remain defensive. I think it's fair to say that I'm cautiously bearish on a day-to-day basis and cautiously bullish on a longer-term basis."
New York state plans to refinance $483 million of insured variable-rate bonds after concern about the financial strength of guarantors backing the debt sent interest costs up more than fivefold since February.
The state paid a top rate of 9 percent on a $74.7 million variable-rate issue backed by CIFG Assurance North America Inc. last week, up from 1.65 percent Feb. 6, before investors began avoiding municipal debt linked to bond insurers. New York will sell uninsured debt to replace all variable-rate bonds guaranteed by CIFG and FGIC Corp. after the companies' credit ratings were lowered last month.
Credit Suisse could announce further writedowns of up to 5 billion Swiss francs ($4.99 billion) when it posts its first-quarter results later this month, Swiss media reported over the weekend.
The financial crisis will affect market structure and pricing for at least a decade and lead to greater regulatory powers for central banks in areas at the centre of the turmoil, analysts at JP Morgan said."Market participants and regulators will focus intensely on controlling the risks that were at the core of the crisis," analysts led by Jan Loeys and Margaret Cannella wrote in a note on Monday.These risks include lending standards in mortgages, leverage in the funding of securitized products, and the use of short-term financing for illiquid long-term assets outside of the regulated banking sector. This will change behavior for market participants "for at least a decade," they wrote, in line with fallout from previous crises.
Douglas A. McIntyre: "One of the factors lost in the debate over the value of Yahoo! (NASDAQ: YHOO) is the amount of time that consumers spend on the site. For advertisers, especially those running display ads, the hours that users spend per month could be critical to the value of the dollars that they invest to spread their messages. According to Nielsen numbers for March, the average time spent on Yahoo! was 3 hours and 12 minutes. The figure for Google (NASDAQ: GOOG) was only 1 hour and 15 minutes. For MSN, the number was 2 hours and 13 minutes and for AOL the figure was four hours. The numbers allow marketers to calculate a 24/7 Wall St. "Advertising Audience Power Rating" based on time spent multiplied by total unique visitors. Google's rating would be 149. Yahoo!'s would be much higher at 367. MSN would weigh in at 213, and AOL's would be 360. If consumer loyalty can be measured in time spent, Yahoo! and AOL may be more valuable than they seem at first blush."
European Central Bank council member Yves Mersch said the bank can't afford to cut interest rates this year with inflation likely to breach its 2 percent limit in 2009.
Crude oil for May delivery gained $1.62, or 1.5%, to settle at $111.76 a barrel on the New York Mercantile Exchange. Gold for June delivery gained $1.70 to end at $928.70 an ounce on the New York Mercantile Exchange.
Bear Stearns Cos.' first-quarter net income slumped to $115 million, or 86 cents a share, from $554 million or $3.82 a share a year ago, according to a 10-Q report filed by the company late Monday.
Delta and Northwest's boards approved a merger that would create the world's largest airline by traffic if the deal wins over regulators and employees. The combined carrier would keep Delta's name and Atlanta headquarters.
According to Bloomberg, the $6.3 trillion-a-day repurchase agreement, or repo, market is a barometer of sentiment because it's where firms finance trades. A narrowing of the spread between the so-called general-collateral and federal-funds rates may suggest declining demand for U.S. government debt. Treasuries have lost 0.8 percent on average since March 20, when the central bank expanded the type of debt it would take in return for the securities to include mortgage and commercial real estate bonds.
Russian oil production has peaked and may never return to current levels, one of the country’s top energy executives has warned, fueling concerns that the world’s biggest oil producers cannot keep up with rampant Asian demand.
Sunday, April 13, 2008
Additional Write-downs
4/13/08 Additional Write-downs
Mohammad Alipour-Jeddi, the top petroleum market analyst at the Organization of Petroleum Exporting Countries, said Saturday he expects global demand for oil to weaken in coming months, according to a Wall Street Journal report. In a speech delivered at the International Monetary Fund, Alipour-Jeddi said the global oil market remains well supplied while seasonal factors point to softening demand in coming months. Demand could weaken further if the global economy slows. However, the OPEC analyst said the sharp spike in oil prices over the last six months was less due to fundamentals than to a weaker dollar and hedges against inflation risks.
Paulson warned that 2008 will be "a more difficult year" for the global economy and more market problems could emerge.
American Airlines received clearance from federal aviation officials to return all of its 300 grounded jets to service, but it won't be until Sunday morning before the airline can fly a full day's schedule.
According to the Sunday Times, CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more. In another sign of the intense pressure on leading banks, Deutsche Bank is attempting to offload some of its €35 billion (£28 billion) of toxic debt to a consortium of private-equity firms. Huge exposure to American mortgages is expected to result in Citi taking a $10 billion hit to its accounts, dragging the bank to a first-quarter loss of almost $3 billion. Some analysts believe Citi’s write-downs could stretch to as much as $12 billion. Merrill will suffer $5 billion of write-downs, analysts say, which would push the bank $2.7 billion into the red.
Mike Burk: "Last weeks sell off was not accompanied by increased volume of issues moving downward...Last week's sell off brought an increase in new lows on both the NYSE and NASDAQ. However, the increases were not enough to suggest a change in trend (from up)...Money supply is continuing to grow at the fastest rate in years...The high number of new lows we saw at the March lows implies a high likelihood of a retest of those lows in the next month or so. For now, last week's sell off did not turn any important indicators downward. I expect the major indices to be higher on Friday April 18 than they were on Friday April 11."
Mick P: "If you feel you need to cut rates, engendering an inflationary expectation and are then relying on a recession or slowdown to keep inflation in check at a lower level, you are not really expecting inflationary forces in the medium term...Is the Fed engendering a "spend now because it will be more expensive tomorrow" attitude?"
According to the Financial Times, the Group of Seven industrialized nations endorsed plans to force banks to hold more capital to guard against risks that contributed to the credit crisis, as part of an initiative to strengthen the financial system.
Royal Dutch Shell, Europe's largest oil company, wants a global carbon market to be introduced as "quickly as possible" to ensure that nations like India and China participate. "We need this as soon as possible to ensure that CO2 reduction dollars focus on the most cost-effective and implementable solutions globally," Malcolm Brinded, Shell's head of exploration and production, said at an energy conference in Paris last week. India and China would participate in a global carbon market, based on binding "cap and trade" agreements, Brinded added.
According to Earthfiles, 34% of American honeybees in commercial hives have disappeared this spring of 2008, in a persistent mystery known as “colony collapse disorder.”
Import prices soared 14.8% measured over the 12 months through last month.
China will stick with a ``tight'' monetary policy as the nation faces increasing pressures of inflation and over-investment amid global market turmoil, said central bank chief Zhou Xiaochuan. China needs to correctly handle the ``pace, focus and magnitude of macro-economic controls to avoid large fluctuations and maintain stable and relatively fast economic growth,'' Zhou, governor of People's Bank of China, said during the International Monetary Fund meeting in Washington
South Africa's rand rose for a third week against the dollar after the central bank raised interest rates to the highest level in almost five years, bolstering the currency's appeal as a carry-trade investment.
The U.S. dollar's decline is making it harder for Persian Gulf nations to control inflation, said United Arab Emirates Central Bank Governor Sultan Bin Nasser al- Suwaidi
Bank of Canada Governor Mark Carney said an economic recovery in the U.S., which buys about three quarters of Canadian exports, is likely to be ``muted.''.
Don Quixote: "Sanity may be madness but the maddest of all is to see life as it is and not as it should be."
Mohammad Alipour-Jeddi, the top petroleum market analyst at the Organization of Petroleum Exporting Countries, said Saturday he expects global demand for oil to weaken in coming months, according to a Wall Street Journal report. In a speech delivered at the International Monetary Fund, Alipour-Jeddi said the global oil market remains well supplied while seasonal factors point to softening demand in coming months. Demand could weaken further if the global economy slows. However, the OPEC analyst said the sharp spike in oil prices over the last six months was less due to fundamentals than to a weaker dollar and hedges against inflation risks.
Paulson warned that 2008 will be "a more difficult year" for the global economy and more market problems could emerge.
American Airlines received clearance from federal aviation officials to return all of its 300 grounded jets to service, but it won't be until Sunday morning before the airline can fly a full day's schedule.
According to the Sunday Times, CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more. In another sign of the intense pressure on leading banks, Deutsche Bank is attempting to offload some of its €35 billion (£28 billion) of toxic debt to a consortium of private-equity firms. Huge exposure to American mortgages is expected to result in Citi taking a $10 billion hit to its accounts, dragging the bank to a first-quarter loss of almost $3 billion. Some analysts believe Citi’s write-downs could stretch to as much as $12 billion. Merrill will suffer $5 billion of write-downs, analysts say, which would push the bank $2.7 billion into the red.
Mike Burk: "Last weeks sell off was not accompanied by increased volume of issues moving downward...Last week's sell off brought an increase in new lows on both the NYSE and NASDAQ. However, the increases were not enough to suggest a change in trend (from up)...Money supply is continuing to grow at the fastest rate in years...The high number of new lows we saw at the March lows implies a high likelihood of a retest of those lows in the next month or so. For now, last week's sell off did not turn any important indicators downward. I expect the major indices to be higher on Friday April 18 than they were on Friday April 11."
Mick P: "If you feel you need to cut rates, engendering an inflationary expectation and are then relying on a recession or slowdown to keep inflation in check at a lower level, you are not really expecting inflationary forces in the medium term...Is the Fed engendering a "spend now because it will be more expensive tomorrow" attitude?"
According to the Financial Times, the Group of Seven industrialized nations endorsed plans to force banks to hold more capital to guard against risks that contributed to the credit crisis, as part of an initiative to strengthen the financial system.
Royal Dutch Shell, Europe's largest oil company, wants a global carbon market to be introduced as "quickly as possible" to ensure that nations like India and China participate. "We need this as soon as possible to ensure that CO2 reduction dollars focus on the most cost-effective and implementable solutions globally," Malcolm Brinded, Shell's head of exploration and production, said at an energy conference in Paris last week. India and China would participate in a global carbon market, based on binding "cap and trade" agreements, Brinded added.
According to Earthfiles, 34% of American honeybees in commercial hives have disappeared this spring of 2008, in a persistent mystery known as “colony collapse disorder.”
Import prices soared 14.8% measured over the 12 months through last month.
China will stick with a ``tight'' monetary policy as the nation faces increasing pressures of inflation and over-investment amid global market turmoil, said central bank chief Zhou Xiaochuan. China needs to correctly handle the ``pace, focus and magnitude of macro-economic controls to avoid large fluctuations and maintain stable and relatively fast economic growth,'' Zhou, governor of People's Bank of China, said during the International Monetary Fund meeting in Washington
South Africa's rand rose for a third week against the dollar after the central bank raised interest rates to the highest level in almost five years, bolstering the currency's appeal as a carry-trade investment.
The U.S. dollar's decline is making it harder for Persian Gulf nations to control inflation, said United Arab Emirates Central Bank Governor Sultan Bin Nasser al- Suwaidi
Bank of Canada Governor Mark Carney said an economic recovery in the U.S., which buys about three quarters of Canadian exports, is likely to be ``muted.''.
Don Quixote: "Sanity may be madness but the maddest of all is to see life as it is and not as it should be."
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