5/21/08 The Forecast
The Federal Reserve on Wednesday cut its forecast for economic growth in 2008 and warned of higher inflation and unemployment but also signaled it was unlikely to cut interest rates again soon. Their forecast for headline inflation as measured by the personal consumption index jumped to a range of 3.1 to 3.4%, much higher than their previous forecast of a 2.1 to 2.4% rise.
Israel and Syria have started indirect talks with the aim of signing a comprehensive peace agreement, the first attempt in eight years to end the decades-old conflict between the two neighbors.
Barack Obama moved to the brink of the Democratic presidential nomination on Tuesday after a victory in the Oregon primary election that brought him within 64 delegates of the total needed to win the race.
Barack Obama has opened an 8-point national lead on John McCain as the U.S. presidential rivals turn their focus to a general election race, according to a Reuters/Zogby poll released on Wednesday.
"We've never had a nominee in the modern era who won a majority of the pledged delegates who did not win the nomination,'' said Tad Devine, a strategist for Democrat John Kerry's 2004 presidential bid.
The Bay Area housing market displayed its first positive sign in months as the volume of April sales rose by its highest percentage in at least 20 years. Real estate experts, however, warned that the trough of the real estate downturn still could lie ahead. A looser mortgage market and shoppers snagging bargains in areas hammered by foreclosures helped propel sales of existing homes more than 30 percent from March, according to DataQuick Information Systems. It was the first monthly sales gain in six months and the largest increase for that time period since at least 1988, when the La Jolla (San Diego County) research firm began tracking statistics.
Frank Barbera: "While we still believe there is a good chance that equities may not actually break down to new multi-month lows until the fall, there is nevertheless a high risk that prices are at present very close to a major interim peak.
According to Rigzone, oilfield services company Expro International Group Tuesday said Halliburton continues to carry out due diligence, which may or may not lead it to make an offer for Expro.
Brazil: The Blanket is Short
Claudio L. S. Haddad | May 21, 2008
The government is worried about the exchange rate appreciation and the current account deficit. At the same time, its primary expenses are increasing more than the growth rate of GDP. Apparently the government cannot or is not willing to see the direct relationship between the two facts. In trying to attain the impossible, resources will be wasted which will decrease the productivity of the economy and worsen the fiscal situation. In the recent years, Federal government primary expenditures have been increasing much faster than the GDP, rising from 15.9% of GDP in 2003 to 17.9% in 2007. This suggests that expenditures increased by 0.5% of GDP every year. According to Cristiano Romero (Valor 5/7) the payroll and the social security expenses should increase by 9% and 8.1% respectively in real terms this year. Besides, although the government estimates signal primary expenses equal to 18.2% of GDP for 2008, more realistic estimates suggest 18.8%, with the Federal Government primary surplus decreasing to 1.1% of GDP, corroborating the expansionist character of fiscal policy.
Applications for U.S. home mortgages fell to its second-lowest level of the year last week as interest rates rose, an industry group said Wednesday. The Mortgage Bankers association said its seasonally adjusted index of mortgage application activity fell 7.8 percent to 621.6 in the week ended May 16.
Shares of Red Robin Gourmet Burgers Inc. declined in late trading Tuesday, after soft restaurant sales in California, Arizona and Nevada tugged down quarterly profit. Earnings slipped 3 percent and missed Wall Street expectations.
Earnings slipped 3 percent and missed Wall Street expectations.
Average U.S. retail gasoline prices continued their move into record territory on Wednesday, with a rise of a penny to $3.81 a gallon for regular unleaded, according to the Daily Fuel Gauge Report from AAA.
American Airlines said on Wednesday it plans to cut domestic capacity by 11 percent to 12 percent this year as fuel prices reach record highs and the weak U.S. economy casts a shadow over the summer travel season.
Time Warner Inc. will get a $9.25 billion one-time cash dividend from its Time Warner Cable Inc. unit before spinning off the business to shareholders
More than 7,600 Bear Stearns Cos' employees, about 55 percent of its staff, are expected to lose their jobs as the troubled investment bank is absorbed into JPMorgan Chase & Co , JPMorgan Chief Executive James Dimon said Tuesday.
The American Petroleum Institute reported a fall of 4.1 million barrels in crude supplies for the week ended May 16. The Energy Department had reported a decline of 5.4 million barrels for the latest week. Motor gasoline supplies were up 820,000 barrels, the API said. The government had reported that supplies were down 800,000 barrels. Distillate supplies climbed by 2 million barrels, the API said. They were up 700,000 barrels, according to the Energy Department. Oil prices bolted to a new record above $132 a barrel Wednesday after the government reported that supplies of crude oil and gasoline fell unexpectedly last week.
Telecommunications gear maker Avaya is cutting about 400 jobs by the end of May due to the weak economy and slow sales of telecommunications equipment, the Associated Press reported Wednesday.
Boeing Co. will cut about 750 workers in Southern California, citing a "downturn in its satellite assembly and integration business."
July crude closed at $133.17 a barrel, up $4.19, or 3.3%, in New York. June gold closed at $928.60 an ounce Wednesday, up $8.40 for the session to mark its highest closing level in five weeks.
On Thursday, energy watchdog IEA is preparing a sharp downward revision of its global oil-supply forecast, a development that could further rattle the oil market. Oil hit a new record above $135, with supply worries, rising global demand and a slumping dollar keeping crude prices on an upward track.
Thursday, May 22, 2008
Wednesday, May 21, 2008
Credit Crisis
5/20/08 Credit Crisis
The credit crisis will likely extend well into the next year and beyond, resulting in three years of multi-billion dollar revenue reversals, according to a prominent U.S. banking analyst, Meredith Whitney, who also slashed her earnings outlook for four Wall Street investment banks. By the end of 2009, over $170 billion of reserve builds will flow through bank earnings on top of "business as usual" loan loss provisions, said the Oppenheimer & Co analyst, who in October correctly predicted that Citigroup would cut its dividend and go on a capital-raising spree. "Either in the form of write-downs or reserve builds, we believe the effect is the same: revenue reversal from years worth of inherently flawed underwriting," Whitney said.The analyst lowered her 2008 outlook for JPMorgan Chase, Citigroup, Bank of America and Wachovia. She, however, cut her second-quarter earnings view for Bank of America and JPMorgan while raising it by a cent each for Citigroup and Wachovia.
"With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation," Federal Reserve Vice Chairman Donald Kohn said in a speech to a business group in New Orleans.
Robert McHugh: "There is a Bullish seasonal tendency this week, the Memorial Day Holiday occurring a week from today. Stocks tend to rally into significant U.S. holiday weekends, so it is possible prices will jockey back and forth, hanging around these high levels into early next week. Our next phi mate turn date is early June, June 3rd +/-, so we cannot rule out that prices hang around into that turn. This is a risk factor for Bears. On the other hand, there are a ton of indicators that are leaning Bearish intermediate term, so once a top is in, we should see a significant decline. Could it start this week? Sure. But with the holiday weekend close at hand, that could mitigate any wave three decline in stocks so that downside momentum does not pick up steam until next week. Rallies tend to occur in slow motion, while declines occur like lightening. It could get ugly the other side of Memorial Day."
US-Led Capitalist System Headed for Collapse?
Syed Rashid Husain, Arab News
Oil prices continue to rise and rise, with no end in sight. Virtually all other commodities seem to be following to be the same suit. Some now say a new economic system is emerging from the ashes of the old and now crumbling financial structure. Failing to meet even the basic needs of the common man, the current economic system is facing its worst crisis and appears in doldrums. It has miserably failed the underprivileged of this world. Markets appear divorced from the fundamentals. F. William Engdahl strongly says in a recent write up that the oil markets (and other markets too) today are controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. And the end-result is growing deprivation to a large number of people across geographical boundaries!
Crude oil rose above $129 a barrel in New York for the first time after Boone Pickens said that oil will reach $150 a barrel this year.
The dollar fell against the yen and euro after the International Monetary Fund said the U.S. housing slump still poses ``serious risks'' to financial markets.
Imperial Tobacco on Tuesday said it's going to issue 4.9 billion pounds ($9.6 billion) of discounted stock to help pay for its 11.3-billion-pound acquisition of Franco-Spanish cigarette maker Altadis, as the world's fourth-largest tobacco firm reported a 44% profit drop for the six months ended in March.
Amgen released a late-stage clinical study that showed its new osteoporosis-fighting compound denosumab was more effective in building up bone density than Merck & Co.'s Fosamax, a leading therapy for the condition.
The region's most exclusive neighborhoods suffered big drops in April, data show. Median sale prices fell 13% in Beverly Hills, 34% in one area of Newport Beach.
When they raid the whore house, they take all the girls!
Excluding the sale of Godiva chocolate, Campbell Soup's adjusted earnings from continuing operations were $154.0 million, or 40 cents per share, missing the consensus estimate of analysts surveyed by Thomson Financial by 4 cents. Revenues for the quarter were up 5.6%, to $1.9 billion, matching analysts' expectations.
Barack Obama is poised to have a majority of pledged delegates after voting in Kentucky and Oregon. On Monday he received the support of five more super delegates. The results of today's primaries will help ``make an argument to any superdelegates remaining that we should be the nominee,'' Obama said.
''Let me be clear, privatizing Social Security was a bad idea when George W. Bush proposed it, it's a bad idea today,'' Obama said.
Financing from all sources topped $21.3 billion for U.S. biotech companies in 2007, and the $5.5 billion contributed by venture capital firms beat the record set in the heady year of 2000, when the Human Genome Project ignited interest in the sector.
“There are more than 100 public retirement systems in the U.S. managing a combined $2.3 trillion. The amount is $380 billion short of the funds needed to pay pensions over the next 30 years, according to the National Association of State Retirement Administrators in Baton Rouge, Louisiana.”
Medtronic expects 2009 profit of $2.94 to $3.02 a share, excluding items.
Target Corp.'s first-quarter profit dropped 7.5% after economic downturns have left consumers with less money to spend on discretionary items. Target CFO says second-quarter profit may miss estimates.
Wholesale prices rose a smaller-than-expected 0.2% in April The core PPI - which excludes food and energy prices - rose 0.4% in April, more than expected. Core prices are up 3% in the past year, the biggest year-over-year rise since late 1991. If you believe the accuracy of these numbers, then you must be smoking rope.
German consumer prices rose 2.6 percent in April from a year earlier after jumping 3.3 percent the previous month, the most in 12 years. German producer-price inflation accelerated to 5.2 percent in April, the fastest in almost two years, the Federal Statistics Office said today. The European Central Bank aims to keep inflation in the euro region just below 2 percent.
The White House on Tuesday denied a published report in Israel that said President Bush intends to attack Iran before the end of his term in January.
Palatin Technologies, Inc. announced that dosing has been initiated in a Phase 2a clinical study of PL-3994, a novel, long-acting natriuretic peptide receptor A agonist, in subjects with controlled hypertension. The study is placebo-controlled and double-blinded, and will include up to five cohorts receiving escalating doses. As many as 35 subjects will be included, with six active subjects and one placebo subject per dose cohort. Subjects passing screening are admitted to a research clinic, placed on a controlled diet and have baseline blood pressures and laboratory values monitored for 24 hours. The next morning, subjects receive a single dose of PL-3994 or placebo with blood pressures and laboratory values monitored for 24 hours. Every other week, another cohort of subjects will receive a higher dose of PL-3994 until a pre-specified blood pressure decrease is observed. "We are excited with our PL-3994 program's rapid progress. Data from these hypertensive patients will provide key indications of the compound's therapeutic potential," stated Dr. Trevor Hallam, Palatin's Executive Vice President for Research and Development. "We look forward to the completion of this study as well as the reporting of results next quarter." Based on the results of this study and the previously completed Phase 1 trial in healthy, non-hypertensive volunteers, a Phase 2 trial in patients with episodes of hypertensive urgency is planned for later this calendar year. Palatin is also developing PL-3994 for the treatment of acute decompensated congestive heart failure and plans to initiate a separate Phase 2 study in these patients later this calendar year.
June gold climbed $14.40 to finish Tuesday at $920.20 an ounce in New York. The contract has now tallied a gain of $53.70 in four trading sessions.
The dollar index was at 72.400, down from 73.059 in late North American trading Monday.
BJ's Wholesale Club Inc.'s first-quarter net income rose 26% to $17.2 million, or 29 cents a share, from $13.7 million, or 21 cents, a year earlier.
Crude-oil futures topped the $130-a-barrel mark for the first time on Wednesday.
The 13% rise in Brent crude oil in sterling terms during April wasn't driven by speculation, the Bank of England said in minutes from the last interest-rate meeting.
Corporate Express NV, the Amsterdam office-products distributor, agreed to buy closely held Lyreco, the Marly, France, office-supplies provider, for 1.73 billion euros ($2.71 billion).
The credit crisis will likely extend well into the next year and beyond, resulting in three years of multi-billion dollar revenue reversals, according to a prominent U.S. banking analyst, Meredith Whitney, who also slashed her earnings outlook for four Wall Street investment banks. By the end of 2009, over $170 billion of reserve builds will flow through bank earnings on top of "business as usual" loan loss provisions, said the Oppenheimer & Co analyst, who in October correctly predicted that Citigroup would cut its dividend and go on a capital-raising spree. "Either in the form of write-downs or reserve builds, we believe the effect is the same: revenue reversal from years worth of inherently flawed underwriting," Whitney said.The analyst lowered her 2008 outlook for JPMorgan Chase, Citigroup, Bank of America and Wachovia. She, however, cut her second-quarter earnings view for Bank of America and JPMorgan while raising it by a cent each for Citigroup and Wachovia.
"With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation," Federal Reserve Vice Chairman Donald Kohn said in a speech to a business group in New Orleans.
Robert McHugh: "There is a Bullish seasonal tendency this week, the Memorial Day Holiday occurring a week from today. Stocks tend to rally into significant U.S. holiday weekends, so it is possible prices will jockey back and forth, hanging around these high levels into early next week. Our next phi mate turn date is early June, June 3rd +/-, so we cannot rule out that prices hang around into that turn. This is a risk factor for Bears. On the other hand, there are a ton of indicators that are leaning Bearish intermediate term, so once a top is in, we should see a significant decline. Could it start this week? Sure. But with the holiday weekend close at hand, that could mitigate any wave three decline in stocks so that downside momentum does not pick up steam until next week. Rallies tend to occur in slow motion, while declines occur like lightening. It could get ugly the other side of Memorial Day."
US-Led Capitalist System Headed for Collapse?
Syed Rashid Husain, Arab News
Oil prices continue to rise and rise, with no end in sight. Virtually all other commodities seem to be following to be the same suit. Some now say a new economic system is emerging from the ashes of the old and now crumbling financial structure. Failing to meet even the basic needs of the common man, the current economic system is facing its worst crisis and appears in doldrums. It has miserably failed the underprivileged of this world. Markets appear divorced from the fundamentals. F. William Engdahl strongly says in a recent write up that the oil markets (and other markets too) today are controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. And the end-result is growing deprivation to a large number of people across geographical boundaries!
Crude oil rose above $129 a barrel in New York for the first time after Boone Pickens said that oil will reach $150 a barrel this year.
The dollar fell against the yen and euro after the International Monetary Fund said the U.S. housing slump still poses ``serious risks'' to financial markets.
Imperial Tobacco on Tuesday said it's going to issue 4.9 billion pounds ($9.6 billion) of discounted stock to help pay for its 11.3-billion-pound acquisition of Franco-Spanish cigarette maker Altadis, as the world's fourth-largest tobacco firm reported a 44% profit drop for the six months ended in March.
Amgen released a late-stage clinical study that showed its new osteoporosis-fighting compound denosumab was more effective in building up bone density than Merck & Co.'s Fosamax, a leading therapy for the condition.
The region's most exclusive neighborhoods suffered big drops in April, data show. Median sale prices fell 13% in Beverly Hills, 34% in one area of Newport Beach.
When they raid the whore house, they take all the girls!
Excluding the sale of Godiva chocolate, Campbell Soup's adjusted earnings from continuing operations were $154.0 million, or 40 cents per share, missing the consensus estimate of analysts surveyed by Thomson Financial by 4 cents. Revenues for the quarter were up 5.6%, to $1.9 billion, matching analysts' expectations.
Barack Obama is poised to have a majority of pledged delegates after voting in Kentucky and Oregon. On Monday he received the support of five more super delegates. The results of today's primaries will help ``make an argument to any superdelegates remaining that we should be the nominee,'' Obama said.
''Let me be clear, privatizing Social Security was a bad idea when George W. Bush proposed it, it's a bad idea today,'' Obama said.
Financing from all sources topped $21.3 billion for U.S. biotech companies in 2007, and the $5.5 billion contributed by venture capital firms beat the record set in the heady year of 2000, when the Human Genome Project ignited interest in the sector.
“There are more than 100 public retirement systems in the U.S. managing a combined $2.3 trillion. The amount is $380 billion short of the funds needed to pay pensions over the next 30 years, according to the National Association of State Retirement Administrators in Baton Rouge, Louisiana.”
Medtronic expects 2009 profit of $2.94 to $3.02 a share, excluding items.
Target Corp.'s first-quarter profit dropped 7.5% after economic downturns have left consumers with less money to spend on discretionary items. Target CFO says second-quarter profit may miss estimates.
Wholesale prices rose a smaller-than-expected 0.2% in April The core PPI - which excludes food and energy prices - rose 0.4% in April, more than expected. Core prices are up 3% in the past year, the biggest year-over-year rise since late 1991. If you believe the accuracy of these numbers, then you must be smoking rope.
German consumer prices rose 2.6 percent in April from a year earlier after jumping 3.3 percent the previous month, the most in 12 years. German producer-price inflation accelerated to 5.2 percent in April, the fastest in almost two years, the Federal Statistics Office said today. The European Central Bank aims to keep inflation in the euro region just below 2 percent.
The White House on Tuesday denied a published report in Israel that said President Bush intends to attack Iran before the end of his term in January.
Palatin Technologies, Inc. announced that dosing has been initiated in a Phase 2a clinical study of PL-3994, a novel, long-acting natriuretic peptide receptor A agonist, in subjects with controlled hypertension. The study is placebo-controlled and double-blinded, and will include up to five cohorts receiving escalating doses. As many as 35 subjects will be included, with six active subjects and one placebo subject per dose cohort. Subjects passing screening are admitted to a research clinic, placed on a controlled diet and have baseline blood pressures and laboratory values monitored for 24 hours. The next morning, subjects receive a single dose of PL-3994 or placebo with blood pressures and laboratory values monitored for 24 hours. Every other week, another cohort of subjects will receive a higher dose of PL-3994 until a pre-specified blood pressure decrease is observed. "We are excited with our PL-3994 program's rapid progress. Data from these hypertensive patients will provide key indications of the compound's therapeutic potential," stated Dr. Trevor Hallam, Palatin's Executive Vice President for Research and Development. "We look forward to the completion of this study as well as the reporting of results next quarter." Based on the results of this study and the previously completed Phase 1 trial in healthy, non-hypertensive volunteers, a Phase 2 trial in patients with episodes of hypertensive urgency is planned for later this calendar year. Palatin is also developing PL-3994 for the treatment of acute decompensated congestive heart failure and plans to initiate a separate Phase 2 study in these patients later this calendar year.
June gold climbed $14.40 to finish Tuesday at $920.20 an ounce in New York. The contract has now tallied a gain of $53.70 in four trading sessions.
The dollar index was at 72.400, down from 73.059 in late North American trading Monday.
BJ's Wholesale Club Inc.'s first-quarter net income rose 26% to $17.2 million, or 29 cents a share, from $13.7 million, or 21 cents, a year earlier.
Crude-oil futures topped the $130-a-barrel mark for the first time on Wednesday.
The 13% rise in Brent crude oil in sterling terms during April wasn't driven by speculation, the Bank of England said in minutes from the last interest-rate meeting.
Corporate Express NV, the Amsterdam office-products distributor, agreed to buy closely held Lyreco, the Marly, France, office-supplies provider, for 1.73 billion euros ($2.71 billion).
Tuesday, May 20, 2008
Credit Crunch and Inflation
5/19/08 Credit Crunch and Inflation
The credit crunch is far from over and is likely to hit sectors other than housing, Marc Faber, Editor and Publisher of “The Gloom, Boom & Doom Report”, told "Squawk Box Europe."
The average price of regular gasoline rose to a record $3.79 a gallon, the Lundberg survey of 7,000 stations nationwide reported Sunday.The price climbed 17 cents on May 16 from two weeks earlier, according to oil-industry analyst Trilby Lundberg. "It is entirely higher crude-oil prices," Lundberg said.
With the continued escalation in fuel prices, U.S. airlines are in a nose dive that could leave some major carriers in bankruptcy.
According to Bloomberg, banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show.
Manitowoc Co., the biggest ice-machine maker in the US, raised its bid for Enodis Plc to 1.08 billion pounds ($2.11 billion), topping Illinois Tool Works Inc.'s offer for the UK supplier of fryers and warmers.
Consumers expect prices to rise 5.2 percent in the next 12 months, according to a monthly survey by the University of Michigan in Ann Arbor, the most pessimistic they've been since 1982. Treasury Inflation Protected Securities, or TIPS, show traders anticipate inflation of about 2.9 percent by January, in line with its average of 3.1 percent the last 20 years.
Now 56 percent of the economists think the economy has started or will enter a recession this year. That's up from 45 percent in a survey in February. If there is a recession, it probably will be short and shallow, economists said. Forecasters downgraded their projections for economic growth. They now predict the economy, which grew by 2.2 percent last year, will slow to 1.4 percent this year. That's lower than the 1.8 percent growth projected in February. If the new figure proves correct, it would mark the weakest growth since the last recession in 2001. Next year, the economy should grow by 2.3 percent, less than previously forecast and a pace that is still considered subpar. "Although housing and credit markets will gradually loosen their grip, U.S economic growth is expected to only slowly return to health," said Ellen Hughes-Cromwick, president of NABE and chief economist at Ford Motor Co. Given the outlook for sluggish overall economic activity, companies are likely to remain cautious in their spending and hiring.
Rob Hanna: "I'm having a hard time finding anything suggesting prices are likely to continue higher."
According to the NY Times, "the prices paid for online ads bought through ad networks dropped 23 percent from March to April, according to PubMatic."
Citigroup slashed its earnings outlook for Wall Street investment banks, Goldman Sachs Group Inc, Lehman Brothers Holdings Inc, and Morgan Stanley, citing a tough operating environment.
Brett Steenbarger: "Though we may be due for some correction--we have not seen the last of the rally following the double-bottom in January/March. I continue to harbor doubts that this rally will bring us significant new price highs for the major averages. Rather, I see it as a late, selective continuation of the bull cycle that began in August, 2006. Some sectors (financials) have likely seen their bull peaks; others (energy) are still making them. If that conjecture is correct, the good news is that we should see further price strength in the major averages into the summer. The bad news is that a more significant bear may lie beyond."
Electronic Arts Inc.will extend its offer for Take-Two Interactive Software Inc. to June 16.
N.Y. Times ad revenue down 5.1% in April. N.Y. Times circulation revenue down 3.3% in April.
Sheila Weinberg, Institute for Truth in Accounting CEO: "We're running deficits in the trillions of dollars, not the hundreds of billions of dollars we're being told."
Jon Markman: "If there is a single word to sum up the global rallies in steel, iron ore, gold, grains and energy over the past three years, it is Brazil. The biggest country in South America has become the world's biggest exporter of raw materials and is prospering like none other on the planet. Its stock market hit an all-time high last week as all others faltered."
Global demand and a bad crop year in Europe and Australia have tightened supplies for hops, barley and wheat. That combined with a hike in transportation costs is driving beer producers, big and small to raise prices.
Charlie Munger: “General Re needed a derivative book like I needed a case of syphilis."
The fallout from the global credit crisis is not over yet, Warren Buffett said on Monday. "I'll talk about the United States. I don't think the effects of the credit crunch are far from over at all," he told a news conference in response to a question. "I think there will be rippling secondary, tertiary effects...It is really more an effect of the residential real estate bubble which led to the credit crunch in some degree," he said.
The Federal Reserve said Monday it will auction $75 billion of 28-day loans at a minimum bid rate of 1.99% under its new term-auction facility.
The U.S. economy is likely to remain weak, but is not in a recession, economists for the Conference Board said Monday after announcing that the index of leading economic indicators rose slightly in April for a second straight month. The index rose 0.1% in April, matching March's gain after falling for the five prior months. "These data certainly reflect a weak economy, but not one in recession," said Ken Goldstein, labor economist at the private research group. The small increases in March and April "could be a signal that the economy may not weaken further."
BCE is Canada's largest telecommunications company, and operates Bell Canada. The C$34.8 billion buyout of BCE Inc is in trouble as investment banks financing the deal sought to renegotiate lending terms, the New York Times said on Monday, citing people on both sides of the transaction.
Microsoft Corp.is considering buying Yahoo Inc.'s search business and taking a minority passive stake in the company after Yahoo has spun off its Asian assets, Thomson Reuters reported Monday on its website late Monday, citing a person familiar with the discussions.
June crude closed at $127.05 a barrel, marking its highest close ever. June gold closed at $905.80 an ounce in New York Monday, up $5.90 for the session to finish at its highest level since April 23.
Staples Inc.launched its public offer of 8 euros ($12.4) a share in cash for all ordinary shares, including shares represented by American Depositary Shares, in the share capital of Corporate Express.
Thomson Reuters Corp. will cut 1,500 jobs as the newly combined financial and professional information provider moves to consolidate operations and reduce costs, a person familiar with the matter said Monday.
A group led by Spanish infrastructure operator Abertis Infraestructuras SA and Citigroup Inc. won bidding for the 75-year lease of the Pennsylvania Turnpike with a cash offer of $12.8 billion in what could be the largest privatization in the U.S. infrastructure sector to date.
Platinum prices could surge a further 15 per cent to a record $2,500 an ounce within the next six months as disruptions to production in South Africa lead to a “substantial” supply deficit this year, one of the biggest users of the metal has forecast.
Eni, the Italian oil group, has discovered a large oil sands deposit in the Republic of Congo that is expected to become Africa’s first large unconventional oil development and could hold several billion barrels. Paolo Scaroni, Eni’s chief executive, said the project, due to begin production in 2011, opened “a new front” in the development of “unconventional” oil.
Home Depot Inc. reported Tuesday that first-quarter net income fell 66%, hurt by economic worries that curtailed home-improvement spending and by costs it incurred to close stores and abandon some new openings in its pipeline.
Credit Suisse said it's upping its oil price estimates, to $120 a barrel this year, $110 a barrel in 2009 and $100 a barrel long term. The brokerage previously expected $91 a barrel oil this year, $90 in 2009 and $75 over the longer term.
The government raised its one-month-old forecast of how much food prices will rise in 2008 by half a percentage point to a range of 4.5% to 5.5%.
The credit crunch is far from over and is likely to hit sectors other than housing, Marc Faber, Editor and Publisher of “The Gloom, Boom & Doom Report”, told "Squawk Box Europe."
The average price of regular gasoline rose to a record $3.79 a gallon, the Lundberg survey of 7,000 stations nationwide reported Sunday.The price climbed 17 cents on May 16 from two weeks earlier, according to oil-industry analyst Trilby Lundberg. "It is entirely higher crude-oil prices," Lundberg said.
With the continued escalation in fuel prices, U.S. airlines are in a nose dive that could leave some major carriers in bankruptcy.
According to Bloomberg, banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show.
Manitowoc Co., the biggest ice-machine maker in the US, raised its bid for Enodis Plc to 1.08 billion pounds ($2.11 billion), topping Illinois Tool Works Inc.'s offer for the UK supplier of fryers and warmers.
Consumers expect prices to rise 5.2 percent in the next 12 months, according to a monthly survey by the University of Michigan in Ann Arbor, the most pessimistic they've been since 1982. Treasury Inflation Protected Securities, or TIPS, show traders anticipate inflation of about 2.9 percent by January, in line with its average of 3.1 percent the last 20 years.
Now 56 percent of the economists think the economy has started or will enter a recession this year. That's up from 45 percent in a survey in February. If there is a recession, it probably will be short and shallow, economists said. Forecasters downgraded their projections for economic growth. They now predict the economy, which grew by 2.2 percent last year, will slow to 1.4 percent this year. That's lower than the 1.8 percent growth projected in February. If the new figure proves correct, it would mark the weakest growth since the last recession in 2001. Next year, the economy should grow by 2.3 percent, less than previously forecast and a pace that is still considered subpar. "Although housing and credit markets will gradually loosen their grip, U.S economic growth is expected to only slowly return to health," said Ellen Hughes-Cromwick, president of NABE and chief economist at Ford Motor Co. Given the outlook for sluggish overall economic activity, companies are likely to remain cautious in their spending and hiring.
Rob Hanna: "I'm having a hard time finding anything suggesting prices are likely to continue higher."
According to the NY Times, "the prices paid for online ads bought through ad networks dropped 23 percent from March to April, according to PubMatic."
Citigroup slashed its earnings outlook for Wall Street investment banks, Goldman Sachs Group Inc, Lehman Brothers Holdings Inc, and Morgan Stanley, citing a tough operating environment.
Brett Steenbarger: "Though we may be due for some correction--we have not seen the last of the rally following the double-bottom in January/March. I continue to harbor doubts that this rally will bring us significant new price highs for the major averages. Rather, I see it as a late, selective continuation of the bull cycle that began in August, 2006. Some sectors (financials) have likely seen their bull peaks; others (energy) are still making them. If that conjecture is correct, the good news is that we should see further price strength in the major averages into the summer. The bad news is that a more significant bear may lie beyond."
Electronic Arts Inc.will extend its offer for Take-Two Interactive Software Inc. to June 16.
N.Y. Times ad revenue down 5.1% in April. N.Y. Times circulation revenue down 3.3% in April.
Sheila Weinberg, Institute for Truth in Accounting CEO: "We're running deficits in the trillions of dollars, not the hundreds of billions of dollars we're being told."
Jon Markman: "If there is a single word to sum up the global rallies in steel, iron ore, gold, grains and energy over the past three years, it is Brazil. The biggest country in South America has become the world's biggest exporter of raw materials and is prospering like none other on the planet. Its stock market hit an all-time high last week as all others faltered."
Global demand and a bad crop year in Europe and Australia have tightened supplies for hops, barley and wheat. That combined with a hike in transportation costs is driving beer producers, big and small to raise prices.
Charlie Munger: “General Re needed a derivative book like I needed a case of syphilis."
The fallout from the global credit crisis is not over yet, Warren Buffett said on Monday. "I'll talk about the United States. I don't think the effects of the credit crunch are far from over at all," he told a news conference in response to a question. "I think there will be rippling secondary, tertiary effects...It is really more an effect of the residential real estate bubble which led to the credit crunch in some degree," he said.
The Federal Reserve said Monday it will auction $75 billion of 28-day loans at a minimum bid rate of 1.99% under its new term-auction facility.
The U.S. economy is likely to remain weak, but is not in a recession, economists for the Conference Board said Monday after announcing that the index of leading economic indicators rose slightly in April for a second straight month. The index rose 0.1% in April, matching March's gain after falling for the five prior months. "These data certainly reflect a weak economy, but not one in recession," said Ken Goldstein, labor economist at the private research group. The small increases in March and April "could be a signal that the economy may not weaken further."
BCE is Canada's largest telecommunications company, and operates Bell Canada. The C$34.8 billion buyout of BCE Inc is in trouble as investment banks financing the deal sought to renegotiate lending terms, the New York Times said on Monday, citing people on both sides of the transaction.
Microsoft Corp.is considering buying Yahoo Inc.'s search business and taking a minority passive stake in the company after Yahoo has spun off its Asian assets, Thomson Reuters reported Monday on its website late Monday, citing a person familiar with the discussions.
June crude closed at $127.05 a barrel, marking its highest close ever. June gold closed at $905.80 an ounce in New York Monday, up $5.90 for the session to finish at its highest level since April 23.
Staples Inc.launched its public offer of 8 euros ($12.4) a share in cash for all ordinary shares, including shares represented by American Depositary Shares, in the share capital of Corporate Express.
Thomson Reuters Corp. will cut 1,500 jobs as the newly combined financial and professional information provider moves to consolidate operations and reduce costs, a person familiar with the matter said Monday.
A group led by Spanish infrastructure operator Abertis Infraestructuras SA and Citigroup Inc. won bidding for the 75-year lease of the Pennsylvania Turnpike with a cash offer of $12.8 billion in what could be the largest privatization in the U.S. infrastructure sector to date.
Platinum prices could surge a further 15 per cent to a record $2,500 an ounce within the next six months as disruptions to production in South Africa lead to a “substantial” supply deficit this year, one of the biggest users of the metal has forecast.
Eni, the Italian oil group, has discovered a large oil sands deposit in the Republic of Congo that is expected to become Africa’s first large unconventional oil development and could hold several billion barrels. Paolo Scaroni, Eni’s chief executive, said the project, due to begin production in 2011, opened “a new front” in the development of “unconventional” oil.
Home Depot Inc. reported Tuesday that first-quarter net income fell 66%, hurt by economic worries that curtailed home-improvement spending and by costs it incurred to close stores and abandon some new openings in its pipeline.
Credit Suisse said it's upping its oil price estimates, to $120 a barrel this year, $110 a barrel in 2009 and $100 a barrel long term. The brokerage previously expected $91 a barrel oil this year, $90 in 2009 and $75 over the longer term.
The government raised its one-month-old forecast of how much food prices will rise in 2008 by half a percentage point to a range of 4.5% to 5.5%.
Monday, May 19, 2008
Breadth
5/18/08 Breadth
Tim Wood: "The fact that breadth is not expanding along with the price advance is reason to question the health of this advance."
Gretchen Morgenson: "Brokerage firms swapping securities at their new Fed window — the Term Securities Lending Facility — do not supply the excess collateral that commercial banks do. And look at the securities the Fed accepts in these swaps: residential and commercial mortgages and other asset-backed issues.Sure, the Fed requires that the securities must be rated triple-A to qualify for a Treasury swap. But as we’ve learned over the last year and a half, such ratings are unreliable.SOME Fed officials agree. Last month, Donald L. Kohn, vice chairman of the Federal Reserve, addressed bankers at a credit market symposium in North Carolina. “I think part of the work-list for the regulators is to re-examine the extent to which we ourselves are relying on these rating agencies to gauge the risks that you guys are taking,” he said. “I think there was far, far too much reliance on credit ratings all round.”And in a speech on April 10, Ben S. Bernanke, the Fed chairman, said: “Investors must take responsibility for developing independent views of the risks of these instruments and not rely solely on credit ratings.”Yet the Fed is doing precisely that when it accepts triple-A rated mortgage securities. “This is classic ‘do as I say, not as I do,’ ” Mr. Rosner said.More worrisome, he added, is the fact that the Fed doesn’t examine the basis for bestowing a triple-A rating on these securities. Are they triple-A based on the soundness of the issuer? Or because of an insurance policy guaranteed by M.B.I.A. or the Ambac Financial Group, the troubled financial guarantors?"
Bill Bonner: "Our view is that higher consumer price inflation is in the pipes and will soon be backing up in the bathtub drains. Dorsch says the U.S. money supply is now increasing at a 16% rate; higher inflation can't be far behind."
"Californians are cutting back on spending," says James Saft in the International Herald Tribune. "Besides causing woes for state and local government, the cutback is giving California's economy another knock and makes further job losses, home repossessions and banking problems more likely."
Oil markets are balanced and there is no need for an emergency OPEC meeting before September despite record oil prices, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said on Saturday."The oil market is balanced... There is no threat to or crisis in supply," he told Al Arabiya TV by telephone. "At the moment, I don't think there is a situation that is big or dangerous that requires a meeting before September."
Wary of losing much-needed cash from recession-battered Americans, Mexico for the first time is dropping its sales tax for tourists. Starting in June at five main airports, foreign tourists who have spent at least 1,200 pesos ($115) in approved shops will be able to use kiosks to claim back the 15% tax that had been charged on souvenirs and other goods they bought at various resorts and cities, the Mexico Tourism Ministry said on May 15.
President Rafael Correa says Ecuador wants to buy out private oil companies unwilling to negotiate new deals with his government. Correa has asked companies now suing over an October decree that slashed their share of windfall oil profits to 1 percent to drop their lawsuits. Ecuador on Friday offered to boost those companies' share of soaring windfall profits to 30 percent. If companies aren't happy with that offer, Correa says his government will buy their assets at "a fair price."
In a statement Sunday, Microsoft says it is considering a different kind of deal with Yahoo. "Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative," the statement said.
John Hussman: "As of last week, valuations remained unfavorable for stocks. Meanwhile, however, market action continued to hover near the point where speculation could begin to feed on itself. The behavior of trading volume and leadership remains relatively uninspiring, but some popular moving averages have been crossed (such as the 200-day moving average of the S&P 500), which has fed some amount of technical buying. Stocks are clearly overbought on a short-term basis, and given that, it's likely we'll observe some sideways movement for a bit even if the speculative interest of investors ends up continuing in the weeks ahead. Meanwhile, that same overbought condition, given a still-unfavorable Market Climate overall, leaves us braced for a possibly hard retreat."
Lowe's Cos.said first-quarter profit fell after the worst U.S. slump in more than 25 years slowed spending on remodeling projects. Net income decreased to $607 million, or 41 cents a share, from $739 million, or 48 cents, a year earlier. Sales declined to $12 billion. The company forecast annual earnings that trail an earlier projection.
Tim Wood: "The fact that breadth is not expanding along with the price advance is reason to question the health of this advance."
Gretchen Morgenson: "Brokerage firms swapping securities at their new Fed window — the Term Securities Lending Facility — do not supply the excess collateral that commercial banks do. And look at the securities the Fed accepts in these swaps: residential and commercial mortgages and other asset-backed issues.Sure, the Fed requires that the securities must be rated triple-A to qualify for a Treasury swap. But as we’ve learned over the last year and a half, such ratings are unreliable.SOME Fed officials agree. Last month, Donald L. Kohn, vice chairman of the Federal Reserve, addressed bankers at a credit market symposium in North Carolina. “I think part of the work-list for the regulators is to re-examine the extent to which we ourselves are relying on these rating agencies to gauge the risks that you guys are taking,” he said. “I think there was far, far too much reliance on credit ratings all round.”And in a speech on April 10, Ben S. Bernanke, the Fed chairman, said: “Investors must take responsibility for developing independent views of the risks of these instruments and not rely solely on credit ratings.”Yet the Fed is doing precisely that when it accepts triple-A rated mortgage securities. “This is classic ‘do as I say, not as I do,’ ” Mr. Rosner said.More worrisome, he added, is the fact that the Fed doesn’t examine the basis for bestowing a triple-A rating on these securities. Are they triple-A based on the soundness of the issuer? Or because of an insurance policy guaranteed by M.B.I.A. or the Ambac Financial Group, the troubled financial guarantors?"
Bill Bonner: "Our view is that higher consumer price inflation is in the pipes and will soon be backing up in the bathtub drains. Dorsch says the U.S. money supply is now increasing at a 16% rate; higher inflation can't be far behind."
"Californians are cutting back on spending," says James Saft in the International Herald Tribune. "Besides causing woes for state and local government, the cutback is giving California's economy another knock and makes further job losses, home repossessions and banking problems more likely."
Oil markets are balanced and there is no need for an emergency OPEC meeting before September despite record oil prices, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said on Saturday."The oil market is balanced... There is no threat to or crisis in supply," he told Al Arabiya TV by telephone. "At the moment, I don't think there is a situation that is big or dangerous that requires a meeting before September."
Wary of losing much-needed cash from recession-battered Americans, Mexico for the first time is dropping its sales tax for tourists. Starting in June at five main airports, foreign tourists who have spent at least 1,200 pesos ($115) in approved shops will be able to use kiosks to claim back the 15% tax that had been charged on souvenirs and other goods they bought at various resorts and cities, the Mexico Tourism Ministry said on May 15.
President Rafael Correa says Ecuador wants to buy out private oil companies unwilling to negotiate new deals with his government. Correa has asked companies now suing over an October decree that slashed their share of windfall oil profits to 1 percent to drop their lawsuits. Ecuador on Friday offered to boost those companies' share of soaring windfall profits to 30 percent. If companies aren't happy with that offer, Correa says his government will buy their assets at "a fair price."
In a statement Sunday, Microsoft says it is considering a different kind of deal with Yahoo. "Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative," the statement said.
John Hussman: "As of last week, valuations remained unfavorable for stocks. Meanwhile, however, market action continued to hover near the point where speculation could begin to feed on itself. The behavior of trading volume and leadership remains relatively uninspiring, but some popular moving averages have been crossed (such as the 200-day moving average of the S&P 500), which has fed some amount of technical buying. Stocks are clearly overbought on a short-term basis, and given that, it's likely we'll observe some sideways movement for a bit even if the speculative interest of investors ends up continuing in the weeks ahead. Meanwhile, that same overbought condition, given a still-unfavorable Market Climate overall, leaves us braced for a possibly hard retreat."
Lowe's Cos.said first-quarter profit fell after the worst U.S. slump in more than 25 years slowed spending on remodeling projects. Net income decreased to $607 million, or 41 cents a share, from $739 million, or 48 cents, a year earlier. Sales declined to $12 billion. The company forecast annual earnings that trail an earlier projection.
Sunday, May 18, 2008
Heightened Monetary Disorder
5/17/08 Heightened Monetary Disorder
Robert McHugh: "The VIX has popped higher to the point where should it close where it is at now, around 17.83 (it is up 1.5 Friday), we will have a new "sell" signal. As mentioned in Thursday evening's newsletter, the past three times the VIX generated a "sell" signal, stocks dropped sharply, for several weeks. Other indicators we follow also suggest a significant top is close at hand, should be in over the next week."
Lehman Brothers will begin trimming its workforce by around 5% starting on Monday, cable news network CNBC reported Friday.
The transports are up 17.5% year to date.
Doug Noland: "The problem with post-asset Bubble “accommodation” is that it specifically accommodates the very Credit infrastructure and related Monetary Processes that financed the preceding boom. It works to validate the present course of financial innovation (think “Wall Street securitizations,” “CDOs” and “carry trades”), while emboldening those at the cutting edge of risk-taking (think “leveraged speculating community”). To be sure, the same Wall Street Credit infrastructure that financed the tech Bubble was empowered to regroup, reemerge, and aggressively expand to grossly over-finance much more expansive Credit and speculative booms in mortgage-related securitizations and housing. These days, powerful forces have been unleashed to over-finance the world.
Moreover, a commitment to aggressively cut rates in response to faltering asset Bubbles openly courts leveraged bond market speculation – a market dynamic that especially engenders artificially low market yields and exacerbates liquidity excess during the late-stage of asset bubbles (think bond market “conundrum”). The last thing a central bank should encourage is an entire industry dedicated to placing leveraged bets on the direction of Federal Reserve policy responses. A strong case can be made that U.S. Treasury and agency markets have become one massive Bubble. The overriding flaw in the Greenspan/Bernanke approach has been to openly disregard Credit Bubble dynamics, in particular the increasingly profound role played by Wall Street-backed finance in fueling Credit, market liquidity and speculative excesses. I believe The Ultimate Objective of a Central Bank is to Foster Monetary Stability in the broadest sense. In this regard, asset Bubbles should be viewed primarily as important indicators of some type of underlying Monetary Disorder. The key analytical focus must be on the underlying Credit and speculative dynamics fueling the asset price distortions – to better understand and rectify the source of “disorder” – and the earlier, the better... No doubt about it, Heightened Monetary Disorder - the cost associated with the Fed’s U.S. Credit system bailout - is increasingly on display. Destabilizing speculation is returning with a vengeance, and it’s anything but limited to commodities markets."
Brett Steenbarger: "At a 30-minute time frame, markets are moving half as much now as they were in January. Is it any wonder that traders looking for big moves are becoming frustrated?"
The dollar fell the most against the euro since March as a drop in consumer confidence and record crude oil prices raised concern U.S. economic growth will slow. The dollar's second consecutive weekly decline against the euro pared its increase from the all-time low reached last month to 2.7 percent. The Australian dollar rose to the strongest level against the greenback since 1984 as oil pushed up prices of other commodities. Mexico's peso rose to a five-year high, while the Brazilian real strengthened to the most since 1999.
Mike Burk: "The market is over bought. As of last Friday, the S&P mid cap index was up for the 7 consecutive days for the first time in over a year. Longer term this is a good sign, but, for the next week or so continued upward progress is likely to be limited."
John Mauldin: "Inflation is uncomfortably high at 4%. Even core inflation is well above the 1-2% comfort zone. But the economy is soft and getting softer. Even with the stimulus package kicking in this quarter, consumer spending is likely to be weak. There are some at the Fed who would like to raise rates as soon as possible to deal with inflation, but the economy is not cooperating. The housing crisis just keeps getting worse, and the credit crisis is causing banks to tighten lending standards on every manner of credit, even with Fed fund rates low. LIBOR and other credit costs and spreads are not dropping as one might have thought they would in response to low Fed fund rates. Tax receipts are slowing well below projections, especially sales tax receipts.Let's look at some of the pressures on the economy. According to the National Small Business Association, more than 5,000 firms filed for bankruptcy in April 2008, the most in any month since new bankruptcy laws took effect in 2005. The data also show that in the first quarter of 2008 13,155 businesses filed for bankruptcy, an increase of nearly 45% from the 9,103 business bankruptcy filings during the same period in 2007.Economists suggest that the leap in bankruptcy filings is a result of the troubles that started with subprime mortgages and other financial instruments of Wall Street, which are now trickling down to Main Street. The ensuing credit crunch, skyrocketing commodity prices, and dormant consumer sales are likely culprits for pushing many more businesses to the brink of bankruptcy throughout 2008.The debt of 174 large US companies is trading at distressed levels, at well over 10% above comparable treasuries. Diane Vazza, S&P's credit chief, says defaults are rising at almost twice the rate of past downturns."US and European banks and financial institutions have 'enormous losses' from bad loans they haven't yet recognized and may have a harder time wooing sovereign-fund rescuers, Carlyle Group Chairman David Rubenstein said."'Based on information I see,' it will take at least a year before all losses are realized, and some financial institutions may fail, Rubenstein said... He didn't name any companies." (Bloomberg)"
Because of the rising cost of fuel, British Airways will ground part of its fleet to save money.
Floyd Norris: "For all nonpetroleum imports, prices in April were up 6.2 percent from a year earlier. That is the fastest rate of gain in almost 20 years, reflecting increases in products from most countries and in most categories. The reasons for the increases include strong world demand for many products, thanks to the emergence of China and India, and a weakening dollar."
Robert McHugh: "The VIX has popped higher to the point where should it close where it is at now, around 17.83 (it is up 1.5 Friday), we will have a new "sell" signal. As mentioned in Thursday evening's newsletter, the past three times the VIX generated a "sell" signal, stocks dropped sharply, for several weeks. Other indicators we follow also suggest a significant top is close at hand, should be in over the next week."
Lehman Brothers will begin trimming its workforce by around 5% starting on Monday, cable news network CNBC reported Friday.
The transports are up 17.5% year to date.
Doug Noland: "The problem with post-asset Bubble “accommodation” is that it specifically accommodates the very Credit infrastructure and related Monetary Processes that financed the preceding boom. It works to validate the present course of financial innovation (think “Wall Street securitizations,” “CDOs” and “carry trades”), while emboldening those at the cutting edge of risk-taking (think “leveraged speculating community”). To be sure, the same Wall Street Credit infrastructure that financed the tech Bubble was empowered to regroup, reemerge, and aggressively expand to grossly over-finance much more expansive Credit and speculative booms in mortgage-related securitizations and housing. These days, powerful forces have been unleashed to over-finance the world.
Moreover, a commitment to aggressively cut rates in response to faltering asset Bubbles openly courts leveraged bond market speculation – a market dynamic that especially engenders artificially low market yields and exacerbates liquidity excess during the late-stage of asset bubbles (think bond market “conundrum”). The last thing a central bank should encourage is an entire industry dedicated to placing leveraged bets on the direction of Federal Reserve policy responses. A strong case can be made that U.S. Treasury and agency markets have become one massive Bubble. The overriding flaw in the Greenspan/Bernanke approach has been to openly disregard Credit Bubble dynamics, in particular the increasingly profound role played by Wall Street-backed finance in fueling Credit, market liquidity and speculative excesses. I believe The Ultimate Objective of a Central Bank is to Foster Monetary Stability in the broadest sense. In this regard, asset Bubbles should be viewed primarily as important indicators of some type of underlying Monetary Disorder. The key analytical focus must be on the underlying Credit and speculative dynamics fueling the asset price distortions – to better understand and rectify the source of “disorder” – and the earlier, the better... No doubt about it, Heightened Monetary Disorder - the cost associated with the Fed’s U.S. Credit system bailout - is increasingly on display. Destabilizing speculation is returning with a vengeance, and it’s anything but limited to commodities markets."
Brett Steenbarger: "At a 30-minute time frame, markets are moving half as much now as they were in January. Is it any wonder that traders looking for big moves are becoming frustrated?"
The dollar fell the most against the euro since March as a drop in consumer confidence and record crude oil prices raised concern U.S. economic growth will slow. The dollar's second consecutive weekly decline against the euro pared its increase from the all-time low reached last month to 2.7 percent. The Australian dollar rose to the strongest level against the greenback since 1984 as oil pushed up prices of other commodities. Mexico's peso rose to a five-year high, while the Brazilian real strengthened to the most since 1999.
Mike Burk: "The market is over bought. As of last Friday, the S&P mid cap index was up for the 7 consecutive days for the first time in over a year. Longer term this is a good sign, but, for the next week or so continued upward progress is likely to be limited."
John Mauldin: "Inflation is uncomfortably high at 4%. Even core inflation is well above the 1-2% comfort zone. But the economy is soft and getting softer. Even with the stimulus package kicking in this quarter, consumer spending is likely to be weak. There are some at the Fed who would like to raise rates as soon as possible to deal with inflation, but the economy is not cooperating. The housing crisis just keeps getting worse, and the credit crisis is causing banks to tighten lending standards on every manner of credit, even with Fed fund rates low. LIBOR and other credit costs and spreads are not dropping as one might have thought they would in response to low Fed fund rates. Tax receipts are slowing well below projections, especially sales tax receipts.Let's look at some of the pressures on the economy. According to the National Small Business Association, more than 5,000 firms filed for bankruptcy in April 2008, the most in any month since new bankruptcy laws took effect in 2005. The data also show that in the first quarter of 2008 13,155 businesses filed for bankruptcy, an increase of nearly 45% from the 9,103 business bankruptcy filings during the same period in 2007.Economists suggest that the leap in bankruptcy filings is a result of the troubles that started with subprime mortgages and other financial instruments of Wall Street, which are now trickling down to Main Street. The ensuing credit crunch, skyrocketing commodity prices, and dormant consumer sales are likely culprits for pushing many more businesses to the brink of bankruptcy throughout 2008.The debt of 174 large US companies is trading at distressed levels, at well over 10% above comparable treasuries. Diane Vazza, S&P's credit chief, says defaults are rising at almost twice the rate of past downturns."US and European banks and financial institutions have 'enormous losses' from bad loans they haven't yet recognized and may have a harder time wooing sovereign-fund rescuers, Carlyle Group Chairman David Rubenstein said."'Based on information I see,' it will take at least a year before all losses are realized, and some financial institutions may fail, Rubenstein said... He didn't name any companies." (Bloomberg)"
Because of the rising cost of fuel, British Airways will ground part of its fleet to save money.
Floyd Norris: "For all nonpetroleum imports, prices in April were up 6.2 percent from a year earlier. That is the fastest rate of gain in almost 20 years, reflecting increases in products from most countries and in most categories. The reasons for the increases include strong world demand for many products, thanks to the emergence of China and India, and a weakening dollar."
Thursday, May 15, 2008
Gov't Numbers
5/15/08 Gov't Numbers
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
Gov't Numbers
5/15/08 Gov't Numbers
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
Gov't Numbers
5/15/08 Gov't Numbers
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
Gov't Numbers
5/15/08 Gov't Numbers
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
For 2008, Illinois Tool Works predicted earnings from continuing operations to come in the range of $3.35 to $3.49 a share with revenue growth of 8% to 12%.
The OPEC oil cartel, in its monthly report, estimated world oil demand this year to average 86.95 million barrels of oil equivalent a day, up 1.2% from last year and a slight downward revision from its previous estimate of 86.97 million barrels a day.
CBS Corp.said Thursday it inked a deal to buy CNet Networks Inc. for $11.50 a share in cash. The deal values the operator of CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com and other Web sites at about $1.8 billion.
The average U.S. gasoline price rose about 2 cents to $3.78 a gallon in the last day, according to the Daily Fuel Gauge Report from the Automobile Association of America.
UBS sees light sweet crude this year at $115 a barrel, up 32% from its earlier forecast, oil in 2009 at $120 a barrel, up 54% from its previous view and oil in 2010 at $116.50 a barrel, up 53% from its previous view. UBS on Thursday upgraded oil major Chevron to buy from neutral.
Retailer J.C. Penney Co Inc reported a 50 percent drop in quarterly profit on Thursday as its middle-income shoppers pulled back on spending amid the U.S. economic downturn.
John Edwards, former candidate for the Democratic presidential nomination and champion of organised labour, sought to rally his party and bring the primary race to a close by providing Barack Obama with his highest-profile endorsement in months.
The number of newly laid off workers applying for unemployment benefits rose slightly last week, indicating the weak economy was still weighing on the job market.The Labor Department reported Thursday that applications for jobless benefits rose by 6,000 last week to 371,000. The number of people who remained on the jobless benefit rolls after drawing an initial week of aid increased 28,000 to 3.06 million in the week ended May 3, the latest period for which figures were available.
Blackstone Group LP, manager of the world's largest private-equity fund, said it had a loss of $66.5 million in the first quarter as leveraged buyouts evaporated and the value of companies it owns declined. Blackstone Group LP President Tony James said banks are mistaken if they think credit markets have begun a sustained recovery. ``It's not clear to me if it's a permanent upswing as I think many of the banks are saying or the eye of the hurricane,'' James told reporters on a conference call today.
Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.
The New York Fed's "Empire State" general business conditions index fell to minus 3.23 in May from positive 0.63 in April. The prices paid measure of inflation rose to 69.57 -- the highest since the start of the data series in July 2001. In April it was 57.29.
The Philly Fed diffusion index rose to negative 15.6 in May from negative 24.9 in April.
June crude closed at a one-week low of $124.12 an ounce Thursday, down 10 cents for the session, after dropping to a low of $120.90. June gold climbed $13.50, or 1.6%, to close at $880 an ounce Thursday in New York.
After stabilizing at 20 the past three months, the NAHB/Wells Fargo home builders' sentiment index fell back in May to 19, only one point above the record low of 18 set in December. Builders' assessment of current sales have never been gloomier in the 23-year history of the survey, with the sales index falling to 17 in May from the previous record low of 18 in April. The sales climate is so bad that the builders say that only a federal subsidy for home buyers will turn the market around.
On the heels of a strong vote for passage in the House, senators on Thursday approved a $289 billion, five-year farm bill that is under a presidential veto threat. Senators voted 81-to-15, easily attaining the two-thirds majority needed to override a veto. On Wednesday, House lawmakers voted 318-to-106 to pass the bill, also securing the two-thirds majority needed for an override.
Natural-gas prices led the losses in the energy sector, with the June futures contract trading 37 cents, or 3.2%, lower at $11.23 per million British thermal units, its lowest level in over a week. Natural-gas inventories rose by 93 billion cubic feet for the week ended May 9, the Energy Department said Thursday. Analysts at Strategic Energy & Economic Research expected the data to show an increase of 85 billion. Total stocks now stand at 1.529 trillion cubic feet, down 286 billion cubic feet from the year-ago level but 3 billion cubic feet above the five-year average, the government data said.
Icahn said in a statement that during the last 10 days he has acquired 59 million shares of Yahoo stock and has applied for federal clearance to by $2.5 billion worth of the company's shares. Icahn said the current Yahoo board "acted irrationally and lost the faith of shareholders" when it turned down Microsoft Corp.'s $33 a share offer for the company. Paulson & Co., the New York hedge-fund manager run by John Paulson, bought a 3.6 percent stake in Yahoo! Inc. and will support investor Carl Icahn's effort to push the company back into takeover talks with Microsoft Corp.
Paulson owned 50 million shares of the Sunnyvale, California-based Internet company as of March 31, according to a filing today with the U.S. Securities and Exchange Commission.
Foreign owners sold $48.2 billion in U.S. financial assets in March compared with net purchases of $48.9 billion in February, the Treasury Department reported Thursday. The U.S. must import about $60 billion in capital every month to finance the balance of payments deficit.
Industrial output of the nation's factories, mines and utilities dropped 0.7% in April in a broad-based decline led by falling production of motor vehicles, the Federal Reserve reported Thursday. Output of factories fell 0.8%, the biggest decline since September 2005. Industrial production has risen 0.2% in the past year, and is down 1.2% since January.
The DJ Health Care Providers Index is down 21% in the past 6 months and down 15% in the past 3 months.
Obama's overall delegate total is 1,895, compared to 1,718 for his rival, Hillary Rodham Clinton. It takes 2,026 to clinch the nomination at the party convention in Denver this summer.
Nordstrom Inc. and Kohl's Corp. on Thursday both reported lower first-quarter earnings and warned that the tough retail climate in the U.S. will likely cause even more damage to their bottom lines in the coming months. Nordstrom warned that it expects 2008 earnings of $2.65 to $2.80 a share, down from a prior targeted range of $2.75 to $2.90 a share. Kohl's said it expects to earn 70 cents to 74 cents a share in the second quarter and $2.95 to $3.15 a share for the full year, below estimates of $3.20.
Republican John McCain declared for the first time Thursday he believes the Iraq war can be won by 2013, although he rejected suggestions that his talk of a timetable put him on the same side as Democrats clamoring for full-scale troop withdrawals.
Wednesday, May 14, 2008
UNG
5/14/08 UNG
Six months ago just about every day I suggested one find a place in one's portfolio for natural gas. My choice was UNG, the U.S. Natural Gas Fund. At the time the price was in the doldrums at $35 a share. With natural gas continuing to surge in price and up about 50% in six months, it may be prudent to think about taking some profits in UNG at $55+. That's a healthy turkey sandwich.
Bernard Baruch: "Nobody ever lost money taking a profit."
The 2-year U.S. Treasury bond is now yielding 2.55%. I have mentioned shorting this note week in and week out. I have stated it is my largest position. It has had a sharp move from 1.5%. At the same time, I continue to believe that U.S. Treasuries are massively overvalued.
Freddie Mac lost 66 cents a share, or $151 million, in the first quarter, compared to a loss of 46 cents a share, or $133 million, a year ago.
Industrial output across the 15-nation euro zone fell 0.2% in March, for a 2% annual gain, Eurostat reported Wednesday.
General Motors Corp will need to raise over $9 billion in financing over the next two years to refinance existing debt and to offset projected cash losses in its auto operations in North America, Lehman Brothers analyst Brian Johnson said on Wednesday.
Clear Channel Communications Inc.signed an amended definitive agreement under which it will be acquired by an investor group for $36 a share, or a total deal value of $17.9 billion. In a statement late on Tuesday, the company said it settled litigation filed in New York and Texas with Bain Capital Partners, Thomas H. Lee Partners and a group of banks. Clear Channel's board has approved the terms and urges holders to vote for the deal. In November 2006, CCU agreed to a $39.20-a-share buyout by Thomas H. Lee Partners and Bain.
U.S. home foreclosure filings in April edged up from March and were a whopping 65 percent higher than a year earlier, real estate data firm RealtyTrac said on Wednesday. Home foreclosure filings in April totaled 243,353, up 4 percent from March, RealtyTrac, an online market of foreclosure properties, said in its U.S. Foreclosure Market Report. The figure is a total of default notices, auction sale notices and bank repossessions.
Deere & Co reported higher quarterly earnings on Wednesday as soaring crop prices boosted global demand for its agricultural equipment, but the company's forecast for the rest of the year was below Wall Street expectations and the stock fell 6 percent. Deere Co.raised its full-year forecast for raw material costs on Wednesday to the range of $400 million to $500 million. With just $110 million spent year to date, Chief Financial Officer Michael Mack noted that soaring commodity expenses will really hit in the second half of the year. "Raw material costs, especially for vital commodities like steel, are racing ahead; well beyond what we had anticipated and we set prices for model year 2008," he said.
Bill Gross , who runs the world's biggest bond fund at Pacific Investment Management Co., called Treasuries ``totally overvalued'' as consumer prices rise, according to a report in AsianInvestor magazine. Pimco has moved away from Treasuries and into high-quality credit-market securities, especially those issued by financial institutions, over the past four weeks, Hong Kong-based AsianInvestor reported.
Bond fund leader Pimco's Mohamed El-Erian on Wednesday said the Federal Reserve does not have the tools to deal with the U.S. housing crisis and rapidly rising consumer prices, leaving it to lawmakers to avert a severe recession. The co-head of the world's largest bond fund company said U.S. policy makers "do not have good policy tools to deal with the destabilizing combination of asset price deflation, and goods inflation."
Bank of America Corp., the nation's biggest consumer bank, said losses on home-equity loans will be even worse than predicted three weeks ago, adding to evidence that more consumers are falling behind on debts.
JPMorgan Chase & Co., the third- largest U.S. bank, may eliminate 4,000 of its own staff as it brings on employees from the purchase of Bear Stearns Cos. and financial markets continue to deteriorate, a person familiar with the matter said.
For the first time, it appears that more than half of all insured Americans are taking prescription medicines regularly for chronic health problems, a study shows.The most widely used drugs are those to lower high blood pressure and cholesterol -- problems often linked to heart disease, obesity and diabetes.The numbers were gathered last year by Medco Health Solutions Inc., which manages prescription benefits for about one in five Americans.
Fund managers believe that inflation is set to rise over the next 12 months, according to Merrill Lynch's monthly survey of managers for May.
According to the report, a net 25% of managers believe that global core inflation will be higher in a year's time, up from 7% who held this position in April and 17% in March.This opinion was borne out in data this week from the U.K., where the rate of growth in consumer prices jumped to 3% in April.
Obama announced his pickup Wednesday of two superdelegates: Rep. Peter Visclosky of Indiana and Democrats Abroad chair Christine Schon Marques. Also endorsing Obama were three former Securities and Exchange Commission chairmen — William Donaldson, David Ruder, and Arthur Levitt Jr., who was appointed by former President Clinton. The campaign released a joint statement by the former SEC chiefs, well as former Federal Reserve Chairman Paul Volcker, that praised Obama's "positive leadership and judgment" on economic issues. "We are aware of the reasoned approach Mr. Obama has taken in analyzing the current financial crisis and the need for balanced regulatory reform," the statement said. "We believe that such a constructive approach can be extended broadly in the economic area as well as elsewhere."
Futures traders have increased their bets that the Federal Reserve will start raising rates in late November after a period of holding rates at the current 2% level. The November fed funds futures contract Wednesday mid-morning priced in about a 56% chance that the central bank will raise its key interest rate by a quarter-point when it meets in late October, to 2.25%, up from 48% odds at the Tuesday settlement and only 16% Monday.
Bank of England Governor Mervyn King signaled he is about done cutting interest rates. King said today he expects inflation to breach the government's 3 percent limit for ``several quarters'' and the central bank's forecasts show further rate cuts may make matters worse. Reducing the Bank of England's benchmark rate to 4.5 percent from the current 5 percent would risk unacceptably high inflation, the central bank's forecasts show.
Real average weekly earnings fell by 0.5 percent in April
according to the BLS.
Henry Ford:"An idealist is one who helps the other fellow
to make a profit."
Gold for June delivery fell $3.10 to close at $866.50
an ounce on the New York Mercantile Exchange. It touched
an intraday low of $864. The contract has now suffered a
drop of $19.30, or 2.2%, since the end of last week.
June crude falls $1.58 to close at $124.22/brl in NY.
June natural gas ends at $11.60/mln BTUs, up 18 cents.
UnitedHealth Group traded at a new 52-week low.
Six months ago just about every day I suggested one find a place in one's portfolio for natural gas. My choice was UNG, the U.S. Natural Gas Fund. At the time the price was in the doldrums at $35 a share. With natural gas continuing to surge in price and up about 50% in six months, it may be prudent to think about taking some profits in UNG at $55+. That's a healthy turkey sandwich.
Bernard Baruch: "Nobody ever lost money taking a profit."
The 2-year U.S. Treasury bond is now yielding 2.55%. I have mentioned shorting this note week in and week out. I have stated it is my largest position. It has had a sharp move from 1.5%. At the same time, I continue to believe that U.S. Treasuries are massively overvalued.
Freddie Mac lost 66 cents a share, or $151 million, in the first quarter, compared to a loss of 46 cents a share, or $133 million, a year ago.
Industrial output across the 15-nation euro zone fell 0.2% in March, for a 2% annual gain, Eurostat reported Wednesday.
General Motors Corp will need to raise over $9 billion in financing over the next two years to refinance existing debt and to offset projected cash losses in its auto operations in North America, Lehman Brothers analyst Brian Johnson said on Wednesday.
Clear Channel Communications Inc.signed an amended definitive agreement under which it will be acquired by an investor group for $36 a share, or a total deal value of $17.9 billion. In a statement late on Tuesday, the company said it settled litigation filed in New York and Texas with Bain Capital Partners, Thomas H. Lee Partners and a group of banks. Clear Channel's board has approved the terms and urges holders to vote for the deal. In November 2006, CCU agreed to a $39.20-a-share buyout by Thomas H. Lee Partners and Bain.
U.S. home foreclosure filings in April edged up from March and were a whopping 65 percent higher than a year earlier, real estate data firm RealtyTrac said on Wednesday. Home foreclosure filings in April totaled 243,353, up 4 percent from March, RealtyTrac, an online market of foreclosure properties, said in its U.S. Foreclosure Market Report. The figure is a total of default notices, auction sale notices and bank repossessions.
Deere & Co reported higher quarterly earnings on Wednesday as soaring crop prices boosted global demand for its agricultural equipment, but the company's forecast for the rest of the year was below Wall Street expectations and the stock fell 6 percent. Deere Co.raised its full-year forecast for raw material costs on Wednesday to the range of $400 million to $500 million. With just $110 million spent year to date, Chief Financial Officer Michael Mack noted that soaring commodity expenses will really hit in the second half of the year. "Raw material costs, especially for vital commodities like steel, are racing ahead; well beyond what we had anticipated and we set prices for model year 2008," he said.
Bill Gross , who runs the world's biggest bond fund at Pacific Investment Management Co., called Treasuries ``totally overvalued'' as consumer prices rise, according to a report in AsianInvestor magazine. Pimco has moved away from Treasuries and into high-quality credit-market securities, especially those issued by financial institutions, over the past four weeks, Hong Kong-based AsianInvestor reported.
Bond fund leader Pimco's Mohamed El-Erian on Wednesday said the Federal Reserve does not have the tools to deal with the U.S. housing crisis and rapidly rising consumer prices, leaving it to lawmakers to avert a severe recession. The co-head of the world's largest bond fund company said U.S. policy makers "do not have good policy tools to deal with the destabilizing combination of asset price deflation, and goods inflation."
Bank of America Corp., the nation's biggest consumer bank, said losses on home-equity loans will be even worse than predicted three weeks ago, adding to evidence that more consumers are falling behind on debts.
JPMorgan Chase & Co., the third- largest U.S. bank, may eliminate 4,000 of its own staff as it brings on employees from the purchase of Bear Stearns Cos. and financial markets continue to deteriorate, a person familiar with the matter said.
For the first time, it appears that more than half of all insured Americans are taking prescription medicines regularly for chronic health problems, a study shows.The most widely used drugs are those to lower high blood pressure and cholesterol -- problems often linked to heart disease, obesity and diabetes.The numbers were gathered last year by Medco Health Solutions Inc., which manages prescription benefits for about one in five Americans.
Fund managers believe that inflation is set to rise over the next 12 months, according to Merrill Lynch's monthly survey of managers for May.
According to the report, a net 25% of managers believe that global core inflation will be higher in a year's time, up from 7% who held this position in April and 17% in March.This opinion was borne out in data this week from the U.K., where the rate of growth in consumer prices jumped to 3% in April.
Obama announced his pickup Wednesday of two superdelegates: Rep. Peter Visclosky of Indiana and Democrats Abroad chair Christine Schon Marques. Also endorsing Obama were three former Securities and Exchange Commission chairmen — William Donaldson, David Ruder, and Arthur Levitt Jr., who was appointed by former President Clinton. The campaign released a joint statement by the former SEC chiefs, well as former Federal Reserve Chairman Paul Volcker, that praised Obama's "positive leadership and judgment" on economic issues. "We are aware of the reasoned approach Mr. Obama has taken in analyzing the current financial crisis and the need for balanced regulatory reform," the statement said. "We believe that such a constructive approach can be extended broadly in the economic area as well as elsewhere."
Futures traders have increased their bets that the Federal Reserve will start raising rates in late November after a period of holding rates at the current 2% level. The November fed funds futures contract Wednesday mid-morning priced in about a 56% chance that the central bank will raise its key interest rate by a quarter-point when it meets in late October, to 2.25%, up from 48% odds at the Tuesday settlement and only 16% Monday.
Bank of England Governor Mervyn King signaled he is about done cutting interest rates. King said today he expects inflation to breach the government's 3 percent limit for ``several quarters'' and the central bank's forecasts show further rate cuts may make matters worse. Reducing the Bank of England's benchmark rate to 4.5 percent from the current 5 percent would risk unacceptably high inflation, the central bank's forecasts show.
Real average weekly earnings fell by 0.5 percent in April
according to the BLS.
Henry Ford:"An idealist is one who helps the other fellow
to make a profit."
Gold for June delivery fell $3.10 to close at $866.50
an ounce on the New York Mercantile Exchange. It touched
an intraday low of $864. The contract has now suffered a
drop of $19.30, or 2.2%, since the end of last week.
June crude falls $1.58 to close at $124.22/brl in NY.
June natural gas ends at $11.60/mln BTUs, up 18 cents.
UnitedHealth Group traded at a new 52-week low.
HP
5/13/08 HP
Hewlett-Packard Co. has agreed to buy Electronic Data Systems Corp. for about $12.6 billion in cash to build a technology-services company that could challenge IBM. The companies said Tuesday their boards had unanimously approved the deal, in which EDS shareholders would get $25 per share. That is a premium of almost 25 percent over what EDS had been trading on Friday. Word of the talks emerged Monday.
Single-family home prices dropped 7.7% in the first quarter in the largest year-over-year decline since the National Association of Realtors began reporting prices in 1982. The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.
The Commerce Department says retail sales fell in April as Americans cut back due to soaring gasoline prices and a slumping economy. However, aside from sales of automobiles, retail sales performed better than economists expected.Investors heard some reassuring words from Federal Reserve Chairman Ben Bernanke, who says financial market turmoil has begun to wane. However, he says the credit crisis is "still far from over."
The economic downturn is hitting roughly one in 10 middle-aged and older Americans especially hard, compelling them to borrow money for everyday living expenses and to seek help from family, friends or charities, according to a survey released Tuesday by the AARP.
Wal-Mart Stores Inc. on Tuesday said first-quarter profits rose 6.9 percent, but the world's largest retailer offered a guarded outlook as consumers wrestle with higher energy and food costs.
Prices that U.S. residents paid for imported goods rose 1.8% in April, the Labor Department reported Tuesday, as prices for petroleum and other products gained. Economists surveyed by MarketWatch were looking for a gain of 1.8%. The price for imported petroleum rose 4.4%. The price for non-petroleum products rose 1.1% for the second consecutive month - matching the largest one-month gain for the index since these prices were first published monthly in December 1988. The price for non-fuel imports rose 1.0% -- matching the prior month's gain - the largest one-month increase since the index was first published in December 2001.
Consumption will rise by 1.03 million barrels per day (bpd), 230,000 bpd less than the previous forecast, the IEA said. The agency has more than halved its estimate from 2.2 million bpd in July 2007 and may cut it further.
June crude climbed as high as $126.98 a barrel in electronic trading to mark a fresh intraday record. Gains in energy futures were led by a 2.1% rise in June heating oil, which was last at $3.63 a gallon. June crude closed at $125.80 a barrel in New York Tuesday, up $1.57, or 1.3%.
With downward revisions to February's inventory growth, the report indicates stronger final sales and weaker inventory growth in the first quarter than first estimated in the report on gross domestic product.
Palatin has undertaken a strategic restructuring with the following elements and objectives:
-- Following a detailed evaluation, including review of regulatory and
commercial information and data on its new melanocortin compounds under
development for sexual dysfunction, Palatin has discontinued
development of bremelanotide for the treatment of male and female
sexual dysfunction;
-- Developing bremelanotide as a therapeutic drug for treatment of
hemorrhagic shock and related indications (shock induced by blood loss,
such as secondary to surgery or trauma);
-- Initiating a Phase 2A study this quarter with PL-3994, Palatin's
natriuretic peptide receptor A agonist compound, in patients with
controlled hypertension;
-- Initiating a Phase 2A study of PL-3994 during the next fiscal year for
treatment of acute congestive heart failure;
-- Advancing new Palatin compound PL-6983, which in animal models causes
significantly lower increases in blood pressure than seen with
bremelanotide, into Phase 1 clinical studies for treatment of male and
female sexual dysfunction;
-- Continuing its melanocortin receptor-based collaboration with
AstraZeneca AB on developing compounds for treating obesity; and
-- Effecting an immediate reduction in force of 30% of the Company's
employees.
June gold closed at $869.60 an ounce in New York Tuesday, down $15.30, or 1.7%, for the session.
Carl Icahn is considering launching a proxy fight at
Yahoo Inc , CNBC reported on Tuesday.
Whole Foods Market Inc on
Tuesday posted lower quarterly net profit, missing analysts'
estimates by a penny, as it booked charges related to its $565
million acquisition of rival Wild Oats Markets in August.
Despite a 28 percent rise in sales during the quarter, the natural and organic foods seller left its fiscal 2008 sales outlook unchanged, and shares fell nearly 8 percent in after-hours trade.
Hewlett-Packard Co. has agreed to buy Electronic Data Systems Corp. for about $12.6 billion in cash to build a technology-services company that could challenge IBM. The companies said Tuesday their boards had unanimously approved the deal, in which EDS shareholders would get $25 per share. That is a premium of almost 25 percent over what EDS had been trading on Friday. Word of the talks emerged Monday.
Single-family home prices dropped 7.7% in the first quarter in the largest year-over-year decline since the National Association of Realtors began reporting prices in 1982. The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.
The Commerce Department says retail sales fell in April as Americans cut back due to soaring gasoline prices and a slumping economy. However, aside from sales of automobiles, retail sales performed better than economists expected.Investors heard some reassuring words from Federal Reserve Chairman Ben Bernanke, who says financial market turmoil has begun to wane. However, he says the credit crisis is "still far from over."
The economic downturn is hitting roughly one in 10 middle-aged and older Americans especially hard, compelling them to borrow money for everyday living expenses and to seek help from family, friends or charities, according to a survey released Tuesday by the AARP.
Wal-Mart Stores Inc. on Tuesday said first-quarter profits rose 6.9 percent, but the world's largest retailer offered a guarded outlook as consumers wrestle with higher energy and food costs.
Prices that U.S. residents paid for imported goods rose 1.8% in April, the Labor Department reported Tuesday, as prices for petroleum and other products gained. Economists surveyed by MarketWatch were looking for a gain of 1.8%. The price for imported petroleum rose 4.4%. The price for non-petroleum products rose 1.1% for the second consecutive month - matching the largest one-month gain for the index since these prices were first published monthly in December 1988. The price for non-fuel imports rose 1.0% -- matching the prior month's gain - the largest one-month increase since the index was first published in December 2001.
Consumption will rise by 1.03 million barrels per day (bpd), 230,000 bpd less than the previous forecast, the IEA said. The agency has more than halved its estimate from 2.2 million bpd in July 2007 and may cut it further.
June crude climbed as high as $126.98 a barrel in electronic trading to mark a fresh intraday record. Gains in energy futures were led by a 2.1% rise in June heating oil, which was last at $3.63 a gallon. June crude closed at $125.80 a barrel in New York Tuesday, up $1.57, or 1.3%.
With downward revisions to February's inventory growth, the report indicates stronger final sales and weaker inventory growth in the first quarter than first estimated in the report on gross domestic product.
Palatin has undertaken a strategic restructuring with the following elements and objectives:
-- Following a detailed evaluation, including review of regulatory and
commercial information and data on its new melanocortin compounds under
development for sexual dysfunction, Palatin has discontinued
development of bremelanotide for the treatment of male and female
sexual dysfunction;
-- Developing bremelanotide as a therapeutic drug for treatment of
hemorrhagic shock and related indications (shock induced by blood loss,
such as secondary to surgery or trauma);
-- Initiating a Phase 2A study this quarter with PL-3994, Palatin's
natriuretic peptide receptor A agonist compound, in patients with
controlled hypertension;
-- Initiating a Phase 2A study of PL-3994 during the next fiscal year for
treatment of acute congestive heart failure;
-- Advancing new Palatin compound PL-6983, which in animal models causes
significantly lower increases in blood pressure than seen with
bremelanotide, into Phase 1 clinical studies for treatment of male and
female sexual dysfunction;
-- Continuing its melanocortin receptor-based collaboration with
AstraZeneca AB on developing compounds for treating obesity; and
-- Effecting an immediate reduction in force of 30% of the Company's
employees.
June gold closed at $869.60 an ounce in New York Tuesday, down $15.30, or 1.7%, for the session.
Carl Icahn is considering launching a proxy fight at
Yahoo Inc , CNBC reported on Tuesday.
Whole Foods Market Inc on
Tuesday posted lower quarterly net profit, missing analysts'
estimates by a penny, as it booked charges related to its $565
million acquisition of rival Wild Oats Markets in August.
Despite a 28 percent rise in sales during the quarter, the natural and organic foods seller left its fiscal 2008 sales outlook unchanged, and shares fell nearly 8 percent in after-hours trade.
Tuesday, May 13, 2008
Housing
5/12/08 Housing
Scott Burns: "Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada — all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.At the end of 2007, for instance, our collective net worth was $57.7 trillion, an unusual drop from $58.3 trillion at the end of the previous quarter. Divide $57.7 trillion by the $120-a-barrel price of oil, and you get 481 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990."
Brett Steenbarger: "Friday's market showed 797 new 20-day highs and 747 fresh 20-day lows--more mixed performance. I cannot imagine the market sustaining a significant bull move on such a selective basis."
John Hussman: "With the U.S. stock market still relatively overbought in an unfavorable Market Climate, there is continued risk of substantial and possibly abrupt weakness. As I've noted frequently, I rarely have much of an opinion on near-term direction except when conditions are either overbought in an unfavorable Climate or oversold in a favorable one. We observed some initial weakness late last week, but we remain braced for more significant trouble. At the same time, we have to recognize that the rebound through early last week brought market internals not far from the point that would begin to feed purely speculative “trend chasing.” So while we're defensive here, you can think of us as having something of a “stop” at which we would cover part of our short-call option hedges (leaving the defensive puts in place) – effectively trading some risk of time decay in return for a modest exposure to rising prices in the event that investors become resolutely speculative. Again, here and now, we remain firmly hedged based on prevailing conditions, and my opinion (which we don't trade on) is that we should allow for fresh short-term trouble as well."
Hewlett-Packard Co. confirmed after Monday's closing bell that the company is in "advanced discussions" with Electronic Data Systems regarding a "possible business combination" between the two companies. The Wall Street Journal reported earlier in the day that the companies were discussion a merger deal worth between $12 billion and $13 billion.
June crude closed at $124.23 a barrel, down $1.73, or 1.4%, for the session. June gold closed at $884.90 an ounce in New York Monday, down 90 cents for the session.
Through the first seven months of this budget year, the federal deficit totals $152.2 billion, nearly double the $80.8 billion deficit during the same period in 2007.
Consumer spending excluding autos grew only 0.1 percent last month on a seasonally adjusted basis, less than the 0.6 percent increase in March, said SpendingPulse, the retail data service of MasterCard Advisors, which is a unit of MasterCard Worldwide.
"In general, consumers are spending less. Without gasoline, they are spending a lot less," said Kamalesh Rao, director of economic research at MasterCard Advisors.
Retail sales excluding cars and gasoline fell 0.7 percent in April versus March.
Gas prices, meanwhile, rose above an average $3.67 a gallon at the pump, following oil's recent path higher.
Mike Burk: "There are no indications that the current decline has played out and seasonally next week has been modestly negative. I expect the major indices to be lower on Friday May 16 than they were on Friday May 9.
Barack Obama's wave of superdelegate endorsements puts him within reach of the Democratic presidential nomination by the end of the primary season on June 3 — even if he loses half of the remaining six contests. The Illinois senator has picked up 26 superdelegates in the past week. At that pace, he will reach the number of delegates needed to clinch the nomination — 2,025 — in the next three weeks, when delegates from the remaining primaries are included.
Obama has 1,871.5 delegates, including endorsements from party and elected officials known as superdelegates. Clinton has 1,697, according to the latest tally by The Associated Press. That leaves Obama just 153.5 delegates short of the number needed to win the nomination at the party's national convention this August in Denver.
There are 217 delegates at stake in the six remaining primaries, in West Virginia, Kentucky, Oregon, Puerto Rico, Montana and South Dakota. Even if Clinton wins most of those delegates, Obama could reach the magic number by the time South Dakota and Montana vote on June 3.
From last November through this April, American women aged 20 and up gained nearly 300,000 jobs, according to the household survey of the Bureau of Labor Statistics (BLS). At the same time, American men lost nearly 700,000 jobs.
Toll Brithers said Tuesday second-quarter home-building revenues fell 30% to $817.9 million. "The just-completed spring selling season was quite weak," Chairman and CEO Robert Toll said in a statement. Toll Brothers said it's looking to use its $2.5 billion of available capital to make acquisitions that fit its criteria of "high-end communities at bargain prices," but said it hasn't seen any yet.
Scott Burns: "Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada — all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.At the end of 2007, for instance, our collective net worth was $57.7 trillion, an unusual drop from $58.3 trillion at the end of the previous quarter. Divide $57.7 trillion by the $120-a-barrel price of oil, and you get 481 billion barrels of oil as the value of America, a fraction of our national value in 1998, 1995 or even 1990."
Brett Steenbarger: "Friday's market showed 797 new 20-day highs and 747 fresh 20-day lows--more mixed performance. I cannot imagine the market sustaining a significant bull move on such a selective basis."
John Hussman: "With the U.S. stock market still relatively overbought in an unfavorable Market Climate, there is continued risk of substantial and possibly abrupt weakness. As I've noted frequently, I rarely have much of an opinion on near-term direction except when conditions are either overbought in an unfavorable Climate or oversold in a favorable one. We observed some initial weakness late last week, but we remain braced for more significant trouble. At the same time, we have to recognize that the rebound through early last week brought market internals not far from the point that would begin to feed purely speculative “trend chasing.” So while we're defensive here, you can think of us as having something of a “stop” at which we would cover part of our short-call option hedges (leaving the defensive puts in place) – effectively trading some risk of time decay in return for a modest exposure to rising prices in the event that investors become resolutely speculative. Again, here and now, we remain firmly hedged based on prevailing conditions, and my opinion (which we don't trade on) is that we should allow for fresh short-term trouble as well."
Hewlett-Packard Co. confirmed after Monday's closing bell that the company is in "advanced discussions" with Electronic Data Systems regarding a "possible business combination" between the two companies. The Wall Street Journal reported earlier in the day that the companies were discussion a merger deal worth between $12 billion and $13 billion.
June crude closed at $124.23 a barrel, down $1.73, or 1.4%, for the session. June gold closed at $884.90 an ounce in New York Monday, down 90 cents for the session.
Through the first seven months of this budget year, the federal deficit totals $152.2 billion, nearly double the $80.8 billion deficit during the same period in 2007.
Consumer spending excluding autos grew only 0.1 percent last month on a seasonally adjusted basis, less than the 0.6 percent increase in March, said SpendingPulse, the retail data service of MasterCard Advisors, which is a unit of MasterCard Worldwide.
"In general, consumers are spending less. Without gasoline, they are spending a lot less," said Kamalesh Rao, director of economic research at MasterCard Advisors.
Retail sales excluding cars and gasoline fell 0.7 percent in April versus March.
Gas prices, meanwhile, rose above an average $3.67 a gallon at the pump, following oil's recent path higher.
Mike Burk: "There are no indications that the current decline has played out and seasonally next week has been modestly negative. I expect the major indices to be lower on Friday May 16 than they were on Friday May 9.
Barack Obama's wave of superdelegate endorsements puts him within reach of the Democratic presidential nomination by the end of the primary season on June 3 — even if he loses half of the remaining six contests. The Illinois senator has picked up 26 superdelegates in the past week. At that pace, he will reach the number of delegates needed to clinch the nomination — 2,025 — in the next three weeks, when delegates from the remaining primaries are included.
Obama has 1,871.5 delegates, including endorsements from party and elected officials known as superdelegates. Clinton has 1,697, according to the latest tally by The Associated Press. That leaves Obama just 153.5 delegates short of the number needed to win the nomination at the party's national convention this August in Denver.
There are 217 delegates at stake in the six remaining primaries, in West Virginia, Kentucky, Oregon, Puerto Rico, Montana and South Dakota. Even if Clinton wins most of those delegates, Obama could reach the magic number by the time South Dakota and Montana vote on June 3.
From last November through this April, American women aged 20 and up gained nearly 300,000 jobs, according to the household survey of the Bureau of Labor Statistics (BLS). At the same time, American men lost nearly 700,000 jobs.
Toll Brithers said Tuesday second-quarter home-building revenues fell 30% to $817.9 million. "The just-completed spring selling season was quite weak," Chairman and CEO Robert Toll said in a statement. Toll Brothers said it's looking to use its $2.5 billion of available capital to make acquisitions that fit its criteria of "high-end communities at bargain prices," but said it hasn't seen any yet.
Monday, May 12, 2008
Pension Funds
5/11/08 Pension Funds
U.S. first class mail rises to 42 cents on Monday.
According to the Washington Post, the funds that pay pension and health benefits to police officers, teachers and millions of other public employees across the country are facing a shortfall that could soon run into trillions of dollars. But the accounting techniques used by state and local governments to balance their pension books disguise the extent of the crisis facing these retirees and the taxpayers who may ultimately be called on to pay the freight, according to a growing number of leading financial analysts.
Brazilian President Luiz Ignacio Lula da Silva wants to get his country into OPEC. With a booming biofuel business alongside new oil reserves, Brazil is poised to become a global energy leader.
China has established a homegrown company to make passenger jumbo jets, state media reported Sunday -- a step forward in the country's quest to become less dependent on Boeing and Airbus.
The number of people holding part-time jobs for economic reasons swelled to 5.2 million in April, up sharply from 4.4 million a year earlier.
"Productivity gains were due primarily to declines in hours worked," the Labor Department's Bureau of Labor Statistics explained. Those hours fell at a 1.8 percent pace, the biggest drop in five years.
Vodafone Group Plc may offer 20 billion pounds ($39 billion) to take over MTN Group Ltd., Africa's largest mobile-phone company, the Sunday Times reported, without saying where it got the information.
Zman: "The press gripes about the rising price of oil on an hourly basis. But high oil and commensurately high gasoline prices may turn out to be the least of the consumer's problems this Summer. Note the rally in Eastern, high BTU coal prices year to date. That's 50% of electricity generation going ballistic. Natural gas is another 20% of U.S. generation, up 50% YTD. Even spot uranium prices has spiraled higher (look for the impact to be felt in 2010 when many longer term contracts roll off). Speculators get the blame for the rally in crude and certainly they have played their part but there are fundamental pressures in each these fuels that are now only exacerbated by the possibility of a now perceived bottoming in the U.S. economy and subsequent recovery."
MBIA says fair value of derivatives down $3.54 billion.
The Chinese central bank raised banks' reserve requirement by a half-point to 16.5% Monday to curb excess liquidity and control soaring inflation.
JA Solar reiterated its forecast for 2008 revenue in the range of $1.03 billion to $1.14 billion and for gross margin to remain above 20%.
An earthquake with a magnitude of 7.8 struck China's Sichuan province Monday.
China's consumer price index accelerated to 8.5% in April from the year-ago month, Chinese state media reported on Monday.
U.S. first class mail rises to 42 cents on Monday.
According to the Washington Post, the funds that pay pension and health benefits to police officers, teachers and millions of other public employees across the country are facing a shortfall that could soon run into trillions of dollars. But the accounting techniques used by state and local governments to balance their pension books disguise the extent of the crisis facing these retirees and the taxpayers who may ultimately be called on to pay the freight, according to a growing number of leading financial analysts.
Brazilian President Luiz Ignacio Lula da Silva wants to get his country into OPEC. With a booming biofuel business alongside new oil reserves, Brazil is poised to become a global energy leader.
China has established a homegrown company to make passenger jumbo jets, state media reported Sunday -- a step forward in the country's quest to become less dependent on Boeing and Airbus.
The number of people holding part-time jobs for economic reasons swelled to 5.2 million in April, up sharply from 4.4 million a year earlier.
"Productivity gains were due primarily to declines in hours worked," the Labor Department's Bureau of Labor Statistics explained. Those hours fell at a 1.8 percent pace, the biggest drop in five years.
Vodafone Group Plc may offer 20 billion pounds ($39 billion) to take over MTN Group Ltd., Africa's largest mobile-phone company, the Sunday Times reported, without saying where it got the information.
Zman: "The press gripes about the rising price of oil on an hourly basis. But high oil and commensurately high gasoline prices may turn out to be the least of the consumer's problems this Summer. Note the rally in Eastern, high BTU coal prices year to date. That's 50% of electricity generation going ballistic. Natural gas is another 20% of U.S. generation, up 50% YTD. Even spot uranium prices has spiraled higher (look for the impact to be felt in 2010 when many longer term contracts roll off). Speculators get the blame for the rally in crude and certainly they have played their part but there are fundamental pressures in each these fuels that are now only exacerbated by the possibility of a now perceived bottoming in the U.S. economy and subsequent recovery."
MBIA says fair value of derivatives down $3.54 billion.
The Chinese central bank raised banks' reserve requirement by a half-point to 16.5% Monday to curb excess liquidity and control soaring inflation.
JA Solar reiterated its forecast for 2008 revenue in the range of $1.03 billion to $1.14 billion and for gross margin to remain above 20%.
An earthquake with a magnitude of 7.8 struck China's Sichuan province Monday.
China's consumer price index accelerated to 8.5% in April from the year-ago month, Chinese state media reported on Monday.
Sunday, May 11, 2008
Inflation
5/10/08 Inflation
According to Bloomberg, India's inflation accelerated at the fastest pace in almost 3 1/2 years, underscoring the threat from rising food prices that prompted the government to extend a ban on futures trading this week. Wholesale prices rose 7.61 percent in the week ended April 26 from a year earlier, after gaining 7.57 percent in the previous week, the government said today.
China's producer price index, a key indicator of inflation, rose 8.1 percent in April over the same month a year earlier, the government reported Friday, as a top economic official sought new controls to cool rising prices.
Crude oil and corn prices surged to record highs on Friday.
Barack Obama for the first time on Friday overtook Hillary Clinton’s supportamong the unelected “super-delegates” who will ultimately settle the Democratic nomination amid signs that people around Mrs Clinton were pushing for her to become Mr Obama’s running mate. Nine super-delegates on Friday endorsed Mr Obama, including one, Donald Payne, an African-American congressman from New Jersey, who switched his support from Mrs Clinton saying that Mr Obama “can bring about the change the country needs”.
Clyde M. See Jr., a former Democratic speaker of the West Virginia House of Delegates and two-time gubernatorial candidate: "There's a lot of bigotry in the country, not just West Virginia." It should be noted that West Virginia is 97% white. When it's all said and done, West Virginia has only 28 pledged delegates.
"The best way for Obama to make inroads with white voters in blue-collar, leaning-red states is to push economic issues to the front and continue to depict the war as a money pit," said Thomas F. Schaller, an associate professor of political science at the University of Maryland, Baltimore County.
Brian Pretti: "Treasury auctions of the last month or so have experienced a paucity of foreign buyers show up to bid. Let's put it this way, if this trend of lackluster response to Treasury auctions on the part of the foreign community were to continue near term for whatever reason, we could indeed be looking at a serious issue for Treasury yields (meaning they have fallen too far to the downside to attract foreign interest). We'll just have to see what happens."
China needs to save less to boost consumption and narrow the trade surplus, said People's Bank of China Governor Zhou Xiaochuan.
ANB Financial N.A. of Bentonville, Ark., was closed by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation was named receiver, the FDIC said late Friday. This marks the third bank failure of the year.
Iraq's government on Saturday agreed a truce with the movement of Shi'ite cleric Moqtada al-Sadr to end weeks of fighting in an eastern Baghdad slum between Shi'ite militia and security.
Peter Schiff: "Soon, as credit card delinquencies rise and losses on pools of securitized credit card debt mount, those supplying the credit will finally get wise to the fact they will never get their money back. As a result the market for such debt will dry up even more quickly than did the market for subprime mortgages. Cards will therefore be much harder to come by and will have much lower limits then they do today. Limited to only the cash in their wallets, Americans will finally be forced to dramatically curtail their spending, and the recession will finally gather serious momentum."
A senior Democrat strategist, familiar with discussions at the highest levels of the Obama camp, has revealed that Mr Obama is now confident of the support of around 120 of the remaining 260 undeclared superdelegates. His aides believe he will only need between 70 and 80 to be sure of the nomination if he wins the Oregon, Montana and South Dakota primaries as expected after this month.
The strategist said Mr Obama has "no intention" of making Mrs Clinton his running mate, but that he is prepared to offer an olive branch to her supporters by seating delegates from Michigan and Florida, won by Mrs Clinton but excluded because they broke party rules.
According to Bloomberg, India's inflation accelerated at the fastest pace in almost 3 1/2 years, underscoring the threat from rising food prices that prompted the government to extend a ban on futures trading this week. Wholesale prices rose 7.61 percent in the week ended April 26 from a year earlier, after gaining 7.57 percent in the previous week, the government said today.
China's producer price index, a key indicator of inflation, rose 8.1 percent in April over the same month a year earlier, the government reported Friday, as a top economic official sought new controls to cool rising prices.
Crude oil and corn prices surged to record highs on Friday.
Barack Obama for the first time on Friday overtook Hillary Clinton’s supportamong the unelected “super-delegates” who will ultimately settle the Democratic nomination amid signs that people around Mrs Clinton were pushing for her to become Mr Obama’s running mate. Nine super-delegates on Friday endorsed Mr Obama, including one, Donald Payne, an African-American congressman from New Jersey, who switched his support from Mrs Clinton saying that Mr Obama “can bring about the change the country needs”.
Clyde M. See Jr., a former Democratic speaker of the West Virginia House of Delegates and two-time gubernatorial candidate: "There's a lot of bigotry in the country, not just West Virginia." It should be noted that West Virginia is 97% white. When it's all said and done, West Virginia has only 28 pledged delegates.
"The best way for Obama to make inroads with white voters in blue-collar, leaning-red states is to push economic issues to the front and continue to depict the war as a money pit," said Thomas F. Schaller, an associate professor of political science at the University of Maryland, Baltimore County.
Brian Pretti: "Treasury auctions of the last month or so have experienced a paucity of foreign buyers show up to bid. Let's put it this way, if this trend of lackluster response to Treasury auctions on the part of the foreign community were to continue near term for whatever reason, we could indeed be looking at a serious issue for Treasury yields (meaning they have fallen too far to the downside to attract foreign interest). We'll just have to see what happens."
China needs to save less to boost consumption and narrow the trade surplus, said People's Bank of China Governor Zhou Xiaochuan.
ANB Financial N.A. of Bentonville, Ark., was closed by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation was named receiver, the FDIC said late Friday. This marks the third bank failure of the year.
Iraq's government on Saturday agreed a truce with the movement of Shi'ite cleric Moqtada al-Sadr to end weeks of fighting in an eastern Baghdad slum between Shi'ite militia and security.
Peter Schiff: "Soon, as credit card delinquencies rise and losses on pools of securitized credit card debt mount, those supplying the credit will finally get wise to the fact they will never get their money back. As a result the market for such debt will dry up even more quickly than did the market for subprime mortgages. Cards will therefore be much harder to come by and will have much lower limits then they do today. Limited to only the cash in their wallets, Americans will finally be forced to dramatically curtail their spending, and the recession will finally gather serious momentum."
A senior Democrat strategist, familiar with discussions at the highest levels of the Obama camp, has revealed that Mr Obama is now confident of the support of around 120 of the remaining 260 undeclared superdelegates. His aides believe he will only need between 70 and 80 to be sure of the nomination if he wins the Oregon, Montana and South Dakota primaries as expected after this month.
The strategist said Mr Obama has "no intention" of making Mrs Clinton his running mate, but that he is prepared to offer an olive branch to her supporters by seating delegates from Michigan and Florida, won by Mrs Clinton but excluded because they broke party rules.
Saturday, May 10, 2008
Crude Oil
5/9/08 Crude Oil
Crude-oil futures blitzed past the $126 a barrel mark Friday, rallying to a record high of $126.20, pushed higher by weakness in the U.S. dollar and concerns over supply disruptions.
AIG reported its record $7.8 billion loss, eclipsing the $5.3 billion loss it recorded in the fourth quarter. AIG said credit-market woes, weakness in housing and stock-market volatility "had a substantial adverse effect" on its results. "The severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations," said AIG Chief Executive Martin Sullivan. The New York-based insurance behemoth took a $9.1 billion write-down for the first quarter on credit derivatives designed to protect against losses on a variety of investments, including subprime mortgages. It booked an additional $6.1 billion in losses in its investment portfolio.
According to AMG Data Services, for the week ending May 7, including ETF activity, Equity funds report net cash inflows totaling $1.521 billion in the week ended 5/7/08 with Domestic funds reporting net inflows of $72 million and Non-domestic funds reporting net inflows of $1.449 billion;
Excluding ETF activity, Equity funds report net cash inflows totaling $699 million with Domestic funds reporting net inflows of $437 million and Non-domestic funds reporting net inflows totaling $262 million.
Rice surged for a third day by the maximum allowed as Nigeria and the Philippines, the two largest importers, sought shipments, further straining global supplies after a cyclone devastated crops in Myanmar.
According to Business Week, Merchant cash advances have been around for roughly a decade. But with big banks in full retreat from lending, more small business owners are seeking help from the likes of AdvanceMe, AmeriMerchant, and hundreds of other companies and independent contractors that offer such advances. The size of the industry jumped 50% in 2007, to around $700 million.
The number of companies defaulting on their junk-rated debt and filing for bankruptcy in North America is running at its fastest pace in five years amid the slowing economy and contraction in credit markets. So far this year, 28 “entities” have defaulted, according to Standard & Poor’s. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.
Henry To: "I expect a significant buying opportunity in small cap value stocks sometime over the next 12 to 18 months - but given that we are still in a general deleveraging environment, I also expect small cap value stocks to under perform at least for the rest of this year (homebuilders and newspaper publishers come into mind)."
Brad Setser: "Barring a major change, the Gulf and China could easily combine to add close to a trillion dollars to their official assets this year."
"Our recently completed financing arrangements give the company record levels of liquidity, with approximately $2 billion in immediately available excess capacity," said Ed Heffernan, Alliance Data's chief financial officer. "We currently expect that Alliance Data could secure an additional $1.5 billion to $2 billion in capacity while maintaining an investment grade profile by levering up from approximately 1x to 3x." Alliance Data said it expects to continue meeting or beating Wall Street's earnings forecasts throughout the year.
According to the Seattle Post-Intelligence, International Lease Financial, the largest customer for Boeing's 787 with 74 on order, said its planes will be delayed "an average in excess of 27 months per aircraft and span across ILFC's entire order." Air Canada said its 787s will be 24 to 30 months late, and probably won't get its first 787 until 2012. Delays could cost Boeing $4 billion in fines.
Citigroup CEO Vikram Pandit said Friday the firm plans to reduce about $500 billion of non-core assets over the next several years.
In a sign of weaker global growth, both imports and exports fell sharply in March, driving the U.S. trade deficit down to $58.2 billion, the Commerce Department reported Friday. Nominal imports fell 2.9% to $206.7 billion, the largest decline in more than six years, despite record oil prices. Nominal exports dropped to $148.5 billion, the biggest drop in nearly three years, despite higher prices for U.S. farm products.
As recently as mid-January, Clinton, with her family's deep roots in the Democratic establishment, led Obama by nearly 100 superdelegates. By Friday morning, Obama had narrowed her lead to 3, as he picked up 5 more supporters.
Obama also picked up the endorsement of the influential American Federation of Government Employees union on Friday.
The market for highly structured credit products exposed to residential mortgage securities hasn't rebounded, American International Group Chief Financial Officer Steven Bensinger said on Friday during a conference call with analysts.
China's overseas sales rose about 21.8 percent from a year earlier, after gaining 30.6 percent in March, according to figures derived from Ministry of Commerce data. The trade surplus was about $16.8 billion compared with $16.7 billion a year earlier.
Communications equipment maker Harris has started exploring strategic options, which may lead to its eventual sale, the Wall Street Journal said on Friday, citing people familiar with the matter. The company serves the government and commercial markets in more than 150 countries, has annual revenues of over $5 billion and more than 16,000 employees.
June gold climbed $3.70 an ounce Friday to close at $885.80. The June contract closed at $125.96 a barrel, up $2.27 for the session and up 8.3% for the week.
“Saudi Arabia is forecast to earn 975 billion riyals ($260 billion) in oil revenue this year as record oil prices boost its current account surplus, Arab News reported, citing a report from Jadwa Investment Co.”
FedEx cut its quarterly-profit forecast again, citing unrelenting fuel-price increases and soft demand.
One-month Treasury bill rates surged 25 bps this week to 1.59%, and 3-month yields rose 15 bps to 1.68%. At the same time, two-year government yields sank 21 bps 2.24%.
Doug Noland: "I don’t believe it is mere coincidence that crude has posted about a 30% y-t-d price surge at the same time as international reserve positions have expanded at about a 30% annualized rate - to a stunning $6.769 TN. Over the past 4 ½ years, official international reserves have ballooned an unprecedented $3.921 trillion, or 138%. During this period, crude prices surged almost 300%. Chinese reserves ballooned more than four-fold over this period to $1.68 Trillion; India’s reserve position tripled to $303bn; and Brazil enjoyed a four-fold increase to $189bn. After beginning 2004 at $73bn, Russian reserves have almost reached the half Trillion mark ($493bn). And just in the past year, OPEC reserves have inflated 42% to $490bn. To be sure, the world is awash like never before in excess “liquidity” for which to bid up the price of critical tradable resources...The CRB Commodities index closed today at an all-time high, sporting y-t-d gain of 19% and one-year rise of 37%. The Goldman Sachs Commodities index, also ending at a record high, has gained 28% so far this year and 68% over the past 12 months. During the past year, soybeans have gained 85%, corn 72%, and wheat 68%. Prices for iron ore, steel and hard commodities have experienced similar price inflation. Gasoline prices are up almost 40%, natural gas about 50%, and heating oil about 90% over the past year...Industries throughout the U.S. and global economies now confront a fundamentally altered environment, where the pricing and availability of key inputs can no longer be taken for granted. For many, the whole idea of “just in time” inventory management has become a luxury that can no longer be afforded. Moreover, recent media accounts have illuminated the problems suffered by farmers and grain elevator operators because of recent dislocations in commodities derivative trading. Financial derivatives markets, having functioned well in the commodities arena for the most part for years now, will now play a destabilizing role in a new era of acute supply/demand imbalances...Furthermore, current inflationary forces are destabilizing and even destructive to many businesses, while playing havoc with the fiscal standing of federal, state and municipal governments."
Crude-oil futures blitzed past the $126 a barrel mark Friday, rallying to a record high of $126.20, pushed higher by weakness in the U.S. dollar and concerns over supply disruptions.
AIG reported its record $7.8 billion loss, eclipsing the $5.3 billion loss it recorded in the fourth quarter. AIG said credit-market woes, weakness in housing and stock-market volatility "had a substantial adverse effect" on its results. "The severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations," said AIG Chief Executive Martin Sullivan. The New York-based insurance behemoth took a $9.1 billion write-down for the first quarter on credit derivatives designed to protect against losses on a variety of investments, including subprime mortgages. It booked an additional $6.1 billion in losses in its investment portfolio.
According to AMG Data Services, for the week ending May 7, including ETF activity, Equity funds report net cash inflows totaling $1.521 billion in the week ended 5/7/08 with Domestic funds reporting net inflows of $72 million and Non-domestic funds reporting net inflows of $1.449 billion;
Excluding ETF activity, Equity funds report net cash inflows totaling $699 million with Domestic funds reporting net inflows of $437 million and Non-domestic funds reporting net inflows totaling $262 million.
Rice surged for a third day by the maximum allowed as Nigeria and the Philippines, the two largest importers, sought shipments, further straining global supplies after a cyclone devastated crops in Myanmar.
According to Business Week, Merchant cash advances have been around for roughly a decade. But with big banks in full retreat from lending, more small business owners are seeking help from the likes of AdvanceMe, AmeriMerchant, and hundreds of other companies and independent contractors that offer such advances. The size of the industry jumped 50% in 2007, to around $700 million.
The number of companies defaulting on their junk-rated debt and filing for bankruptcy in North America is running at its fastest pace in five years amid the slowing economy and contraction in credit markets. So far this year, 28 “entities” have defaulted, according to Standard & Poor’s. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.
Henry To: "I expect a significant buying opportunity in small cap value stocks sometime over the next 12 to 18 months - but given that we are still in a general deleveraging environment, I also expect small cap value stocks to under perform at least for the rest of this year (homebuilders and newspaper publishers come into mind)."
Brad Setser: "Barring a major change, the Gulf and China could easily combine to add close to a trillion dollars to their official assets this year."
"Our recently completed financing arrangements give the company record levels of liquidity, with approximately $2 billion in immediately available excess capacity," said Ed Heffernan, Alliance Data's chief financial officer. "We currently expect that Alliance Data could secure an additional $1.5 billion to $2 billion in capacity while maintaining an investment grade profile by levering up from approximately 1x to 3x." Alliance Data said it expects to continue meeting or beating Wall Street's earnings forecasts throughout the year.
According to the Seattle Post-Intelligence, International Lease Financial, the largest customer for Boeing's 787 with 74 on order, said its planes will be delayed "an average in excess of 27 months per aircraft and span across ILFC's entire order." Air Canada said its 787s will be 24 to 30 months late, and probably won't get its first 787 until 2012. Delays could cost Boeing $4 billion in fines.
Citigroup CEO Vikram Pandit said Friday the firm plans to reduce about $500 billion of non-core assets over the next several years.
In a sign of weaker global growth, both imports and exports fell sharply in March, driving the U.S. trade deficit down to $58.2 billion, the Commerce Department reported Friday. Nominal imports fell 2.9% to $206.7 billion, the largest decline in more than six years, despite record oil prices. Nominal exports dropped to $148.5 billion, the biggest drop in nearly three years, despite higher prices for U.S. farm products.
As recently as mid-January, Clinton, with her family's deep roots in the Democratic establishment, led Obama by nearly 100 superdelegates. By Friday morning, Obama had narrowed her lead to 3, as he picked up 5 more supporters.
Obama also picked up the endorsement of the influential American Federation of Government Employees union on Friday.
The market for highly structured credit products exposed to residential mortgage securities hasn't rebounded, American International Group Chief Financial Officer Steven Bensinger said on Friday during a conference call with analysts.
China's overseas sales rose about 21.8 percent from a year earlier, after gaining 30.6 percent in March, according to figures derived from Ministry of Commerce data. The trade surplus was about $16.8 billion compared with $16.7 billion a year earlier.
Communications equipment maker Harris has started exploring strategic options, which may lead to its eventual sale, the Wall Street Journal said on Friday, citing people familiar with the matter. The company serves the government and commercial markets in more than 150 countries, has annual revenues of over $5 billion and more than 16,000 employees.
June gold climbed $3.70 an ounce Friday to close at $885.80. The June contract closed at $125.96 a barrel, up $2.27 for the session and up 8.3% for the week.
“Saudi Arabia is forecast to earn 975 billion riyals ($260 billion) in oil revenue this year as record oil prices boost its current account surplus, Arab News reported, citing a report from Jadwa Investment Co.”
FedEx cut its quarterly-profit forecast again, citing unrelenting fuel-price increases and soft demand.
One-month Treasury bill rates surged 25 bps this week to 1.59%, and 3-month yields rose 15 bps to 1.68%. At the same time, two-year government yields sank 21 bps 2.24%.
Doug Noland: "I don’t believe it is mere coincidence that crude has posted about a 30% y-t-d price surge at the same time as international reserve positions have expanded at about a 30% annualized rate - to a stunning $6.769 TN. Over the past 4 ½ years, official international reserves have ballooned an unprecedented $3.921 trillion, or 138%. During this period, crude prices surged almost 300%. Chinese reserves ballooned more than four-fold over this period to $1.68 Trillion; India’s reserve position tripled to $303bn; and Brazil enjoyed a four-fold increase to $189bn. After beginning 2004 at $73bn, Russian reserves have almost reached the half Trillion mark ($493bn). And just in the past year, OPEC reserves have inflated 42% to $490bn. To be sure, the world is awash like never before in excess “liquidity” for which to bid up the price of critical tradable resources...The CRB Commodities index closed today at an all-time high, sporting y-t-d gain of 19% and one-year rise of 37%. The Goldman Sachs Commodities index, also ending at a record high, has gained 28% so far this year and 68% over the past 12 months. During the past year, soybeans have gained 85%, corn 72%, and wheat 68%. Prices for iron ore, steel and hard commodities have experienced similar price inflation. Gasoline prices are up almost 40%, natural gas about 50%, and heating oil about 90% over the past year...Industries throughout the U.S. and global economies now confront a fundamentally altered environment, where the pricing and availability of key inputs can no longer be taken for granted. For many, the whole idea of “just in time” inventory management has become a luxury that can no longer be afforded. Moreover, recent media accounts have illuminated the problems suffered by farmers and grain elevator operators because of recent dislocations in commodities derivative trading. Financial derivatives markets, having functioned well in the commodities arena for the most part for years now, will now play a destabilizing role in a new era of acute supply/demand imbalances...Furthermore, current inflationary forces are destabilizing and even destructive to many businesses, while playing havoc with the fiscal standing of federal, state and municipal governments."
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