6/23/08 GM
Disposal company Republic Services said Monday it will buy Allied Waste Industries in a $6.07 billion stock deal that would combine the second- and third-largest players in the industry. Republic Services Inc. will pay Allied Waste shareholders .45 worth of a Republic share for each share held, valued at $14.04 per share based on Republic's Friday closing stock price of $31.19.
GM stock is trading at the $13 level, a price I have not seen in my adult life. Other than in China, do their products have much of a future? GM said it will extend a previously announced two-week shutdown at six of its plants by one week, according to reports. GM will also raise prices on its 2009 models by 3.5% on average.
"The Standard & Poor's 500 Index has never reached a low within the first three months of a contraction, said Brian Belski, Merrill's U.S. sector strategist," according to Bloomberg.
Nouriel Roubini: "Central banks in many advanced and emerging economies are facing a nightmare scenario, in which they simultaneously must tighten monetary policy (to fight inflation) and ease it (to reduce the downside risks to growth). As inflation and growth risks combine in varied and complex ways in different economies, it will be very difficult for central bankers to juggle these contradictory imperatives."
John Hussman: "From the standpoint of capitulation, last week's decline was actually very orderly, and hardly caused the CBOE volatility index to budge. When we see the VIX spike to the mid 30's or 40's, it may become useful to survey opportunities to assume greater market risk. So far, however, the VIX makes it clear that investors are taking recent losses very casually."
Google Inc.is planning to unveil a new service that measures Internet usage utilizing data from Web servers, the Wall Street Journal reported late Monday, citing sources who have been briefed on the plan.
UPS is slashing its second-quarter earnings outlook to a range of 83 cents to 88 cents a share from its previous target of 97 cents to $1.04 a share.
UAL Corp.plans to lay off 950 pilots Reuters reported Monday.
August crude closed at $136.74 a barrel Monday in New York, up $1.38, or 1%, for the session. August gold closed at $887.20 an ounce in New York Monday, down $16.50, or 1.8%, for the session.
CME Group, parent company of the world's largest derivatives exchange, said its board has authorized a $1.1 billion share buyback and a special dividend of $5 per share.
CNH Global N.V., a supplier of agricultural and construction equipment businesses, said Monday it will implement a 5 percent surcharge on a range of products due to higher costs for steel, energy, commodities and transportation.
Monday, June 23, 2008
Saudi Arabia
6/22/08 Saudi Arabia
The Oil Drum: "When Saudi Arabia announces production targets it isn't using a clear cut definition of oil. Saudi Arabia produces two groups of hydrocarbons: crude oil and natural gas liquids. Natural Gas Liquids (NGL) are a group of hydrocarbons that fall between natural gas and oil - which consist amongst others of ethane (C2H6), propane (C3H8) and butane (C4H10).
The important difference is that crude oil can be refined into gasoline, diesel and kerosene while NGL's cannot. These are mainly used as feedstock for the chemical industry. Therefore when Saudi Arabia increases crude oil it can influence oil markets heavily, but if it increases NGL's the impact is much smaller. Point one to watch for is therefore whether production announcements refer to crude oil or to all liquids.
A second point is that the country always talks about production capacity. It is not very clear whether actual production or production plus spare capacity is meant. Spare capacity is additional capacity that can be brought online within 90 days in case of an emergency (e.g when the US or Israel attacks Iran). The US Energy Information Administration and OECD International Energy Agency think that spare capacity of Saudi Arabia amounts to 1.5 to 2 million barrels per day. Whether this is the case or not is of course debatable, but for analysis of production it is less interesting...Saudi Arabia has not produced more than 9.5 million barrels per day of crude oil in recent years. In fact the last time Saudi Arabia produced more was 1981 when production briefly reached 9.65 million barrels per day.
The latest high of all Liquids production was 11.10 million barrels per day in the first quarter of 2006. We can establish from production data sources that last known production of total liquids was 10.58 million barrels per day in the 4th quarter of 2007 and last known crude oil production was 9.2 million barrels per day in may 2008.
Saudi Arabia may raise its oil production beyond a planned 200000 barrel-a-day increase in July if the oil market requires extra supply, Saudi Oil Minister Ali al-Naimi told consumers at a summit.
According to the Financial Times, the Federal Reserve is likely to indicate some increased concern about inflation following its policy meeting this week, but to do so in a manner than avoids any suggestion that interest rate rises are imminent.
Veteran news anchor Tom Brokaw has agreed to moderate NBC's "Meet the Press" through the November election to fill the vacancy created by the death of Tim Russert.
According to the WSJ, Citigroup is set this week to embark on an aggressive round of layoffs totaling as much as 10% of its world-wide investment-banking work force.
The U.N. nuclear watchdog chief warned in comments aired Saturday that any military strike on Iran could turn the Mideast into a "ball of fire" and lead the country to a more aggressive stance on its controversial nuclear program.
The comments by Mohamed ElBaradei, head of the International Atomic Energy Agency, came in an interview with an Arab television station aired a day after U.S. officials said they believed recent large Israeli military exercises may have been meant to show Israel's ability to hit Iran's nuclear sites.
"In my opinion, a military strike will be the worst ... it will turn the Middle East to a ball of fire," Mr. ElBaradei said on Al-Arabiya television. It also could prompt Iran to press even harder to seek a nuclear program, and force him to resign, he said.
Iran on Saturday also criticized the
Economists expect the deficit to top $400 billion when the fiscal year ends Sept. 30, rivaling the all-time high of $413 billion set in 2004. Meanwhile, Congress recently adopted a spending plan that projects a $340 billion deficit in 2009 -- a number likely to grow, lawmakers say, as the cost of the Iraq war rises, the economy weakens and the flow of revenue slows.
Bunge Ltd. has agreed to acquire Corn Products International Inc. for $4.4 billion in stock.
The Oil Drum: "When Saudi Arabia announces production targets it isn't using a clear cut definition of oil. Saudi Arabia produces two groups of hydrocarbons: crude oil and natural gas liquids. Natural Gas Liquids (NGL) are a group of hydrocarbons that fall between natural gas and oil - which consist amongst others of ethane (C2H6), propane (C3H8) and butane (C4H10).
The important difference is that crude oil can be refined into gasoline, diesel and kerosene while NGL's cannot. These are mainly used as feedstock for the chemical industry. Therefore when Saudi Arabia increases crude oil it can influence oil markets heavily, but if it increases NGL's the impact is much smaller. Point one to watch for is therefore whether production announcements refer to crude oil or to all liquids.
A second point is that the country always talks about production capacity. It is not very clear whether actual production or production plus spare capacity is meant. Spare capacity is additional capacity that can be brought online within 90 days in case of an emergency (e.g when the US or Israel attacks Iran). The US Energy Information Administration and OECD International Energy Agency think that spare capacity of Saudi Arabia amounts to 1.5 to 2 million barrels per day. Whether this is the case or not is of course debatable, but for analysis of production it is less interesting...Saudi Arabia has not produced more than 9.5 million barrels per day of crude oil in recent years. In fact the last time Saudi Arabia produced more was 1981 when production briefly reached 9.65 million barrels per day.
The latest high of all Liquids production was 11.10 million barrels per day in the first quarter of 2006. We can establish from production data sources that last known production of total liquids was 10.58 million barrels per day in the 4th quarter of 2007 and last known crude oil production was 9.2 million barrels per day in may 2008.
Saudi Arabia may raise its oil production beyond a planned 200000 barrel-a-day increase in July if the oil market requires extra supply, Saudi Oil Minister Ali al-Naimi told consumers at a summit.
According to the Financial Times, the Federal Reserve is likely to indicate some increased concern about inflation following its policy meeting this week, but to do so in a manner than avoids any suggestion that interest rate rises are imminent.
Veteran news anchor Tom Brokaw has agreed to moderate NBC's "Meet the Press" through the November election to fill the vacancy created by the death of Tim Russert.
According to the WSJ, Citigroup is set this week to embark on an aggressive round of layoffs totaling as much as 10% of its world-wide investment-banking work force.
The U.N. nuclear watchdog chief warned in comments aired Saturday that any military strike on Iran could turn the Mideast into a "ball of fire" and lead the country to a more aggressive stance on its controversial nuclear program.
The comments by Mohamed ElBaradei, head of the International Atomic Energy Agency, came in an interview with an Arab television station aired a day after U.S. officials said they believed recent large Israeli military exercises may have been meant to show Israel's ability to hit Iran's nuclear sites.
"In my opinion, a military strike will be the worst ... it will turn the Middle East to a ball of fire," Mr. ElBaradei said on Al-Arabiya television. It also could prompt Iran to press even harder to seek a nuclear program, and force him to resign, he said.
Iran on Saturday also criticized the
Economists expect the deficit to top $400 billion when the fiscal year ends Sept. 30, rivaling the all-time high of $413 billion set in 2004. Meanwhile, Congress recently adopted a spending plan that projects a $340 billion deficit in 2009 -- a number likely to grow, lawmakers say, as the cost of the Iraq war rises, the economy weakens and the flow of revenue slows.
Bunge Ltd. has agreed to acquire Corn Products International Inc. for $4.4 billion in stock.
Saturday, June 21, 2008
Ocean Water Acidity
6/21/08 Ocean Water Acidity
Earthfiles: "Ocean water along the Pacific Coast has increased in acidity so much after absorbing carbon dioxide from the atmosphere that scientists are surprised. None of the global warming climate models saw open oceans increasing in acidity by 30% until the end of the 21st Century. But the Earth is changing much faster than computer models can project. A new study published in the June 2008 journal, Science, shows that ocean water only four miles off the northern California shore, is already 30% more acidic than normal.
By 2008, it is estimated that oceans have absorbed 525 billion tons of greenhouse gases. All the carbon dioxide absorbed by seawater has produced increasing amounts of carbonic acid. The calcium carbonate shells of clams, oysters, corals, diatoms and some planktons weaken and disintegrate in carbonic acid. Could we be facing a time in the next few decades where shellfish, corals, diatoms and planktons won't be able to survive? Like dominoes falling, without them in the food chain, what happens to other marine life? And what happens to humans who depend on sea creatures for food?"
“The last time the oceans endured such a drastic change
in chemistry was 65 million years ago, at about the same time
the dinosaurs went extinct.” - Ken Caldeira, Ph.D., Stanford University
The US economy is likely to “stagnate” in the second half of this year, the International Monetary Fund warned, as stock markets in the US and Europe fell to their lowest levels since March and US bank shares hit a five-year low.
Gasoline near $4 a gallon helped send prices for used large pickups and SUVs tumbling at least 21 percent in May, Atlanta- based Manheim Consulting estimates. That cuts trade-in values, pushing light-truck sales down 16 percent in 2008, compared with less than 1 percent for cars.
According to Bloomberg, MBIA Inc.'s five-level downgrade by Moody's Investors Service probably will force it to make $7.4 billion of payments and collateral postings.
China's central bank Governor Zhou Xiaochuan said his bank may formulate ``stronger policies'' to tackle inflation exacerbated by the government's latest fuel- price increases.
The International Monetary Fund said the U.S. economic slump has been shallower than estimated and warned the Federal Reserve may have to raise interest rates ``quickly'' to contain inflation.
California's unemployment rate rocketed up by 0.6 percentage points in May - the largest one-month increase since the state began keeping records in 1976 - as the fallout from high energy prices and the depressed housing market rippled through the state's economy.
The state's jobless rate was a seasonally adjusted 6.8 percent, up from 6.2 percent in April, the California Employment Development Department reported Friday. That's the highest rate since November 2003, when California was recovering from recession.
Much of Texas has plunged into extreme drought conditions.
According to the study by private analysts Global Insight for the U.S. Conference of Mayors meeting in Miami. Just eight months ago, researchers predicted property values would shrink by $1.2 trillion this year, the study said. "Metro areas are expected to suffer a $1.46-trillion decline in property values in 2008," the study said. "The increased loss is a result of even greater deterioration in home markets and prices than anticipated."
The decline is the equivalent of $21,277 per home, the study said.
Chevron Corp. has suspended output of 120,000 barrels a day of oil production in Nigeria after local militants attacked a key supply pipeline, media reports said Saturday.
The oil minister, who is close to the country's powerful Shiite clerical leadership, told the British newspaper The Guardian this week that Iraq will demand the right to veto any U.S. military operation.
But American commanders believe they need such sweeping powers to protect U.S. soldiers in a combat zone.
With communities in the Midwest still under water, Democrat Barack Obama on Saturday criticized Republican John McCain for opposing federal spending on flood prevention programs and opened a new debate in the White House race.
Mike Burk: "The market is oversold and there is reason to think we are at or very near the low for this downward move. Every one of the issues in the Dow Jones Industrial Average (DJIA) is below its 50 day EMA, a relatively rare event that has occurred near bottoms...Near the low last August there were 1132 new lows on the NYSE, at the January low there were 1114 new lows and at the March low there were 759 new lows. At each of those points I pointed out there was a high likelihood of a retest because of the high number of new lows. On Friday the DJIA closed less than 1% above its March low (close enough to qualify as a retest) and there were "only" 275 new lows, not enough to imply a high likelyhood of another retest. The market could collapse in the next few days generating a lot of new lows, but that scenario seems unlikely...I expect the major indices to be higher on Friday June 27 than they were on Friday June 20."
The U.S. energy secretary said Saturday that insufficient oil production, not financial speculation, was driving soaring crude prices.
Earthfiles: "Ocean water along the Pacific Coast has increased in acidity so much after absorbing carbon dioxide from the atmosphere that scientists are surprised. None of the global warming climate models saw open oceans increasing in acidity by 30% until the end of the 21st Century. But the Earth is changing much faster than computer models can project. A new study published in the June 2008 journal, Science, shows that ocean water only four miles off the northern California shore, is already 30% more acidic than normal.
By 2008, it is estimated that oceans have absorbed 525 billion tons of greenhouse gases. All the carbon dioxide absorbed by seawater has produced increasing amounts of carbonic acid. The calcium carbonate shells of clams, oysters, corals, diatoms and some planktons weaken and disintegrate in carbonic acid. Could we be facing a time in the next few decades where shellfish, corals, diatoms and planktons won't be able to survive? Like dominoes falling, without them in the food chain, what happens to other marine life? And what happens to humans who depend on sea creatures for food?"
“The last time the oceans endured such a drastic change
in chemistry was 65 million years ago, at about the same time
the dinosaurs went extinct.” - Ken Caldeira, Ph.D., Stanford University
The US economy is likely to “stagnate” in the second half of this year, the International Monetary Fund warned, as stock markets in the US and Europe fell to their lowest levels since March and US bank shares hit a five-year low.
Gasoline near $4 a gallon helped send prices for used large pickups and SUVs tumbling at least 21 percent in May, Atlanta- based Manheim Consulting estimates. That cuts trade-in values, pushing light-truck sales down 16 percent in 2008, compared with less than 1 percent for cars.
According to Bloomberg, MBIA Inc.'s five-level downgrade by Moody's Investors Service probably will force it to make $7.4 billion of payments and collateral postings.
China's central bank Governor Zhou Xiaochuan said his bank may formulate ``stronger policies'' to tackle inflation exacerbated by the government's latest fuel- price increases.
The International Monetary Fund said the U.S. economic slump has been shallower than estimated and warned the Federal Reserve may have to raise interest rates ``quickly'' to contain inflation.
California's unemployment rate rocketed up by 0.6 percentage points in May - the largest one-month increase since the state began keeping records in 1976 - as the fallout from high energy prices and the depressed housing market rippled through the state's economy.
The state's jobless rate was a seasonally adjusted 6.8 percent, up from 6.2 percent in April, the California Employment Development Department reported Friday. That's the highest rate since November 2003, when California was recovering from recession.
Much of Texas has plunged into extreme drought conditions.
According to the study by private analysts Global Insight for the U.S. Conference of Mayors meeting in Miami. Just eight months ago, researchers predicted property values would shrink by $1.2 trillion this year, the study said. "Metro areas are expected to suffer a $1.46-trillion decline in property values in 2008," the study said. "The increased loss is a result of even greater deterioration in home markets and prices than anticipated."
The decline is the equivalent of $21,277 per home, the study said.
Chevron Corp. has suspended output of 120,000 barrels a day of oil production in Nigeria after local militants attacked a key supply pipeline, media reports said Saturday.
The oil minister, who is close to the country's powerful Shiite clerical leadership, told the British newspaper The Guardian this week that Iraq will demand the right to veto any U.S. military operation.
But American commanders believe they need such sweeping powers to protect U.S. soldiers in a combat zone.
With communities in the Midwest still under water, Democrat Barack Obama on Saturday criticized Republican John McCain for opposing federal spending on flood prevention programs and opened a new debate in the White House race.
Mike Burk: "The market is oversold and there is reason to think we are at or very near the low for this downward move. Every one of the issues in the Dow Jones Industrial Average (DJIA) is below its 50 day EMA, a relatively rare event that has occurred near bottoms...Near the low last August there were 1132 new lows on the NYSE, at the January low there were 1114 new lows and at the March low there were 759 new lows. At each of those points I pointed out there was a high likelihood of a retest because of the high number of new lows. On Friday the DJIA closed less than 1% above its March low (close enough to qualify as a retest) and there were "only" 275 new lows, not enough to imply a high likelyhood of another retest. The market could collapse in the next few days generating a lot of new lows, but that scenario seems unlikely...I expect the major indices to be higher on Friday June 27 than they were on Friday June 20."
The U.S. energy secretary said Saturday that insufficient oil production, not financial speculation, was driving soaring crude prices.
Financial And Economic Vulnerability
6/20/08 Financial And Economic Vulnerability
Doug Noland: "Grossly inappropriate short-term U.S. interest-rates are today directly stoking serious price inflation, in the process reducing consumer discretionary income and the capacity to service enormous debt loads...And because of the worsening Credit backdrop, mortgage and consumer debt borrowing costs are rising in spite of Fed rate cuts. Moreover, households are suffering further from the sharp reduction in returns on their savings, not to mention the inflation-related decline in many stock prices...Sinking home prices and surging energy and food prices are causing bloody havoc on general creditworthiness, a huge dilemma for the faltering financial sector and finance/consumption-driven Bubble economy. The bust in Wall Street finance is driving a major shift in economy-wide spending patterns, putting downward pressure on wages, incomes and profits in some sectors, while other sectors enjoy huge inflationary boosts. The breakdown in Wall Street “alchemy” has ensured that the Fed-orchestrated reflation bypasses home prices as it hastens problematic inflation elsewhere. A very strong case can be made that the nature of the Wall Street finance and asset-based lending boom nurtured a degree of financial and economic imbalance and vulnerability unlike the wage-based inflation of the seventies...I simply see no way around the necessity of sharply reducing the amount of new Credit and imports required to sustain the U.S. economy. I see no alternative than a long and wrenching adjustment period while the household balance sheet is repaired, financial sector stability is restored, and some semblance of economic balance is achieved."
Venezuelan President Hugo Chavez is vowing to help poor, landlocked Paraguay meet its petroleum needs and explore for oil and natural gas.
Chavez says Venezuela "guarantees" it will satisfy demand for oil in the South American nation.
Del Monte Foods Co. has confirmed it is in talks with South Korea's Dongwon Enterprise Co. about potentially selling its Starkist seafood business.
According to AMG Data Services, Including ETF activity, Equity funds report net cash inflows totaling $22.028 billion in the week ended 6/18/08 with Domestic funds reporting net inflows of $24.264 billion and Non-domestic funds reporting net outflows of -$2.237 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$106 million with Domestic funds reporting net inflows of $369 million and Non-domestic funds reporting net outflows totaling -$475 million.
Have you considered the following? Bush will go down as the most popular as well as the worst president in this nation's history. He will have broken a myriad of laws; reduced our freedoms; spit on the articles in our Constitution; started a war without cause; his economic policies placed our nation's finances in harm's way; and yet, accomplished the unthinkable-- he will walk away without even a slap on his wrist and/or a scratch on his head. That is quite an accomplishment, and probably the only accomplishment of his 2-term presidency.
Anheuser-Busch Cos. Inc.said Friday that Carlos Fernandez, chairman and chief executive officer of Mexican brewer Grupo Modelo, submitted his resignation Thursday as a board member of Anheuser-Busch, effective immediately.
Lehman Brothers cut its earnings estimates on Fannie Mae and Freddie Mac, saying the housing market continues to deteriorate at an accelerating pace. It expects national house prices to drop 20% from the peak.
Goldman Sachs analysts say that the Chinese fuel price hike announced Thursday won't significantly slow demand growth and may, in fact, increase it. There will be a higher incentive for refineries to bring more products to the market, which in turn can alleviate domestic shortages of refined products.
Washington Mutual is cutting 1,200 more jobs as part of the lender's efforts to reduce costs and return to profitability.
Mexico's central bank unexpectedly increased its benchmark interest rate to fight the fastest inflation in three years amid higher food and energy prices. Mexico's five-member board voted today to raise the overnight lending rate by a quarter percentage point to 7.75 percent.
Iran would respond to an Israeli attack on nuclear facilities with a ``heavy blow,'' a senior cleric said, following a New York Times report that Israel carried out an exercise that could prepare it for such a strike.
Ayatollah Ahmad Khatami, leading Friday prayers in Tehran, said today that Iran favored dialogue and would resist ``mischievous acts,'' the state-run Islamic Republic News Agency said. Such an attack would prompt an ``uproar on the part of our nation,'' Khatami said.
MBIA Inc. and Ambac Financial Group Inc. declined after Moody's Investors Service stripped the bond insurers of their Aaa ratings.
Global oil demand is likely to contract 0.6% in 2008 for the first time in 15 years, said J.P. Morgan Chase late Friday.
The Dow Jones Industrial Average fell 220.4 points, or 1.8%, to end at 11,842.69, giving the blue chips a weekly loss of 3.8%. The S&P 500 shed 24.91 points, or 1.9%, to stand at 1,317.92, leaving it 3.1% down on the week, while the Nasdaq Composite fell 55.97 points, or 2.3%, with the technology-laden index off 2% from a week ago.
July crude closed at $134.62 a barrel in New York Friday, up $2.69, or 2%, for the session, but down 0.2% for the week. August gold closed at $903.70 an ounce Friday in New York, down 50 cents for the session, but up 3.5% for the week.
The flooding in the Midwest has brought freight traffic on the upper Mississippi to a standstill, stranding more than 100 barges loaded with grain, cement, scrap metal, fertilizer and other products while shippers wait for the water to drop on the Big Muddy.
Peter Schiff: "Throughout history, governments have always used crises to justify blatant power grabs. Often the crisis subsides, but the expanded government powers remain. In America this week, the tendency came into sharp focus. Congress signaled that it is preparing to perpetuate the Bush Administration's domestic wiretapping program, and has even abandoned the pretense that warrantless surveillance be confined to terrorism. Similarly, even though our financial crisis has yet to reach full flower, Treasury Secretary Paulson announced plans to give the Federal Reserve new and explicit powers to oversee and regulate the financial services industry. However, a sober look at his plan reveals that it is tantamount to giving the fox complete autonomy to guard the henhouse."
As for Nancy Pelosi, she stated the Bush Administration's domestic wiretapping program did not violate the Constitution. This is the same Pelosi who proclaimed impeachment was off the table. When she runs for re-election, I suggest she run as a Republican. Hopefully, the voters will deep six her the next time around.
BCE Inc. on Friday won the right to go ahead with the largest leveraged buyout in history, a US$35 billion deal that the telecommunications company's bondholders fought, saying it would reduce their holdings to junk. Canada's Supreme Court overturned a lower court ruling that the sale of BCE, the parent of telecommunications holding company Bell Canada, to the Ontario Teachers' Pension Plan and its minority U.S. partners didn't adequately consider bondholders' interests.
According to Rigzone, a consortium led by the oil-services arm of China National Offshore Oil Corp. is in advanced talks to buy Norwegian oil drilling contractor Awilco Offshore ASA in a deal that could be valued at more than $2 billion.
Iran is pressing on with uranium enrichment "non-stop," its envoy to the U.N. nuclear agency was quoted as saying on Saturday, despite a world powers' offer of economic incentives to coax Tehran into halting such activities.
Obama reported his weakest fund-raising month this year, raising $22 million in May for his presidential campaign. He ended the month with $43 million cash on hand, according to his campaign.
According to the WSJ, Ford said the plunge of U.S. truck and SUV sales due to record-high gasoline prices was forcing the new cuts, and even pushing back the launch of its redesigned F-150 pickup truck that once was expected to drive the company's recovery. The moves suggest the company is bracing for a greater loss in 2008 than its $2.7 billion loss last year, and Ford said it no longer expects to break even by 2009.
Doug Noland: "Grossly inappropriate short-term U.S. interest-rates are today directly stoking serious price inflation, in the process reducing consumer discretionary income and the capacity to service enormous debt loads...And because of the worsening Credit backdrop, mortgage and consumer debt borrowing costs are rising in spite of Fed rate cuts. Moreover, households are suffering further from the sharp reduction in returns on their savings, not to mention the inflation-related decline in many stock prices...Sinking home prices and surging energy and food prices are causing bloody havoc on general creditworthiness, a huge dilemma for the faltering financial sector and finance/consumption-driven Bubble economy. The bust in Wall Street finance is driving a major shift in economy-wide spending patterns, putting downward pressure on wages, incomes and profits in some sectors, while other sectors enjoy huge inflationary boosts. The breakdown in Wall Street “alchemy” has ensured that the Fed-orchestrated reflation bypasses home prices as it hastens problematic inflation elsewhere. A very strong case can be made that the nature of the Wall Street finance and asset-based lending boom nurtured a degree of financial and economic imbalance and vulnerability unlike the wage-based inflation of the seventies...I simply see no way around the necessity of sharply reducing the amount of new Credit and imports required to sustain the U.S. economy. I see no alternative than a long and wrenching adjustment period while the household balance sheet is repaired, financial sector stability is restored, and some semblance of economic balance is achieved."
Venezuelan President Hugo Chavez is vowing to help poor, landlocked Paraguay meet its petroleum needs and explore for oil and natural gas.
Chavez says Venezuela "guarantees" it will satisfy demand for oil in the South American nation.
Del Monte Foods Co. has confirmed it is in talks with South Korea's Dongwon Enterprise Co. about potentially selling its Starkist seafood business.
According to AMG Data Services, Including ETF activity, Equity funds report net cash inflows totaling $22.028 billion in the week ended 6/18/08 with Domestic funds reporting net inflows of $24.264 billion and Non-domestic funds reporting net outflows of -$2.237 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$106 million with Domestic funds reporting net inflows of $369 million and Non-domestic funds reporting net outflows totaling -$475 million.
Have you considered the following? Bush will go down as the most popular as well as the worst president in this nation's history. He will have broken a myriad of laws; reduced our freedoms; spit on the articles in our Constitution; started a war without cause; his economic policies placed our nation's finances in harm's way; and yet, accomplished the unthinkable-- he will walk away without even a slap on his wrist and/or a scratch on his head. That is quite an accomplishment, and probably the only accomplishment of his 2-term presidency.
Anheuser-Busch Cos. Inc.said Friday that Carlos Fernandez, chairman and chief executive officer of Mexican brewer Grupo Modelo, submitted his resignation Thursday as a board member of Anheuser-Busch, effective immediately.
Lehman Brothers cut its earnings estimates on Fannie Mae and Freddie Mac, saying the housing market continues to deteriorate at an accelerating pace. It expects national house prices to drop 20% from the peak.
Goldman Sachs analysts say that the Chinese fuel price hike announced Thursday won't significantly slow demand growth and may, in fact, increase it. There will be a higher incentive for refineries to bring more products to the market, which in turn can alleviate domestic shortages of refined products.
Washington Mutual is cutting 1,200 more jobs as part of the lender's efforts to reduce costs and return to profitability.
Mexico's central bank unexpectedly increased its benchmark interest rate to fight the fastest inflation in three years amid higher food and energy prices. Mexico's five-member board voted today to raise the overnight lending rate by a quarter percentage point to 7.75 percent.
Iran would respond to an Israeli attack on nuclear facilities with a ``heavy blow,'' a senior cleric said, following a New York Times report that Israel carried out an exercise that could prepare it for such a strike.
Ayatollah Ahmad Khatami, leading Friday prayers in Tehran, said today that Iran favored dialogue and would resist ``mischievous acts,'' the state-run Islamic Republic News Agency said. Such an attack would prompt an ``uproar on the part of our nation,'' Khatami said.
MBIA Inc. and Ambac Financial Group Inc. declined after Moody's Investors Service stripped the bond insurers of their Aaa ratings.
Global oil demand is likely to contract 0.6% in 2008 for the first time in 15 years, said J.P. Morgan Chase late Friday.
The Dow Jones Industrial Average fell 220.4 points, or 1.8%, to end at 11,842.69, giving the blue chips a weekly loss of 3.8%. The S&P 500 shed 24.91 points, or 1.9%, to stand at 1,317.92, leaving it 3.1% down on the week, while the Nasdaq Composite fell 55.97 points, or 2.3%, with the technology-laden index off 2% from a week ago.
July crude closed at $134.62 a barrel in New York Friday, up $2.69, or 2%, for the session, but down 0.2% for the week. August gold closed at $903.70 an ounce Friday in New York, down 50 cents for the session, but up 3.5% for the week.
The flooding in the Midwest has brought freight traffic on the upper Mississippi to a standstill, stranding more than 100 barges loaded with grain, cement, scrap metal, fertilizer and other products while shippers wait for the water to drop on the Big Muddy.
Peter Schiff: "Throughout history, governments have always used crises to justify blatant power grabs. Often the crisis subsides, but the expanded government powers remain. In America this week, the tendency came into sharp focus. Congress signaled that it is preparing to perpetuate the Bush Administration's domestic wiretapping program, and has even abandoned the pretense that warrantless surveillance be confined to terrorism. Similarly, even though our financial crisis has yet to reach full flower, Treasury Secretary Paulson announced plans to give the Federal Reserve new and explicit powers to oversee and regulate the financial services industry. However, a sober look at his plan reveals that it is tantamount to giving the fox complete autonomy to guard the henhouse."
As for Nancy Pelosi, she stated the Bush Administration's domestic wiretapping program did not violate the Constitution. This is the same Pelosi who proclaimed impeachment was off the table. When she runs for re-election, I suggest she run as a Republican. Hopefully, the voters will deep six her the next time around.
BCE Inc. on Friday won the right to go ahead with the largest leveraged buyout in history, a US$35 billion deal that the telecommunications company's bondholders fought, saying it would reduce their holdings to junk. Canada's Supreme Court overturned a lower court ruling that the sale of BCE, the parent of telecommunications holding company Bell Canada, to the Ontario Teachers' Pension Plan and its minority U.S. partners didn't adequately consider bondholders' interests.
According to Rigzone, a consortium led by the oil-services arm of China National Offshore Oil Corp. is in advanced talks to buy Norwegian oil drilling contractor Awilco Offshore ASA in a deal that could be valued at more than $2 billion.
Iran is pressing on with uranium enrichment "non-stop," its envoy to the U.N. nuclear agency was quoted as saying on Saturday, despite a world powers' offer of economic incentives to coax Tehran into halting such activities.
Obama reported his weakest fund-raising month this year, raising $22 million in May for his presidential campaign. He ended the month with $43 million cash on hand, according to his campaign.
According to the WSJ, Ford said the plunge of U.S. truck and SUV sales due to record-high gasoline prices was forcing the new cuts, and even pushing back the launch of its redesigned F-150 pickup truck that once was expected to drive the company's recovery. The moves suggest the company is bracing for a greater loss in 2008 than its $2.7 billion loss last year, and Ford said it no longer expects to break even by 2009.
Thursday, June 19, 2008
Another Hindenburg Omen
6/19/08 Another Hindenburg Omen
Robert McHugh: "We got another confirming Hindenburg Omen observation Tuesday, June 17th, the third since June 6th, and we continue to have an official Hindenburg Omen potential stock market crash signal on the clock. Getting a third does not make the risk of a crash any greater than had we just two, however it does drive home the point this remains an unhealthy market, and it is no aberration."
Royal Dutch Shell said it shut down production from an offshore oil field that produces about 200,000 barrels per day after the most powerful militant group in Nigeria launched an attack on an installation there Thursday.
Circuit City Stores Inc's quarterly loss widened to $164.8 million, or $1 a share, from $54.6 million, or 33 cents, a year earlier. Sales dropped to $2.3 billion from $2.49 billion a year earlier. The company, which is exploring its strategic alternatives following a buyout offer from Blockbuster Inc, said it's suspended future dividend payments.
Commercial property foreclosure postings in the Dallas-Fort Worth area jumped 35 percent in the first half of 2008, although the number remains very low.
Fewer than 1,000 commercial postings were recorded through June, according to Addison-based Foreclosure Listing Service.
That compares with more than 25,000 residential foreclosure postings during the same six-month period in Dallas, Tarrant, Collin and Denton counties.
According to the NY Times, in recent years, this global shortage of drill-ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones. Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike of oil and gasoline prices.
China's monetary policy may be overwhelmed by inflows of speculative capital if it doesn't allow greater exchange-rate flexibility, the World Bank said.
``China is too large an economy not to have an independent monetary policy,'' Louis Kuijs, acting chief economist for China, said in Beijing today when the Washington-based lender released its quarterly report on the nation. ``To have that, you need more exchange-rate flexibility.''
Hundreds of sensitive nuclear missile components that were previously part of a US Air Force nuclear inventory cannot be accounted for, according to a Pentagon report.
Bob Barr, the Libertarian Party presidential nominee, offered a scathing critique of Sen. John McCain. Barr, a one-time conservative Republican House member from Georgia who broke with the Bush administration and many of his former congressional colleagues, blasted McCain for his support of the war in Iraq, his energy policies and his stand on reducing government spending.
An employer has no right to read an employee's text messages without the worker's knowledge and consent, and federal law bars service providers from turning over the contents of the messages to the employer who pays for the service, the 9th U.S. Circuit Court of Appeals ruled Wednesday.
Rob Hanna: "One statistic I look at and use in my trading is the amount of time a security trades above or below certain moving averages. One moving average I look at is the 10-day moving average. Right now there are 4 stocks in the S&P 100 that have closed below their 10-day moving average for at least 30 days in a row. They are BAC, RF, GM and WB. Using the current S&P 100, I ran some scans back over the last 10 years to find out how unusual this is. In the last 10 years there have been only 65 occurrences of an S&P 100 stock closing below its 10-day moving average for 30 days in a row. Twice there have been 4 or more on at once. The first time was in late August of 1998 when there was up to 5 and the 2nd time was early March of 2000 with 4. From a historical perspective, some of the recent selling, especially in banks and financials, has been persistent to a degree that has rarely been seen."
Forest Labs annouced positive phase-III results of its skin-infection drug Ceftaroline.
Alliance Data Signs Long-Term Agreement to Provide Private Label Credit Card Services for Fast-Growing Web and Catalog Retailer Peach Direct.
The number of Americans filing first-time claims for unemployment benefits fell last week, signaling the labor market may be stabilizing. Initial jobless claims fell 5,000 to 381,000 in the week ended June 14, more than forecast, from a revised 386,000 the prior week, the Labor Department said today in Washington. The total number of people collecting benefits dropped 76,000 to 3.06 million for the week ended June 7.
Iran is studying incentives from the world's powers for the country to drop its uranium-enrichment program and will respond ``at an appropriate time,'' Foreign Minister Manouchehr Mottaki said.
Iran is prepared to negotiate on the proposals, though it won't be intimidated by threats from the U.S., Mottaki told reporters today in Uganda's capital, Kampala. The U.S. ``has no right to interfere; the time for ordering other nations is over,'' he said.
The U.S., European governments, Russia and China are offering the incentives in exchange for a halt to Iran's production of nuclear fuel, which the U.S. and its allies suspect is disguising a program to develop an atomic bomb or gain the knowledge to make one.
The Oil Drum reported the Dutch government acknowledged in its new energy strategy that Dutch natural gas production has passed its peak. Stating that the peak occurred in 2007/2008 and the Netherlands will have become a net importer of natural gas by 2025.
Nouriel Roubini: "Is there a significant chance that Israel will attack by year end Iran’s nuclear facilities? The German magazine Spiegel argues so in a two-part article “Mission Doable“ and “‘We Will See a Middle East in Flames’“ (hat tip to Fabius Maximus):
While the Europeans continue to pin their hopes on diplomacy and are convinced that a negotiated solution that would allow Tehran to save face is still possible, the Israelis already view the UN sanctions regime as a failure. Russia and China, they say, sabotaged the boycott from the very beginning, and even the Europeans have only half-heartedly supported sanctions. More rumors about a strike by Israel at Iran."
"The standing inventory of new construction is declining rapidly, but it's being offset somewhat by existing homes and foreclosures," said Lawrence Angelilli, senior vice president of finance at Centex Corp. (CTX). Steven Hilton, chief executive at Meritage Homes Corp. (MTH), said home builders have smaller inventories than the data being reported by the government. He estimated public builders, on average, have less than a 3-month supply as they try to cut the number of "speculative" homes, or those without a buyer due to a cancellation. When builders start to have less incentive to cut prices in order to move inventory and generate cash, it could be one of the "first signals to price stability," Hilton said Thursday at an industry conference hosted by Bank of America Corp.
High-net worth individuals, those coveted financial-services customers with at least $2 million to invest, are shifting assets from brokerages and large global banks to smaller, more conservative alternatives.``For the first time in my career, I saw concern about the location of one's assets,'' said Robert Balentine, the head of Wilmington Trust Corp.'s investment management group. ``We've seen tangible evidence of very wealthy clients shifting assets out of brokerage firms in great numbers.''
July crude fell $4.75, or 3.5%, to close at $131.93 a barrel Thursday in New York, marking the contract's weakest closing price since June 10. China said it increased retail-energy prices and oil analysts said the news raised concerns over a slowdown in demand.
August gold closed at $904.20 an ounce in New York Thursday, up $10.70, or 1.2%, for the session. That was the contract's highest closing level since May 28.
Americans drove just below 935 billion vehicle miles in 2008 as of April 30, the lowest total since 2003's figure of 899 billion miles, according to the monthly Travel Trends report from the U.S. Federal Highway Administration. In April, Americans drove 246 billion miles, down 1.8% from 250 billion in the year-ago period.
Citigroup Inc's chief financial officer Gary Crittenden said Thursday that, "if current trends prevail, it is fair to conclude we will continue to have substantial additional marks on our subprime exposure this quarter."
Natural-gas inventories rose by 57 billion cubic feet for the week ended June 13, the Energy Department said Thursday. Global Insight expected the data to show an increase of 65 billion. Total stocks now stand at 1.943 trillion cubic feet, down 376 billion cubic feet from the year-ago level and 52 billion cubic feet below the five-year average, the government data said. July natural gas was last down 7 cents at $13.145 per million British thermal units in electronic trading on Globex.
The factory sector in the Philadelphia region weakened in June for the seventh straight month, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed index fell to negative 17.1 from negative 15.6 in May.
The Conference Board said Thursday that the index of leading economic indicators rose slightly in May for a second straight month. The index, which attempts to forecast turning points in the economy, rose 0.1% in May, matching April's gain.
Robert McHugh: "We got another confirming Hindenburg Omen observation Tuesday, June 17th, the third since June 6th, and we continue to have an official Hindenburg Omen potential stock market crash signal on the clock. Getting a third does not make the risk of a crash any greater than had we just two, however it does drive home the point this remains an unhealthy market, and it is no aberration."
Royal Dutch Shell said it shut down production from an offshore oil field that produces about 200,000 barrels per day after the most powerful militant group in Nigeria launched an attack on an installation there Thursday.
Circuit City Stores Inc's quarterly loss widened to $164.8 million, or $1 a share, from $54.6 million, or 33 cents, a year earlier. Sales dropped to $2.3 billion from $2.49 billion a year earlier. The company, which is exploring its strategic alternatives following a buyout offer from Blockbuster Inc, said it's suspended future dividend payments.
Commercial property foreclosure postings in the Dallas-Fort Worth area jumped 35 percent in the first half of 2008, although the number remains very low.
Fewer than 1,000 commercial postings were recorded through June, according to Addison-based Foreclosure Listing Service.
That compares with more than 25,000 residential foreclosure postings during the same six-month period in Dallas, Tarrant, Collin and Denton counties.
According to the NY Times, in recent years, this global shortage of drill-ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones. Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike of oil and gasoline prices.
China's monetary policy may be overwhelmed by inflows of speculative capital if it doesn't allow greater exchange-rate flexibility, the World Bank said.
``China is too large an economy not to have an independent monetary policy,'' Louis Kuijs, acting chief economist for China, said in Beijing today when the Washington-based lender released its quarterly report on the nation. ``To have that, you need more exchange-rate flexibility.''
Hundreds of sensitive nuclear missile components that were previously part of a US Air Force nuclear inventory cannot be accounted for, according to a Pentagon report.
Bob Barr, the Libertarian Party presidential nominee, offered a scathing critique of Sen. John McCain. Barr, a one-time conservative Republican House member from Georgia who broke with the Bush administration and many of his former congressional colleagues, blasted McCain for his support of the war in Iraq, his energy policies and his stand on reducing government spending.
An employer has no right to read an employee's text messages without the worker's knowledge and consent, and federal law bars service providers from turning over the contents of the messages to the employer who pays for the service, the 9th U.S. Circuit Court of Appeals ruled Wednesday.
Rob Hanna: "One statistic I look at and use in my trading is the amount of time a security trades above or below certain moving averages. One moving average I look at is the 10-day moving average. Right now there are 4 stocks in the S&P 100 that have closed below their 10-day moving average for at least 30 days in a row. They are BAC, RF, GM and WB. Using the current S&P 100, I ran some scans back over the last 10 years to find out how unusual this is. In the last 10 years there have been only 65 occurrences of an S&P 100 stock closing below its 10-day moving average for 30 days in a row. Twice there have been 4 or more on at once. The first time was in late August of 1998 when there was up to 5 and the 2nd time was early March of 2000 with 4. From a historical perspective, some of the recent selling, especially in banks and financials, has been persistent to a degree that has rarely been seen."
Forest Labs annouced positive phase-III results of its skin-infection drug Ceftaroline.
Alliance Data Signs Long-Term Agreement to Provide Private Label Credit Card Services for Fast-Growing Web and Catalog Retailer Peach Direct.
The number of Americans filing first-time claims for unemployment benefits fell last week, signaling the labor market may be stabilizing. Initial jobless claims fell 5,000 to 381,000 in the week ended June 14, more than forecast, from a revised 386,000 the prior week, the Labor Department said today in Washington. The total number of people collecting benefits dropped 76,000 to 3.06 million for the week ended June 7.
Iran is studying incentives from the world's powers for the country to drop its uranium-enrichment program and will respond ``at an appropriate time,'' Foreign Minister Manouchehr Mottaki said.
Iran is prepared to negotiate on the proposals, though it won't be intimidated by threats from the U.S., Mottaki told reporters today in Uganda's capital, Kampala. The U.S. ``has no right to interfere; the time for ordering other nations is over,'' he said.
The U.S., European governments, Russia and China are offering the incentives in exchange for a halt to Iran's production of nuclear fuel, which the U.S. and its allies suspect is disguising a program to develop an atomic bomb or gain the knowledge to make one.
The Oil Drum reported the Dutch government acknowledged in its new energy strategy that Dutch natural gas production has passed its peak. Stating that the peak occurred in 2007/2008 and the Netherlands will have become a net importer of natural gas by 2025.
Nouriel Roubini: "Is there a significant chance that Israel will attack by year end Iran’s nuclear facilities? The German magazine Spiegel argues so in a two-part article “Mission Doable“ and “‘We Will See a Middle East in Flames’“ (hat tip to Fabius Maximus):
While the Europeans continue to pin their hopes on diplomacy and are convinced that a negotiated solution that would allow Tehran to save face is still possible, the Israelis already view the UN sanctions regime as a failure. Russia and China, they say, sabotaged the boycott from the very beginning, and even the Europeans have only half-heartedly supported sanctions. More rumors about a strike by Israel at Iran."
"The standing inventory of new construction is declining rapidly, but it's being offset somewhat by existing homes and foreclosures," said Lawrence Angelilli, senior vice president of finance at Centex Corp. (CTX). Steven Hilton, chief executive at Meritage Homes Corp. (MTH), said home builders have smaller inventories than the data being reported by the government. He estimated public builders, on average, have less than a 3-month supply as they try to cut the number of "speculative" homes, or those without a buyer due to a cancellation. When builders start to have less incentive to cut prices in order to move inventory and generate cash, it could be one of the "first signals to price stability," Hilton said Thursday at an industry conference hosted by Bank of America Corp.
High-net worth individuals, those coveted financial-services customers with at least $2 million to invest, are shifting assets from brokerages and large global banks to smaller, more conservative alternatives.``For the first time in my career, I saw concern about the location of one's assets,'' said Robert Balentine, the head of Wilmington Trust Corp.'s investment management group. ``We've seen tangible evidence of very wealthy clients shifting assets out of brokerage firms in great numbers.''
July crude fell $4.75, or 3.5%, to close at $131.93 a barrel Thursday in New York, marking the contract's weakest closing price since June 10. China said it increased retail-energy prices and oil analysts said the news raised concerns over a slowdown in demand.
August gold closed at $904.20 an ounce in New York Thursday, up $10.70, or 1.2%, for the session. That was the contract's highest closing level since May 28.
Americans drove just below 935 billion vehicle miles in 2008 as of April 30, the lowest total since 2003's figure of 899 billion miles, according to the monthly Travel Trends report from the U.S. Federal Highway Administration. In April, Americans drove 246 billion miles, down 1.8% from 250 billion in the year-ago period.
Citigroup Inc's chief financial officer Gary Crittenden said Thursday that, "if current trends prevail, it is fair to conclude we will continue to have substantial additional marks on our subprime exposure this quarter."
Natural-gas inventories rose by 57 billion cubic feet for the week ended June 13, the Energy Department said Thursday. Global Insight expected the data to show an increase of 65 billion. Total stocks now stand at 1.943 trillion cubic feet, down 376 billion cubic feet from the year-ago level and 52 billion cubic feet below the five-year average, the government data said. July natural gas was last down 7 cents at $13.145 per million British thermal units in electronic trading on Globex.
The factory sector in the Philadelphia region weakened in June for the seventh straight month, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed index fell to negative 17.1 from negative 15.6 in May.
The Conference Board said Thursday that the index of leading economic indicators rose slightly in May for a second straight month. The index, which attempts to forecast turning points in the economy, rose 0.1% in May, matching April's gain.
Wednesday, June 18, 2008
A Warning
6/18/08 A Warning
A credit strategist from the Royal Bank of Scotland warned investors in a note that the S&P 500 may fall by more than 300 points by September and that iTraxx index of high-grade corporate bonds could soar, according to a report in the Daily Telegraph newspaper. "Cash is the key safe haven. This is about not losing your money, and not losing your job," the RBS strategist, Bob Janjuah, was quoted as saying.
Burlington Northern Santa Fe Corp warned on Wednesday that earnings would miss forecasts because of flooding in the U.S. Midwest and rising fuel prices. Not long ago, all analysts were bullish on the rails--except for me.
Coventry Healt lowered its earnings estimates because of disappointing April and May results, sending shares sliding 19% to $32.44. Coventry now sees earnings of 55 cents to 57 cents a share for the second quarter, and $3.65 to $3.75 a share for the year.
Huntsman dropped 38% to $12.87 in heavy trade after Apollo Management LP and Hexion Specialty Chemicals said it has filed a lawsuit against Huntsman, alleging the chemical company's poor financial results make a previously announced takeover bid untenable.
The Dow Jones Industrial Average fell 131.24 points, or 1.1%, to 12,029.06. The Dow at 3 month low.The S&P 500 shed 13.13 points to 1,337.8, or 1%, while the Nasdaq Composite declined 28.02 points, or 1.1%, to 2,429.71.
July crude climbed $2.67, or 2%, to close at $136.68 a barrel in New York Wednesday. Gold for August delivery gained $6.60 to finish at $893.50 an ounce on the New York Mercantile Exchange.
The American Petroleum Institute reported a fall Wednesday of 3.1 million barrels in crude supplies for the week ended June 13. The Energy Department had reported a decline of 1.2 million barrels for the latest week. Motor gasoline supplies were down 2.4 million barrels, the API said. The government had reported that supplies fell by 1.2 million barrels. Distillate supplies climbed by 1.4 million barrels, the API said. They were up 2.6 million barrels, according to the Energy Department.
FedEx Corp. reported disappointing results, with rising fuel costs denting its bottom line. FedEx also said it expects first-quarter earnings of 80 cents to $1.00 a share and fiscal 2009 earnings of $4.75 to $5.25 a share.
Pfizer Inc. has agreed to settle patent litigation with India-based generic drugmaker Ranbaxy Laboratories Ltd. Under terms of the settlement, Ranbaxy will obtain a license effective Nov. 30, 2011, to sell generic versions of Pfizer's cholesterol-lowering drug Lipitor and high blood-pressure and cholesterol treatment Caduet in the U.S.
Moving to stem rising inflation and civil discontent, President Felipe Calderon and Mexican industrialists announced an agreement Wednesday to freeze prices on more than 150 food items.
The First Trust ISE Global Wind Energy ETF (NYSE Arca: FAN) launched Wednesday.
30-year fixed mortgage rates at an eight-month high.
According to Wikipedia:
The traditional definition of a Hindenburg Omen has five criteria:
*
That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
*
That the smaller of these numbers is greater than 75. (this is not a rule but a function of the 2.2% of the total issues)
*
That the NYSE 10 Week moving average is rising.
*
That the McClellan Oscillator is negative on that same day.
*
That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.
These measures are calculated each evening using Wall Street Journal figures for consistency. The occurrence of all five criteria on one day is often referred to as an unconfirmed Hindenburg Omen. A confirmed Hindenburg Omen occurs if a second (or more) Hindenburg Omen signals occur during a 36-day period from the first signal.
A credit strategist from the Royal Bank of Scotland warned investors in a note that the S&P 500 may fall by more than 300 points by September and that iTraxx index of high-grade corporate bonds could soar, according to a report in the Daily Telegraph newspaper. "Cash is the key safe haven. This is about not losing your money, and not losing your job," the RBS strategist, Bob Janjuah, was quoted as saying.
Burlington Northern Santa Fe Corp warned on Wednesday that earnings would miss forecasts because of flooding in the U.S. Midwest and rising fuel prices. Not long ago, all analysts were bullish on the rails--except for me.
Coventry Healt lowered its earnings estimates because of disappointing April and May results, sending shares sliding 19% to $32.44. Coventry now sees earnings of 55 cents to 57 cents a share for the second quarter, and $3.65 to $3.75 a share for the year.
Huntsman dropped 38% to $12.87 in heavy trade after Apollo Management LP and Hexion Specialty Chemicals said it has filed a lawsuit against Huntsman, alleging the chemical company's poor financial results make a previously announced takeover bid untenable.
The Dow Jones Industrial Average fell 131.24 points, or 1.1%, to 12,029.06. The Dow at 3 month low.The S&P 500 shed 13.13 points to 1,337.8, or 1%, while the Nasdaq Composite declined 28.02 points, or 1.1%, to 2,429.71.
July crude climbed $2.67, or 2%, to close at $136.68 a barrel in New York Wednesday. Gold for August delivery gained $6.60 to finish at $893.50 an ounce on the New York Mercantile Exchange.
The American Petroleum Institute reported a fall Wednesday of 3.1 million barrels in crude supplies for the week ended June 13. The Energy Department had reported a decline of 1.2 million barrels for the latest week. Motor gasoline supplies were down 2.4 million barrels, the API said. The government had reported that supplies fell by 1.2 million barrels. Distillate supplies climbed by 1.4 million barrels, the API said. They were up 2.6 million barrels, according to the Energy Department.
FedEx Corp. reported disappointing results, with rising fuel costs denting its bottom line. FedEx also said it expects first-quarter earnings of 80 cents to $1.00 a share and fiscal 2009 earnings of $4.75 to $5.25 a share.
Pfizer Inc. has agreed to settle patent litigation with India-based generic drugmaker Ranbaxy Laboratories Ltd. Under terms of the settlement, Ranbaxy will obtain a license effective Nov. 30, 2011, to sell generic versions of Pfizer's cholesterol-lowering drug Lipitor and high blood-pressure and cholesterol treatment Caduet in the U.S.
Moving to stem rising inflation and civil discontent, President Felipe Calderon and Mexican industrialists announced an agreement Wednesday to freeze prices on more than 150 food items.
The First Trust ISE Global Wind Energy ETF (NYSE Arca: FAN) launched Wednesday.
30-year fixed mortgage rates at an eight-month high.
According to Wikipedia:
The traditional definition of a Hindenburg Omen has five criteria:
*
That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
*
That the smaller of these numbers is greater than 75. (this is not a rule but a function of the 2.2% of the total issues)
*
That the NYSE 10 Week moving average is rising.
*
That the McClellan Oscillator is negative on that same day.
*
That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.
These measures are calculated each evening using Wall Street Journal figures for consistency. The occurrence of all five criteria on one day is often referred to as an unconfirmed Hindenburg Omen. A confirmed Hindenburg Omen occurs if a second (or more) Hindenburg Omen signals occur during a 36-day period from the first signal.
Tuesday, June 17, 2008
Hindenburg Omen
6/17/08 Hindenburg Omen
Robert McHugh: "We got a confirming, second Hindenburg Omen observation Monday, June 16th, so we now have an official Hindenburg Omen potential stock market crash signal on the clock. This means, there is an approximate 25 percent probability that we will see a full blown stock market crash within the next 120 days, taking us into a risk zone through October 2008. This is significant as the odds of getting a stock market crash on any given random day is less than one-tenth of one percent. Further, we can tell you that there has not been a stock market crash over the past 25 years without a confirmed H.O."
Finished goods are up 7.2% over the past year.
Wholesale prices bolted ahead in May at the fastest pace in six months as energy and food costs marched higher.The Labor Department reported Tuesday that its Producer Price Index, which measures the costs of goods before they reach store shelves, shot up 1.4 percent in May. That was up from a modest 0.2 percent rise in April and marked the biggest increase since November.
U.S. housing starts slid 3.3 percent in May to their lowest level in more than 17 years, while permits for future construction also fell, signaling more weakness ahead for the battered U.S. housing sector.
Best Buy reported a 7 percent drop first-quarter profits Tuesday, but it still beat Wall Street's expectations because of a lower share count and increased sales.
Seneca: " It is not because things are difficult that we do not dare, it is because we do not dare that they are difficult."
Goldman Sachs Group Inc said second-quarter earnings fell about 10 percent, but still easily beat lowered Wall Street expectations on higher fees from asset management and stock underwriting.
Adobe Systems Inc.'s profit rose 41 percent in the second quarter because of strong sales and booming demand in international markets.
The output of the nation's factories, mines and utilities fell 0.2% in May, the Federal Reserve said Tuesday. This is the third drop in the past four months.
Tesoro said it's schedule to realize its goal of generating $750 million to $1 billion of operating cash flow through reduced operating and administrative costs, lower capital expenditures and reduced working capital driven mainly by inventory reductions.
The U.S. current account deficit widened to $176.4 billion in the first three months of the year from $167.2 billion in the fourth quarter, the Commerce Department reported Tuesday. The current account deficit was 5% of gross domestic product. The increase was largely due to lower income earned by Americans overseas. Net financial flows into the United States fell to $124.3 billion from $213.4 billion.
Analysts from Goldman Sachs Group Inc.estimated that U.S. banks may need as much as $65 billion in new capital and said that raising that amount will be harder and more expensive in coming months.
Consumer price inflation in the United Kingdom is set to rise sharply in the second half of the year due largely to surging energy and food prices, likely hitting an annualized pace of more than 4%, Bank of England Gov. Mervyn King told U.K. Chancellor of the Exchequer Alistair Darling in an open letter published Tuesday.
Swamped by debt and rising medical bills, elderly Americans have been seeking bankruptcy-court protection at sharply faster rates than other adults, a study to be released Tuesday indicates.
Salmon-Challis National Forest Supervisor Bill Wood has signed the Record of Decision approving a modified Plan of Operations for Formation Capital Corporation's Idaho Cobalt Project, a proposed cobalt mining project located in the Panther Creek drainage west of Salmon.
Rob Hanna: " The S&P 500 rose today for the 3rd day in a row. As I showed on May 30th, when the S&P is trading below its 200-day moving average and without the proper pattern of increasing volume, this has provided a short-run negative expectancy over the last 35 years. What was interesting about today’s rise is that it was so weak from a price perspective. This can be a sign that the bulls are losing momentum and the short-term tide is ready to turn back to the bears."
According to Reuters, Credit Derivatives Research LLC, an independent credit research company, on Tuesday launched an index to measure, or hedge against, counterparty risk in the $62 trillion credit derivatives market.
The index, dubbed the CDR Counterparty Risk Index, comprises the average spread of the largest 15 credit derivative counterparties and may be used to hedge against the risk of a counterparty failing, or to track perceptions of their credit quality.
"The biggest fear when you do a credit default swap contract is when somebody goes into default and you're expecting your $10 million back from the guy you trade with and they're not there to pay you that money," said Tim Backshall, chief strategist at Credit Derivatives Research in Walnut Creek, California.
When a company defaults on its debt the protection seller in a credit default swap contract, which is often a bank, pays the protection buyer the full amount insured.
The average credit spread of the 15 largest dealers, which represent more than 90 percent of volumes in the market, peaked at 250 basis points in March, compared to 25 basis points a year ago, though have since retreated to 100 basis points, according to CDR data.
"That risk is a low number still but it's a lot higher than it ever was before," said Backshall.
Erich Fromm: "Creativity requires the courage to let go of certainties."
August gold closed at $886.90 an ounce in New York Tuesday, up 60 cents for the session to mark a recovery from the day's low of $876.70. July crude closed at $134.01 a barrel Tuesday, down 60 cents for the New York trading session.
The fertilizer stocks shot to the moon on Tuesday and the railroad stocks took it on the chin.
Robert McHugh: "We got a confirming, second Hindenburg Omen observation Monday, June 16th, so we now have an official Hindenburg Omen potential stock market crash signal on the clock. This means, there is an approximate 25 percent probability that we will see a full blown stock market crash within the next 120 days, taking us into a risk zone through October 2008. This is significant as the odds of getting a stock market crash on any given random day is less than one-tenth of one percent. Further, we can tell you that there has not been a stock market crash over the past 25 years without a confirmed H.O."
Finished goods are up 7.2% over the past year.
Wholesale prices bolted ahead in May at the fastest pace in six months as energy and food costs marched higher.The Labor Department reported Tuesday that its Producer Price Index, which measures the costs of goods before they reach store shelves, shot up 1.4 percent in May. That was up from a modest 0.2 percent rise in April and marked the biggest increase since November.
U.S. housing starts slid 3.3 percent in May to their lowest level in more than 17 years, while permits for future construction also fell, signaling more weakness ahead for the battered U.S. housing sector.
Best Buy reported a 7 percent drop first-quarter profits Tuesday, but it still beat Wall Street's expectations because of a lower share count and increased sales.
Seneca: " It is not because things are difficult that we do not dare, it is because we do not dare that they are difficult."
Goldman Sachs Group Inc said second-quarter earnings fell about 10 percent, but still easily beat lowered Wall Street expectations on higher fees from asset management and stock underwriting.
Adobe Systems Inc.'s profit rose 41 percent in the second quarter because of strong sales and booming demand in international markets.
The output of the nation's factories, mines and utilities fell 0.2% in May, the Federal Reserve said Tuesday. This is the third drop in the past four months.
Tesoro said it's schedule to realize its goal of generating $750 million to $1 billion of operating cash flow through reduced operating and administrative costs, lower capital expenditures and reduced working capital driven mainly by inventory reductions.
The U.S. current account deficit widened to $176.4 billion in the first three months of the year from $167.2 billion in the fourth quarter, the Commerce Department reported Tuesday. The current account deficit was 5% of gross domestic product. The increase was largely due to lower income earned by Americans overseas. Net financial flows into the United States fell to $124.3 billion from $213.4 billion.
Analysts from Goldman Sachs Group Inc.estimated that U.S. banks may need as much as $65 billion in new capital and said that raising that amount will be harder and more expensive in coming months.
Consumer price inflation in the United Kingdom is set to rise sharply in the second half of the year due largely to surging energy and food prices, likely hitting an annualized pace of more than 4%, Bank of England Gov. Mervyn King told U.K. Chancellor of the Exchequer Alistair Darling in an open letter published Tuesday.
Swamped by debt and rising medical bills, elderly Americans have been seeking bankruptcy-court protection at sharply faster rates than other adults, a study to be released Tuesday indicates.
Salmon-Challis National Forest Supervisor Bill Wood has signed the Record of Decision approving a modified Plan of Operations for Formation Capital Corporation's Idaho Cobalt Project, a proposed cobalt mining project located in the Panther Creek drainage west of Salmon.
Rob Hanna: " The S&P 500 rose today for the 3rd day in a row. As I showed on May 30th, when the S&P is trading below its 200-day moving average and without the proper pattern of increasing volume, this has provided a short-run negative expectancy over the last 35 years. What was interesting about today’s rise is that it was so weak from a price perspective. This can be a sign that the bulls are losing momentum and the short-term tide is ready to turn back to the bears."
According to Reuters, Credit Derivatives Research LLC, an independent credit research company, on Tuesday launched an index to measure, or hedge against, counterparty risk in the $62 trillion credit derivatives market.
The index, dubbed the CDR Counterparty Risk Index, comprises the average spread of the largest 15 credit derivative counterparties and may be used to hedge against the risk of a counterparty failing, or to track perceptions of their credit quality.
"The biggest fear when you do a credit default swap contract is when somebody goes into default and you're expecting your $10 million back from the guy you trade with and they're not there to pay you that money," said Tim Backshall, chief strategist at Credit Derivatives Research in Walnut Creek, California.
When a company defaults on its debt the protection seller in a credit default swap contract, which is often a bank, pays the protection buyer the full amount insured.
The average credit spread of the 15 largest dealers, which represent more than 90 percent of volumes in the market, peaked at 250 basis points in March, compared to 25 basis points a year ago, though have since retreated to 100 basis points, according to CDR data.
"That risk is a low number still but it's a lot higher than it ever was before," said Backshall.
Erich Fromm: "Creativity requires the courage to let go of certainties."
August gold closed at $886.90 an ounce in New York Tuesday, up 60 cents for the session to mark a recovery from the day's low of $876.70. July crude closed at $134.01 a barrel Tuesday, down 60 cents for the New York trading session.
The fertilizer stocks shot to the moon on Tuesday and the railroad stocks took it on the chin.
Ross Perot
6/16/08 Ross Perot
Columnist Robert D. Novak said in a story published Monday that sources close to Ben Bernanke indicated the Fed chief has no current plans to raise interest rates to fight inflation. Bernanke is more worried about the jump in oil and gasoline prices causing an economic slowdown rather than an overheated economy, Novak said, citing sources.
In case Novak did not notice, the market raised rates for the Fed.
Front month July corn on the Chicago Board of Trade rose to a contract high of $7.57-3/4 a bushel, up more than 3.5 percent from Friday's close, while July 2009 soared to an all-time peak of $8.07.
Tim Wood: "Since July 2007 we have had an upside Dow theory non-confirmation, followed by a bearish primary trend change that was followed by a downside non-confirmation out of the January/March secondary lows. This was all then followed by a rally into the most recent secondary high points that carried the Transports to a new closing high on June 5, 2008 while the Industrials have lagged. As a result, another upside non-confirmation has been form...to date nothing has occurred to negate the bearish primary trend change that occurred on November 21, 2007. So, until the bearish primary trend, that was established on November 21, 2007 is negated, there is not sufficient evidence in accordance with classical Dow theory, to determine if we are still operating within the context of a longer-term bull market or if we have indeed moved into the early stages of a long term bear market."
Brett Steenbarger: "Until we see greater evidence of demand for stocks, it will be difficult to sustain a bull move. That having been said, I'm not yet seeing the kind of selling that typified the markets in the first quarter of this year. As long as that's the case, we appear to be trading in a broad range defined by the March lows and the recent market highs."
Ross Perot launched a new Web site Sunday, scolding America about its fiscal irresponsibility and the impact bad decisions will have on the country’s future.
Perot says America is spending its way over the edge of a cliff, and has launched Perotcharts.com to shake up voters about the national debt and the federal government
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Columnist Robert D. Novak said in a story published Monday that sources close to Ben Bernanke indicated the Fed chief has no current plans to raise interest rates to fight inflation. Bernanke is more worried about the jump in oil and gasoline prices causing an economic slowdown rather than an overheated economy, Novak said, citing sources.
In case Novak did not notice, the market raised rates for the Fed.
Front month July corn on the Chicago Board of Trade rose to a contract high of $7.57-3/4 a bushel, up more than 3.5 percent from Friday's close, while July 2009 soared to an all-time peak of $8.07.
Tim Wood: "Since July 2007 we have had an upside Dow theory non-confirmation, followed by a bearish primary trend change that was followed by a downside non-confirmation out of the January/March secondary lows. This was all then followed by a rally into the most recent secondary high points that carried the Transports to a new closing high on June 5, 2008 while the Industrials have lagged. As a result, another upside non-confirmation has been form...to date nothing has occurred to negate the bearish primary trend change that occurred on November 21, 2007. So, until the bearish primary trend, that was established on November 21, 2007 is negated, there is not sufficient evidence in accordance with classical Dow theory, to determine if we are still operating within the context of a longer-term bull market or if we have indeed moved into the early stages of a long term bear market."
Brett Steenbarger: "Until we see greater evidence of demand for stocks, it will be difficult to sustain a bull move. That having been said, I'm not yet seeing the kind of selling that typified the markets in the first quarter of this year. As long as that's the case, we appear to be trading in a broad range defined by the March lows and the recent market highs."
Ross Perot launched a new Web site Sunday, scolding America about its fiscal irresponsibility and the impact bad decisions will have on the country’s future.
Perot says America is spending its way over the edge of a cliff, and has launched Perotcharts.com to shake up voters about the national debt and the federal government
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Monday, June 16, 2008
Continuing Economic Downturn
6/15/08 Continuing Economic Downturn
"Within the Constitution's separation-of-powers structure, few exercises of judicial power are as legitimate or as necessary as the responsibility to hear challenges to the authority of the Executive to imprison a person," Justice Kennedy wrote.
North Dakota has set a monthly oil production record and is on pace to set a record for the year, state and industry officials say.The state Industrial Commission reports that North Dakota oil wells pumped an average of 150,578 barrels a day in April. The previous high of 147,774 barrels a day was set in August 1984.
Luxury home developer WCI Communities Inc on Friday said it formed a special board committee to evaluate restructuring proposals from potential investors.
The Oil Drum: "Aramco’s statement that it is the world’s leading oil producer is now false as it now second after Russia since 2006. Nevertheless, Saudi Aramco’s repeated statement about remaining recoverable oil reserves being 260 billion barrels (Gb) is still generally accepted...Saudi Aramco has kept remaining recoverable crude oil reserves constant simply by artificially increasing the OIIP each year since 1982, accompanied by an unrealistically high average recovery factor of 52% since 1988. Saudi Aramco’s propaganda campaign is failing. Saudi Aramco is no longer the world’s leading crude oil producer. Saudi Aramco’s statement of 260 billion barrels of remaining recoverable reserves is almost certainly false. Instead, the remaining recoverable crude oil reserves are probably less than 100 Gb, instead of 260 Gb. It is time to call on Saudi Aramco and the other OPEC members to tell the truth about their reserves."
Capital One said in a filing to the Securities and Exchange Commission that its U.S. charge-off rate was 6.28% and that its international charge-off rate was 6.5%. In April, the U.S. charge-off rate was 6.08% and the international rate was 6.34%.
The proposal to merge XM Satellite Radio Holdings Inc.and Sirius Satellite Radio Inc. received backing from the staff of the Federal Communications Commission, with conditions to protect consumers from price increases in service and receiving equipment, The Wall Street Journal reported.
Consumer price inflation across the 15-nation euro zone rose at an upwardly revised annual pace of 3.7% in May, Eurostat reported Monday, up from a preliminary May estimate of 3.6% and an April pace of 3.3%.
John Hussman: "And the Fed is talking about raising rates to slow inflation and support the dollar? The Fed is on the fast track to destroying its own credibility. In my view, no sooner will all of this “tough love” leave the lips of Fed governors than the Fed will be forced to announce some novel emergency “liquidity facility” to address a fresh round of credit concerns. We may even observe an emergency easing on some morning in the next few months when the markets appear likely to open up particularly weak. The simple fact is that inflation outside of food and energy is not particularly high. Moreover, Fed tightening can do nothing to ease the food and energy pressures short of intentionally throwing the U.S. into a deeper recession (by making adjustable-rate mortgage resets more onerous than they already are). Mortgage failures remain the predominant risk to the economy, and that risk will not go away soon...In short, mortgage foreclosures and defaults are just now hitting their stride, and we are likely to observe a second round of credit fears as those losses mount. The U.S. dollar has enjoyed a brief rebound on tightening talk from the Fed, which is likely to quickly dissipate as soon as those credit concerns revive. Meanwhile, commodity price pressure is likely to diminish by the end of summer as the result of a continuing economic downturn coupled with a flight-to-safety which will reduce monetary velocity."
"Within the Constitution's separation-of-powers structure, few exercises of judicial power are as legitimate or as necessary as the responsibility to hear challenges to the authority of the Executive to imprison a person," Justice Kennedy wrote.
North Dakota has set a monthly oil production record and is on pace to set a record for the year, state and industry officials say.The state Industrial Commission reports that North Dakota oil wells pumped an average of 150,578 barrels a day in April. The previous high of 147,774 barrels a day was set in August 1984.
Luxury home developer WCI Communities Inc on Friday said it formed a special board committee to evaluate restructuring proposals from potential investors.
The Oil Drum: "Aramco’s statement that it is the world’s leading oil producer is now false as it now second after Russia since 2006. Nevertheless, Saudi Aramco’s repeated statement about remaining recoverable oil reserves being 260 billion barrels (Gb) is still generally accepted...Saudi Aramco has kept remaining recoverable crude oil reserves constant simply by artificially increasing the OIIP each year since 1982, accompanied by an unrealistically high average recovery factor of 52% since 1988. Saudi Aramco’s propaganda campaign is failing. Saudi Aramco is no longer the world’s leading crude oil producer. Saudi Aramco’s statement of 260 billion barrels of remaining recoverable reserves is almost certainly false. Instead, the remaining recoverable crude oil reserves are probably less than 100 Gb, instead of 260 Gb. It is time to call on Saudi Aramco and the other OPEC members to tell the truth about their reserves."
Capital One said in a filing to the Securities and Exchange Commission that its U.S. charge-off rate was 6.28% and that its international charge-off rate was 6.5%. In April, the U.S. charge-off rate was 6.08% and the international rate was 6.34%.
The proposal to merge XM Satellite Radio Holdings Inc.and Sirius Satellite Radio Inc. received backing from the staff of the Federal Communications Commission, with conditions to protect consumers from price increases in service and receiving equipment, The Wall Street Journal reported.
Consumer price inflation across the 15-nation euro zone rose at an upwardly revised annual pace of 3.7% in May, Eurostat reported Monday, up from a preliminary May estimate of 3.6% and an April pace of 3.3%.
John Hussman: "And the Fed is talking about raising rates to slow inflation and support the dollar? The Fed is on the fast track to destroying its own credibility. In my view, no sooner will all of this “tough love” leave the lips of Fed governors than the Fed will be forced to announce some novel emergency “liquidity facility” to address a fresh round of credit concerns. We may even observe an emergency easing on some morning in the next few months when the markets appear likely to open up particularly weak. The simple fact is that inflation outside of food and energy is not particularly high. Moreover, Fed tightening can do nothing to ease the food and energy pressures short of intentionally throwing the U.S. into a deeper recession (by making adjustable-rate mortgage resets more onerous than they already are). Mortgage failures remain the predominant risk to the economy, and that risk will not go away soon...In short, mortgage foreclosures and defaults are just now hitting their stride, and we are likely to observe a second round of credit fears as those losses mount. The U.S. dollar has enjoyed a brief rebound on tightening talk from the Fed, which is likely to quickly dissipate as soon as those credit concerns revive. Meanwhile, commodity price pressure is likely to diminish by the end of summer as the result of a continuing economic downturn coupled with a flight-to-safety which will reduce monetary velocity."
Saturday, June 14, 2008
Interest Rate Prediction
6/13/08 Interest Rate Prediction
Richard Benson: "Unless interest rates are increased materially above the rate of inflation, prices will continue to rise. But with the high level of bad debt in the world banking system, the financial system would not survive the strain of a significant interest rate increase. For a period of time, stagflation will become a new way of life for many of us."
The Federal Reserve will increase its 2 percent benchmark interest rate in quarter-point increments in September and October to curb inflation, Barclays Capital Inc. predicted in a report today. China, which invests up to a third of its record $1.68 trillion in foreign-currency reserves in Treasuries, should seek higher-returning alternatives, a former legislator said.
CPI rose by a seasonally adjusted 0.6% in May - it's biggest jump in six months. Consensus economist estimates were for a gain of 0.5%. Excluding food and energy costs, prices rose 0.2%, matching forecasts.
George Ure: " OK, on a not-seasonally adjusted basis, the inflation rate is now running 10% which is what happens when you pencil out an unadjusted 0.8% for 12 months."
Iraq's prime minister said Friday that talks with the U.S. on a long-term security agreement between the two nations have reached a dead end, saying the U.S. proposals "violate Iraqi sovereignty."
From Banking Times: The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
From Time Magazine: "If the U.S. or Israel so much as drops a bomb on one of its reactors or its military training camps, Iran will shut down Gulf oil exports by launching a barrage of Chinese Silkworm missiles on tankers in the Strait of Hormuz and Arab oil facilities. In the worst case scenario, seventeen million barrels of oil would come off world markets."
A current MSNBC poll is running about 89% in favor of impeachment proceedings against the current inhabitant of the White House.
UnitedHealth is down to $30, a new 52-week low, and down roughly 50% from the year's high. The last time the stock sold at $30 was in January 2004.
The consumer sentiment index in June fell to 56.7 from 59.8 in May, according to Friday media reports on the reading from the University of Michigan/Reuters. The current economic conditions index fell to 68.7 from 73.3.
Microsoft has said a Yahoo-Google deal would put more than 90 percent of the search ad market in Mountain View, California-based Google's hands.
Apex Silver Mines is down to $5.90, a new 10-year low, and down from over $20 in the past 52 weeks. About one week ago, a director bought stock at $6.95. Based on the outlook for the company's earnings in 2009, I believe the shares will be considerably higher in 12 months.
The swollen Cedar River has complicated operations at John Deere Waterloo Works, forcing employee evacuations and unplanned shutdowns.“The flood situation for the Waterloo area remains critical in general but under control in the specific instance of John Deere facilities,” Deere spokesman Ken Golden said. Deere’s tractor assembly operations are in the first week of a scheduled two-week shutdown. As a result, limited production had been planned at some of the other locations.
Richard Benson: "Unless interest rates are increased materially above the rate of inflation, prices will continue to rise. But with the high level of bad debt in the world banking system, the financial system would not survive the strain of a significant interest rate increase. For a period of time, stagflation will become a new way of life for many of us."
The Federal Reserve will increase its 2 percent benchmark interest rate in quarter-point increments in September and October to curb inflation, Barclays Capital Inc. predicted in a report today. China, which invests up to a third of its record $1.68 trillion in foreign-currency reserves in Treasuries, should seek higher-returning alternatives, a former legislator said.
CPI rose by a seasonally adjusted 0.6% in May - it's biggest jump in six months. Consensus economist estimates were for a gain of 0.5%. Excluding food and energy costs, prices rose 0.2%, matching forecasts.
George Ure: " OK, on a not-seasonally adjusted basis, the inflation rate is now running 10% which is what happens when you pencil out an unadjusted 0.8% for 12 months."
Iraq's prime minister said Friday that talks with the U.S. on a long-term security agreement between the two nations have reached a dead end, saying the U.S. proposals "violate Iraqi sovereignty."
From Banking Times: The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
From Time Magazine: "If the U.S. or Israel so much as drops a bomb on one of its reactors or its military training camps, Iran will shut down Gulf oil exports by launching a barrage of Chinese Silkworm missiles on tankers in the Strait of Hormuz and Arab oil facilities. In the worst case scenario, seventeen million barrels of oil would come off world markets."
A current MSNBC poll is running about 89% in favor of impeachment proceedings against the current inhabitant of the White House.
UnitedHealth is down to $30, a new 52-week low, and down roughly 50% from the year's high. The last time the stock sold at $30 was in January 2004.
The consumer sentiment index in June fell to 56.7 from 59.8 in May, according to Friday media reports on the reading from the University of Michigan/Reuters. The current economic conditions index fell to 68.7 from 73.3.
Microsoft has said a Yahoo-Google deal would put more than 90 percent of the search ad market in Mountain View, California-based Google's hands.
Apex Silver Mines is down to $5.90, a new 10-year low, and down from over $20 in the past 52 weeks. About one week ago, a director bought stock at $6.95. Based on the outlook for the company's earnings in 2009, I believe the shares will be considerably higher in 12 months.
The swollen Cedar River has complicated operations at John Deere Waterloo Works, forcing employee evacuations and unplanned shutdowns.“The flood situation for the Waterloo area remains critical in general but under control in the specific instance of John Deere facilities,” Deere spokesman Ken Golden said. Deere’s tractor assembly operations are in the first week of a scheduled two-week shutdown. As a result, limited production had been planned at some of the other locations.
Friday, June 13, 2008
Rising Interest Rates
6/12/03 Rising Interest Rates
Retail sales in the U.S. rose twice as much as forecast in May as Americans used their tax rebates to shop at electronics and department stores, and record gasoline prices swelled service-station receipts.Purchases climbed 1 percent, the most since November, following a 0.4 percent gain the prior month that was previously reported as a drop, the Commerce Department said in Washington. Purchases excluding gasoline increased 0.8 percent last month. Treasuries slid after the report, with benchmark 10-year note yields rising to 4.16 percent at 8:52 a.m. in New York, from 4.07 percent late yesterday.
Devin Brady: "This year, cotton acreage nationwide dropped 28-percent, hitting an 18-year low of 11.1 million acres, according to the United states Department of Agriculture. Acreage dropped by about 22-percent in Texas, the national leader, and by nearly 20-percent in California."
Invitrogen, which makes chemical kits used to analyze and clone genes, said it agreed to combine with Applied Biosystems Group, a unit of Applera, in a cash and stock deal it valued at $6.7 billion. The deal price of $38 per share is 17 percent above Applied Biosystems’ closing stock price on Wednesday.
Business sales rose at the fastest pace in five months in April, outpacing the growth of inventories, and leaving most businesses with small stockpiles of unsold goods, the Commerce Department reported Thursday. Total sales increased 1.4% in April, the fastest growth since November. Inventories increased a slower 0.5%, dropping the inventory-sales ratio to 1.25, a tick higher than the record low of 1.24 set in November.
For all of fiscal 2008, Qualcomm said it sees earnings per share to be approximately $2.09 to $2.13, compared to its prior estimate of $2.04 to $2.09.
The Oil Drum: "Strike action by thousands of Spanish and Portuguese truckers produced ominous knock-on effects on food supplies, aviation and industry yesterday, as Lisbon airport ran out of fuel, car factories shut down and petrol stations and supermarkets reported shortages.In a worrying sign for other European countries that face rising discontent at the spiraling cost of diesel, a third day of strikes generated widespread mayhem and the mood turned ugly after the first casualties of the standoff: two strikers died in clashes on picket lines.
South Africa's central bank raised its key interest rate by 50 basis points to 12% Thursday, citing "further deterioration in the inflation outlook."
The Supreme Court ruled Thursday that foreign terrorism suspects held at Guantanamo Bay have rights under the Constitution to challenge their detention in U.S. civilian courts. In its third rebuke of the Bush administration's treatment of prisoners, the court ruled 5-4 that the government is violating the rights of prisoners being held indefinitely and without charges at the U.S. naval base in Cuba.
Natural-gas inventories rose by 80 billion cubic feet for the week ended June 6, the Energy Department said Thursday. Global Insight expected the data to show an increase of 103 billion. Total stocks now stand at 1.886 trillion cubic feet, down 343 billion cubic feet from the year-ago level and 19 billion cubic feet below the five-year average, the government data said. July natural gas was last up 18 cents at $12.835 per million British thermal units in electronic trading on Globex.
July crude turns higher on Globex, up 47 cents at $136.81July crude turns higher on Globex, up 47 cents at $136.81.
The difference between yields on 10-year Treasury Inflation Protected Securities, or TIPS, and conventional notes has widened to 2.51 percentage points, from 2.28 percentage points at the end of April. The figure reflects the inflation rate that traders expect for the next decade.
Yahoo Inc.has struck a Web search agreement with Google Inc.that could be worth about $800 million in annual revenues. In a statement, Yahoo said the deal will allow it to run ads supplied by Google alongside searches on its main Web site as well as some of its other properties in the United States and Canada. Yahoo shares dropped to $23.52.
Anheuser-Busch Cos. is in early talks with Mexico's Grupo Modelo SA about a possible combination of the companies, The Wall Street Journal reported late Thursday on its Web site, citing people familiar with the matter. Anheuser already has a non-controlling stake in Modelo of about 50%, according to the Journal.
According to the FT, refiners are paying record premiums for the high-quality crude oil they use to produce diesel and petrol, a sign of strong demand in the physical oil market that calls into question claims that soaring oil prices are being driven by speculators. Refiners are paying up to $5-$6 a barrel on top of current record prices to secure high-grade oil, traders said, double the level of a year ago. The mark-ups are four times higher than the 2000-2008 average. The movement in prices paid for physical barrels of oil has gone largely undetected outside the refinery industry because financial markets pay almost exclusive attention to the price of oil futures traded in London and New York.
The 2-year Treasury bond yield jumped up to 3.05% and the 10-year to 4.21%.
According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $7.851 billion in May ($13.819 Bil xETF activity) as Domestic funds report net outfows of -$1.257 billion (Inflows $7.285 Bil xETFs) and Non-domestic funds report net inflows of $9.108 billion ($6.534 Bil xETFs); Excluding ETF activity, International funds report net inflows totaling $4.843 billion, as net inlows are reported in all Emerging and Developed regions except Asia/Pacific (-$259 Mil) and Japan (-$26 Mil); Excluding ETF activity, Real Estate funds report the second consecutive month of net inflows ($1.019 Bil)for the first time since February 2007.
Lehman Brothers Holdings CEO Richard Fuld is actively listening to offers for the beleaguered investment bank, including a possible bid by private-equity firm Blackstone for a 20% to 30% stake, CNBC has learned.
On June 12, 2008, Alliance Data Systems Corporation provided to market analysts an IR Update announcing that its Epsilon business has signed a multi-year extension agreement with Nestle Purina PetCare Company to continue to host and manage its multi-brand interactive marketing database platform.
Gary Dorsch: "The US dollar remains weak against the Euro, because the yield on the 2-year US Treasury note is roughly -180 basis points below the German 2-year schatz yield. A year ago, the US 2-yr T-note was yielding +60 basis points more than the German schatz. On June 11th, St. Louis Fed chief James Bullard said the 2% fed funds rate is too low and could fuel inflation, unless the Fed takes action going forward. "The Fed's easing in January and March was very sharp, for insurance against the possibility of a very bad outcome from the financial crisis. The probability of a very bad outcome from the financial crisis is now receding, and we've still got the low level of interest rates. I see inflationary consequences of that going forward, if we don't take action and stay on top of this situation," Bullard warned."
U.S. foreclosure activity rose 7% in May, or up 48% from the same period last year, RealtyTrac said. The report also shows one in every 483 U.S. households received a foreclosure filing during the month, the highest monthly foreclosure rate since RealtyTrac began issuing the report in January 2005. It's the third monthly rise in a row and 29th straight year-on-year increase.
India's inflation jumped to a seven-year high of 8.75% in the week ended May 31 from the same period a year ago, raising concerns that the country's central bank may adjust monetary policy to rein in soaring prices.
China's retail sales climbed 21.6% in May, holding near April's nine-year high pace of 22% growth, the Chinese government said Friday.
Retail sales in the U.S. rose twice as much as forecast in May as Americans used their tax rebates to shop at electronics and department stores, and record gasoline prices swelled service-station receipts.Purchases climbed 1 percent, the most since November, following a 0.4 percent gain the prior month that was previously reported as a drop, the Commerce Department said in Washington. Purchases excluding gasoline increased 0.8 percent last month. Treasuries slid after the report, with benchmark 10-year note yields rising to 4.16 percent at 8:52 a.m. in New York, from 4.07 percent late yesterday.
Devin Brady: "This year, cotton acreage nationwide dropped 28-percent, hitting an 18-year low of 11.1 million acres, according to the United states Department of Agriculture. Acreage dropped by about 22-percent in Texas, the national leader, and by nearly 20-percent in California."
Invitrogen, which makes chemical kits used to analyze and clone genes, said it agreed to combine with Applied Biosystems Group, a unit of Applera, in a cash and stock deal it valued at $6.7 billion. The deal price of $38 per share is 17 percent above Applied Biosystems’ closing stock price on Wednesday.
Business sales rose at the fastest pace in five months in April, outpacing the growth of inventories, and leaving most businesses with small stockpiles of unsold goods, the Commerce Department reported Thursday. Total sales increased 1.4% in April, the fastest growth since November. Inventories increased a slower 0.5%, dropping the inventory-sales ratio to 1.25, a tick higher than the record low of 1.24 set in November.
For all of fiscal 2008, Qualcomm said it sees earnings per share to be approximately $2.09 to $2.13, compared to its prior estimate of $2.04 to $2.09.
The Oil Drum: "Strike action by thousands of Spanish and Portuguese truckers produced ominous knock-on effects on food supplies, aviation and industry yesterday, as Lisbon airport ran out of fuel, car factories shut down and petrol stations and supermarkets reported shortages.In a worrying sign for other European countries that face rising discontent at the spiraling cost of diesel, a third day of strikes generated widespread mayhem and the mood turned ugly after the first casualties of the standoff: two strikers died in clashes on picket lines.
South Africa's central bank raised its key interest rate by 50 basis points to 12% Thursday, citing "further deterioration in the inflation outlook."
The Supreme Court ruled Thursday that foreign terrorism suspects held at Guantanamo Bay have rights under the Constitution to challenge their detention in U.S. civilian courts. In its third rebuke of the Bush administration's treatment of prisoners, the court ruled 5-4 that the government is violating the rights of prisoners being held indefinitely and without charges at the U.S. naval base in Cuba.
Natural-gas inventories rose by 80 billion cubic feet for the week ended June 6, the Energy Department said Thursday. Global Insight expected the data to show an increase of 103 billion. Total stocks now stand at 1.886 trillion cubic feet, down 343 billion cubic feet from the year-ago level and 19 billion cubic feet below the five-year average, the government data said. July natural gas was last up 18 cents at $12.835 per million British thermal units in electronic trading on Globex.
July crude turns higher on Globex, up 47 cents at $136.81July crude turns higher on Globex, up 47 cents at $136.81.
The difference between yields on 10-year Treasury Inflation Protected Securities, or TIPS, and conventional notes has widened to 2.51 percentage points, from 2.28 percentage points at the end of April. The figure reflects the inflation rate that traders expect for the next decade.
Yahoo Inc.has struck a Web search agreement with Google Inc.that could be worth about $800 million in annual revenues. In a statement, Yahoo said the deal will allow it to run ads supplied by Google alongside searches on its main Web site as well as some of its other properties in the United States and Canada. Yahoo shares dropped to $23.52.
Anheuser-Busch Cos. is in early talks with Mexico's Grupo Modelo SA about a possible combination of the companies, The Wall Street Journal reported late Thursday on its Web site, citing people familiar with the matter. Anheuser already has a non-controlling stake in Modelo of about 50%, according to the Journal.
According to the FT, refiners are paying record premiums for the high-quality crude oil they use to produce diesel and petrol, a sign of strong demand in the physical oil market that calls into question claims that soaring oil prices are being driven by speculators. Refiners are paying up to $5-$6 a barrel on top of current record prices to secure high-grade oil, traders said, double the level of a year ago. The mark-ups are four times higher than the 2000-2008 average. The movement in prices paid for physical barrels of oil has gone largely undetected outside the refinery industry because financial markets pay almost exclusive attention to the price of oil futures traded in London and New York.
The 2-year Treasury bond yield jumped up to 3.05% and the 10-year to 4.21%.
According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $7.851 billion in May ($13.819 Bil xETF activity) as Domestic funds report net outfows of -$1.257 billion (Inflows $7.285 Bil xETFs) and Non-domestic funds report net inflows of $9.108 billion ($6.534 Bil xETFs); Excluding ETF activity, International funds report net inflows totaling $4.843 billion, as net inlows are reported in all Emerging and Developed regions except Asia/Pacific (-$259 Mil) and Japan (-$26 Mil); Excluding ETF activity, Real Estate funds report the second consecutive month of net inflows ($1.019 Bil)for the first time since February 2007.
Lehman Brothers Holdings CEO Richard Fuld is actively listening to offers for the beleaguered investment bank, including a possible bid by private-equity firm Blackstone for a 20% to 30% stake, CNBC has learned.
On June 12, 2008, Alliance Data Systems Corporation provided to market analysts an IR Update announcing that its Epsilon business has signed a multi-year extension agreement with Nestle Purina PetCare Company to continue to host and manage its multi-brand interactive marketing database platform.
Gary Dorsch: "The US dollar remains weak against the Euro, because the yield on the 2-year US Treasury note is roughly -180 basis points below the German 2-year schatz yield. A year ago, the US 2-yr T-note was yielding +60 basis points more than the German schatz. On June 11th, St. Louis Fed chief James Bullard said the 2% fed funds rate is too low and could fuel inflation, unless the Fed takes action going forward. "The Fed's easing in January and March was very sharp, for insurance against the possibility of a very bad outcome from the financial crisis. The probability of a very bad outcome from the financial crisis is now receding, and we've still got the low level of interest rates. I see inflationary consequences of that going forward, if we don't take action and stay on top of this situation," Bullard warned."
U.S. foreclosure activity rose 7% in May, or up 48% from the same period last year, RealtyTrac said. The report also shows one in every 483 U.S. households received a foreclosure filing during the month, the highest monthly foreclosure rate since RealtyTrac began issuing the report in January 2005. It's the third monthly rise in a row and 29th straight year-on-year increase.
India's inflation jumped to a seven-year high of 8.75% in the week ended May 31 from the same period a year ago, raising concerns that the country's central bank may adjust monetary policy to rein in soaring prices.
China's retail sales climbed 21.6% in May, holding near April's nine-year high pace of 22% growth, the Chinese government said Friday.
Thursday, June 12, 2008
Buyouts
6/11/08 Buyouts
Gas prices advanced further into record territory Wednesday, reaching a new record national average of $4.052, according to a survey of stations by AAA and the Oil Price Information Service.
Toyota is introducing a plug-in hybrid with next-generation lithium-ion batteries in Japan, the U.S. and Europe by 2010, under a widespread strategy to be green outlined Wednesday.
China's export growth unexpectedly accelerated in May, easing concern that a strengthening yuan and a slowdown in U.S. demand will trigger an economic slump.Overseas sales rose 28.1 percent from a year earlier, after gaining a revised 21.9 percent in April, the customs bureau said on its Web site today. Exports to the U.S. accelerated, withstanding a 10 percent.
According to the FT, Citigroup, Merrill Lynch and UBS, the banks most exposed to Ambac and MBIA, could face further writedowns of up to $10bn after the bond insurers last week lost their fight to retain their triple A credit ratings.
Japan’s Daiichi Sankyo is to buy Ranbaxy Laboratories, India’s biggest generic drugs maker, in a deal worth up to $4.6bn.
The NY Times reported that fourteen research teams studying the impacts of warming on the Arctic Ocean have issued independent projections of how the sea ice will behave this summer, and 11 of them foresee an ice retreat at least as extraordinary as last year’s or even more dramatic. The other three groups that issued a numerical estimate see the ice extent heading back toward, but not equaling, the average minimum for summers since satellites began tracking the comings and goings of Arctic sea ice in 1979. Five other groups chose not to issue a numerical estimate.
The two refineries in Rio Grande do Norte and Ceara states, along with plants that are either under construction or being planned, will boost Petrobras's refining capacity by at least 1 million barrels a day by 2014, the company said in a statement on its Web site. Brazilian state-run oil giant Petroleo Brasileiro SA (PBR) is planning a major expansion in its fleet of oil rigs, tankers and support vessels, a program that will have a major impact on worldwide capacity for such equipment, the company's president said Tuesday.
"We know this will affect capacity worldwide," the firm's president, Jose Sergio Gabrielli, told a meeting of the Brazilian-American Chamber of Commerce.
Japan's gross domestic product, or the total value of the nation's goods and services, in the January-March period grew at an annual pace of 4.0 percent, up from an initial estimate of 3.3 percent. From the previous quarter, GDP grew 1.0 percent, better than the 0.8 percent first announced, the Cabinet Office said.
China's trade surplus shrank 10 percent in May from a year earlier, the second straight monthly decline, as the value of imports of crude oil and other raw materials surged, the government said Wednesday. The $20.2 billion surplus for May was still relatively large -- up from a $16.7 billion gap in April and $13.4 billion in March -- and larger than analysts had predicted.Imports ballooned 40 percent to $100.3 billion, the General Administration of Customs said. Exports, meanwhile, rose 28 percent to $120.5 billion -- still strong amid speculation that the slowdown in the U.S. economy would significantly erode export demand.
Mortgage applications rose after falling for three straight weeks, rebounding from the lowest level in more than six years despite a rise in home loan rates.
World oil production fell by 0.2 percent in 2007, the first decline since 2002, and proven oil reserves were flat, BP Plc said in an annual review released on Wednesday.Production fell by 130,000 barrels per day (bpd) last year to 81.53 million bpd and reserves were essentially flat at 1.24 trillion barrels, London-based BP said in its 2008 Statistical Review of World Energy.
India's central bank hiked its repo rate by 25 basis points to 8% Wednesday in a move to fight soaring inflation. This was the first rate hike since March 2007.
The Semiconductor Industry Association on Wednesday cut its 2008 semiconductor sales growth forecast to 4.3% from 7.7%, citing ongoing pricing pressure in memory chips.
Burlington Northern Santa Fe Corp.started off lower after UBS AG said it may cut its profit forecast.
Marc Faber: "Stocks, property and commodities are overvalued as an economic slowdown and inflation will curb earnings growth and erode the value of assets...Contrary to the last 25 years, we are in a period of de-leveraging. Corporate profits in particular are still far too high for 2009 and have to be adjusted downwards, and valuations become less compelling.''
The American Petroleum Institute reported a fall Wednesday of 3.2 million barrels in crude supplies for the week ended June 6. The Energy Department had reported a decline of 4.6 million barrels for the latest week. Motor gasoline supplies were up 986,000 barrels, the API said. The government had reported that supplies climbed 1 million barrels. Distillate supplies climbed by 504,000 barrels, the API said. They were up 2.3 million barrels, according to the Energy Department.Demand for gasoline over the four weeks ended June 6 was 1.3 percent lower than a year earlier, averaging over 9.3 million barrels a day.At the same time, U.S. refineries ran at 88.6 percent of total capacity on average, a drop of 1.1 percentage points from the prior week. July crude climbed as high as $137.69 a barrel on the New York Mercantile Exchange Wednesday, and was last up $6.38, or 4.9%, at $137.69.
The Federal Reserve says the economy remained "generally weak" heading into summer as rising costs for energy and food pounded consumers and forced some companies to push their own prices higher.
iShares DJ U.S. Home Construction (ITB) and SPDR S&P Homebuilders ETF (XHB), were both off about 6% in late-afternoon trading.
The railroads were particularly hard hit on Wednesday.
The federal budget deficit widened to $165.9 billion in May as the government paid out some $48 billion in tax rebates to individuals, the Treasury Department reported Wednesday. Receipts fell to $124.3 billion in May, down 24% compared with the previous May. Outlays rose 25% year-on-year to $290.2 billion.
Gold for August delivery surged $11.70 to end at $882.90 an ounce on the New York Mercantile Exchange.
InBev, which makes Stella Artois and Beck's, is offering $65 per share for Anheuser, which is the leading U.S. brewer with 48.5 percent of the market. Its shares closed at $58.35 on Wednesday on the New York Stock Exchange.
Peter Acciavatti, a credit analyst and managing director at JP Morgan Securities Inc, said Wall Street write-downs and losses totaling at least $325 billion so far may ultimately mean $3.9 trillion in tighter credit conditions, he told Reuters in an interview.
Midwest rains push corn prices above $7 a bushel.
Initial jobless claims jumped by 25,000 in the week ending June 7, to 384,000, the Labor Department reported Thursday. The four-week average of initial claims rose by 2,500 to 371,500. Continuing unemployment claims posted a gain of 58,000, pushing the number up to 3.14 million for the week ending May 31. The four-week average of continuing claims rose by 16,500 to 3.09 million in the latest week.
Gas prices advanced further into record territory Wednesday, reaching a new record national average of $4.052, according to a survey of stations by AAA and the Oil Price Information Service.
Toyota is introducing a plug-in hybrid with next-generation lithium-ion batteries in Japan, the U.S. and Europe by 2010, under a widespread strategy to be green outlined Wednesday.
China's export growth unexpectedly accelerated in May, easing concern that a strengthening yuan and a slowdown in U.S. demand will trigger an economic slump.Overseas sales rose 28.1 percent from a year earlier, after gaining a revised 21.9 percent in April, the customs bureau said on its Web site today. Exports to the U.S. accelerated, withstanding a 10 percent.
According to the FT, Citigroup, Merrill Lynch and UBS, the banks most exposed to Ambac and MBIA, could face further writedowns of up to $10bn after the bond insurers last week lost their fight to retain their triple A credit ratings.
Japan’s Daiichi Sankyo is to buy Ranbaxy Laboratories, India’s biggest generic drugs maker, in a deal worth up to $4.6bn.
The NY Times reported that fourteen research teams studying the impacts of warming on the Arctic Ocean have issued independent projections of how the sea ice will behave this summer, and 11 of them foresee an ice retreat at least as extraordinary as last year’s or even more dramatic. The other three groups that issued a numerical estimate see the ice extent heading back toward, but not equaling, the average minimum for summers since satellites began tracking the comings and goings of Arctic sea ice in 1979. Five other groups chose not to issue a numerical estimate.
The two refineries in Rio Grande do Norte and Ceara states, along with plants that are either under construction or being planned, will boost Petrobras's refining capacity by at least 1 million barrels a day by 2014, the company said in a statement on its Web site. Brazilian state-run oil giant Petroleo Brasileiro SA (PBR) is planning a major expansion in its fleet of oil rigs, tankers and support vessels, a program that will have a major impact on worldwide capacity for such equipment, the company's president said Tuesday.
"We know this will affect capacity worldwide," the firm's president, Jose Sergio Gabrielli, told a meeting of the Brazilian-American Chamber of Commerce.
Japan's gross domestic product, or the total value of the nation's goods and services, in the January-March period grew at an annual pace of 4.0 percent, up from an initial estimate of 3.3 percent. From the previous quarter, GDP grew 1.0 percent, better than the 0.8 percent first announced, the Cabinet Office said.
China's trade surplus shrank 10 percent in May from a year earlier, the second straight monthly decline, as the value of imports of crude oil and other raw materials surged, the government said Wednesday. The $20.2 billion surplus for May was still relatively large -- up from a $16.7 billion gap in April and $13.4 billion in March -- and larger than analysts had predicted.Imports ballooned 40 percent to $100.3 billion, the General Administration of Customs said. Exports, meanwhile, rose 28 percent to $120.5 billion -- still strong amid speculation that the slowdown in the U.S. economy would significantly erode export demand.
Mortgage applications rose after falling for three straight weeks, rebounding from the lowest level in more than six years despite a rise in home loan rates.
World oil production fell by 0.2 percent in 2007, the first decline since 2002, and proven oil reserves were flat, BP Plc said in an annual review released on Wednesday.Production fell by 130,000 barrels per day (bpd) last year to 81.53 million bpd and reserves were essentially flat at 1.24 trillion barrels, London-based BP said in its 2008 Statistical Review of World Energy.
India's central bank hiked its repo rate by 25 basis points to 8% Wednesday in a move to fight soaring inflation. This was the first rate hike since March 2007.
The Semiconductor Industry Association on Wednesday cut its 2008 semiconductor sales growth forecast to 4.3% from 7.7%, citing ongoing pricing pressure in memory chips.
Burlington Northern Santa Fe Corp.started off lower after UBS AG said it may cut its profit forecast.
Marc Faber: "Stocks, property and commodities are overvalued as an economic slowdown and inflation will curb earnings growth and erode the value of assets...Contrary to the last 25 years, we are in a period of de-leveraging. Corporate profits in particular are still far too high for 2009 and have to be adjusted downwards, and valuations become less compelling.''
The American Petroleum Institute reported a fall Wednesday of 3.2 million barrels in crude supplies for the week ended June 6. The Energy Department had reported a decline of 4.6 million barrels for the latest week. Motor gasoline supplies were up 986,000 barrels, the API said. The government had reported that supplies climbed 1 million barrels. Distillate supplies climbed by 504,000 barrels, the API said. They were up 2.3 million barrels, according to the Energy Department.Demand for gasoline over the four weeks ended June 6 was 1.3 percent lower than a year earlier, averaging over 9.3 million barrels a day.At the same time, U.S. refineries ran at 88.6 percent of total capacity on average, a drop of 1.1 percentage points from the prior week. July crude climbed as high as $137.69 a barrel on the New York Mercantile Exchange Wednesday, and was last up $6.38, or 4.9%, at $137.69.
The Federal Reserve says the economy remained "generally weak" heading into summer as rising costs for energy and food pounded consumers and forced some companies to push their own prices higher.
iShares DJ U.S. Home Construction (ITB) and SPDR S&P Homebuilders ETF (XHB), were both off about 6% in late-afternoon trading.
The railroads were particularly hard hit on Wednesday.
The federal budget deficit widened to $165.9 billion in May as the government paid out some $48 billion in tax rebates to individuals, the Treasury Department reported Wednesday. Receipts fell to $124.3 billion in May, down 24% compared with the previous May. Outlays rose 25% year-on-year to $290.2 billion.
Gold for August delivery surged $11.70 to end at $882.90 an ounce on the New York Mercantile Exchange.
InBev, which makes Stella Artois and Beck's, is offering $65 per share for Anheuser, which is the leading U.S. brewer with 48.5 percent of the market. Its shares closed at $58.35 on Wednesday on the New York Stock Exchange.
Peter Acciavatti, a credit analyst and managing director at JP Morgan Securities Inc, said Wall Street write-downs and losses totaling at least $325 billion so far may ultimately mean $3.9 trillion in tighter credit conditions, he told Reuters in an interview.
Midwest rains push corn prices above $7 a bushel.
Initial jobless claims jumped by 25,000 in the week ending June 7, to 384,000, the Labor Department reported Thursday. The four-week average of initial claims rose by 2,500 to 371,500. Continuing unemployment claims posted a gain of 58,000, pushing the number up to 3.14 million for the week ending May 31. The four-week average of continuing claims rose by 16,500 to 3.09 million in the latest week.
Wednesday, June 11, 2008
Declining Confidence
6/10/08 Declining Confidence
Confidence in the global economy fell in June as central banks signaled interest rates may be heading higher, a survey of Bloomberg users on five continents showed.The Bloomberg Professional Global Confidence Index fell to 21 from May's 22.7, with respondents becoming more pessimistic in every region. A level below 50 indicates negative sentiment. The measure had rebounded in the previous two months after hitting a low of 13.1 in March.``There's been a shift in focus to the inflation beast,'' said Martin Van Vliet, an economist at ING Bank in Amsterdam who took part in the survey. ``You can clearly see a coordinated verbal response from central banks highlighting the rise in long- term inflation expectations.''
Bloomberg reported rainstorms sweeping the biggest corn states in the U.S. are damaging a crop that's already failing to keep pace with global demand for food, fuel and cattle feed. Farms in Iowa were drenched with 5.78 inches of rain last month, or 37 percent more than normal, according to Harry Hillaker, the climatologist for the biggest corn-growing state. The 22.23 inches that fell on Illinois from January through May was 45 percent above normal and the third-wettest on record, according to data compiled by the state. Corn rose to a record $6.73 a bushel yesterday in Chicago, extending this year's gain to 44 percent. Yields in the U.S. may fall 10 percent short of government forecasts, the biggest drop in 13 years, and send prices up another 34 percent as storms delay planting, stunt growth and leech fertilizer from the soil, said Terry Jones, who farms more than 6,000 acres near Williamsburg, Iowa.
The cost of renting ships that transport key raw materials such as iron ore and coal have risen to all-time highs and put further pressures on inflation and the global economy.
According to the LA Times, despite the jaw-dropping prices at the pump -- they jumped 19 cents a gallon in California to $4.43 in the last week and averaged more than $4 a gallon nationwide for the first time, the Energy Department said Monday -- service station owners aren't making the killing that motorists assume.
That's because credit card fees, the price of tanker-loads of fuel and other costs are rising so rapidly that station owners haven't been able to keep pace despite the record prices they're charging. "People see $4 gas, and they think these retailers are making a fortune," said Ben Brockwell, a director at Oil Price Information Service, which tracks fuel prices. "The reality is these guys are being stressed to the limit."
Rep. Ron Paul: "If the Fed continues with its bubble blowing policies of the past, the new commodities bubble will continue to grow, gas prices will continue to go up, as the value of your dollars go down. We will see an overinvestment in these commodities as solutions are desperately sought for a supply shortage, which is only part of the problem. Make no mistake, though, this is not the free market at work. Government manipulations have added levels of complication and unintended consequences to the marketplace.This is not the time for members of Congress to take political potshots at each other, or to imagine that the free market is somehow to blame. This is the time to understand and fix problems. That begins with making sure the decision makers have a firm grasp on the causes of the problems and possible effects of their decisions. This is absolutely crucial if we want to get it right this time. That is why I am in the process of calling for hearings on Capitol Hill on how the falling value of the dollar affects energy prices."
According to the FT, Chinese white-goods maker Qingdao Haier is considering a bid for General Electric’s appliance business and has begun to approach investment banks to advise it, according to a person familiar with the matter. Haier is one of a large group of potential bidders across the globe with an interest in acquiring the GE operations, which could fetch up to $7bn.
The World Bank sees global economic growth of just 2.7% in 2008, down from a previous 3.3%. Developing countries should expand 6.7%; the U.S. just 1.1%.
Citigroup boosted its 2008 Brent outlook 22 percent to $116.60 a barrel, while Merrill Lynch raised its own by 14 percent to $114.
Rising food and energy costs are still trickling through the economy, complicating the outlook for inflation, Boston Federal Reserve President Eric Rosengren said on Tuesday. Speaking on Cape Cod, Rosengren said the central bank still expects prices to trend down as the economy softens, but conceded that it is less confident in this outlook because of simmering commodity costs. "The effects of significant increases in food and energy prices are still feeding through the economy, as are the impacts of appropriately aggressive monetary and fiscal policy responses to the recent financial turmoil,'' he said.
United Rentals plans to make a "modified Dutch auction" tender offer to repurchase up to 27,160,000 shares of its common stock at a price between $22.00 and $25.00 per share.
XTO Energy Inc.said it'll buy closely held Hunt Petroleum Corp. for $4.19 billion in cash and stock, as the Fort Worth, Texas, natural gas and oil producer moved to boost its reserves and production.
The U.S. trade deficit widened to $60.9 billion in April behind higher prices for crude oil and other commodities, the Commerce Department reported Tuesday. Imports rose 4.5% to $216.4 billion, while exports increased 3.3% to $155.5 billion.
Skillanalytics: "XHB (Homebuilder’s ETF) showed up on my RSI2 scan - and then I looked at a Bullish % Index I constructed in Bull’s-Eye Broker a while back. I think it’s pretty compelling. Now, the ATR on it is quite large - so I’d be taking a fairly small position."
George Ure: " The macro-problem is that somewhere between 2000 and 2015, a Grand Super Cycle top will be in. As that occurs, we won't be looking at a decline from 14,000 to 12,000 that became evident last week. Nope: it will be more like 14,000 to 2,000 to a Dow somewhere between 2,000 and zero. If there's a number I fear more than any other, it is a weekly close under 11,893.7."
Regulators and banks agreed to changes aimed at easing the risk of a collapse in the $62 trillion market for credit-default swaps.Morgan Stanley, Deutsche Bank AG and Goldman Sachs Group Inc. are among the 17 banks creating a system to move trades through a clearinghouse that would absorb a failure by one of the market-makers, the Federal Reserve Bank of New York said yesterday in a statement following a meeting with the firms.This will reduce ``the systemic risk when a large counterparty fails,'' Tim Brunne, a Munich-based credit strategist at UniCredit SpA, said in an interview today. ``A large portion of the market would be trading against the central counterparty, and that would be a good thing.''
By the Fed's late October meeting, futures traders are now fully pricing in the chance of a half point hike to rates, to 2.50%.
Agrium ups 2Q view to $2.80-$3.00 range from $1.92-$2.22.
Oil futures moved higher Wednesday morning, with the Nymex July contract up $1.77 at $133.08 a barrel in electronic trade. Oil futures fell by more than 2% on Tuesday.
The European Central Bank has not signaled it will make a series of rate hikes after July, ECB Executive Board member Juergen Stark said, according to a report published Wednesday by Bloomberg.
China's imports of crude oil in the January through May period totaled 75.97 million metric tons (659.8 million barrels), up 12.7% from the year-earlier period, according to figures released by the General Administration of Customs Wednesday.
Staples announced that it's reached an agreement with Corporate Express' board in a deal that values the Dutch office supplies group at 3.1 billion euros ($4.8 billion) on an enterprise basis.
China's producer-price index climbed in May from a year earlier at its fastest pace in three years, as industry grappled with higher prices for oil, coal and steal. The producer-price index climbed 8.2% in May, after rising 8.1% in April, the National Bureau of Statistics said Wednesday.
Confidence in the global economy fell in June as central banks signaled interest rates may be heading higher, a survey of Bloomberg users on five continents showed.The Bloomberg Professional Global Confidence Index fell to 21 from May's 22.7, with respondents becoming more pessimistic in every region. A level below 50 indicates negative sentiment. The measure had rebounded in the previous two months after hitting a low of 13.1 in March.``There's been a shift in focus to the inflation beast,'' said Martin Van Vliet, an economist at ING Bank in Amsterdam who took part in the survey. ``You can clearly see a coordinated verbal response from central banks highlighting the rise in long- term inflation expectations.''
Bloomberg reported rainstorms sweeping the biggest corn states in the U.S. are damaging a crop that's already failing to keep pace with global demand for food, fuel and cattle feed. Farms in Iowa were drenched with 5.78 inches of rain last month, or 37 percent more than normal, according to Harry Hillaker, the climatologist for the biggest corn-growing state. The 22.23 inches that fell on Illinois from January through May was 45 percent above normal and the third-wettest on record, according to data compiled by the state. Corn rose to a record $6.73 a bushel yesterday in Chicago, extending this year's gain to 44 percent. Yields in the U.S. may fall 10 percent short of government forecasts, the biggest drop in 13 years, and send prices up another 34 percent as storms delay planting, stunt growth and leech fertilizer from the soil, said Terry Jones, who farms more than 6,000 acres near Williamsburg, Iowa.
The cost of renting ships that transport key raw materials such as iron ore and coal have risen to all-time highs and put further pressures on inflation and the global economy.
According to the LA Times, despite the jaw-dropping prices at the pump -- they jumped 19 cents a gallon in California to $4.43 in the last week and averaged more than $4 a gallon nationwide for the first time, the Energy Department said Monday -- service station owners aren't making the killing that motorists assume.
That's because credit card fees, the price of tanker-loads of fuel and other costs are rising so rapidly that station owners haven't been able to keep pace despite the record prices they're charging. "People see $4 gas, and they think these retailers are making a fortune," said Ben Brockwell, a director at Oil Price Information Service, which tracks fuel prices. "The reality is these guys are being stressed to the limit."
Rep. Ron Paul: "If the Fed continues with its bubble blowing policies of the past, the new commodities bubble will continue to grow, gas prices will continue to go up, as the value of your dollars go down. We will see an overinvestment in these commodities as solutions are desperately sought for a supply shortage, which is only part of the problem. Make no mistake, though, this is not the free market at work. Government manipulations have added levels of complication and unintended consequences to the marketplace.This is not the time for members of Congress to take political potshots at each other, or to imagine that the free market is somehow to blame. This is the time to understand and fix problems. That begins with making sure the decision makers have a firm grasp on the causes of the problems and possible effects of their decisions. This is absolutely crucial if we want to get it right this time. That is why I am in the process of calling for hearings on Capitol Hill on how the falling value of the dollar affects energy prices."
According to the FT, Chinese white-goods maker Qingdao Haier is considering a bid for General Electric’s appliance business and has begun to approach investment banks to advise it, according to a person familiar with the matter. Haier is one of a large group of potential bidders across the globe with an interest in acquiring the GE operations, which could fetch up to $7bn.
The World Bank sees global economic growth of just 2.7% in 2008, down from a previous 3.3%. Developing countries should expand 6.7%; the U.S. just 1.1%.
Citigroup boosted its 2008 Brent outlook 22 percent to $116.60 a barrel, while Merrill Lynch raised its own by 14 percent to $114.
Rising food and energy costs are still trickling through the economy, complicating the outlook for inflation, Boston Federal Reserve President Eric Rosengren said on Tuesday. Speaking on Cape Cod, Rosengren said the central bank still expects prices to trend down as the economy softens, but conceded that it is less confident in this outlook because of simmering commodity costs. "The effects of significant increases in food and energy prices are still feeding through the economy, as are the impacts of appropriately aggressive monetary and fiscal policy responses to the recent financial turmoil,'' he said.
United Rentals plans to make a "modified Dutch auction" tender offer to repurchase up to 27,160,000 shares of its common stock at a price between $22.00 and $25.00 per share.
XTO Energy Inc.said it'll buy closely held Hunt Petroleum Corp. for $4.19 billion in cash and stock, as the Fort Worth, Texas, natural gas and oil producer moved to boost its reserves and production.
The U.S. trade deficit widened to $60.9 billion in April behind higher prices for crude oil and other commodities, the Commerce Department reported Tuesday. Imports rose 4.5% to $216.4 billion, while exports increased 3.3% to $155.5 billion.
Skillanalytics: "XHB (Homebuilder’s ETF) showed up on my RSI2 scan - and then I looked at a Bullish % Index I constructed in Bull’s-Eye Broker a while back. I think it’s pretty compelling. Now, the ATR on it is quite large - so I’d be taking a fairly small position."
George Ure: " The macro-problem is that somewhere between 2000 and 2015, a Grand Super Cycle top will be in. As that occurs, we won't be looking at a decline from 14,000 to 12,000 that became evident last week. Nope: it will be more like 14,000 to 2,000 to a Dow somewhere between 2,000 and zero. If there's a number I fear more than any other, it is a weekly close under 11,893.7."
Regulators and banks agreed to changes aimed at easing the risk of a collapse in the $62 trillion market for credit-default swaps.Morgan Stanley, Deutsche Bank AG and Goldman Sachs Group Inc. are among the 17 banks creating a system to move trades through a clearinghouse that would absorb a failure by one of the market-makers, the Federal Reserve Bank of New York said yesterday in a statement following a meeting with the firms.This will reduce ``the systemic risk when a large counterparty fails,'' Tim Brunne, a Munich-based credit strategist at UniCredit SpA, said in an interview today. ``A large portion of the market would be trading against the central counterparty, and that would be a good thing.''
By the Fed's late October meeting, futures traders are now fully pricing in the chance of a half point hike to rates, to 2.50%.
Agrium ups 2Q view to $2.80-$3.00 range from $1.92-$2.22.
Oil futures moved higher Wednesday morning, with the Nymex July contract up $1.77 at $133.08 a barrel in electronic trade. Oil futures fell by more than 2% on Tuesday.
The European Central Bank has not signaled it will make a series of rate hikes after July, ECB Executive Board member Juergen Stark said, according to a report published Wednesday by Bloomberg.
China's imports of crude oil in the January through May period totaled 75.97 million metric tons (659.8 million barrels), up 12.7% from the year-earlier period, according to figures released by the General Administration of Customs Wednesday.
Staples announced that it's reached an agreement with Corporate Express' board in a deal that values the Dutch office supplies group at 3.1 billion euros ($4.8 billion) on an enterprise basis.
China's producer-price index climbed in May from a year earlier at its fastest pace in three years, as industry grappled with higher prices for oil, coal and steal. The producer-price index climbed 8.2% in May, after rising 8.1% in April, the National Bureau of Statistics said Wednesday.
Tuesday, June 10, 2008
Inflation
6/9/08 Inflation
Corn for July delivery rose as much as 22.25 cents, or 3.4 percent, to $6.73 in after-hours trading on the Chicago Board of Trade and stood at $6.675 as of 11:59 a.m. London time. The contract gained 8.6 percent last week, the biggest gain in 10 weeks. New-crop December corn traded as high as $6.985 a bushel.
Soybeans for July delivery added as much as 32 cents, or 2.2 percent, to $14.895 a bushel, and last traded at $14.7825. The price rose 6.9 percent last week, the most since June 2005. Soybeans, which reached a record $15.865 on March 3, are up 22 percent this year, for a fourth consecutive annual gain.
U.K. producer prices increased at the quickest rate in two decades in May, increasing the odds the Bank of England will refrain from interest-rate cuts even as the economy edges toward a recession. Prices charged by factories rose 1.6 percent from April, the Office for National Statistics said in London today. That's the most since comparable records began in 1986 and double the median forecast of 32 economists in a Bloomberg News survey. From a year earlier, prices rose 8.9 percent.
Willis Group Holdings, the London-based global insurance broker, is to acquire a smaller rival in the US for about $2.1bn in cash and shares, kicking off what could be a wave of consolidation in the sector.The deal to buy Hilb Rogal & Hobbs for $46 a share would expand Willis’s presence in North America. The region contributes 45 per cent to overall revenues, up from 30 per cent in 2007.
Iranian supreme leader Ayatollah Ali Khamenei on Monday warned Iraq's visiting prime minister against signing an agreement with the United States keeping foreign troops in the country beyond 2008.
According to Business Week, by April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures.
Brett Steenbarger: "Only 43% of S&P 500 stocks are now trading above their 50-day moving averages, down from 80% at the market peak. Only 29% of those stocks are now trading above their 20-day moving averages.
Despite this weakness, we are not yet recording significant oversold levels in my Cumulative Demand-Supply Index (middle chart), though the index has been deteriorating for a while. Readings below -20 have tended to accompany good intermediate-term buying opportunities; the current reading is -4.69."
McDonald's Corp.said sales at outlets open at least 13 months rose 7.7 percent in May, driven by demand from customers in the U.K., France and Australia.
Japan's longest postwar expansion may be over, as record crude oil and raw materials costs discourage companies from hiring and spending, a government report showed. The economy may be reaching a ``turning point,'' the Cabinet Office said today after releasing figures that showed the coincident index, a measure of current economic activity, fell to 101.7 in April from a revised 102.4 the previous month.
Fund manager BlackRock expects the global credit crisis to last another two to four years as a weakening U.S. economy triggers more write downs by banks, its chief investment officer for equities said on Monday.
Michael Pettis: "An article came out Monday evening on Reuters claiming that inside sources have revealed that China’s foreign currency reserves at the end of April were $1.7567 trillion. If this is true that means that reserves grew in the month of April by $74.5 billion, the biggest one-month reserve jump in China’s history (and probably in the history of the world)."
Bruce Berkowitz: "People are driving less, getting older. So we are moving from oil stocks to healthcare."
Lehman prices $4 billion offering at $28 per share.
Interest-rate futures traders see a 76% chance the Federal Reserve will raise its target rate to 2.25% by this autumn, according to the November fed funds futures contract. The probability was 56% late Friday.
Pending sales of previously owned U.S. homes unexpectedly rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower, a real estate trade group report showed. An index of sales contracts on previously owned U.S. homes rose 6.3% in April from the prior month, the National Association of Realtors reported Monday. The index, which is considered a leading indicator of existing home sales, was down 13.1% from the April 2007 level.
A new employment indicator released Monday morning by the Conference Board, a business-research group, suggests more labor-market weakness is ahead. Their employment trends index, which aggregates eight separate leading employment indicators to forecast labor-market turning points, is at a level of 113.7 for May – its lowest level since 2004. The index has been falling steadily since last July except for a one-month rise in January, the new data shows.
August gold falls 90 cents to end at $898.10/oz in NY. July crude closed at $134.35 a barrel Monday in New York, down $4.19.
``The increase in prices isn't justified in terms of market fundamentals,'' the Saudi government said today in a statement distributed by the Saudi Press Agency.
Richard Fisher, president of the Federal Reserve Bank of Dallas, said he agrees with another central bank official's assessment today that higher interest rates may be needed to offset global inflation.``It's something that I think a lot of monetary authorities will have to come to grips with,'' Fisher said of inflation during an interview with CNBC today. ``The question is how and when.''
On Monday, the financials had a particularly poor day and the rails a particularly good day.
Apple unveiled an upgraded iPhone with a faster Internet connection that will start at $199.
Two-year yields rose 33 basis points, or 0.33 percentage point, to 2.71 percent at 4:45 p.m. in New York, according to BG Cantor Market Data.Yields on two-year notes touched 2.74 percent, the biggest one-day increase since March 1996.
Tracinda Corp. on Tuesday said approximately 1.02 billion shares of Ford's common stock were tendered in its offer to buy 20 million shares of the auto maker. Tracinda will purchase 20 million shares at $8.50 per share, for a total purchase price of $170 million.
The International Energy Agency on Tuesday lowered its forecast for average global oil product demand in 2008 to 86.8 million barrels a day, down 80,000 barrels a day from its estimate last month. The decline followed the reduction of price subsidies in several non-OECD countries, the IEA said.
The Shanghai Composite Index plunged 8.1% to 3,061.47 while the Shenzhen Index tumbled 8.3% to 925.72. The PBOC announced over the weekend it would lift the ratio of reserves banks must set aside as deposits by 1 percentage point to 17.5%.
Manpower Inc said its seasonally adjusted net employment outlook fell for the third consecutive quarter, to a level of 12, compared with 14 last quarter and 18 a year ago. The index measures the difference between employers saying they plan to add jobs and those planning to cut them. Of 10 sectors tracked by Manpower, only one -- mining -- has a stable outlook for job seekers compared with the previous quarter.
Corn for July delivery rose as much as 22.25 cents, or 3.4 percent, to $6.73 in after-hours trading on the Chicago Board of Trade and stood at $6.675 as of 11:59 a.m. London time. The contract gained 8.6 percent last week, the biggest gain in 10 weeks. New-crop December corn traded as high as $6.985 a bushel.
Soybeans for July delivery added as much as 32 cents, or 2.2 percent, to $14.895 a bushel, and last traded at $14.7825. The price rose 6.9 percent last week, the most since June 2005. Soybeans, which reached a record $15.865 on March 3, are up 22 percent this year, for a fourth consecutive annual gain.
U.K. producer prices increased at the quickest rate in two decades in May, increasing the odds the Bank of England will refrain from interest-rate cuts even as the economy edges toward a recession. Prices charged by factories rose 1.6 percent from April, the Office for National Statistics said in London today. That's the most since comparable records began in 1986 and double the median forecast of 32 economists in a Bloomberg News survey. From a year earlier, prices rose 8.9 percent.
Willis Group Holdings, the London-based global insurance broker, is to acquire a smaller rival in the US for about $2.1bn in cash and shares, kicking off what could be a wave of consolidation in the sector.The deal to buy Hilb Rogal & Hobbs for $46 a share would expand Willis’s presence in North America. The region contributes 45 per cent to overall revenues, up from 30 per cent in 2007.
Iranian supreme leader Ayatollah Ali Khamenei on Monday warned Iraq's visiting prime minister against signing an agreement with the United States keeping foreign troops in the country beyond 2008.
According to Business Week, by April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures.
Brett Steenbarger: "Only 43% of S&P 500 stocks are now trading above their 50-day moving averages, down from 80% at the market peak. Only 29% of those stocks are now trading above their 20-day moving averages.
Despite this weakness, we are not yet recording significant oversold levels in my Cumulative Demand-Supply Index (middle chart), though the index has been deteriorating for a while. Readings below -20 have tended to accompany good intermediate-term buying opportunities; the current reading is -4.69."
McDonald's Corp.said sales at outlets open at least 13 months rose 7.7 percent in May, driven by demand from customers in the U.K., France and Australia.
Japan's longest postwar expansion may be over, as record crude oil and raw materials costs discourage companies from hiring and spending, a government report showed. The economy may be reaching a ``turning point,'' the Cabinet Office said today after releasing figures that showed the coincident index, a measure of current economic activity, fell to 101.7 in April from a revised 102.4 the previous month.
Fund manager BlackRock expects the global credit crisis to last another two to four years as a weakening U.S. economy triggers more write downs by banks, its chief investment officer for equities said on Monday.
Michael Pettis: "An article came out Monday evening on Reuters claiming that inside sources have revealed that China’s foreign currency reserves at the end of April were $1.7567 trillion. If this is true that means that reserves grew in the month of April by $74.5 billion, the biggest one-month reserve jump in China’s history (and probably in the history of the world)."
Bruce Berkowitz: "People are driving less, getting older. So we are moving from oil stocks to healthcare."
Lehman prices $4 billion offering at $28 per share.
Interest-rate futures traders see a 76% chance the Federal Reserve will raise its target rate to 2.25% by this autumn, according to the November fed funds futures contract. The probability was 56% late Friday.
Pending sales of previously owned U.S. homes unexpectedly rose in April to the highest level in six months as foreclosed properties flooded the market and drove prices sharply lower, a real estate trade group report showed. An index of sales contracts on previously owned U.S. homes rose 6.3% in April from the prior month, the National Association of Realtors reported Monday. The index, which is considered a leading indicator of existing home sales, was down 13.1% from the April 2007 level.
A new employment indicator released Monday morning by the Conference Board, a business-research group, suggests more labor-market weakness is ahead. Their employment trends index, which aggregates eight separate leading employment indicators to forecast labor-market turning points, is at a level of 113.7 for May – its lowest level since 2004. The index has been falling steadily since last July except for a one-month rise in January, the new data shows.
August gold falls 90 cents to end at $898.10/oz in NY. July crude closed at $134.35 a barrel Monday in New York, down $4.19.
``The increase in prices isn't justified in terms of market fundamentals,'' the Saudi government said today in a statement distributed by the Saudi Press Agency.
Richard Fisher, president of the Federal Reserve Bank of Dallas, said he agrees with another central bank official's assessment today that higher interest rates may be needed to offset global inflation.``It's something that I think a lot of monetary authorities will have to come to grips with,'' Fisher said of inflation during an interview with CNBC today. ``The question is how and when.''
On Monday, the financials had a particularly poor day and the rails a particularly good day.
Apple unveiled an upgraded iPhone with a faster Internet connection that will start at $199.
Two-year yields rose 33 basis points, or 0.33 percentage point, to 2.71 percent at 4:45 p.m. in New York, according to BG Cantor Market Data.Yields on two-year notes touched 2.74 percent, the biggest one-day increase since March 1996.
Tracinda Corp. on Tuesday said approximately 1.02 billion shares of Ford's common stock were tendered in its offer to buy 20 million shares of the auto maker. Tracinda will purchase 20 million shares at $8.50 per share, for a total purchase price of $170 million.
The International Energy Agency on Tuesday lowered its forecast for average global oil product demand in 2008 to 86.8 million barrels a day, down 80,000 barrels a day from its estimate last month. The decline followed the reduction of price subsidies in several non-OECD countries, the IEA said.
The Shanghai Composite Index plunged 8.1% to 3,061.47 while the Shenzhen Index tumbled 8.3% to 925.72. The PBOC announced over the weekend it would lift the ratio of reserves banks must set aside as deposits by 1 percentage point to 17.5%.
Manpower Inc said its seasonally adjusted net employment outlook fell for the third consecutive quarter, to a level of 12, compared with 14 last quarter and 18 a year ago. The index measures the difference between employers saying they plan to add jobs and those planning to cut them. Of 10 sectors tracked by Manpower, only one -- mining -- has a stable outlook for job seekers compared with the previous quarter.
Monday, June 09, 2008
Crude
6/8/08 Crude
Robert McHugh: "We said in Thursday, June 5th's, evening newsletter, after that day's phony sharp rally, "Technically, what Thursday's rally did accomplish was to set up the possibility of getting a Hindenburg Omen observation over the next week or so." Well, guess what, we got a Hindenburg Omen observation Friday, June 6th. What this means is we are now on the clock for a confirming observation. Should we get a second observation within the next 36 days, it means there is a much higher than normal probability that we will get a major stock market decline over the next 120 days, with a 25 percent shot at a full blown stock market crash. 120 days takes us into the dreaded September/October period."
Roughly 60 million people said they were going to use their government economic stimulus checks to pay down credit card debt, student loans or medical bills.
The U.S. Geological Survey's Leigh Price, a Denver geochemist who died in 2000, estimated that the Bakken ( in North Dakota and Montana) might hold 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels. The challenge is getting the oil out. Bakken crude is locked two miles underground in a layer of dolomite, a dense mineral that doesn't surrender oil the way more porous limestone does. The dolomite band is narrow, too, averaging just 22 feet in North Dakota.
There will be a total solar eclipse on August 1, 2008.
Wall Street is closely watching whether Pfizer can continue to pay its hefty dividend, which at a 6.7 percent yield, is twice the industry average. It is D'Amelio's (Pfizer CFO) job to balance the books in a manner that protects the dividend. D'Amelio insists the dividend is not only safe, but projects it will grow 10 percent this year -- barring any "significant events," he has said with a classic Jersey accent. If the Pfizer dividend is safe, the risk/reward on the stock at $17.98 could be quite favorable. The last time the stock traded at this price was in 1997.
The Oil Drum: "Iraq, home to the world's third largest proven oil reserves, is in talks with neighbouring Iran and Kuwait to reach a deal to pool shared oilfields, the London-based Asharq al-Awsat reported on Sunday."Iraq has entered negotiations with Kuwait and Iran," it quoted Iraqi Oil Minister Hussain al-Shahristani as saying. "We have informed them of the necessity of signing an agreement to unify the oil fields and to move away from a situation where each side has control from its side as that will bleed these fields in an uneconomical way."
Over the weekend, the national average for gasoline hit $4.02 a gallon.
Lehman Brothers Holdings Inc on Monday announced plans to raise $6 billion to bolster its capital base after losses from trading and hedging resulted in an expected $2.77 billion second-quarter loss for the investment bank. Ratings agency Moody's Investors Service on Monday lowered the rating outlook on Lehman Brothers Holdings Inc. to negative from stable.
Pier 1 Imports Inc.has offered to buy Cost Plus in a stock-for-stock transaction in which Pier 1 would issue 0.6000 shares for each share of Cost Plus. This represents an offer price of $4.00 per share.
John Hussman: "While the surge in oil had the marks of a short squeeze, my own view continues to be that the commodities run will most likely complete its course during the coming quarter. As I noted a couple of weeks ago, “once a speculative price run-up becomes nearly vertical, it becomes very difficult to form expectations about the final price peak, since very small changes in the date of that peak imply significant differences in the final price. Still, the combination of a developing contango in the oil futures curve, a weakening global economy, and the likelihood of a moderate but positive supply response in the months ahead makes it unlikely that oil prices will escape their cyclical tendencies beyond the summer months.”
Robert McHugh: "We said in Thursday, June 5th's, evening newsletter, after that day's phony sharp rally, "Technically, what Thursday's rally did accomplish was to set up the possibility of getting a Hindenburg Omen observation over the next week or so." Well, guess what, we got a Hindenburg Omen observation Friday, June 6th. What this means is we are now on the clock for a confirming observation. Should we get a second observation within the next 36 days, it means there is a much higher than normal probability that we will get a major stock market decline over the next 120 days, with a 25 percent shot at a full blown stock market crash. 120 days takes us into the dreaded September/October period."
Roughly 60 million people said they were going to use their government economic stimulus checks to pay down credit card debt, student loans or medical bills.
The U.S. Geological Survey's Leigh Price, a Denver geochemist who died in 2000, estimated that the Bakken ( in North Dakota and Montana) might hold 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels. The challenge is getting the oil out. Bakken crude is locked two miles underground in a layer of dolomite, a dense mineral that doesn't surrender oil the way more porous limestone does. The dolomite band is narrow, too, averaging just 22 feet in North Dakota.
There will be a total solar eclipse on August 1, 2008.
Wall Street is closely watching whether Pfizer can continue to pay its hefty dividend, which at a 6.7 percent yield, is twice the industry average. It is D'Amelio's (Pfizer CFO) job to balance the books in a manner that protects the dividend. D'Amelio insists the dividend is not only safe, but projects it will grow 10 percent this year -- barring any "significant events," he has said with a classic Jersey accent. If the Pfizer dividend is safe, the risk/reward on the stock at $17.98 could be quite favorable. The last time the stock traded at this price was in 1997.
The Oil Drum: "Iraq, home to the world's third largest proven oil reserves, is in talks with neighbouring Iran and Kuwait to reach a deal to pool shared oilfields, the London-based Asharq al-Awsat reported on Sunday."Iraq has entered negotiations with Kuwait and Iran," it quoted Iraqi Oil Minister Hussain al-Shahristani as saying. "We have informed them of the necessity of signing an agreement to unify the oil fields and to move away from a situation where each side has control from its side as that will bleed these fields in an uneconomical way."
Over the weekend, the national average for gasoline hit $4.02 a gallon.
Lehman Brothers Holdings Inc on Monday announced plans to raise $6 billion to bolster its capital base after losses from trading and hedging resulted in an expected $2.77 billion second-quarter loss for the investment bank. Ratings agency Moody's Investors Service on Monday lowered the rating outlook on Lehman Brothers Holdings Inc. to negative from stable.
Pier 1 Imports Inc.has offered to buy Cost Plus in a stock-for-stock transaction in which Pier 1 would issue 0.6000 shares for each share of Cost Plus. This represents an offer price of $4.00 per share.
John Hussman: "While the surge in oil had the marks of a short squeeze, my own view continues to be that the commodities run will most likely complete its course during the coming quarter. As I noted a couple of weeks ago, “once a speculative price run-up becomes nearly vertical, it becomes very difficult to form expectations about the final price peak, since very small changes in the date of that peak imply significant differences in the final price. Still, the combination of a developing contango in the oil futures curve, a weakening global economy, and the likelihood of a moderate but positive supply response in the months ahead makes it unlikely that oil prices will escape their cyclical tendencies beyond the summer months.”
Sunday, June 08, 2008
Diminishing Wealth
6/7/08 Diminishing Wealth
Robert McHugh: "The financial situation is deteriorating and we would not be surprised by an all-out stock market crash before year end. Raise cash. Borrowing is going to get harder and harder now that the bond insurers lost their AAA rating."
Doug Noland: "During Q1, Household Assets declined $1.590 TN (8.8% annualized) to $70.466 TN, led by a $1.334 TN (11.8% annualized) decline in Financial Assets and a $305bn (5.5% annualized) drop in Real Estate. And with Liabilities increasing $106bn (3% annualized), Household Net Worth contracted a meaningful $1.696 TN (11.8% annualized). Over the past year, Household Assets have increased only $309bn (0.4%). And with Liabilities growing $871bn (6.8%), Household Net Worth dropped $562bn from a year earlier. This is in sharp contrast to the almost $12 TN surge in Household Net Worth during the previous three years. This negative wealth effect has and will continue to place a drag on consumption. It should be noted, however, that so far resilient 4.5% y-o-y income growth has worked to bolster spending in the face of declining wealth...And despite the weak dollar, a rapidly slowing economy, and severe U.S. Credit tumult the intractable dollar “recycling” requirement had ROW (rest of the world) acquiring U.S. Credit instruments at a stunning SAAR $996bn during the quarter. This is an enormous U.S. and global problem.
Total ROW holdings of U.S. Financial Assets have expanded $1.383 TN over the past year to $15.507 TN. It is no coincidence that this growth closely matches the increase in International Reserve Assets over the past year ($1.426 TN). And the various forms of Acute Global Monetary Disorder that have taken root are certainly a consequence of this increasingly Unwieldy Pool of Excess Global Finance. Crude oil and energy prices have surged better than 40% so far this year (natural gas up 70%), with the Goldman Sachs Commodities index sporting a y-t-d gain of 38%. Moreover, today’s moon shot in crude and commodities provides further warning as to the newfound degree of Global Price Instability that has emerged from a dysfunctional U.S. Credit mechanism and global financial “system.”...I’ll continue to argue passionately that the current trajectory of U.S. Credit expansion and today’s unsound Economic Structure are highly inflationary and a dollar disaster. Importantly, today’s dollar outflows hit a world already inundated with excess dollar balances – not to mention domestic Credit excesses that become extreme almost across the globe. It is also my view that current Monetary Processes and the trajectory of U.S. and global imbalances ensure ongoing ballooning of the massive Global Pool of Speculative Finance. Indeed, this “Pool” is at the epicenter of today’s most intense inflationary and speculative biases – biases that are being thrust to blow-off extremes by the latest round of aggressive (and misguided) Fed reflation (think NASDAQ 1999 and U.S. mortgages 2006)."
At Fidelity of Boston, the largest retirement plan administrator in the country, the number of people making hardship withdrawals rose 17 percent last year. At Vanguard, hardship withdrawals rose 16 percent in 2007, to 47,197. The share of all custom ers making hardship withdrawals remains relatively low, however; at Vanguard, 1.5 percent of customers made early withdrawals last year, up from 1.2 percent in 2002. "It's another measure of economic stress among households," said Stephen Utkus, retirement research director at Vanguard in Pennsylvania. "I suspect you'll see people dropping out of 401(k) plans or ending their contributions because they can't afford to save."
Russian President Dmitry Medvedev said ``economic egoism'' has led to what may be the worst economic contraction since the depression of the 1930s, and placed some of the blame on the U.S. The Russian leader said no single country, even the U.S., can reverse the global economic decline alone, and claimed a role for Russia in finding a solution.
Australian house prices fell in the first quarter by the most in five years after the central bank raised interest rates at the fastest pace in more than a decade. The median price for houses fell to A$458,488 ($439,644) in the March quarter, down 2.7 percent from the previous three months, the Real Estate Institute of Australia and Mortgage Choice Ltd. said. Apartments also fell 2.7 percent to A$355,297.
Samuel Bodman, attending two days of meetings in northern Japan among energy chiefs from Group of Eight industrialized countries and other top economies, said the surge in world oil prices was largely a simple problem of supply and demand.
Graham Summers: "I believe the market is ripe for a major (20% or more) downturn in the coming months. Novice investors would do well to shift a sizable portion of their portfolios to cash."
Brett Steenbarger: "That is the paradox at the heart of trading and many other performance activities. The goal is profitability, but the best practice is to not focus on the goal. By staying connected to the processes that lead to the goal, we maintain consistency in our expectations, mood, and outlook--and that pays off in consistent performance."
“According to the May 1, 2008 CCC inventory report there are only 24.1 million bushels of wheat in inventory, so after this sale there will be only 2.7 million bushels of wheat left the entire CCC inventory,” warned Matlack. “Our concern is not that we are using the remainder of our strategic grain reserves for humanitarian relief. AAM fully supports the action and all humanitarian food relief. Our concern is that the U.S. has nothing else in our emergency food pantry. There is no cheese, no butter, no dry milk powder, no grains or anything else left in reserve. The o°©nly thing left in the entire CCC inventory will be 2.7 million bushels of wheat which is about enough wheat to make 1⁄2 of a loaf of bread for each of the 300 million people in America.”
The CCC is a federal government-owned and operated entity that was created to stabilize, support, and protect farm income and prices. CCC is also supposed to maintain balanced and adequate supplies of agricultural commodities and aids in their orderly distribution.
“This lack of emergency preparedness is the fault of the 1996 farm bill which eliminated the government’s grain reserves as well as the Farmer Owned Reserve (FOR),” explained Matlack. “We had hoped to reinstate the FOR and a Strategic Energy Grain Reserve in the new farm bill, but the politics of food defeated our efforts. As farmers it is our calling and purpose in life to feed our families, our communities, our nation and a good part of the world, but we need better planning and coordination if we are to meet that purpose. AAM pledges to continue our work for better farm policy which includes an FOR and a Strategic Energy Grain Reserve.”
The two-year U.S. Treasury note yielded 2.38 percent, or 2.25 percentage points less than the comparable-maturity German bund. The gap was the widest since 1993, making dollar- denominated assets less attractive. This may prove to be a very attractive entry point for this trade.
"I don't think ministers will meet before September unless there is a real threat to supply," the OPEC source told Reuters. "They won't meet just to talk about price increases." Israel's deputy prime minister said in remarks published last week that an attack on Iran's nuclear sites looked "unavoidable." A senior Israeli defense official said on Sunday the remarks did not reflect Israeli policy.
Arjun Murti says gas may have to hit $5.75 a gallon before consumption cools enough to take the heat off fuel prices.
According to Bloomberg, sales at U.S. retailers probably rose in May as Americans started spending tax rebate checks and record gas prices inflated service-station receipts, economists said before reports this week.
Axel Weber, Bundesbank president, was one of the ECB governing council members most strongly in favour of raising borrowing costs. On Friday, the Bundesbank said it expected German inflation to average 3 per cent this year - 0.7 percentage points higher than it had expected in December.
Mike Burk: "The market appears to be in a normal healthy correction with the blue chips leading the way downward. I expect the major indices to be lower on Friday June 13 than they were on Friday June 6."
Robert McHugh: "The financial situation is deteriorating and we would not be surprised by an all-out stock market crash before year end. Raise cash. Borrowing is going to get harder and harder now that the bond insurers lost their AAA rating."
Doug Noland: "During Q1, Household Assets declined $1.590 TN (8.8% annualized) to $70.466 TN, led by a $1.334 TN (11.8% annualized) decline in Financial Assets and a $305bn (5.5% annualized) drop in Real Estate. And with Liabilities increasing $106bn (3% annualized), Household Net Worth contracted a meaningful $1.696 TN (11.8% annualized). Over the past year, Household Assets have increased only $309bn (0.4%). And with Liabilities growing $871bn (6.8%), Household Net Worth dropped $562bn from a year earlier. This is in sharp contrast to the almost $12 TN surge in Household Net Worth during the previous three years. This negative wealth effect has and will continue to place a drag on consumption. It should be noted, however, that so far resilient 4.5% y-o-y income growth has worked to bolster spending in the face of declining wealth...And despite the weak dollar, a rapidly slowing economy, and severe U.S. Credit tumult the intractable dollar “recycling” requirement had ROW (rest of the world) acquiring U.S. Credit instruments at a stunning SAAR $996bn during the quarter. This is an enormous U.S. and global problem.
Total ROW holdings of U.S. Financial Assets have expanded $1.383 TN over the past year to $15.507 TN. It is no coincidence that this growth closely matches the increase in International Reserve Assets over the past year ($1.426 TN). And the various forms of Acute Global Monetary Disorder that have taken root are certainly a consequence of this increasingly Unwieldy Pool of Excess Global Finance. Crude oil and energy prices have surged better than 40% so far this year (natural gas up 70%), with the Goldman Sachs Commodities index sporting a y-t-d gain of 38%. Moreover, today’s moon shot in crude and commodities provides further warning as to the newfound degree of Global Price Instability that has emerged from a dysfunctional U.S. Credit mechanism and global financial “system.”...I’ll continue to argue passionately that the current trajectory of U.S. Credit expansion and today’s unsound Economic Structure are highly inflationary and a dollar disaster. Importantly, today’s dollar outflows hit a world already inundated with excess dollar balances – not to mention domestic Credit excesses that become extreme almost across the globe. It is also my view that current Monetary Processes and the trajectory of U.S. and global imbalances ensure ongoing ballooning of the massive Global Pool of Speculative Finance. Indeed, this “Pool” is at the epicenter of today’s most intense inflationary and speculative biases – biases that are being thrust to blow-off extremes by the latest round of aggressive (and misguided) Fed reflation (think NASDAQ 1999 and U.S. mortgages 2006)."
At Fidelity of Boston, the largest retirement plan administrator in the country, the number of people making hardship withdrawals rose 17 percent last year. At Vanguard, hardship withdrawals rose 16 percent in 2007, to 47,197. The share of all custom ers making hardship withdrawals remains relatively low, however; at Vanguard, 1.5 percent of customers made early withdrawals last year, up from 1.2 percent in 2002. "It's another measure of economic stress among households," said Stephen Utkus, retirement research director at Vanguard in Pennsylvania. "I suspect you'll see people dropping out of 401(k) plans or ending their contributions because they can't afford to save."
Russian President Dmitry Medvedev said ``economic egoism'' has led to what may be the worst economic contraction since the depression of the 1930s, and placed some of the blame on the U.S. The Russian leader said no single country, even the U.S., can reverse the global economic decline alone, and claimed a role for Russia in finding a solution.
Australian house prices fell in the first quarter by the most in five years after the central bank raised interest rates at the fastest pace in more than a decade. The median price for houses fell to A$458,488 ($439,644) in the March quarter, down 2.7 percent from the previous three months, the Real Estate Institute of Australia and Mortgage Choice Ltd. said. Apartments also fell 2.7 percent to A$355,297.
Samuel Bodman, attending two days of meetings in northern Japan among energy chiefs from Group of Eight industrialized countries and other top economies, said the surge in world oil prices was largely a simple problem of supply and demand.
Graham Summers: "I believe the market is ripe for a major (20% or more) downturn in the coming months. Novice investors would do well to shift a sizable portion of their portfolios to cash."
Brett Steenbarger: "That is the paradox at the heart of trading and many other performance activities. The goal is profitability, but the best practice is to not focus on the goal. By staying connected to the processes that lead to the goal, we maintain consistency in our expectations, mood, and outlook--and that pays off in consistent performance."
“According to the May 1, 2008 CCC inventory report there are only 24.1 million bushels of wheat in inventory, so after this sale there will be only 2.7 million bushels of wheat left the entire CCC inventory,” warned Matlack. “Our concern is not that we are using the remainder of our strategic grain reserves for humanitarian relief. AAM fully supports the action and all humanitarian food relief. Our concern is that the U.S. has nothing else in our emergency food pantry. There is no cheese, no butter, no dry milk powder, no grains or anything else left in reserve. The o°©nly thing left in the entire CCC inventory will be 2.7 million bushels of wheat which is about enough wheat to make 1⁄2 of a loaf of bread for each of the 300 million people in America.”
The CCC is a federal government-owned and operated entity that was created to stabilize, support, and protect farm income and prices. CCC is also supposed to maintain balanced and adequate supplies of agricultural commodities and aids in their orderly distribution.
“This lack of emergency preparedness is the fault of the 1996 farm bill which eliminated the government’s grain reserves as well as the Farmer Owned Reserve (FOR),” explained Matlack. “We had hoped to reinstate the FOR and a Strategic Energy Grain Reserve in the new farm bill, but the politics of food defeated our efforts. As farmers it is our calling and purpose in life to feed our families, our communities, our nation and a good part of the world, but we need better planning and coordination if we are to meet that purpose. AAM pledges to continue our work for better farm policy which includes an FOR and a Strategic Energy Grain Reserve.”
The two-year U.S. Treasury note yielded 2.38 percent, or 2.25 percentage points less than the comparable-maturity German bund. The gap was the widest since 1993, making dollar- denominated assets less attractive. This may prove to be a very attractive entry point for this trade.
"I don't think ministers will meet before September unless there is a real threat to supply," the OPEC source told Reuters. "They won't meet just to talk about price increases." Israel's deputy prime minister said in remarks published last week that an attack on Iran's nuclear sites looked "unavoidable." A senior Israeli defense official said on Sunday the remarks did not reflect Israeli policy.
Arjun Murti says gas may have to hit $5.75 a gallon before consumption cools enough to take the heat off fuel prices.
According to Bloomberg, sales at U.S. retailers probably rose in May as Americans started spending tax rebate checks and record gas prices inflated service-station receipts, economists said before reports this week.
Axel Weber, Bundesbank president, was one of the ECB governing council members most strongly in favour of raising borrowing costs. On Friday, the Bundesbank said it expected German inflation to average 3 per cent this year - 0.7 percentage points higher than it had expected in December.
Mike Burk: "The market appears to be in a normal healthy correction with the blue chips leading the way downward. I expect the major indices to be lower on Friday June 13 than they were on Friday June 6."
Friday, June 06, 2008
Unemployment Rate
6/5/08 Unemployment Rate
The unemployment rate rose to 5.5 percent last month from 5 percent, its highest level since October 2004. Some 49,000 jobs were cut from payrolls in May, up from a revised 28,000 that were lost in April.
Robert McHugh: "We believe stocks are about to fall sharply. There is the possibility of a small bounce before getting started, but stocks should be much lower a few weeks from now. We had a very small change in the McClellan Oscillator Wednesday, which means there is likely to be a large price move over the next day or two."
Russian inflation accelerated quicker than economists expected in May to the fastest pace for five and a half years as food prices soared. The inflation rate rose to 15.1 percent from 14.3 percent, the Federal Statistics Service said by e-mail today, and exceeded the 15 percent median estimate of 15 economists surveyed by Bloomberg. On the month, prices gained 1.4 percent, the same as in April. Food prices rose an annual 22.1 percent.
China's trade surplus is likely to shrink in 2008 for the first time in five years, with a rising local currency and the US economy's slowdown two of the prime reasons, the government said on Thursday.
New Zealand's central bank Governor Alan Bollard said he may cut interest rates from a record this year, triggering the biggest slump in the currency in five months.``Our forecast is consistent with the possibility of a rate cut in the third quarter,'' Bollard said in an interview from Wellington today after he kept the official cash rate unchanged at 8.25 percent. ``We may see markets decide on a softer New Zealand dollar.''
Wal-Mart Stores Inc on Thursday reported a better-than-expected 3.9 percent rise in sales at U.S. stores open at least a year in May. Wal-Mart sees June U.S. same-store sales excluding fuel up 2% to 4%.
First-time claims for unemployment benefits fell by 18,000 to 357,000 in the latest week, the Labor Department reported Thursday. The four-week average of initial claims fell by 2,750 to 368,500 in the week ending May 31. Continuing claims fell by 16,000 in the week ended May 24, dropping to 3.09 million.
Already trading at their lowest levels in more than a decade, shares of Pfizer Inc. slipped in premarket trading Thursday after a Goldman Sachs analyst cut his rating on the drug maker's stock.
In a client note, analyst James Kelly downgraded Pfizer stock to "Neutral" from "Buy," saying he expects weaker sales of key product candidates in Pfizer's pipeline. He took Pfizer shares off a portfolio of recommended stocks and replaced them with shares of Eli Lilly & Co. As an aside, yesterday there was unusual activity in the June 17.50 Pfizer puts. Just a coincidence?
Brad Hintz, who follows brokers for Sanford Bernstein: "We recommend investors remain on the sidelines with Lehman until the firm demonstrates a reduction in leverage and lowers its exposures to troubled asset classes."
According to Bloomberg, Brazil's oil discoveries, including the Western Hemisphere's largest in three decades, may cost $100 billion more to develop than the industry's most costly field. The Tupi deposit and nearby offshore prospects probably will cost $240 billion to exploit, said Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd. and a former Royal Dutch Shell Plc exploration manager. The total exceeds the $136 billion estimate for Kazakhstan's Kashagan field, led by Eni SpA, and would be enough to fund the U.S. space program for 14 years.
Nordstrom Inc. said Thursday its May same-store sales rose 10.9%, topping the mean estimate of analysts polled by Thomson Reuters for an increase of 8.1%. The company said it expects June same-store sales to fall 18% to 20%.
Since its March low, the S&P Utilities Sector is up nearly 10%.
According to the Oil Drum, NAFTA requires that Canada continue to export about 60% of its gas production to the US, and based on the EIA’s predictions of Canadian NG imports, it seems as if the US will be holding Canada to this clause.
European Central Bank governor Jean-Claude Trichet hinted that interest rates could rise in the euro zone next month.
Bill Bonner: "Lehman Bros. is said to be looking for $3 to $4 billion in new capital. The company has nine times as much in level 2 and level 3 assets as it has in tangible equity. And it's not the worst. Merrill Lynch's level 2 and level 3 assets equal 2,565% of its tangible equity."
A new Senate report gives a fresh shot of adrenaline to the election-year debate over the Iraq war. President Bush and his top officials deliberately misrepresented secret intelligence to make the case to invade Iraq, according to the Senate Intelligence Committee.
July crude climbed $5.49, or 4.5%, to close at $127.79 a barrel, the contract's strongest closing level since May 28. August gold fell $8.30 to close at $875.50 an ounce Thursday, its weakest closing level since May 14.
Nucor Corp. announced that it had raised its earnings expectations because of increased overseas demand.
Ford Motor Co. plans to lower salaried-related costs by 15% through white-collar job cuts, including attrition and consolidation of open positions.
Federal Reserve Bank of Richmond President Jeffrey Lacker : "The danger is that the effect of recent credit extension on the incentives of financial market participants might induce greater risk taking, which in turn could give rise to more frequent crises, in which case it might be difficult to resist further expanding the scope of central bank lending."
U.S. households lost $1.7 trillion in wealth during the first quarter as the collapse in the housing market and a weak stock market took their toll, the Federal Reserve reported Thursday. The net worth of U.S. households and nonprofits dropped at an annual rate of 11.3% in the quarter to $55.97 trillion.
According to the WSJ, Federal regulators warned that banking-industry turmoil will continue as financial institutions come to terms with piles of bad loans made to home and condo builders. Amid a dismal spring sales season for new homes, banks have begun to dump these loans at what will likely be steep discounts, setting the stage for billions of dollars in fresh losses.
The unemployment rate rose to 5.5 percent last month from 5 percent, its highest level since October 2004. Some 49,000 jobs were cut from payrolls in May, up from a revised 28,000 that were lost in April.
Robert McHugh: "We believe stocks are about to fall sharply. There is the possibility of a small bounce before getting started, but stocks should be much lower a few weeks from now. We had a very small change in the McClellan Oscillator Wednesday, which means there is likely to be a large price move over the next day or two."
Russian inflation accelerated quicker than economists expected in May to the fastest pace for five and a half years as food prices soared. The inflation rate rose to 15.1 percent from 14.3 percent, the Federal Statistics Service said by e-mail today, and exceeded the 15 percent median estimate of 15 economists surveyed by Bloomberg. On the month, prices gained 1.4 percent, the same as in April. Food prices rose an annual 22.1 percent.
China's trade surplus is likely to shrink in 2008 for the first time in five years, with a rising local currency and the US economy's slowdown two of the prime reasons, the government said on Thursday.
New Zealand's central bank Governor Alan Bollard said he may cut interest rates from a record this year, triggering the biggest slump in the currency in five months.``Our forecast is consistent with the possibility of a rate cut in the third quarter,'' Bollard said in an interview from Wellington today after he kept the official cash rate unchanged at 8.25 percent. ``We may see markets decide on a softer New Zealand dollar.''
Wal-Mart Stores Inc on Thursday reported a better-than-expected 3.9 percent rise in sales at U.S. stores open at least a year in May. Wal-Mart sees June U.S. same-store sales excluding fuel up 2% to 4%.
First-time claims for unemployment benefits fell by 18,000 to 357,000 in the latest week, the Labor Department reported Thursday. The four-week average of initial claims fell by 2,750 to 368,500 in the week ending May 31. Continuing claims fell by 16,000 in the week ended May 24, dropping to 3.09 million.
Already trading at their lowest levels in more than a decade, shares of Pfizer Inc. slipped in premarket trading Thursday after a Goldman Sachs analyst cut his rating on the drug maker's stock.
In a client note, analyst James Kelly downgraded Pfizer stock to "Neutral" from "Buy," saying he expects weaker sales of key product candidates in Pfizer's pipeline. He took Pfizer shares off a portfolio of recommended stocks and replaced them with shares of Eli Lilly & Co. As an aside, yesterday there was unusual activity in the June 17.50 Pfizer puts. Just a coincidence?
Brad Hintz, who follows brokers for Sanford Bernstein: "We recommend investors remain on the sidelines with Lehman until the firm demonstrates a reduction in leverage and lowers its exposures to troubled asset classes."
According to Bloomberg, Brazil's oil discoveries, including the Western Hemisphere's largest in three decades, may cost $100 billion more to develop than the industry's most costly field. The Tupi deposit and nearby offshore prospects probably will cost $240 billion to exploit, said Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd. and a former Royal Dutch Shell Plc exploration manager. The total exceeds the $136 billion estimate for Kazakhstan's Kashagan field, led by Eni SpA, and would be enough to fund the U.S. space program for 14 years.
Nordstrom Inc. said Thursday its May same-store sales rose 10.9%, topping the mean estimate of analysts polled by Thomson Reuters for an increase of 8.1%. The company said it expects June same-store sales to fall 18% to 20%.
Since its March low, the S&P Utilities Sector is up nearly 10%.
According to the Oil Drum, NAFTA requires that Canada continue to export about 60% of its gas production to the US, and based on the EIA’s predictions of Canadian NG imports, it seems as if the US will be holding Canada to this clause.
European Central Bank governor Jean-Claude Trichet hinted that interest rates could rise in the euro zone next month.
Bill Bonner: "Lehman Bros. is said to be looking for $3 to $4 billion in new capital. The company has nine times as much in level 2 and level 3 assets as it has in tangible equity. And it's not the worst. Merrill Lynch's level 2 and level 3 assets equal 2,565% of its tangible equity."
A new Senate report gives a fresh shot of adrenaline to the election-year debate over the Iraq war. President Bush and his top officials deliberately misrepresented secret intelligence to make the case to invade Iraq, according to the Senate Intelligence Committee.
July crude climbed $5.49, or 4.5%, to close at $127.79 a barrel, the contract's strongest closing level since May 28. August gold fell $8.30 to close at $875.50 an ounce Thursday, its weakest closing level since May 14.
Nucor Corp. announced that it had raised its earnings expectations because of increased overseas demand.
Ford Motor Co. plans to lower salaried-related costs by 15% through white-collar job cuts, including attrition and consolidation of open positions.
Federal Reserve Bank of Richmond President Jeffrey Lacker : "The danger is that the effect of recent credit extension on the incentives of financial market participants might induce greater risk taking, which in turn could give rise to more frequent crises, in which case it might be difficult to resist further expanding the scope of central bank lending."
U.S. households lost $1.7 trillion in wealth during the first quarter as the collapse in the housing market and a weak stock market took their toll, the Federal Reserve reported Thursday. The net worth of U.S. households and nonprofits dropped at an annual rate of 11.3% in the quarter to $55.97 trillion.
According to the WSJ, Federal regulators warned that banking-industry turmoil will continue as financial institutions come to terms with piles of bad loans made to home and condo builders. Amid a dismal spring sales season for new homes, banks have begun to dump these loans at what will likely be steep discounts, setting the stage for billions of dollars in fresh losses.
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