9/12/08 Arlington Institute
Arlington Institute: "Here at the Arlington Institute, we have worked with real precognizant dreamers who have had experience with intelligence services and we have subsequently learned about the hundreds of case studies of individuals who had explicit dreams about the 9/11 affair (people jumping out of burning high rise buildings, etc.), beginning some six months before the event. We have been intrigued with the notion that the human collective unconscious somehow anticipates large impending perturbations. Our WHETHEReport project, for which we are looking for funding, is in fact based upon this dynamic. In telling people about this project I have received strong confirmations of the efficacy of the underlying logic from many individuals around the world.
Well, in the last two days I have received four independent, explicit indications from far removed friends suggesting that something very substantial and disruptive is going to happen to the U.S. within the next 60 days or so. If these warnings manifest themselves in an event of the significance of something like 9/11 then people all over the world should begin to experience dreams and other intuitions suggesting that something extraordinary is about to happen."
Consumer spending without autos rose 0.4 percent last month on a seasonally adjusted basis, less than the 1 percent increase in July, said SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard Worldwide .
"People are focusing on the essentials which are going up and up," said Kamalesh Rao, director of economic research at MasterCard Advisors.
This attention to household staples had caused shoppers to pare back on items such as clothes and consumer electronics, which typically enjoy sales bumps in late summer as students return to school.
A Keefe, Bruyette & Woods analyst on Thursday cut her profit estimates on Goldman Sachs Group Inc. on expectations for lower equities trading revenue.
Lauren Smith reduced her third-quarter earnings estimate to $1.40 per share from $2.17 per share, and her full-year estimate to $13.57 per share from $14.35 per share
Barry Ritholtz: "The US dollar just hit a one year high. If the ECB begins cutting, or if the dollar continues to rally, we could see the export sector significantly impacted."
Robert McHugh: "We are expecting a crash-like decline in stocks sometime over the next four to six weeks, starting at any time. Maybe now, maybe in a week, maybe two. Things are unraveling fast. Declines are five waves, and rallies are three (corrective), volume is up on declines, and shrinks on rallies, and we continue to get lower highs. What we are expecting pretty soon is lower lows. This coming decline could shock mainstream analysts. We see that the rally from July 15th's lows has formed a rounded top, that the sweet spot of a finishing decline is close at hand. We show that on the top of page 8 in Wednesday's report to subscribers. The HUI could get whacked from this coming decline, as it will be very deflationary, wiping out trillions more in wealth, however this coming equity decline should alert the Master Planners that a massive stimulus and hyperinflation policy should start yesterday, and that stimulus should be the catalyst for a turnaround in precious metals, commodities, and the HUI. If they fail to kickstart the credit creation function, we are headed into an economic black hole not unlike the 1930s."
Russia's foreign exchange reserves fell by $8.9 billion to stand at $573.6 billion during the week ending Sept. 5, the Russian central bank reported on Thursday. Since Aug. 1, when they stood at $597.3 billion, Russia's reserves have declined by nearly $24 billion. Investors have pulled money out of Russia in recent weeks on concerns over escalating geopolitical tensions with the West following the military conflict between Georgia and Russia, falling commodity prices and concerns about state interference in the economy. Russian equities have been battered by an ongoing sell-off, with the RTS stock index falling about 43% year-to-date.
King Pharmaceuticals Inc.said Thursday that it plans to start a cash tender offer to buy shares of Alpharma Inc. for $37 apiece. In late August, King said Alpharma, a fellow specialty-drug maker, rejected its takeover bid for $33 a share.
An index for U.S. import prices fell 3.7% in August -- the first decrease since December and the largest one-month decline since the index was first published monthly in December 1988, the Labor Department reported Thursday. Economists surveyed by MarketWatch were looking for a 1.7% decline. Petroleum prices fell 12.8% -- the largest monthly decrease since April 2003. Overall, import prices were up 16% over the past 12 months. Natural gas prices fell 16.4% -- the largest monthly decrease since October 2006. Excluding all fuels, import prices rose 0.2% in August. Meanwhile, the import price index for foods, feeds and beverages rose 0.7% in August, and are up 15.9% over the past 12 months - the largest annual increase since the index was first published in September 1977.
The U.S. trade deficit widened more than expected in July, boosted by the largest volume of imported oil in four years, the Commerce Department reported Thursday. The seasonally adjusted trade deficit - exports minus imports - grew by 5.7% to $62.2 billion, the most in 16 months. The nominal deficit was larger than the $58.6 billion expected by economists surveyed by MarketWatch. The gap in June was revised higher to $58.8 billion. In July, imports rose 3.9% to a record $230.3 billion, while exports grew 3.3% to a record $168.1 billion. After adjusting for inflation, the real trade deficit rose by 2.7% from a seven-year low in June.
Anatoly Chubais, former head of RAO UES of Russia, is predicting an energy crisis in Russia at the beginning of 2010 if the rate of gas production in the country stagnates.
There have been two cold winters in Russia out of the last seven, Chubais notes, and another one can be expected in 2010. Fuel oil reserves will be insufficient by that time, which could lead to a shortage of 7 billion kilowatt-hours of electricity. Electricity and heat can be generated, Chubais reasons, but technical limitations, such as the capacity of electricity generating stations and transportation complexities for fuel oil, hinder it.
Chubais suggests that the energy crisis of 2010 may be “substantial” and require evacuations from a number of cities. “But even those risks can be avoided if electricity reform and the liberalization of the natural gas market are approached sensibly,” he said. Chubais perceives a gas shortage in Russia even as gas export programs are being developed. He referred to gas export as a “sacred cow” that nonetheless had to be dealt with.
The SPDR Gold Trust, the world's largest gold-backed exchange traded fund, reported that it sold more than 10 tons of bullion this past Tuesday. That corresponds to 1.7 percent of its total holdings. SPDR now holds "only" 631.2 tons of gold, down from 641.93 tons on Sept. 8. The trust has sold 68.7 tons of gold since its holdings hit a record 705.9 tons two months ago. The current level is still up from the 627 tons reported for December 2007 -- when gold was trading in the $860 range.
The Oil Drum: "Hurricane Ike's current track predicts landfall between Corpus Christi and Galveston Saturday morning; but the storm isn't strengthening much yet and the track has been moving northwards--so, because of the wobbles in the track, models are still uncertain. Within the current NHC storm path lies about 5 million bpd of US petroleum refining capacity. (Perspective: 5 MMBBL is about 30% of US capacity (about 15 MMBBL), and a bit less than 6% of global capacity (~85 MMBBL). Also, the MMS reported Wednesday that staff has been evacuated from 452 production platforms (63.0%) and 81 rigs (66.9%) – (95.9% of the oil production and 73.1% of the natural gas production has been shut-in as a precautionary measure for Hurricane Ike.)"
The Labor Department reported that applications for jobless benefits dropped to a seasonally adjusted 445,000, down by 6,000 from the prior week and above analysts' expectations of 440,000.
The four-week moving average, which smooths out week-to-week fluctuations, rose slightly to 440,000.
The number of people continuing to draw jobless benefits increased to a five-year high of 3.53 million, above analysts' expectations.
Sunoco rallied 5 points during the first 4 1/2 hours of trading. Crack spreads have been widening for the refining group. A few months ago I suggested the purchase of Sunoco, Valero, and Frontier, and in addition, a special mention of Marathon Oil at the $40 level.
The U.S. Office of Thrift Supervision said it is monitoring the condition of WaMu, Reuters reported Thursday.
Gloria Steinem: "This isn't the first time a
boss has picked an unqualified woman just because she agrees with him and
opposes everything most other women want and need. Feminism has never been
about getting a job for one woman. It's about making life more fair for
women everywhere. It's not about a piece of the existing pie; there are too
many of us for that. It's about baking a new pie.
Sarah Palin, who was touted all summer by Rush Limbaugh, is no way to
attract most women, including die-hard Clinton supporters. Palin shares
nothing but a chromosome with Clinton . Her down-home, divisive and
deceptive speech did nothing to cosmeticize a Republican convention that has
more than twice as many male delegates as female, a presidential candidate
who is owned and operated by the right wing and a platform that opposes
pretty much everything Clinton's candidacy stood for -- and that Barack
Obama's still does. To vote in protest for McCain/Palin would be like
saying, "Somebody stole my shoes, so I'll amputate my legs."...So let's be clear: The culprit is John McCain. He may have chosen Palin out
of change-envy, or a belief that women can't tell the difference between
form and content, but the main motive was to please right-wing ideologues;
the same ones who nixed anyone who is now or ever has been a supporter of
reproductive freedom. If that were not the case, McCain could have chosen a
woman who knows what a vice president does and who has thought about Iraq ;
someone like Texas Sen. Kay Bailey Hutchison or Sen. Olympia Snowe of Maine.
McCain could have taken a baby step away from right-wing patriarchs who
determine his actions, right down to opposing the Violence Against Women
Act.
Palin's value to those patriarchs is clear: She opposes just about every
issue that women support by a majority or plurality. She believes that
creationism should be taught in public schools but disbelieves global
warming; she opposes gun control but supports government control of women's
wombs; she opposes stem cell research but approves "abstinence-only"
programs, which increase unwanted births, sexually transmitted diseases and
abortions; she tried to use taxpayers' millions for a state program to shoot
wolves from the air but didn't spend enough money to fix a state school
system with the lowest high-school graduation rate in the nation; she runs
with a candidate who opposes the Fair Pay Act but supports $500 million in
subsidies for a natural gas pipeline across Alaska; she supports drilling in
the Arctic National Wildlife Reserve, though even McCain has opted for the
lesser evil of offshore drilling. She is Phyllis Schlafly, only younger."
Natural-gas inventories rose by 58 billion cubic feet for the week ended Sept. 5, the U.S. Energy Department said Thursday. Total stocks now stand at 2.905 trillion cubic feet, down 146 billion cubic feet from the year-ago level but 82 billion cubic feet above the five-year average, the government data said.
October crude fell $1.71 to close at $100.87 per barrel on the New York Mercantile Exchange. Gold for December delivery fell $17, or 2.2%, to close at $745.50 an ounce on the Comex division of the New York Mercantile Exchange, the first time the metal closed below $750 since last October.
Foreclosure filings in August increased 27 percent compared to the same month a year ago, a significantly slower pace than in previous months, according to data released Thursday.
Nationwide, 303,800 homes received at least one foreclosure-related notice in August, up 12 percent from July, RealtyTrac Inc. said. That means one in every 416 U.S. households received a foreclosure filing last month.
Friday, September 12, 2008
Thursday, September 11, 2008
OPEC
9/11/08 OPEC
OPEC cut daily production by 520,000 barrels a day to 28.8 million.
Russia, which attends OPEC conferences as an observer, sent a very senior official, the influential deputy prime minister Igor Sechin.
Analysts linked his attendance to tension between Russia and the West over Moscow's conflict with Georgia.
Russia's energy ministry said Russia wanted to hold regular dialogue with OPEC and had invited representatives to Moscow for a meeting in October.
In the past, Russia has agreed to trim production in line with OPEC output cuts to support prices.
Khelil's estimation of how much output will be removed from the market derived from amounts OPEC members were really producing, rather than agreed limits.
OPEC's new production ceiling is 28.8 million bpd, compared with its earlier target of 29.67 million bpd, ministers said.
France's Total SA, one of the world's biggest oil companies, said Wednesday it expects oil prices to remain high and plans to raise its production.
"We consider that the price of energy, the price of oil will remain strong, high," Total Chief Executive Christophe de Margerie said in an Internet presentation to investors.
Billionaire investor Warren Buffett's Berkshire Hathaway Inc has told one of its units to stop insuring bank deposits above the amount guaranteed by the U.S. federal government, the Wall Street Journal reported.
The subsidiary, Kansas Bankers Surety Co, is notifying about 1,500 banks in more than 30 states that it will no longer offer a program called "bank deposit guaranty bonds."
Robert McHugh: " The Hindenburg Omen from June still has life, is valid for four months, which would allow for more decline into mid-October. A sharp rally of 1 percent or so Wednesday could generate another observation. Bonds are up over 120 again. The VIX rose sharply. Fear seems everywhere."
"You can wrap an old fish in a piece of paper called change, and it's still going to stink after eight years..."
James Turk: "The Treasury reports the US Gold Reserves monthly at this link: http://fms.treas.gov/gold/index.html These reserves include "gold held by U.S. Mint facilities", which the report labels as "working stock" and describes it as "the portion of the U.S. government-owned Gold Bullion Reserve that the U.S. Mint uses as the raw material for minting congressionally authorized coins." The August 29, 2008 report says the quantity of working stock is 2,783,218.656 ounces. Yet we are told by the Mint that none of that can be minted into gold eagles? Would Fat Tony say we are a "sucker" to believe that the Mint cannot produce gold eagles to meet demand?
Here's something even more bizarre. One would assume that the size of the Mint's working stock varies from month to month, just like inventory varies from month to month in any business as a result of changes in production and the ebbs and flows in sales. And indeed, the Mint's inventory did vary monthly, up until March 2006. But according to the Treasury's reports, the Mint's working stock has remained exactly 2,783,218.656 ounces since April 2006. How is it possible that the Mint's working stock has remained unchanged for 28 months? Have you ever seen any business anywhere in the world for which its working stock was unchanged for a day, let alone 28 months?...It's really very simple. Fiat currency is a scheme perpetrated by central banks. To make their scheme work, they intervene in the gold market to manipulate the gold price. By doing so they try to make their fiat currency look better.
Thus, it's not gold that is the barbarous relic. The barbarous relic is central banking."
Brazil's economy grew by 6.1% year-on-year in the second quarter, exceeding market expectations of a GDP growth rate of 5.5%, the Brazilian statistics institute IBGE reported Wednesday.
Japan's wholesale inflation remained near a 27-year high in August, the government said Wednesday, as the soaring costs of energy and raw materials continued to pressure businesses.
The index for domestic corporate goods prices rose 7.2 percent from a year ago, the Bank of Japan said.
The U.S. Department of Defense said Wednesday it has canceled a $35 billion contract competition among aircraft manufacturers Boeing and Northrop Grumman to build its next-generation airborne tankers. In a release, Defense Secretary Robert Gates said an award could not be fairly handed out by a January deadline, and he will therefore leave it for the next administration to evaluate the criteria and appropriate budget.
Crude supplies fell by 5.9 million barrels for the week ended Sept. 5, according to the Energy Department Wednesday. Motor gasoline supplies dropped for a seventh week in a row, by 6.5 million barrels. Distillate stocks were down 1.2 million barrels. Refinery utilization was at 78.3% compared with 88.7% of capacity a week earlier.
The American Petroleum Institute reported Wednesday a drop of 21.6 million barrels in crude supplies for the week ended Sept. 5. But that's after an upward revision to the previous week's stocks. The Energy Department had reported a decline of 5.9 million barrels for the latest week. Motor gasoline supplies were down 3 million barrels, the API said. The government had reported that supplies fell by 6.5 million barrels. Distillate supplies were up 3.5 million barrels, the API said. They were down 1.2 million for the week, according to the Energy Department.
Democratic presidential nominee Barack Obama is accusing John McCain's campaign of "lies and phony outrage and Swift-boat politics" in claiming he had made a sexist comment against vice presidential candidate Sarah Palin.
Vishay Intertechnology said it has increased its all-cash offer to buy International Rectifier Corp. to $23 a share. The maker of discrete semiconductor products also said it is taking its proposal directly to IRF shareholders.
Republican Rep. Ron Paul, the libertarian-leaning Texas lawmaker who attracted a devoted following in the GOP primaries, said Wednesday he rejected an appeal to endorse John McCain's presidential bid.
"The idea was that he would do less harm than the other candidate," Paul said.
Palin has sought $197 million worth of earmarks for 2009, down about 25 percent from the $256 million she sought in the 2008 budget year. As mayor of tiny Wasilla, Alaska, she hired a lobbyist to seek federal money for special projects. Wasilla obtained 14 earmarks, totaling $27 million, between 2000-2003, according to Taxpayers for Common Sense.
New Zealand's central bank cut its official cash rate by half a percentage point to 7.5% Thursday, a deeper cut than many analysts and investors had expected. "The New Zealand economy is experiencing a marked slowdown, led primarily by the household sector. The outlook for the global economy has deteriorated further in the wake of continued financial market turmoil," Reserve Bank Governor Alan Bollard said in a statement. The New Zealand dollar was down 2.2% against its U.S. counterpart, buying 65.33 cents.
October crude closed at $102.58 per barrel on the New York Mercantile Exchange Wednesday, marking a fresh five-month low, down 68 cents for the session. Gold for December delivery fell $29.50, or 3.7%, to $762.50 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing level since Oct. 24, 2007.
The Bank of England will proceed with plans to provide liquidity insurance to financial institutions, but cannot provide banks with long-term funding, Bank of England Gov. Mervyn King told a parliamentary committee Thursday. A special liquidity program put in place this spring will close on schedule on Oct. 21, King said.
British consumers' median expectations for the rate of inflation over the next year rose to 4.4% in August, according to the Bank of England quarterly inflation survey released Thursday.
Mexican billionaire Carlos Slim and has family have built a 6.4% stake in The New York Times Co., according to a Securities and Exchange Commission filing late Wednesday.
Brazil's central bank, in a widely expected move, raised its benchmark interest rate Wednesday evening by 75-basis points, to 13.75%.
OPEC cut daily production by 520,000 barrels a day to 28.8 million.
Russia, which attends OPEC conferences as an observer, sent a very senior official, the influential deputy prime minister Igor Sechin.
Analysts linked his attendance to tension between Russia and the West over Moscow's conflict with Georgia.
Russia's energy ministry said Russia wanted to hold regular dialogue with OPEC and had invited representatives to Moscow for a meeting in October.
In the past, Russia has agreed to trim production in line with OPEC output cuts to support prices.
Khelil's estimation of how much output will be removed from the market derived from amounts OPEC members were really producing, rather than agreed limits.
OPEC's new production ceiling is 28.8 million bpd, compared with its earlier target of 29.67 million bpd, ministers said.
France's Total SA, one of the world's biggest oil companies, said Wednesday it expects oil prices to remain high and plans to raise its production.
"We consider that the price of energy, the price of oil will remain strong, high," Total Chief Executive Christophe de Margerie said in an Internet presentation to investors.
Billionaire investor Warren Buffett's Berkshire Hathaway Inc has told one of its units to stop insuring bank deposits above the amount guaranteed by the U.S. federal government, the Wall Street Journal reported.
The subsidiary, Kansas Bankers Surety Co, is notifying about 1,500 banks in more than 30 states that it will no longer offer a program called "bank deposit guaranty bonds."
Robert McHugh: " The Hindenburg Omen from June still has life, is valid for four months, which would allow for more decline into mid-October. A sharp rally of 1 percent or so Wednesday could generate another observation. Bonds are up over 120 again. The VIX rose sharply. Fear seems everywhere."
"You can wrap an old fish in a piece of paper called change, and it's still going to stink after eight years..."
James Turk: "The Treasury reports the US Gold Reserves monthly at this link: http://fms.treas.gov/gold/index.html These reserves include "gold held by U.S. Mint facilities", which the report labels as "working stock" and describes it as "the portion of the U.S. government-owned Gold Bullion Reserve that the U.S. Mint uses as the raw material for minting congressionally authorized coins." The August 29, 2008 report says the quantity of working stock is 2,783,218.656 ounces. Yet we are told by the Mint that none of that can be minted into gold eagles? Would Fat Tony say we are a "sucker" to believe that the Mint cannot produce gold eagles to meet demand?
Here's something even more bizarre. One would assume that the size of the Mint's working stock varies from month to month, just like inventory varies from month to month in any business as a result of changes in production and the ebbs and flows in sales. And indeed, the Mint's inventory did vary monthly, up until March 2006. But according to the Treasury's reports, the Mint's working stock has remained exactly 2,783,218.656 ounces since April 2006. How is it possible that the Mint's working stock has remained unchanged for 28 months? Have you ever seen any business anywhere in the world for which its working stock was unchanged for a day, let alone 28 months?...It's really very simple. Fiat currency is a scheme perpetrated by central banks. To make their scheme work, they intervene in the gold market to manipulate the gold price. By doing so they try to make their fiat currency look better.
Thus, it's not gold that is the barbarous relic. The barbarous relic is central banking."
Brazil's economy grew by 6.1% year-on-year in the second quarter, exceeding market expectations of a GDP growth rate of 5.5%, the Brazilian statistics institute IBGE reported Wednesday.
Japan's wholesale inflation remained near a 27-year high in August, the government said Wednesday, as the soaring costs of energy and raw materials continued to pressure businesses.
The index for domestic corporate goods prices rose 7.2 percent from a year ago, the Bank of Japan said.
The U.S. Department of Defense said Wednesday it has canceled a $35 billion contract competition among aircraft manufacturers Boeing and Northrop Grumman to build its next-generation airborne tankers. In a release, Defense Secretary Robert Gates said an award could not be fairly handed out by a January deadline, and he will therefore leave it for the next administration to evaluate the criteria and appropriate budget.
Crude supplies fell by 5.9 million barrels for the week ended Sept. 5, according to the Energy Department Wednesday. Motor gasoline supplies dropped for a seventh week in a row, by 6.5 million barrels. Distillate stocks were down 1.2 million barrels. Refinery utilization was at 78.3% compared with 88.7% of capacity a week earlier.
The American Petroleum Institute reported Wednesday a drop of 21.6 million barrels in crude supplies for the week ended Sept. 5. But that's after an upward revision to the previous week's stocks. The Energy Department had reported a decline of 5.9 million barrels for the latest week. Motor gasoline supplies were down 3 million barrels, the API said. The government had reported that supplies fell by 6.5 million barrels. Distillate supplies were up 3.5 million barrels, the API said. They were down 1.2 million for the week, according to the Energy Department.
Democratic presidential nominee Barack Obama is accusing John McCain's campaign of "lies and phony outrage and Swift-boat politics" in claiming he had made a sexist comment against vice presidential candidate Sarah Palin.
Vishay Intertechnology said it has increased its all-cash offer to buy International Rectifier Corp. to $23 a share. The maker of discrete semiconductor products also said it is taking its proposal directly to IRF shareholders.
Republican Rep. Ron Paul, the libertarian-leaning Texas lawmaker who attracted a devoted following in the GOP primaries, said Wednesday he rejected an appeal to endorse John McCain's presidential bid.
"The idea was that he would do less harm than the other candidate," Paul said.
Palin has sought $197 million worth of earmarks for 2009, down about 25 percent from the $256 million she sought in the 2008 budget year. As mayor of tiny Wasilla, Alaska, she hired a lobbyist to seek federal money for special projects. Wasilla obtained 14 earmarks, totaling $27 million, between 2000-2003, according to Taxpayers for Common Sense.
New Zealand's central bank cut its official cash rate by half a percentage point to 7.5% Thursday, a deeper cut than many analysts and investors had expected. "The New Zealand economy is experiencing a marked slowdown, led primarily by the household sector. The outlook for the global economy has deteriorated further in the wake of continued financial market turmoil," Reserve Bank Governor Alan Bollard said in a statement. The New Zealand dollar was down 2.2% against its U.S. counterpart, buying 65.33 cents.
October crude closed at $102.58 per barrel on the New York Mercantile Exchange Wednesday, marking a fresh five-month low, down 68 cents for the session. Gold for December delivery fell $29.50, or 3.7%, to $762.50 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing level since Oct. 24, 2007.
The Bank of England will proceed with plans to provide liquidity insurance to financial institutions, but cannot provide banks with long-term funding, Bank of England Gov. Mervyn King told a parliamentary committee Thursday. A special liquidity program put in place this spring will close on schedule on Oct. 21, King said.
British consumers' median expectations for the rate of inflation over the next year rose to 4.4% in August, according to the Bank of England quarterly inflation survey released Thursday.
Mexican billionaire Carlos Slim and has family have built a 6.4% stake in The New York Times Co., according to a Securities and Exchange Commission filing late Wednesday.
Brazil's central bank, in a widely expected move, raised its benchmark interest rate Wednesday evening by 75-basis points, to 13.75%.
Wednesday, September 10, 2008
No Place To Hide
9/10/08 No Place To Hide
International Herald Tribune: "Brazil and Argentina are ready to stop using U.S. dollars to trade goods between them. Brazil's president tells the Buenos Aires-based Clarin newspaper that exports and imports between the two nations will be bought and sold in local currency — reals and pesos." You can be assured many other countries will follow.
The dollar is worth? That's up to those on the receiving end.
The oil market is balanced, said Ali Naimi, Saudi Arabia’s powerful oil minister, making it less likely the Opec oil cartel will formally decide to cut its output at a meeting later on Tuesday.
Mr Naimi said as he arrived in Vienna in the early hours of Tuesday: “The market is fairly well balanced and we have worked very hard since June’s meeting to bring prices to where they are now.” He added: “Whatever the customers want, we will satisfy.”
Rep. Ron Paul: "The government's thirst for power will not be easily, or cheaply, quenched. Fiat currency is one tool governments have to extract wealth quietly from the working class. It is time for the people to wake up to this ruse and look to the Constitution to restore sound currency."
Robert McHugh: "Don't be fooled by Monday's dramatic stock rally. Read Monday's Market Newsletter to subscribers for the reasons why we say this. We study the internals, the indicators, and the patterns that warn this rally is not to be trusted."
Christian Science Monitor: "One interesting finding in the USA Today poll was the polarizing effect of Palin. According to the survey, 29 percent said her presence on the ticket makes them more likely to vote for McCain, while 21 percent said she made a McCain vote less likely. That kind of reaction mirrors what we are hearing from our communities. The potential net effect: For the remaining 57 days of the campaign, we could be down to the true independent and undecided voters. In terms of Patchwork Nation’s electoral breakdown by community, that may mean that the election really will be about the three county types that were pretty close in 2004 – the wealthy suburban “Monied ’Burbs,” the growing and diversifying “Boom Towns,” and the smaller-town “Service Worker Centers.”
China's passenger-car sales fell in August for the first time in more than three years as the Beijing Olympics and a slumping stock market prompted drivers to delay purchases.
The federal government will run a near-record deficit of $407 billion for the budget year ending Sept. 30, according to the latest Capitol Hill estimates.
The new Congressional Budget Office figures released Tuesday say the flood of red ink will spill over into next year, when the deficit would reach a record $438 billion — and could go even higher as the government takes over mortgage giants Fannie Mae and Freddie Mac.
McDonald's Corp on Tuesday said global sales at restaurants open at least 13 months rose 8.5 percent in August, beating some analysts' expectations, as an Olympics advertising blitz bolstered results.
An index of sales contracts on previously owned U.S. homes fell 3.2% in July from the prior month, the National Association of Realtors reported Tuesday. The index, which is considered a leading indicator of existing home sales, was down 6.8% from the prior year. Pending home sales in July were mixed regionally, with a decline of 10.6% in the West, and 7.5% in the Northeast. In the South, there was no growth. And in the Midwest, there was a gain of 2.8%. The June pending home sales index was revised to a gain of 5.8% from a prior estimate of a 5.3% increase.
Former Federal Reserve Chairman Paul Volcker says the U.S. financial system is "broken."
At a banking conference in Calgary, he went on to predict that "Growth in the economy in this decade will be the slowest of any decade since the Great Depression, right in the middle of all this financial innovation.''
"It is the most complicated financial crisis I have ever experienced, and I have experienced a few," said Volcker.
In early Tuesday trading, Lehman shares were down 30% to a new 52-week low at $10+.
Reynolds American Inc. and its subsidiary R.J. Reynolds Tobacco Co. said Tuesday they were cutting about 10 percent of their American work force as the company restructures its portfolio.
The nation's second-largest tobacco company said it plans to lay off about 570 workers in Winston-Salem, N.C, where the two companies are based, or about 16 percent of the work force there.
Lehman Bros. shares fell 45% to $7.79 on news that a Korean bank backed away from talks to buy a stake in the New York bank. As Wall Street wondered how the investment bank was going to raise new capital, short-sellers drove the stock lower.
The Dow Jones industrials dropped 280 points, or 2.4%, to 11,231. The Standard & Poor's 500 Index fell 43 points, or 3.4%, to 1,225, and the Nasdaq Composite Index was off 60 points, or 2.6%, to 2,210.
With today's sell-off, the Dow gave up 97% of its gain on Monday and had its 25th loss of 200 or more points this year. The S&P 500 and Nasdaq saw their Monday gains disappear.
At $39.77, Marathon Oil made a new 52-week low. The last time it traded at this level was 2 years ago.
Standard & Poor's Ratings Services late Tuesday said it lowered the outlook on Washington Mutual Inc.and Washington Mutual Bank to negative from stable.
Humana Inc. expects to lose about 308,000 members because its Medicare plan pricing was above premium benchmark rates in 34 regions, the health insurer said in a Securities and Exchange Commission filing late Tuesday. The company expects to lose the members on Jan. 1.
October crude dropped $3.08, or 2.9%, to close at $103.26 per barrel on the New York Mercantile Exchange.
Interest-rate futures show traders started betting the Federal Reserve will lower its target interest rate from 2% at the end of this year, a sharp reversal from forecasts for rate increases less than a week ago. The December futures contract on Tuesday showed a 25% chance the central bank will reduce rates to 1.75% at its meeting that month.
Lehman Brothers on Wednesday said it plans to spin off to shareholders $25 billion to $30 billion of its commercial real estate portfolio into a separate, public company. "The concentration of positions in commercial real estate-related assets has become a significant concern for investors and creditors," Lehman said. The Wall Street firm also said it intends to sell a majority stake, estimated at roughly 55%, in a subset of its investment-management business. Lehman Bros. lost $3.9 billion, or $5.62 a share in its third quarter after taking a gross mark to market loss of $7.8 billion. The company also said it cut its quarterly dividend to 5 cents a share.
The International Energy Agency has lowered global oil demand forecasts for 2008 and 2009. For 2008, it sees demand of 86.8 million barrels of oil a day, which is up 0.8% from 2007 levels but 100,000 barrels lower than last month's forecasts. For 2009, it sees oil demand rising to 87.6 million barrels, which is 140,000 barrels lower than last month's estimate.
China's wholesale inflation accelerated at a faster pace than the consumer inflation in August, as raw material costs rose more than an increase in the prices of finished products. The country's PPI for August soared 10.1% over the same month a year-ago, rising faster than the 10% increase recorded in July, according to reports. But a reading of consumer prices grew at a slower-than-expected 4.9% during the month.
International Herald Tribune: "Brazil and Argentina are ready to stop using U.S. dollars to trade goods between them. Brazil's president tells the Buenos Aires-based Clarin newspaper that exports and imports between the two nations will be bought and sold in local currency — reals and pesos." You can be assured many other countries will follow.
The dollar is worth? That's up to those on the receiving end.
The oil market is balanced, said Ali Naimi, Saudi Arabia’s powerful oil minister, making it less likely the Opec oil cartel will formally decide to cut its output at a meeting later on Tuesday.
Mr Naimi said as he arrived in Vienna in the early hours of Tuesday: “The market is fairly well balanced and we have worked very hard since June’s meeting to bring prices to where they are now.” He added: “Whatever the customers want, we will satisfy.”
Rep. Ron Paul: "The government's thirst for power will not be easily, or cheaply, quenched. Fiat currency is one tool governments have to extract wealth quietly from the working class. It is time for the people to wake up to this ruse and look to the Constitution to restore sound currency."
Robert McHugh: "Don't be fooled by Monday's dramatic stock rally. Read Monday's Market Newsletter to subscribers for the reasons why we say this. We study the internals, the indicators, and the patterns that warn this rally is not to be trusted."
Christian Science Monitor: "One interesting finding in the USA Today poll was the polarizing effect of Palin. According to the survey, 29 percent said her presence on the ticket makes them more likely to vote for McCain, while 21 percent said she made a McCain vote less likely. That kind of reaction mirrors what we are hearing from our communities. The potential net effect: For the remaining 57 days of the campaign, we could be down to the true independent and undecided voters. In terms of Patchwork Nation’s electoral breakdown by community, that may mean that the election really will be about the three county types that were pretty close in 2004 – the wealthy suburban “Monied ’Burbs,” the growing and diversifying “Boom Towns,” and the smaller-town “Service Worker Centers.”
China's passenger-car sales fell in August for the first time in more than three years as the Beijing Olympics and a slumping stock market prompted drivers to delay purchases.
The federal government will run a near-record deficit of $407 billion for the budget year ending Sept. 30, according to the latest Capitol Hill estimates.
The new Congressional Budget Office figures released Tuesday say the flood of red ink will spill over into next year, when the deficit would reach a record $438 billion — and could go even higher as the government takes over mortgage giants Fannie Mae and Freddie Mac.
McDonald's Corp on Tuesday said global sales at restaurants open at least 13 months rose 8.5 percent in August, beating some analysts' expectations, as an Olympics advertising blitz bolstered results.
An index of sales contracts on previously owned U.S. homes fell 3.2% in July from the prior month, the National Association of Realtors reported Tuesday. The index, which is considered a leading indicator of existing home sales, was down 6.8% from the prior year. Pending home sales in July were mixed regionally, with a decline of 10.6% in the West, and 7.5% in the Northeast. In the South, there was no growth. And in the Midwest, there was a gain of 2.8%. The June pending home sales index was revised to a gain of 5.8% from a prior estimate of a 5.3% increase.
Former Federal Reserve Chairman Paul Volcker says the U.S. financial system is "broken."
At a banking conference in Calgary, he went on to predict that "Growth in the economy in this decade will be the slowest of any decade since the Great Depression, right in the middle of all this financial innovation.''
"It is the most complicated financial crisis I have ever experienced, and I have experienced a few," said Volcker.
In early Tuesday trading, Lehman shares were down 30% to a new 52-week low at $10+.
Reynolds American Inc. and its subsidiary R.J. Reynolds Tobacco Co. said Tuesday they were cutting about 10 percent of their American work force as the company restructures its portfolio.
The nation's second-largest tobacco company said it plans to lay off about 570 workers in Winston-Salem, N.C, where the two companies are based, or about 16 percent of the work force there.
Lehman Bros. shares fell 45% to $7.79 on news that a Korean bank backed away from talks to buy a stake in the New York bank. As Wall Street wondered how the investment bank was going to raise new capital, short-sellers drove the stock lower.
The Dow Jones industrials dropped 280 points, or 2.4%, to 11,231. The Standard & Poor's 500 Index fell 43 points, or 3.4%, to 1,225, and the Nasdaq Composite Index was off 60 points, or 2.6%, to 2,210.
With today's sell-off, the Dow gave up 97% of its gain on Monday and had its 25th loss of 200 or more points this year. The S&P 500 and Nasdaq saw their Monday gains disappear.
At $39.77, Marathon Oil made a new 52-week low. The last time it traded at this level was 2 years ago.
Standard & Poor's Ratings Services late Tuesday said it lowered the outlook on Washington Mutual Inc.and Washington Mutual Bank to negative from stable.
Humana Inc. expects to lose about 308,000 members because its Medicare plan pricing was above premium benchmark rates in 34 regions, the health insurer said in a Securities and Exchange Commission filing late Tuesday. The company expects to lose the members on Jan. 1.
October crude dropped $3.08, or 2.9%, to close at $103.26 per barrel on the New York Mercantile Exchange.
Interest-rate futures show traders started betting the Federal Reserve will lower its target interest rate from 2% at the end of this year, a sharp reversal from forecasts for rate increases less than a week ago. The December futures contract on Tuesday showed a 25% chance the central bank will reduce rates to 1.75% at its meeting that month.
Lehman Brothers on Wednesday said it plans to spin off to shareholders $25 billion to $30 billion of its commercial real estate portfolio into a separate, public company. "The concentration of positions in commercial real estate-related assets has become a significant concern for investors and creditors," Lehman said. The Wall Street firm also said it intends to sell a majority stake, estimated at roughly 55%, in a subset of its investment-management business. Lehman Bros. lost $3.9 billion, or $5.62 a share in its third quarter after taking a gross mark to market loss of $7.8 billion. The company also said it cut its quarterly dividend to 5 cents a share.
The International Energy Agency has lowered global oil demand forecasts for 2008 and 2009. For 2008, it sees demand of 86.8 million barrels of oil a day, which is up 0.8% from 2007 levels but 100,000 barrels lower than last month's forecasts. For 2009, it sees oil demand rising to 87.6 million barrels, which is 140,000 barrels lower than last month's estimate.
China's wholesale inflation accelerated at a faster pace than the consumer inflation in August, as raw material costs rose more than an increase in the prices of finished products. The country's PPI for August soared 10.1% over the same month a year-ago, rising faster than the 10% increase recorded in July, according to reports. But a reading of consumer prices grew at a slower-than-expected 4.9% during the month.
Tuesday, September 09, 2008
Big Government Gets Bigger
9/9/08 Big Government Gets Bigger
John Hussman: "A record 9.16% of U.S. mortgages were in delinquency (6.41%) or foreclosure (2.75%) as of June 30. This figure will likely be even worse in the third quarter report. The bright side, for what it's worth, is that I expect that we are currently in the heaviest period of this deterioration, and while that means a continued high foreclosure rate and mounting losses for financials over the next quarter or two, it also means that the the rate of change in this deterioration is presently near its peak. In short, we'll continue to see additional mortgage-related losses well into 2009 and even 2010, but I don't expect the rate of new foreclosures to continue accelerating beyond a few more months."
According to Reuters, Europe is interested in finding ways to move forward with projects like the Nabucco pipeline project, the official said of a U.S.- and EU-backed project that would take Azeri gas to Europe through Georgia and Turkey. But concern about instability in the Caucasus has been scaring off investors.
Europe also wants to ensure that the Baku-Tbilisi-Ceyhan pipeline, which ships 850,000 barrels per day of high quality Azeri crude from the Caspian to the Mediterranean, remains open and functioning, the U.S. official said.
Wheat plunged to a three-month low on speculation that record global production will outpace demand, boosting grain inventories.
Growers worldwide will collect 670.8 million metric tons in the year ending May 31, up 9.9 percent from the prior year, the U.S. Department of Agriculture said last month. Global stockpiles will increase 18 percent to 136.2 million tons, the USDA said. Wheat prices have tumbled 44 percent from a record $13.495 a bushel on Feb. 27.
``The world is awash in wheat,'' said Gavin Maguire, a director of research for EHedger LLC in Chicago. ``Prices will fall to keep supplies moving.''
Obama's campaign is conducting a massive voter-registration drive. Steve Hildebrand, his deputy campaign manager, says three states -- Florida, Michigan and North Carolina --- have more than 400,000 new voters; Georgia and Pennsylvania have more than 300,000. Most of the new voters favor Obama, he says.
Internet advertising has resulted in ``thousands and thousands of click-throughs onto sites where they can register to vote,'' he says, and ``it's something we'll continue through the general election.''
St. George Bank Ltd., Australia's fifth-largest bank, agreed to a revised 17.3 billion Australian dollar ($14.4 billion) takeover proposal by larger rival Westpac Banking Corp. on Monday, in what would be the biggest banking acquisition in Australian history.
JetBlue Airways Corp. is auctioning off more than 300 roundtrip flights and six vacation packages this week on eBay, with opening bids set between 5 and 10 cents.
The flights are to more than 20 destinations, including four "mystery" JetBlue Getaways Vacation packages to undisclosed locations.
The three-, five- and seven-day auctions include one- and two-person roundtrip, weekend flights in September from cities including Boston, Chicago, New York, Orlando, Salt Lake City, Fort Lauderdale and Southern California.
Gehl Co. said Monday that it will be acquired by Manitou BF S.A., its largest shareholder, for $30 a share. The West Bend, Wis., maker of agricultural and construction compact equipment said the deal has an enterprise value of about $450 million. Shares of Gehl closed Friday at $13.66. In premarket trading Monday, shares were up about 112%.
Nouriel Roubini: "Details on the US government bailout of the two GSEs – as well as the bailout of the other GSEs, the Federal Home Loan Banks that recently wasted hundreds of billions by lending to troubled mortgage lending institutions - are still partial but the overall picture is not pretty. This bailout plan has mostly lousy features that exacerbate the moral hazard of this government intervention and the overall fiscal costs of such intervention."
Alan Farago: "Nationalization of private financial institutions is happening right now, under the supervision of the Bush administration and the shield of US taxpayers, while the party values continue to tout the "free market". Free market, to whom?
Today, the Republican spin machine is struggling to pin the socialization-- nationalization, if you will-- of Fannie Mae and Freddie Mac on someone else...
Today, the Republican spin machine is struggling to pin the socialization-- nationalization, if you will-- of Fannie Mae and Freddie Mac on someone else. How dare the Republicans accuse "liberals" for being angry about the fire sale of US assets to Asia, the Middle East, and even Russia? Filled up your car at Lukoil recently? The fact is that lefties and liberals have been no where in view, except as community organizers and neighborhood activists.
We didn't hear John McCain, last night in St. Paul, nor will Florida top donors hear Sarah Palin in Miami next week utter a solitary word of the fiscal irresponsibility that pushed the US economy into the biggest crisis since the Great Depression while making many of them a fortune in the process."
Rob Hanna: "It's Monday morning and the futures are up over 3.0% due to the FNM/FRE bailout news. Since 1998 there have been 16 times when the S&P 500 has gapped up 2.0% or more. Eight of those times it closed higher than the open, and eight it closed lower.
Of the 16 instances 10 saw an intraday drop of 1% or more from the opening price and 6 did not.
12 of the 16 broke below the lows of the 1st half hour of trading at some point during the day. Shorting that break and holding until the end of the day would have resulted in 6 winning trades and 6 losing trades.
5 of them broke the lows of the 1st half hour after 10:30am. Of those, 4 went on to close even lower on the day. The lone instance that rebounded closed almost 3% higher, though.
So far I've yet to indentify a sizable edge for trading a gap this large on an intraday basis."
One might ask what part does short covering play when the Dow gaps up 340 points at the opening of trading?
Italy's Eni SpA has agreed to buy Canada's First Calgary Petroleums Ltd in a cash deal worth C$923 million ($865 million), the latest in a series of acquisitions aimed at boosting its oil and gas reserves.
The U.S. labor market will probably continue to weaken "well into 2009," according to the employment trend index released by the Conference Board on Monday. The index, which looks at eight forward-looking indicators of employment, dropped to 110.8 in August, down 0.5% from July and down 8% from a year ago. "The employment trends index continues to rapidly deteriorate, suggesting there is little likelihood of a turnaround in the job market anytime soon," said Gad Levanon, senior economist at research organization. "In fact, the pace of decline points toward job losses and rising unemployment extending well into 2009."
South Korea's Financial Services Commission Chairman Jun Kwang-woo said Tuesday that talks between state-run Korea Development Bank and Lehman Brothers Holdings Inc.have ended, Dow Jones Newswires reported. He declined to say what conclusions, if any, had been reached, the report said.
British industrial production fell more than expected in July, while manufacturing output declined largely in line with forecasts. The Office for National Statistics said industrial production dropped 0.4% on the month for an annual decline of 1.9%.
Fewer U.S. employers intend to add staff in the fourth quarter, as they "carefully adjust" their workforces to meet demand, according to a survey by Manpower Inc. The Milwaukee employment-services firm surveyed 14,000 employers in the U.S. Of the total, 22% expect to increase their workforces over third-quarter levels, 13% will reduce them, 59% will hold staff steady, and 6% aren't sure, Manpower said.
The Dow Jones Industrial Averagegained 289 points, or 2.6%, to end at 11,510, with 29 of its 30 components advancing. The S&P 500 index gained 25 points, or 2%, to end at 1,267, while the Nasdaq Composite rose 13 points, or 0.6%, to 2,269.
John Hussman: "A record 9.16% of U.S. mortgages were in delinquency (6.41%) or foreclosure (2.75%) as of June 30. This figure will likely be even worse in the third quarter report. The bright side, for what it's worth, is that I expect that we are currently in the heaviest period of this deterioration, and while that means a continued high foreclosure rate and mounting losses for financials over the next quarter or two, it also means that the the rate of change in this deterioration is presently near its peak. In short, we'll continue to see additional mortgage-related losses well into 2009 and even 2010, but I don't expect the rate of new foreclosures to continue accelerating beyond a few more months."
According to Reuters, Europe is interested in finding ways to move forward with projects like the Nabucco pipeline project, the official said of a U.S.- and EU-backed project that would take Azeri gas to Europe through Georgia and Turkey. But concern about instability in the Caucasus has been scaring off investors.
Europe also wants to ensure that the Baku-Tbilisi-Ceyhan pipeline, which ships 850,000 barrels per day of high quality Azeri crude from the Caspian to the Mediterranean, remains open and functioning, the U.S. official said.
Wheat plunged to a three-month low on speculation that record global production will outpace demand, boosting grain inventories.
Growers worldwide will collect 670.8 million metric tons in the year ending May 31, up 9.9 percent from the prior year, the U.S. Department of Agriculture said last month. Global stockpiles will increase 18 percent to 136.2 million tons, the USDA said. Wheat prices have tumbled 44 percent from a record $13.495 a bushel on Feb. 27.
``The world is awash in wheat,'' said Gavin Maguire, a director of research for EHedger LLC in Chicago. ``Prices will fall to keep supplies moving.''
Obama's campaign is conducting a massive voter-registration drive. Steve Hildebrand, his deputy campaign manager, says three states -- Florida, Michigan and North Carolina --- have more than 400,000 new voters; Georgia and Pennsylvania have more than 300,000. Most of the new voters favor Obama, he says.
Internet advertising has resulted in ``thousands and thousands of click-throughs onto sites where they can register to vote,'' he says, and ``it's something we'll continue through the general election.''
St. George Bank Ltd., Australia's fifth-largest bank, agreed to a revised 17.3 billion Australian dollar ($14.4 billion) takeover proposal by larger rival Westpac Banking Corp. on Monday, in what would be the biggest banking acquisition in Australian history.
JetBlue Airways Corp. is auctioning off more than 300 roundtrip flights and six vacation packages this week on eBay, with opening bids set between 5 and 10 cents.
The flights are to more than 20 destinations, including four "mystery" JetBlue Getaways Vacation packages to undisclosed locations.
The three-, five- and seven-day auctions include one- and two-person roundtrip, weekend flights in September from cities including Boston, Chicago, New York, Orlando, Salt Lake City, Fort Lauderdale and Southern California.
Gehl Co. said Monday that it will be acquired by Manitou BF S.A., its largest shareholder, for $30 a share. The West Bend, Wis., maker of agricultural and construction compact equipment said the deal has an enterprise value of about $450 million. Shares of Gehl closed Friday at $13.66. In premarket trading Monday, shares were up about 112%.
Nouriel Roubini: "Details on the US government bailout of the two GSEs – as well as the bailout of the other GSEs, the Federal Home Loan Banks that recently wasted hundreds of billions by lending to troubled mortgage lending institutions - are still partial but the overall picture is not pretty. This bailout plan has mostly lousy features that exacerbate the moral hazard of this government intervention and the overall fiscal costs of such intervention."
Alan Farago: "Nationalization of private financial institutions is happening right now, under the supervision of the Bush administration and the shield of US taxpayers, while the party values continue to tout the "free market". Free market, to whom?
Today, the Republican spin machine is struggling to pin the socialization-- nationalization, if you will-- of Fannie Mae and Freddie Mac on someone else...
Today, the Republican spin machine is struggling to pin the socialization-- nationalization, if you will-- of Fannie Mae and Freddie Mac on someone else. How dare the Republicans accuse "liberals" for being angry about the fire sale of US assets to Asia, the Middle East, and even Russia? Filled up your car at Lukoil recently? The fact is that lefties and liberals have been no where in view, except as community organizers and neighborhood activists.
We didn't hear John McCain, last night in St. Paul, nor will Florida top donors hear Sarah Palin in Miami next week utter a solitary word of the fiscal irresponsibility that pushed the US economy into the biggest crisis since the Great Depression while making many of them a fortune in the process."
Rob Hanna: "It's Monday morning and the futures are up over 3.0% due to the FNM/FRE bailout news. Since 1998 there have been 16 times when the S&P 500 has gapped up 2.0% or more. Eight of those times it closed higher than the open, and eight it closed lower.
Of the 16 instances 10 saw an intraday drop of 1% or more from the opening price and 6 did not.
12 of the 16 broke below the lows of the 1st half hour of trading at some point during the day. Shorting that break and holding until the end of the day would have resulted in 6 winning trades and 6 losing trades.
5 of them broke the lows of the 1st half hour after 10:30am. Of those, 4 went on to close even lower on the day. The lone instance that rebounded closed almost 3% higher, though.
So far I've yet to indentify a sizable edge for trading a gap this large on an intraday basis."
One might ask what part does short covering play when the Dow gaps up 340 points at the opening of trading?
Italy's Eni SpA has agreed to buy Canada's First Calgary Petroleums Ltd in a cash deal worth C$923 million ($865 million), the latest in a series of acquisitions aimed at boosting its oil and gas reserves.
The U.S. labor market will probably continue to weaken "well into 2009," according to the employment trend index released by the Conference Board on Monday. The index, which looks at eight forward-looking indicators of employment, dropped to 110.8 in August, down 0.5% from July and down 8% from a year ago. "The employment trends index continues to rapidly deteriorate, suggesting there is little likelihood of a turnaround in the job market anytime soon," said Gad Levanon, senior economist at research organization. "In fact, the pace of decline points toward job losses and rising unemployment extending well into 2009."
South Korea's Financial Services Commission Chairman Jun Kwang-woo said Tuesday that talks between state-run Korea Development Bank and Lehman Brothers Holdings Inc.have ended, Dow Jones Newswires reported. He declined to say what conclusions, if any, had been reached, the report said.
British industrial production fell more than expected in July, while manufacturing output declined largely in line with forecasts. The Office for National Statistics said industrial production dropped 0.4% on the month for an annual decline of 1.9%.
Fewer U.S. employers intend to add staff in the fourth quarter, as they "carefully adjust" their workforces to meet demand, according to a survey by Manpower Inc. The Milwaukee employment-services firm surveyed 14,000 employers in the U.S. Of the total, 22% expect to increase their workforces over third-quarter levels, 13% will reduce them, 59% will hold staff steady, and 6% aren't sure, Manpower said.
The Dow Jones Industrial Averagegained 289 points, or 2.6%, to end at 11,510, with 29 of its 30 components advancing. The S&P 500 index gained 25 points, or 2%, to end at 1,267, while the Nasdaq Composite rose 13 points, or 0.6%, to 2,269.
Monday, September 08, 2008
The Rescue
9/8/08 The Rescue
Daniel Webster: “The contest, for all ages, has been to rescue Liberty from the grasp of executive power”
The NY Times reported advisers poring over the books of Fannie Mae and Freddie Mac concluded that Freddie’s accounting methods had overstated its cushion, officials said.
Brett Steenbarger: "Money continues to flow out of the stock market...Even when the Dow has bounced from intermediate-term lows, positive money flows have only been sustained for a short period of time--and have represented excellent selling opportunities."
Because of the demand for ethanol, the U.S. expanded corn production by 23 percent in 2007, the World Bank found. At the same time, it reduced soybean fields by 16 percent. The cost of shipping soy from the Midwest to ports in the Pacific Northwest and onward to Asia has increased from $32 a metric ton two years ago to $80, according to Mark Klein, a spokesman for Minnesota-based Cargill Inc., one of four companies that import soybeans to Indonesia.
Barack Obama: “I know the governor of Alaska has been, you know, saying she is change,” Obama said at a town hall here. “But when you (have) been taking all these earmarks when it is convenient and then suddenly you are the champion anti-earmark person. That is not change, come on. I mean, words mean something. You can’t just make stuff up.”
Continued OPEC production at current levels would lead to over-supply of its crude in the
first half of 2009, causing a fall in prices, Iran's OPEC governor was quoted as saying on Sunday. Mohammad Ali Khatibi, speaking two days before OPEC ministers are due to meet in Vienna, said demand for the cartel's oil was forecast at about 31 million barrels per day (bpd) for the first six months of next year.
"OPEC's oil production currently ... is between 32.6 and 32.8 million bpd," Khatibi was quoted as saying by the official IRNA news agency.
BHP Billiton is seeking approval to build a US$3.5 billion water desalinization plant to service its Escondida copper mine in northern Chile, one of the world's top sources of the metal, a company spokesman said Saturday.
BHP, the world's largest mining company, filed a request to build the plant and two 110-mile (180-kilometer) pipelines that would carry water from the Pacific Ocean to the mine in Chile's Atacama Desert, said Santiago-based BHP.
Does this sound familiar?
“I want you to just let a wave of intolerance wash over you. I want you to let a wave of hatred wash over you. Yes, hate is good ... if a Christian voted for Clinton, he sinned against God. It's that simple. Our goal is a Christian nation. We have a biblical duty, we are called by God to conquer this country... former leader of Operation Rescue” Randall Terry (American Founder of the Christian pro-life organization, Operation Rescue)
Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.
Treasury Secretary Henry Paulson says the actions were being taken because "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."
"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said.
Altria reached terms on a deal to buy smokeless tobacco maker UST for $11.7 billion, including the assumption of $1.3 billion in assumed debt. Altria will pay shareholders of the maker of Copenhagen and Skoal $69.50 per share in cash, which is a 29% premium to its three-month average stock price. UST had surged 25% on Friday on speculation of such a deal.
Commodity futures rose on Monday in reaction to the U.S. government's plan to seize Fannie Mae and Freddie Mac, the struggling mortgage giants. Oil futures rose $1.81 to $108.04 a barrel, gold futures rose $14 to $811.60 an ounce and platinum futures rose $32.20 to $1,400 an ounce.
ConocoPhillips has agreed to pay up to $8 billion for a half share in the coal seam gas assets of Origin Energy Ltd. and an associated liquefied natural gas project in Queensland, Australia.
Daniel Webster: “The contest, for all ages, has been to rescue Liberty from the grasp of executive power”
The NY Times reported advisers poring over the books of Fannie Mae and Freddie Mac concluded that Freddie’s accounting methods had overstated its cushion, officials said.
Brett Steenbarger: "Money continues to flow out of the stock market...Even when the Dow has bounced from intermediate-term lows, positive money flows have only been sustained for a short period of time--and have represented excellent selling opportunities."
Because of the demand for ethanol, the U.S. expanded corn production by 23 percent in 2007, the World Bank found. At the same time, it reduced soybean fields by 16 percent. The cost of shipping soy from the Midwest to ports in the Pacific Northwest and onward to Asia has increased from $32 a metric ton two years ago to $80, according to Mark Klein, a spokesman for Minnesota-based Cargill Inc., one of four companies that import soybeans to Indonesia.
Barack Obama: “I know the governor of Alaska has been, you know, saying she is change,” Obama said at a town hall here. “But when you (have) been taking all these earmarks when it is convenient and then suddenly you are the champion anti-earmark person. That is not change, come on. I mean, words mean something. You can’t just make stuff up.”
Continued OPEC production at current levels would lead to over-supply of its crude in the
first half of 2009, causing a fall in prices, Iran's OPEC governor was quoted as saying on Sunday. Mohammad Ali Khatibi, speaking two days before OPEC ministers are due to meet in Vienna, said demand for the cartel's oil was forecast at about 31 million barrels per day (bpd) for the first six months of next year.
"OPEC's oil production currently ... is between 32.6 and 32.8 million bpd," Khatibi was quoted as saying by the official IRNA news agency.
BHP Billiton is seeking approval to build a US$3.5 billion water desalinization plant to service its Escondida copper mine in northern Chile, one of the world's top sources of the metal, a company spokesman said Saturday.
BHP, the world's largest mining company, filed a request to build the plant and two 110-mile (180-kilometer) pipelines that would carry water from the Pacific Ocean to the mine in Chile's Atacama Desert, said Santiago-based BHP.
Does this sound familiar?
“I want you to just let a wave of intolerance wash over you. I want you to let a wave of hatred wash over you. Yes, hate is good ... if a Christian voted for Clinton, he sinned against God. It's that simple. Our goal is a Christian nation. We have a biblical duty, we are called by God to conquer this country... former leader of Operation Rescue” Randall Terry (American Founder of the Christian pro-life organization, Operation Rescue)
Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.
Treasury Secretary Henry Paulson says the actions were being taken because "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."
"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said.
Altria reached terms on a deal to buy smokeless tobacco maker UST for $11.7 billion, including the assumption of $1.3 billion in assumed debt. Altria will pay shareholders of the maker of Copenhagen and Skoal $69.50 per share in cash, which is a 29% premium to its three-month average stock price. UST had surged 25% on Friday on speculation of such a deal.
Commodity futures rose on Monday in reaction to the U.S. government's plan to seize Fannie Mae and Freddie Mac, the struggling mortgage giants. Oil futures rose $1.81 to $108.04 a barrel, gold futures rose $14 to $811.60 an ounce and platinum futures rose $32.20 to $1,400 an ounce.
ConocoPhillips has agreed to pay up to $8 billion for a half share in the coal seam gas assets of Origin Energy Ltd. and an associated liquefied natural gas project in Queensland, Australia.
Sunday, September 07, 2008
Government Takeover
9/7/08 Government Takeover
According to the Associated Press, the government is expected to take over Fannie Mae and Freddie Mac as soon as this weekend in a monumental move designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation's mortgage debt, a person briefed on the matter said Friday night.
Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.
Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to put the troubled companies into a conservatorship.
Regulators on Friday shut down Silver State Bank, saying the Nevada bank failed because of losses on soured loans, mainly in commercial real estate and land development.
It was the 11th failure this year of a federally insured bank.
Nevada regulators closed Silver State and the Federal Deposit Insurance Corp. was appointed receiver of the bank, based in Henderson, Nev. It had $2 billion in assets and $1.7 billion in deposits as of June 30.
Andrew K. McCain, a son of Republican presidential nominee John McCain, sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing "personal reasons," corporate filings with the Securities and Exchange Commission show. Andrew McCain also was a member of the bank's audit committee, responsible for oversight of the company's accounting.
A light earthquake centered near Alamo shook the Bay Area Friday evening. Reported at 9 p.m., it was a magnitude 4.0, said the U.S. Geological Survey.
General Electric said on Friday that US securities regulators might take civil action against the conglomerate following an investigation into its accounting methods on derivatives.
The US Securities & Exchange Commission issued a "Wells notice" to GE on Thursday alerting the company that investigators may recommend the agency file charges.
Peter Schiff: "Without raising an eyebrow on Wall Street or in the press, the GDP deflator, used in the report to downwardly adjust GDP to account for inflation, was shown at just 1.2% annualized.... the lowest deflator in ten years. In other words, to arrive at a 3.3% growth rate, the government assumed that inflation is running at a ten-year low! In contrast, the latest reading on consumer prices (CPI) in the second quarter shows year-on-year inflation running at a 5.6% rate, a seventeen-year high! In fact, for the second quarter, the same time period measured by the GDP deflator, prices actually rose at an even faster pace of 8.0% annualized. How can it be that inflation is simultaneously running at a seventeen-year high and a ten-year low? Welcome to the Alice in Wonderland world of government statistics....Investors relying on this data and reacting to the global economic slowdown by buying dollars and other U.S. based assets while selling gold, commodities, and foreign assets, are jumping out of the frying pan right into the fire. My guess is that it will not be much longer before they feel the heat."
"John McCain was a cheerleader for us to go into Iraq," Obama told a crowd in Lancaster, Pa., on Thursday. "He was wrong and I was right."
The FT reported friday’s sharp increase in the monthly unemployment to 6.1 per cent – the biggest jump for five years – jolted attention back to the economy and sparked criticism of how little the issue was discussed by Republicans at their gathering in St Paul, Minnesota. “These [Republicans] spent three days [in St Paul] and you wouldn’t know what people are going through in the neighbourhoods because they didn’t talk about it,” Mr Obama told voters in Pennsylvania.
The word “economy” was mentioned fewer than half the times in keynote Republican speeches this week than at the Democratic convention in Denver.
While Mr Obama focused much of his acceptance speech nine days ago on the economic anxieties of middle-class Americans, Mr McCain’s address on Thursday dwelled mostly on his military record and a call for Americans to put their “country first”.
Representative Charles B. Rangel paid no interest for more than a decade on a mortgage extended to him by a company connected to a donor to his campaigns.
Paul Krugman: "The experience of the years since 2000 — the memory of what happened to working Americans when faux-populist Republicans controlled the government — is still fairly fresh in voters’ minds. Furthermore, while Democrats’ supposed contempt for ordinary people is mainly a figment of Republican imagination, the G.O.P. really is the Gramm Old Party — it really does believe that the economy is just fine, and the fact that most Americans disagree just shows that we’re a nation of whiners.
But the Democrats can’t afford to be complacent. Resentment, no matter how contrived, is a powerful force, and it’s one that Republicans are very, very good at exploiting."
Barack Obama's campaign plans to employ high-profile female supporters in an effort to blunt GOP vice presidential candidate Sarah Palin's potential to persuade women to vote Republican. Hillary Clinton, Arizona Gov. Janet Napolitano and Kansas Gov. Kathleen Sebelius all were scheduled to campaign for Obama in the coming weeks.
Nomura Holdings Inc., Japan's largest brokerage group, is considering buying a stake in U.S. investment bank Lehman Brothers, a Japanese newspaper reported Saturday.
The Oil Drum: "Hurricane Ike, a dangerous Category 3 storm on the five-step Saffir-Simpson scale and projected to grow again into a potentially devastating Category 4, appeared increasingly likely to hit Cuba and then target the oil fields of the Gulf.
While long-range storm tracks are subject to huge errors, Ike could potentially follow Hurricane Gustav, plowing through an area that produces a quarter of domestic U.S. oil, and slam ashore near New Orleans, which was swamped and traumatized by Hurricane Katrina three year ago."
Nearly one in five U.S. households gets their TV online, double the number in 2006, a new survey shows. It would be interesting to see what percentage of these households vote in November and what percentage voted for Obama and what percentage for McCain.
According to the Washington Post, half of all those polled view Palin favorably and 37 percent hold negative opinions. Men are somewhat more apt to view her favorably, but that is mainly because women are far more likely to be Democrats. In the new poll, it is underlying political attitudes that appear to dominate, just as they do in ratings of Sen. Joseph R. Biden Jr. (Del.), the Democratic vice presidential nominee. Eighty-five percent of Republicans view Palin favorably, and nearly nine in 10 approve of her selection as Sen. John McCain's running mate. Among Democrats, 24 percent view her favorably and 57 percent disapprove of her selection.
Nationwide, there are about 42 million registered Democrats and about 31 million Republicans, according to statistics compiled by The Associated Press.
The Democrats have posted big gains in many competitive states, including Nevada, New Hampshire, Iowa, Colorado and Florida. They have also been targeting historically Republican southern states.
Since 2006, the Democrats have added 167,000 voters in North Carolina, while the Republicans have added 36,000. The Democrats' biggest voter registration goal is in Georgia, where the Obama campaign hopes to register 500,000 voters before the election, said Dean, who has spent the past month traveling the country on a voter registration bus tour.
"The Obama folks are serious about Georgia," Dean said. Georgia has added 337,000 voters since 2006, but the state does not identify them by party affiliation.
In Pennsylvania, the Democrats have added 375,000 voters since 2006 while the Republicans have lost 117,000.
Mike Burk: "The market is oversold and likely to rally over the next few days. That rally should be followed by a retest of the July lows by the SPX and Dow Jones Industrial Average. The retest should mark the final low for the rest of the year.
I expect the major indices to be higher on Friday September 12 than they were on Friday September 5."
According to the Associated Press, the government is expected to take over Fannie Mae and Freddie Mac as soon as this weekend in a monumental move designed to protect the mortgage market from the failure of the two companies, which together hold or guarantee half of the nation's mortgage debt, a person briefed on the matter said Friday night.
Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.
Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to put the troubled companies into a conservatorship.
Regulators on Friday shut down Silver State Bank, saying the Nevada bank failed because of losses on soured loans, mainly in commercial real estate and land development.
It was the 11th failure this year of a federally insured bank.
Nevada regulators closed Silver State and the Federal Deposit Insurance Corp. was appointed receiver of the bank, based in Henderson, Nev. It had $2 billion in assets and $1.7 billion in deposits as of June 30.
Andrew K. McCain, a son of Republican presidential nominee John McCain, sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing "personal reasons," corporate filings with the Securities and Exchange Commission show. Andrew McCain also was a member of the bank's audit committee, responsible for oversight of the company's accounting.
A light earthquake centered near Alamo shook the Bay Area Friday evening. Reported at 9 p.m., it was a magnitude 4.0, said the U.S. Geological Survey.
General Electric said on Friday that US securities regulators might take civil action against the conglomerate following an investigation into its accounting methods on derivatives.
The US Securities & Exchange Commission issued a "Wells notice" to GE on Thursday alerting the company that investigators may recommend the agency file charges.
Peter Schiff: "Without raising an eyebrow on Wall Street or in the press, the GDP deflator, used in the report to downwardly adjust GDP to account for inflation, was shown at just 1.2% annualized.... the lowest deflator in ten years. In other words, to arrive at a 3.3% growth rate, the government assumed that inflation is running at a ten-year low! In contrast, the latest reading on consumer prices (CPI) in the second quarter shows year-on-year inflation running at a 5.6% rate, a seventeen-year high! In fact, for the second quarter, the same time period measured by the GDP deflator, prices actually rose at an even faster pace of 8.0% annualized. How can it be that inflation is simultaneously running at a seventeen-year high and a ten-year low? Welcome to the Alice in Wonderland world of government statistics....Investors relying on this data and reacting to the global economic slowdown by buying dollars and other U.S. based assets while selling gold, commodities, and foreign assets, are jumping out of the frying pan right into the fire. My guess is that it will not be much longer before they feel the heat."
"John McCain was a cheerleader for us to go into Iraq," Obama told a crowd in Lancaster, Pa., on Thursday. "He was wrong and I was right."
The FT reported friday’s sharp increase in the monthly unemployment to 6.1 per cent – the biggest jump for five years – jolted attention back to the economy and sparked criticism of how little the issue was discussed by Republicans at their gathering in St Paul, Minnesota. “These [Republicans] spent three days [in St Paul] and you wouldn’t know what people are going through in the neighbourhoods because they didn’t talk about it,” Mr Obama told voters in Pennsylvania.
The word “economy” was mentioned fewer than half the times in keynote Republican speeches this week than at the Democratic convention in Denver.
While Mr Obama focused much of his acceptance speech nine days ago on the economic anxieties of middle-class Americans, Mr McCain’s address on Thursday dwelled mostly on his military record and a call for Americans to put their “country first”.
Representative Charles B. Rangel paid no interest for more than a decade on a mortgage extended to him by a company connected to a donor to his campaigns.
Paul Krugman: "The experience of the years since 2000 — the memory of what happened to working Americans when faux-populist Republicans controlled the government — is still fairly fresh in voters’ minds. Furthermore, while Democrats’ supposed contempt for ordinary people is mainly a figment of Republican imagination, the G.O.P. really is the Gramm Old Party — it really does believe that the economy is just fine, and the fact that most Americans disagree just shows that we’re a nation of whiners.
But the Democrats can’t afford to be complacent. Resentment, no matter how contrived, is a powerful force, and it’s one that Republicans are very, very good at exploiting."
Barack Obama's campaign plans to employ high-profile female supporters in an effort to blunt GOP vice presidential candidate Sarah Palin's potential to persuade women to vote Republican. Hillary Clinton, Arizona Gov. Janet Napolitano and Kansas Gov. Kathleen Sebelius all were scheduled to campaign for Obama in the coming weeks.
Nomura Holdings Inc., Japan's largest brokerage group, is considering buying a stake in U.S. investment bank Lehman Brothers, a Japanese newspaper reported Saturday.
The Oil Drum: "Hurricane Ike, a dangerous Category 3 storm on the five-step Saffir-Simpson scale and projected to grow again into a potentially devastating Category 4, appeared increasingly likely to hit Cuba and then target the oil fields of the Gulf.
While long-range storm tracks are subject to huge errors, Ike could potentially follow Hurricane Gustav, plowing through an area that produces a quarter of domestic U.S. oil, and slam ashore near New Orleans, which was swamped and traumatized by Hurricane Katrina three year ago."
Nearly one in five U.S. households gets their TV online, double the number in 2006, a new survey shows. It would be interesting to see what percentage of these households vote in November and what percentage voted for Obama and what percentage for McCain.
According to the Washington Post, half of all those polled view Palin favorably and 37 percent hold negative opinions. Men are somewhat more apt to view her favorably, but that is mainly because women are far more likely to be Democrats. In the new poll, it is underlying political attitudes that appear to dominate, just as they do in ratings of Sen. Joseph R. Biden Jr. (Del.), the Democratic vice presidential nominee. Eighty-five percent of Republicans view Palin favorably, and nearly nine in 10 approve of her selection as Sen. John McCain's running mate. Among Democrats, 24 percent view her favorably and 57 percent disapprove of her selection.
Nationwide, there are about 42 million registered Democrats and about 31 million Republicans, according to statistics compiled by The Associated Press.
The Democrats have posted big gains in many competitive states, including Nevada, New Hampshire, Iowa, Colorado and Florida. They have also been targeting historically Republican southern states.
Since 2006, the Democrats have added 167,000 voters in North Carolina, while the Republicans have added 36,000. The Democrats' biggest voter registration goal is in Georgia, where the Obama campaign hopes to register 500,000 voters before the election, said Dean, who has spent the past month traveling the country on a voter registration bus tour.
"The Obama folks are serious about Georgia," Dean said. Georgia has added 337,000 voters since 2006, but the state does not identify them by party affiliation.
In Pennsylvania, the Democrats have added 375,000 voters since 2006 while the Republicans have lost 117,000.
Mike Burk: "The market is oversold and likely to rally over the next few days. That rally should be followed by a retest of the July lows by the SPX and Dow Jones Industrial Average. The retest should mark the final low for the rest of the year.
I expect the major indices to be higher on Friday September 12 than they were on Friday September 5."
Friday, September 05, 2008
Non-Employment
9/6/08 Non-Employment
The nation's unemployment rate jumped to 6.1% in August, the highest in almost five years, the Labor Department said Friday.This was the eight consecutive monthly decline. Emplyment is negative year over year. Nonfarm payrolls shrank by 84,000 in August. The labor market was also much weaker over the summer than previously estimated. Job losses totaled 160,000 in June and July, more than the previous estimate of 100,000. Average hourly earnings increased 7 cents, or 0.4% to $18.14. Earnings are up 3.6% in the past year. The average workweek remained steady at 33.7 hours. Unfortunately, inflation ate up the wage gains.
Barry Ritholtz provided that Merrill Lynch's David Rosenberg observes:
"Once the YoY trend in payrolls goes negative, it does not bounce back – it is the hallmark for a new trend that lasts more than a year; and at the trough reaches -1.5% to -2%. So, we have already seen 463,000 jobs cut so far this year, and the historical record would tell you that there is probably between another 1.5-2.0 million to go before the job market backdrop stabilizes."
Merrill Lynch & Co , battered by more than $40 billion of write-downs tied largely to mortgages, will likely incur fresh write-downs, in addition to those assumed after its recent sale of repackaged debt to Lone Star Funds, said an analyst at Goldman Sachs, who cut the stock to a "sell." Analyst William Tanona also widened his third-quarter loss forecast for the world's largest brokerage, while adding the stock to his Americas conviction sell list.
Samsung, one of the largest companies in South Korea, says it may want to buy US flash chip company Sandisk. The US firm's stock has dropped from a 52-week high of $56.46 to under $14.
It's been several years that I began urging you to consider cutting back on the U.S. dollar. Recently, we have witnessed a 10% rally in the dollar. In my view, this may be your last chance to cut back on dollar holdings. Waiting to cut your losses further is non-rational behavior.
George Ure: "On an inflation-adjusted basis, if you put in the Spring 2000 Dow Jones of 11,723 into the Federal Reserve's online inflation calculator, you'll see that in order to have just maintained purchasing power, the Dow would have to be at 14,677.58."
Total print ads in the U.S. were down 16 percent in the second quarter to $8.8 billion. That makes nine consecutive quarters in which “print revenues have declined at an almost continuously accelerating rate,” notes Alan Mutter at Reflections of a Newsosaur.
According to Bloomberg, global markets have lost $17 trillion since the market top in 2007, with global financial companies down 29%.
Bill Gross said during “Street Signs” Thursday that his firm would be staying out of any and all bank offerings for the foreseeable future. Banks the world over have raised $400 billion in capital, Gross said, and may need to raise much more.
The Bush administration has conducted an extensive spying operation on Prime Minister Nouri al-Maliki, his staff and others in the Iraqi government, according to a new book by Washington Post associate editor Bob Woodward.
"We know everything he says," according to one of multiple sources Woodward cites about the practice in "The War Within: A Secret White House History, 2006-2008," scheduled for release Monday.The book also says that the U.S. troop "surge" of 2007, in which President Bush sent nearly 30,000 additional U.S. combat forces and support troops to Iraq, was not the primary factor behind the steep drop in violence there during the past 16 months.
Rather, Woodward reports, "groundbreaking" new covert techniques enabled U.S. military and intelligence officials to locate, target and kill insurgent leaders and key individuals in extremist groups such as al-Qaeda in Iraq.
In a critical epilogue assessing the president's performance as commander-in-chief, Woodward concludes that Bush "rarely was the voice of realism on the Iraq war" and "too often failed to lead."
Interest-rate futures traders eliminated bets the Federal Reserve will increase its target interest rate by the end of the year as the Labor Department showed the U.S. unemployment rate jumped to 6.1% in August, the highest in above five years. As recently as Thursday, the December futures contract showed a 25% chance of a quarter-percentage point hike to 2.25%. Earlier this year, the futures market showed expectations of several increases from the current 2% target rate to combat inflation, but that is now seen as less likely in the face of a weakening job market.
At Thursday's close, the 50-day moving avaerage was below the 200-day moving average and the 50-week was approaching the 200-week moving average. This should be monitored
very diligently.
Chile's central bank raised its target interest rate to 8.25 percent, the highest in almost a decade, as policy makers step up the fight against inflation. Inflation reached a 13-year high of 9.5 percent in July.
Philippine inflation accelerated to the fastest pace in more than 16 years, adding pressure on the central bank to increase borrowing costs further in October. Consumer prices climbed 12.5 percent in August from a year earlier after rising a revised 12.3 percent in July.
It is important to note that Wal-Mart's reported same store sales are NOT adjusted for inflation. Hence, a gain of 3+% is simply no gain at all.
Russian Times: "The Russian Central Bank stepped into the market and sold up to $4 billion on Thursday to brake the ruble's fall, while shares went into free-fall despite a much-awaited shareholder peace deal on oil company TNK-BP.
The ruble fell as low as 30.41, its lowest since the current composition of the basket was set at 55 cents and 45 euro cents in February 2007.
The benchmark RTS Index closed 3.94 percent lower, at 1,526.57, less than a point above the intraday low that marked the index's weakest level this year. The RTS has not seen levels this low since October 2006.
Falling Western markets and fears that capital outflows could accelerate outweighed a long-awaited end to a conflict between BP and its local partners, which had played out in the international media and poisoned sentiment.
"It is easier to undermine investor trust than it is to revive it," said Alexander Orlov, head of research at Da Vinci Capital Management.
Over the past two years I have written many times about the decline in Mexico's Cantarell
oil field. Now Sean Broderick writes: "
Unlike a hurricane, this problem is not short-term, and in fact it will only get worse over time. I'm talking about the steep, sharp drop in production at Mexico's biggest oil field, Cantarell. I am getting increasingly frustrated by how little attention Americans are paying to this major crisis brewing in their backyard. So, I think maybe the mainstream news should start treating Cantarell the same way they do a hurricane. Maybe that would generate some attention! After all, Cantarell's decline has already cost us — 1.2 million barrels per day — the same amount we lost from Gustav.
The only difference: The Cantarell losses are permanent rather than temporary.
Mexico Is the World's #6 Oil Producing Nation;
Cantarell Provides Nearly 60% of Mexican Crude Oil Output
In July, output at Mexico's largest oil field, Cantarell, was off 37% from the year earlier period, dropping to 974,000 barrels per day (bpd). What's more, Cantarell's production has already been cut by more than half from its 2004 peak of 2.113 million barrels per day.
Since Cantarell is the biggest Mexican oil field by far, it is dragging down that country's production overall. Combined with Mexico's rising fuel consumption, the amount of oil that Mexico has to export to the U.S. is dropping like a stone.
I can't overstate the importance of Cantarell to global oil production and U.S. oil imports ...
Cantarell is a "supergiant" — as big as combining the four biggest oil fields ever found in the U.S. side of the Gulf.
As of June (the latest EIA statistics available), Mexico was the third-largest supplier of oil to the U.S. — behind Saudi Arabia and Canada — but that might not continue...
Mexico's crude oil production dropped 10% in the first seven months of 2008 to an average of 2.845 million bpd. Meanwhile, oil exports in the January-July period dropped 16.3% to an average of 1.443 million bpd.
In other words, Mexico's oil exports are dropping much faster than its production... A senior Pemex executive said in July that output at Cantarell would drop to just 600,000 bpd by 2012. At the current rate of decline (37%), Cantarell will probably hit that production level at the end of next year."
Those believing crude's drop is going to continue are fooling themselves. How much longer does Saudi Arabia want to get stuck with our drooping dollar? Are we going to take over Canada?
The rate of mortgages entering foreclosure hit another record high in the second quarter, as did the percentage of loans somewhere in the foreclosure process, the Mortgage Bankers Association reported on Friday. The delinquency rate, which measures mortgages that aren't in foreclosure but have at least one overdue payment, also was the highest ever recorded in the MBA's quarterly survey.
"While our cranes and materials processing and mining segments continue to perform better than our expectations, continued market softening and input costs in the aerial work platforms and construction segments in Western Europe and the United States are expected to more than offset those positive factors," said Ron DeFeo, Terex Chairman and Chief Executive Officer.
The FT reported National City, the US bank that has been among the hardest hit by the subprime crisis, is trying to reduce its exposure to the riskiest category of home loans by offering customers cash to close their untapped home equity lines.
Daniel Amerman: "Actual losses in the US real estate market are much higher than what you have been reading in the newspapers recently. Using a combination of official government statistics and the most widely used index of housing values, we will demonstrate that the US real estate market has lost a total of $6 trillion in value in the last two years. We will show that an average house that was worth about $226,000 in 2006 is, once you adjust for inflation, down to a real value of only about $160,000. To put what a $6 trillion loss is into perspective, we will show that when all factors are taken into account, the two year drop in US real estate values is equivalent to wiping out the entire retirement savings of all 78 million Baby Boomers, and annual housing losses are close to the annual GDP of China."
"You haven't heard a word about how we're going to deal with any aspect of the economy that is affecting you and your pocketbook day-to-day," Obama told reporters in York, Pennsylvania. "Haven't heard a word about it. I'm not exaggerating. Literally, two nights, they have not said a word about it."
The charge that McCain is ignoring the economy is also worrying some in the GOP. Republican strategists say that after a week of speeches focused largely on reform and national security, McCain's biggest hurdle remains the economy.
"I think it's the greatest challenge," former McCain adviser Mark McKinnon said, at a Thursday discussion looking ahead to the fall campaign, referring to economic and health care issues.
Republicans are trailing the Democrats in party identification and registration. Democrats have registered record numbers of new voters.
Boeing machinists will begin a strike at midnight after contract talks with a federal mediator failed, according to reports Friday.
October crude closed at a fresh five-month low of $106.23 per barrel on the New York Mercantile Exchange Friday, down $1.66 for the session to lose 8% for the week. Gold for December delivery closed down 40 cents at $802.80 an ounce on the New York Mercantile Exchange after trading as high as $823.10. Gold has lost $32.4, or 3.9%, in the week.
The nation's unemployment rate jumped to 6.1% in August, the highest in almost five years, the Labor Department said Friday.This was the eight consecutive monthly decline. Emplyment is negative year over year. Nonfarm payrolls shrank by 84,000 in August. The labor market was also much weaker over the summer than previously estimated. Job losses totaled 160,000 in June and July, more than the previous estimate of 100,000. Average hourly earnings increased 7 cents, or 0.4% to $18.14. Earnings are up 3.6% in the past year. The average workweek remained steady at 33.7 hours. Unfortunately, inflation ate up the wage gains.
Barry Ritholtz provided that Merrill Lynch's David Rosenberg observes:
"Once the YoY trend in payrolls goes negative, it does not bounce back – it is the hallmark for a new trend that lasts more than a year; and at the trough reaches -1.5% to -2%. So, we have already seen 463,000 jobs cut so far this year, and the historical record would tell you that there is probably between another 1.5-2.0 million to go before the job market backdrop stabilizes."
Merrill Lynch & Co , battered by more than $40 billion of write-downs tied largely to mortgages, will likely incur fresh write-downs, in addition to those assumed after its recent sale of repackaged debt to Lone Star Funds, said an analyst at Goldman Sachs, who cut the stock to a "sell." Analyst William Tanona also widened his third-quarter loss forecast for the world's largest brokerage, while adding the stock to his Americas conviction sell list.
Samsung, one of the largest companies in South Korea, says it may want to buy US flash chip company Sandisk. The US firm's stock has dropped from a 52-week high of $56.46 to under $14.
It's been several years that I began urging you to consider cutting back on the U.S. dollar. Recently, we have witnessed a 10% rally in the dollar. In my view, this may be your last chance to cut back on dollar holdings. Waiting to cut your losses further is non-rational behavior.
George Ure: "On an inflation-adjusted basis, if you put in the Spring 2000 Dow Jones of 11,723 into the Federal Reserve's online inflation calculator, you'll see that in order to have just maintained purchasing power, the Dow would have to be at 14,677.58."
Total print ads in the U.S. were down 16 percent in the second quarter to $8.8 billion. That makes nine consecutive quarters in which “print revenues have declined at an almost continuously accelerating rate,” notes Alan Mutter at Reflections of a Newsosaur.
According to Bloomberg, global markets have lost $17 trillion since the market top in 2007, with global financial companies down 29%.
Bill Gross said during “Street Signs” Thursday that his firm would be staying out of any and all bank offerings for the foreseeable future. Banks the world over have raised $400 billion in capital, Gross said, and may need to raise much more.
The Bush administration has conducted an extensive spying operation on Prime Minister Nouri al-Maliki, his staff and others in the Iraqi government, according to a new book by Washington Post associate editor Bob Woodward.
"We know everything he says," according to one of multiple sources Woodward cites about the practice in "The War Within: A Secret White House History, 2006-2008," scheduled for release Monday.The book also says that the U.S. troop "surge" of 2007, in which President Bush sent nearly 30,000 additional U.S. combat forces and support troops to Iraq, was not the primary factor behind the steep drop in violence there during the past 16 months.
Rather, Woodward reports, "groundbreaking" new covert techniques enabled U.S. military and intelligence officials to locate, target and kill insurgent leaders and key individuals in extremist groups such as al-Qaeda in Iraq.
In a critical epilogue assessing the president's performance as commander-in-chief, Woodward concludes that Bush "rarely was the voice of realism on the Iraq war" and "too often failed to lead."
Interest-rate futures traders eliminated bets the Federal Reserve will increase its target interest rate by the end of the year as the Labor Department showed the U.S. unemployment rate jumped to 6.1% in August, the highest in above five years. As recently as Thursday, the December futures contract showed a 25% chance of a quarter-percentage point hike to 2.25%. Earlier this year, the futures market showed expectations of several increases from the current 2% target rate to combat inflation, but that is now seen as less likely in the face of a weakening job market.
At Thursday's close, the 50-day moving avaerage was below the 200-day moving average and the 50-week was approaching the 200-week moving average. This should be monitored
very diligently.
Chile's central bank raised its target interest rate to 8.25 percent, the highest in almost a decade, as policy makers step up the fight against inflation. Inflation reached a 13-year high of 9.5 percent in July.
Philippine inflation accelerated to the fastest pace in more than 16 years, adding pressure on the central bank to increase borrowing costs further in October. Consumer prices climbed 12.5 percent in August from a year earlier after rising a revised 12.3 percent in July.
It is important to note that Wal-Mart's reported same store sales are NOT adjusted for inflation. Hence, a gain of 3+% is simply no gain at all.
Russian Times: "The Russian Central Bank stepped into the market and sold up to $4 billion on Thursday to brake the ruble's fall, while shares went into free-fall despite a much-awaited shareholder peace deal on oil company TNK-BP.
The ruble fell as low as 30.41, its lowest since the current composition of the basket was set at 55 cents and 45 euro cents in February 2007.
The benchmark RTS Index closed 3.94 percent lower, at 1,526.57, less than a point above the intraday low that marked the index's weakest level this year. The RTS has not seen levels this low since October 2006.
Falling Western markets and fears that capital outflows could accelerate outweighed a long-awaited end to a conflict between BP and its local partners, which had played out in the international media and poisoned sentiment.
"It is easier to undermine investor trust than it is to revive it," said Alexander Orlov, head of research at Da Vinci Capital Management.
Over the past two years I have written many times about the decline in Mexico's Cantarell
oil field. Now Sean Broderick writes: "
Unlike a hurricane, this problem is not short-term, and in fact it will only get worse over time. I'm talking about the steep, sharp drop in production at Mexico's biggest oil field, Cantarell. I am getting increasingly frustrated by how little attention Americans are paying to this major crisis brewing in their backyard. So, I think maybe the mainstream news should start treating Cantarell the same way they do a hurricane. Maybe that would generate some attention! After all, Cantarell's decline has already cost us — 1.2 million barrels per day — the same amount we lost from Gustav.
The only difference: The Cantarell losses are permanent rather than temporary.
Mexico Is the World's #6 Oil Producing Nation;
Cantarell Provides Nearly 60% of Mexican Crude Oil Output
In July, output at Mexico's largest oil field, Cantarell, was off 37% from the year earlier period, dropping to 974,000 barrels per day (bpd). What's more, Cantarell's production has already been cut by more than half from its 2004 peak of 2.113 million barrels per day.
Since Cantarell is the biggest Mexican oil field by far, it is dragging down that country's production overall. Combined with Mexico's rising fuel consumption, the amount of oil that Mexico has to export to the U.S. is dropping like a stone.
I can't overstate the importance of Cantarell to global oil production and U.S. oil imports ...
Cantarell is a "supergiant" — as big as combining the four biggest oil fields ever found in the U.S. side of the Gulf.
As of June (the latest EIA statistics available), Mexico was the third-largest supplier of oil to the U.S. — behind Saudi Arabia and Canada — but that might not continue...
Mexico's crude oil production dropped 10% in the first seven months of 2008 to an average of 2.845 million bpd. Meanwhile, oil exports in the January-July period dropped 16.3% to an average of 1.443 million bpd.
In other words, Mexico's oil exports are dropping much faster than its production... A senior Pemex executive said in July that output at Cantarell would drop to just 600,000 bpd by 2012. At the current rate of decline (37%), Cantarell will probably hit that production level at the end of next year."
Those believing crude's drop is going to continue are fooling themselves. How much longer does Saudi Arabia want to get stuck with our drooping dollar? Are we going to take over Canada?
The rate of mortgages entering foreclosure hit another record high in the second quarter, as did the percentage of loans somewhere in the foreclosure process, the Mortgage Bankers Association reported on Friday. The delinquency rate, which measures mortgages that aren't in foreclosure but have at least one overdue payment, also was the highest ever recorded in the MBA's quarterly survey.
"While our cranes and materials processing and mining segments continue to perform better than our expectations, continued market softening and input costs in the aerial work platforms and construction segments in Western Europe and the United States are expected to more than offset those positive factors," said Ron DeFeo, Terex Chairman and Chief Executive Officer.
The FT reported National City, the US bank that has been among the hardest hit by the subprime crisis, is trying to reduce its exposure to the riskiest category of home loans by offering customers cash to close their untapped home equity lines.
Daniel Amerman: "Actual losses in the US real estate market are much higher than what you have been reading in the newspapers recently. Using a combination of official government statistics and the most widely used index of housing values, we will demonstrate that the US real estate market has lost a total of $6 trillion in value in the last two years. We will show that an average house that was worth about $226,000 in 2006 is, once you adjust for inflation, down to a real value of only about $160,000. To put what a $6 trillion loss is into perspective, we will show that when all factors are taken into account, the two year drop in US real estate values is equivalent to wiping out the entire retirement savings of all 78 million Baby Boomers, and annual housing losses are close to the annual GDP of China."
"You haven't heard a word about how we're going to deal with any aspect of the economy that is affecting you and your pocketbook day-to-day," Obama told reporters in York, Pennsylvania. "Haven't heard a word about it. I'm not exaggerating. Literally, two nights, they have not said a word about it."
The charge that McCain is ignoring the economy is also worrying some in the GOP. Republican strategists say that after a week of speeches focused largely on reform and national security, McCain's biggest hurdle remains the economy.
"I think it's the greatest challenge," former McCain adviser Mark McKinnon said, at a Thursday discussion looking ahead to the fall campaign, referring to economic and health care issues.
Republicans are trailing the Democrats in party identification and registration. Democrats have registered record numbers of new voters.
Boeing machinists will begin a strike at midnight after contract talks with a federal mediator failed, according to reports Friday.
October crude closed at a fresh five-month low of $106.23 per barrel on the New York Mercantile Exchange Friday, down $1.66 for the session to lose 8% for the week. Gold for December delivery closed down 40 cents at $802.80 an ounce on the New York Mercantile Exchange after trading as high as $823.10. Gold has lost $32.4, or 3.9%, in the week.
Another Big Down Day
9/5/08 Another Big Down Day
Dreamland news: For the last year, productivity increased to 3.4% from the previously reported 2.8%. This is the fastest annual increase in productivity in four years. Unit labor costs rose 0.6% year-over-year, compared with the previous estimate of 1.5%.
The Energy Information Administration estimates that heating oil prices are expected to reach $4.34 a gallon across the nation this year.
First-time claims for state unemployment benefits had their biggest jump in five weeks, the Labor Department reported Thursday. The number of initial claims in the week ending August 20 rose 15,000 to 444,000. It's the highest level since the week ended August 9. Claims in the previous week were revised to a decrease of 6,000 to 429,000 compared with the initial estimate of a fall of 10,000 to 425,000. The four-week average of initial claims fell 3,250 to 438,000. Meanwhile, the number of Americans receiving state jobless benefits held steady rose 6,000 to 3.44 million in the week ending August 23.This is the highest level since November 2003. The four-week moving average of continuing claims rose 33,250 to 3.4 million. This is also the highest level since November 2003.
U.S. private-sector employment fell 33,000 in August, according to a media report of the ADP employment index released Thursday. Analysts surveyed by MarketWatch were looking for a drop of 25,000. Adding in some 20,000 government workers typically hired in a given month, the ADP index suggests U.S. nonfarm payrolls fell about 13,000 in August.
Wal-Mart Stores Inc.said Thursday its August sales at U.S. stores open at least one year rose 3%, excluding fuel.
Korea Asset Management Corp's CEO Lee Chol Hwi told Bloomberg News in an interview that it may be "difficult" for the firm to buy assets from Merrill Lynch because of a difference in how the firms value the assets. ``We have been seeking to buy a significant amount, but a deal may be difficult at this rate," the CEO was quoted as saying. Lee also said Korea Asset may buy non-performing loans from Lehman Brothers and other companies, the report said. Korea Asset set up a 1 trillion won, or $871 million, fund to invest in bad debts in the U.S.
Toll's third-quarter net contracts -- after cancellations -- totaled 812 homes valued at $469.9 million. The figures are down 27% in units and 35% in dollars from the year-earlier period. Toll said that buyers canceled 195 contracts in the quarter, the lowest figure in nine quarters. At the end of the quarter, Toll had $1.5 billion of cash and more than $1.3 billion available under a bank-credit line maturing in March 2011. Debt at July 31 was 18% of total capital, the company's lowest historic level, Toll said.
Sweden's Riksbank on Thursday raised its repo rate by a quarter of a percentage point to 4.75% and said the lending rate is likely to remain unchanged for the rest of the year.
Boeing Co faces a walkout by 27,000 workers on Friday after members of its largest labor union rejected the planemaker's contract offer and voted to strike unless a compromise is reached in time.
The International Association of Machinists (IAM) said 87 percent of its members had voted to strike from midnight on Wednesday but would hold off for 48 hours to allow last-ditch talks to prevent an economically damaging strike.
Hurricane Gustav may be long gone, but more than a dozen Gulf Coast refineries remained shut down Wednesday, raising the specter of higher gasoline prices if the plants don't reopen soon.
Robert McHugh: "We are likely to see a large price move either Thursday or Friday, as we got an extremely small change in the McClellan Oscillator Tuesday and again Wednesday, and if wave 2 up is over, that move should be down. It is more and more likely that wave {c} of 2 up completed its Rising Bearish Wedge Tuesday, with the spike rally at the open, followed by the afternoon plunge. If so, it means the top of wave {c} is below wave {a}, a truncated rally. The 30 minute and 15 minute Full Stochastics argue there could be a decline in stock prices by the close on Thursday. The short-term EW labeling considers that a small degree wave 2 occurred Wednesday, meaning a bunch of waved 3's down could be next."
Brett Steenbarger: "News coming from the housing market has hardly been positive, but the homebuilder stocks seem to be looking beyond the current weakness. The rise in fixed income prices--the 10-year Treasury yield fell below 3.7% today--would seem to suggest economic weakness and a flight to safe yields. All the more interesting, then, that we're seeing relative strength among consumer discretionary and housing issues."
Between The Hedges: " I continue to see evidence of forced selling. I suspect the many hedge funds that had massively overweight commodities are seeing redemption notices right now, which is leading to pressure in many non-commodity stocks as they are forced to liquidate holdings to meet these redemptions. As well, margin calls are likely a factor. We should see the broad market lift when this forced selling subsides."
On Wednesday, Bloomberg reported Aluminum fell for an eighth day, the longest losing streak since 2001, on signs manufacturers are delaying purchases until economic growth improves. Nickel, copper and zinc advanced.
Stockpiles of aluminum climbed 2,650 metric tons, or 0.2 percent, to 1.17 million tons, the highest since April 2004, the London Metal Exchange said today. European company investment fell 1.2 percent in the second quarter, the first decline in five years, the European Union's statistics office said today.
George Ure: "Tomorrow morning we'll get the newest unemployment report. I expect it will be flat to maybe up a tenth. But, just between us, we know that one reason for the 'low unemployment rate is the multiple wars the West is waging. Drop those and I expect unemployment would be a full 2 percentage points higher and maybe 4. And remember, 'discouraged job seekers' (those who have run out of benefits) don't count. "
Through the Wednesday close, the S&P 500 has rebounded 4.9 percent from its 2008 low on July 15 as oil tumbled 21 percent. The index has still lost 13 percent this year as subprime-related losses at global banks climbed above $500 billion and the U.S. economy teetered on the brink of a recession.
Iran has invited Brazil to join the Organization of Petroleum Exporting Countries, Latin America News Digest reported Wednesday.
The New York Times reports:"Procter & Gamble, for example, has raised by 7 percent to 10 percent the prices it charges retailers for items made with ingredients derived from oil. The company is planning to maintain the increase 'to recover costs already incurred,' Paul Fox, a spokesman, said."
Nouriel Roubini: "
It is by now clear that the shopped-out, saving-less and debt-burdened US consumer is on the ropes and that there will be a significant and persistent contraction of real consumption for the next few quarters. About a dozen separate negative headwinds – to be described in detail in this note - are now hitting the US consumer while the positive effects on consumption of the tax rebates are already fading away.
That rebate boost was supposed to stimulate consumption until august of this year instead after a recovery of retail sales, real personal spending and consumption in April and May real retail sales and real personal consumption spending have fallen already in June and July. So consumers stopped consuming in spite of the tax rebates instead of spending such rebates (so far only 30% of them have been spent). This suggests that real consumption will certainly fall in Q3 and will continue to fall for a while into the middle of 2009. Real consumption did not fall in the 2001 recession and you have to go back to the 1990-91 recession to see a single quarter of negative consumption growth."
Natural-gas inventories rose by 90 billion cubic feet for the week ended August 29, the Energy Department said Thursday. That matched an estimate from analysts at Global Insight. Total stocks now stand at 2.847 trillion cubic feet, down 148 billion cubic feet from the year-ago level but 102 billion cubic feet above the five-year average, the government data said. October natural gas was down 16.2 cents, or 2.2%, at $7.102 per million British thermal units on Globex.
Steve Benen: "It started like a harmless joke, didn't it? Sarah Palin is from Alaska, Alaska is near Russia, and since Republican rhetoric has become breathtakingly ridiculous lately, some of us joked that Republicans might think the proximity between the state and the country counts as foreign policy experience. It was meant as satire. No one really expected Republicans to make the argument.
And yet, he we are. On ABC's "World News Tonight," none other than John McCain became the latest Republican to make the connection.
GIBSON: But as you know, the questions revolve really around foreign policy experience. Can you honestly say you feel confident having someone who hasn't traveled outside the United States until last year, dealing with an insurgent Russia, with an Iran with nuclear ambitions, with an unstable Pakistan, not to mention the war on terror?MCCAIN: Sure. And one of the key elements of America's national security requirements are energy. She understands the energy issues better than anybody I know in Washington, D.C., and she understands. Alaska is right next to Russia. She understands that."
Longtime Boca Raton homebuilder Oriole Homes Corp. filed an assignment for the benefit of creditors in Palm Beach County and plans to liquidate its assets.
A survey being released Thursday by the Mercer consulting firm found 59 percent of companies intend to keep down rising health care costs in 2009 by raising workers' deductibles, copays or out-of-pocket spending limits. On average, health care costs will go up by an estimated 5.7 percent next year for both workers and their employers, the study found. That repeats this year's 5.7 percent hike and a 6.1 percent jump in 2007.
The American Petroleum Institute reported Thursday a rise of 4.2 million barrels in crude supplies for the week ended August 29. The Energy Department had reported a decline of 1.9 million barrels for the latest week. Motor gasoline supplies were up 935,000 million barrels, the API said. The government had reported that supplies fell by 1 million barrels. Distillate supplies were down 157,000 barrels, the API said. They were down 400,000 barrels for the week, according to the Energy Department.
The Dow Jones Industrial Average dropped 344 points, or 3%, at 11,188, with 29 of its 30 components ending in the red. The Dow suffered its worst percentage drop since June 26. The S&P 500 index fell 38 points, or 3%, to 1,236, while the Nasdaq Composite slid 74 points, or 3.2%, to 2,259.
October crude fell $1.46, or 1.3%, to close at $107.89 per barrel on the New York Mercantile Exchange Thursday. Gold for December delivery slid $5, or 0.6%, to close at $803.20 an ounce on the New York Mercantile Exchange.
According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $4.732 billion in the week ended 9/3/08 with Domestic funds reporting net inflows of $5.621 billion and Non-domestic funds reporting net outflows of -$889 million;
Excluding ETF activity, Equity funds report net cash outflows totaling -$398 million with Domestic funds reporting net inflows of $170 million and Non-domestic funds reporting net outflows totaling -$567 million.
The People's Bank of China, China's central bank, has begun discussions with the finance ministry on ways to shore up its capital, The New York Times reported, citing three people familiar with the discussions. The move could makes it less likely that China will allow the yuan to continue rising against the dollar, and accepting an injection of capital from the finance ministry could reduce the independence of the central bank, the report said. The central bank is in need of capital because of its roughly $1 trillion purchase of U.S. Treasury bonds and Fannie Mae- and Freddie Mac-issued mortgage-backed debt, which have dropped in value in yuan terms.
Altria is in advanced talks to buy UST, the maker of the popular Skoal and Copenhagen smokeless tobacco brands, for more than $10 billion, The New York Times reported on its Web site, citing people with close knowledge of the negotiations.
Dreamland news: For the last year, productivity increased to 3.4% from the previously reported 2.8%. This is the fastest annual increase in productivity in four years. Unit labor costs rose 0.6% year-over-year, compared with the previous estimate of 1.5%.
The Energy Information Administration estimates that heating oil prices are expected to reach $4.34 a gallon across the nation this year.
First-time claims for state unemployment benefits had their biggest jump in five weeks, the Labor Department reported Thursday. The number of initial claims in the week ending August 20 rose 15,000 to 444,000. It's the highest level since the week ended August 9. Claims in the previous week were revised to a decrease of 6,000 to 429,000 compared with the initial estimate of a fall of 10,000 to 425,000. The four-week average of initial claims fell 3,250 to 438,000. Meanwhile, the number of Americans receiving state jobless benefits held steady rose 6,000 to 3.44 million in the week ending August 23.This is the highest level since November 2003. The four-week moving average of continuing claims rose 33,250 to 3.4 million. This is also the highest level since November 2003.
U.S. private-sector employment fell 33,000 in August, according to a media report of the ADP employment index released Thursday. Analysts surveyed by MarketWatch were looking for a drop of 25,000. Adding in some 20,000 government workers typically hired in a given month, the ADP index suggests U.S. nonfarm payrolls fell about 13,000 in August.
Wal-Mart Stores Inc.said Thursday its August sales at U.S. stores open at least one year rose 3%, excluding fuel.
Korea Asset Management Corp's CEO Lee Chol Hwi told Bloomberg News in an interview that it may be "difficult" for the firm to buy assets from Merrill Lynch because of a difference in how the firms value the assets. ``We have been seeking to buy a significant amount, but a deal may be difficult at this rate," the CEO was quoted as saying. Lee also said Korea Asset may buy non-performing loans from Lehman Brothers and other companies, the report said. Korea Asset set up a 1 trillion won, or $871 million, fund to invest in bad debts in the U.S.
Toll's third-quarter net contracts -- after cancellations -- totaled 812 homes valued at $469.9 million. The figures are down 27% in units and 35% in dollars from the year-earlier period. Toll said that buyers canceled 195 contracts in the quarter, the lowest figure in nine quarters. At the end of the quarter, Toll had $1.5 billion of cash and more than $1.3 billion available under a bank-credit line maturing in March 2011. Debt at July 31 was 18% of total capital, the company's lowest historic level, Toll said.
Sweden's Riksbank on Thursday raised its repo rate by a quarter of a percentage point to 4.75% and said the lending rate is likely to remain unchanged for the rest of the year.
Boeing Co faces a walkout by 27,000 workers on Friday after members of its largest labor union rejected the planemaker's contract offer and voted to strike unless a compromise is reached in time.
The International Association of Machinists (IAM) said 87 percent of its members had voted to strike from midnight on Wednesday but would hold off for 48 hours to allow last-ditch talks to prevent an economically damaging strike.
Hurricane Gustav may be long gone, but more than a dozen Gulf Coast refineries remained shut down Wednesday, raising the specter of higher gasoline prices if the plants don't reopen soon.
Robert McHugh: "We are likely to see a large price move either Thursday or Friday, as we got an extremely small change in the McClellan Oscillator Tuesday and again Wednesday, and if wave 2 up is over, that move should be down. It is more and more likely that wave {c} of 2 up completed its Rising Bearish Wedge Tuesday, with the spike rally at the open, followed by the afternoon plunge. If so, it means the top of wave {c} is below wave {a}, a truncated rally. The 30 minute and 15 minute Full Stochastics argue there could be a decline in stock prices by the close on Thursday. The short-term EW labeling considers that a small degree wave 2 occurred Wednesday, meaning a bunch of waved 3's down could be next."
Brett Steenbarger: "News coming from the housing market has hardly been positive, but the homebuilder stocks seem to be looking beyond the current weakness. The rise in fixed income prices--the 10-year Treasury yield fell below 3.7% today--would seem to suggest economic weakness and a flight to safe yields. All the more interesting, then, that we're seeing relative strength among consumer discretionary and housing issues."
Between The Hedges: " I continue to see evidence of forced selling. I suspect the many hedge funds that had massively overweight commodities are seeing redemption notices right now, which is leading to pressure in many non-commodity stocks as they are forced to liquidate holdings to meet these redemptions. As well, margin calls are likely a factor. We should see the broad market lift when this forced selling subsides."
On Wednesday, Bloomberg reported Aluminum fell for an eighth day, the longest losing streak since 2001, on signs manufacturers are delaying purchases until economic growth improves. Nickel, copper and zinc advanced.
Stockpiles of aluminum climbed 2,650 metric tons, or 0.2 percent, to 1.17 million tons, the highest since April 2004, the London Metal Exchange said today. European company investment fell 1.2 percent in the second quarter, the first decline in five years, the European Union's statistics office said today.
George Ure: "Tomorrow morning we'll get the newest unemployment report. I expect it will be flat to maybe up a tenth. But, just between us, we know that one reason for the 'low unemployment rate is the multiple wars the West is waging. Drop those and I expect unemployment would be a full 2 percentage points higher and maybe 4. And remember, 'discouraged job seekers' (those who have run out of benefits) don't count. "
Through the Wednesday close, the S&P 500 has rebounded 4.9 percent from its 2008 low on July 15 as oil tumbled 21 percent. The index has still lost 13 percent this year as subprime-related losses at global banks climbed above $500 billion and the U.S. economy teetered on the brink of a recession.
Iran has invited Brazil to join the Organization of Petroleum Exporting Countries, Latin America News Digest reported Wednesday.
The New York Times reports:"Procter & Gamble, for example, has raised by 7 percent to 10 percent the prices it charges retailers for items made with ingredients derived from oil. The company is planning to maintain the increase 'to recover costs already incurred,' Paul Fox, a spokesman, said."
Nouriel Roubini: "
It is by now clear that the shopped-out, saving-less and debt-burdened US consumer is on the ropes and that there will be a significant and persistent contraction of real consumption for the next few quarters. About a dozen separate negative headwinds – to be described in detail in this note - are now hitting the US consumer while the positive effects on consumption of the tax rebates are already fading away.
That rebate boost was supposed to stimulate consumption until august of this year instead after a recovery of retail sales, real personal spending and consumption in April and May real retail sales and real personal consumption spending have fallen already in June and July. So consumers stopped consuming in spite of the tax rebates instead of spending such rebates (so far only 30% of them have been spent). This suggests that real consumption will certainly fall in Q3 and will continue to fall for a while into the middle of 2009. Real consumption did not fall in the 2001 recession and you have to go back to the 1990-91 recession to see a single quarter of negative consumption growth."
Natural-gas inventories rose by 90 billion cubic feet for the week ended August 29, the Energy Department said Thursday. That matched an estimate from analysts at Global Insight. Total stocks now stand at 2.847 trillion cubic feet, down 148 billion cubic feet from the year-ago level but 102 billion cubic feet above the five-year average, the government data said. October natural gas was down 16.2 cents, or 2.2%, at $7.102 per million British thermal units on Globex.
Steve Benen: "It started like a harmless joke, didn't it? Sarah Palin is from Alaska, Alaska is near Russia, and since Republican rhetoric has become breathtakingly ridiculous lately, some of us joked that Republicans might think the proximity between the state and the country counts as foreign policy experience. It was meant as satire. No one really expected Republicans to make the argument.
And yet, he we are. On ABC's "World News Tonight," none other than John McCain became the latest Republican to make the connection.
GIBSON: But as you know, the questions revolve really around foreign policy experience. Can you honestly say you feel confident having someone who hasn't traveled outside the United States until last year, dealing with an insurgent Russia, with an Iran with nuclear ambitions, with an unstable Pakistan, not to mention the war on terror?MCCAIN: Sure. And one of the key elements of America's national security requirements are energy. She understands the energy issues better than anybody I know in Washington, D.C., and she understands. Alaska is right next to Russia. She understands that."
Longtime Boca Raton homebuilder Oriole Homes Corp. filed an assignment for the benefit of creditors in Palm Beach County and plans to liquidate its assets.
A survey being released Thursday by the Mercer consulting firm found 59 percent of companies intend to keep down rising health care costs in 2009 by raising workers' deductibles, copays or out-of-pocket spending limits. On average, health care costs will go up by an estimated 5.7 percent next year for both workers and their employers, the study found. That repeats this year's 5.7 percent hike and a 6.1 percent jump in 2007.
The American Petroleum Institute reported Thursday a rise of 4.2 million barrels in crude supplies for the week ended August 29. The Energy Department had reported a decline of 1.9 million barrels for the latest week. Motor gasoline supplies were up 935,000 million barrels, the API said. The government had reported that supplies fell by 1 million barrels. Distillate supplies were down 157,000 barrels, the API said. They were down 400,000 barrels for the week, according to the Energy Department.
The Dow Jones Industrial Average dropped 344 points, or 3%, at 11,188, with 29 of its 30 components ending in the red. The Dow suffered its worst percentage drop since June 26. The S&P 500 index fell 38 points, or 3%, to 1,236, while the Nasdaq Composite slid 74 points, or 3.2%, to 2,259.
October crude fell $1.46, or 1.3%, to close at $107.89 per barrel on the New York Mercantile Exchange Thursday. Gold for December delivery slid $5, or 0.6%, to close at $803.20 an ounce on the New York Mercantile Exchange.
According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $4.732 billion in the week ended 9/3/08 with Domestic funds reporting net inflows of $5.621 billion and Non-domestic funds reporting net outflows of -$889 million;
Excluding ETF activity, Equity funds report net cash outflows totaling -$398 million with Domestic funds reporting net inflows of $170 million and Non-domestic funds reporting net outflows totaling -$567 million.
The People's Bank of China, China's central bank, has begun discussions with the finance ministry on ways to shore up its capital, The New York Times reported, citing three people familiar with the discussions. The move could makes it less likely that China will allow the yuan to continue rising against the dollar, and accepting an injection of capital from the finance ministry could reduce the independence of the central bank, the report said. The central bank is in need of capital because of its roughly $1 trillion purchase of U.S. Treasury bonds and Fannie Mae- and Freddie Mac-issued mortgage-backed debt, which have dropped in value in yuan terms.
Altria is in advanced talks to buy UST, the maker of the popular Skoal and Copenhagen smokeless tobacco brands, for more than $10 billion, The New York Times reported on its Web site, citing people with close knowledge of the negotiations.
Thursday, September 04, 2008
20-Day Volume
9/4/08 20-Day Volume
Coca-Cola Co will pay $2.5 billion for Chinese juice maker Huiyuan (1886.HK), triple its value, strengthening the world's leading drinks maker's hold on a booming market in the biggest foreign takeover in China. The U.S. firm will pay HK$12.20 a share in cash -- 43 times Huiyuan's forecast 2008 earnings and nearly three times its Friday close of HK$4.14, sending the Chinese firm's shares up 170 percent.
China's big banks, having trimmed their holdings of U.S. mortgage-related debt, are facing increasingly difficult decisions about how to invest their sizable foreign-currency holdings.
Amid jitters about the future of Fannie Mae and Freddie Mac, China's four biggest listed banks have pared back their holdings in debt related to the two U.S. mortgage giants. At the end of June, the four banks held a combined $23.28 billion of debt issued or guaranteed by Fannie and Freddie. That's a small fraction of the trillions of dollars outstanding, but the reductions attracted interest as a possible gauge of broader sentiment toward such securities.
Barack Obama met the 50 percent threshold for the first time Tuesday in the Gallup daily tracking poll, a symbolic hurdle that until now had eluded the Democratic nominee.
The Gallup daily tracking poll has found that since the conclusion of the Democratic convention, Obama has risen 5 percentage points in the polls and now leads John McCain 50 percent to 42 percent.
Brett Steenbarger: "I see that Rennie Yang, author of the excellent Market Tells service, observes that 20-day volume in the stock market has made a seven-year low. "Once in 2004 and a couple of times in the 70's NYSE volume hit a three-year low," he observes, "but this is the first time in the last fifty years we've seen it hit a 5-year+ low. Volume is not just low, it's really low." Of course, it's not just that volume is low; it's that we are seeing reduced volume following a bounce from the mid-July lows. If you think in Market Profile terms, this means that higher prices are failing to attract participation--not something you'd expect to see if this were a fresh bull market leg."
U.S. companies' announced layoffs in August fell from July, but were running above the level set a year ago, suggesting persistent weakness in the labor market, a report released Wednesday showed.
Downsizing at U.S. companies last month totaled 88,736, 14 percent lower than in July, but 12 percent higher than August 2007, employment consulting firm Challenger, Gray & Christmas Inc. said.
"We have not seen this level of summer job cutting since 2002, when the country was still struggling to recover in the wake of the 2001 recession and September 11 (attacks)," said John Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement.
Year-to-date, planned layoffs total 667,996, up 29 percent from 515,855 during the same eight-month period in 2007.
The Korean won is now at a near four-year low against even the dollar and has fallen almost 21 percent in the past year, and 11 percent in the past three months, including a 9 percent drop against an anemic yen. Those who forecast it would end 2008 below 900 to the dollar now talk about 1200. For sure, the US dollar has been experiencing a revival against most currencies (China’s excepted) but that does not explain why Korea’s has been so hard hit even compared with Asian ones with far worse political problems and no better economics.
Almost every statistic that comes out of Korea is now treated as a horror story by the analysts from houses with fine records of losing other people’s money while paying themselves huge amounts.
Falling exports and lower household spending caused the euro economy to shrink by 0.2 percent in the second quarter, EU statistics showed Wednesday.
Oil analysts doubted that Opec would agree to an output cut at its conference in Vienna on September 9, but unease over the price fall is being seen even in Saudi Arabia, the most moderate Opec member. Saudi Aramco has been cutting the discount at which it sells Arab heavy, a poor-quality crude which it uses to calm the oil price, off- ering large quantities at big discounts.
Leo Drollas, of the Centre for Global Energy Studies, said: “[The Saudis] . . . fear heavy oil price falls. They are trying to anticipate that by not putting much oil on the market.”
Chris Mayer: "The Economist ran a good piece recently highlighting industry's reliance on water and water's relationship in producing so many goods. In Silicon Valley, for instance, 25% of the water use is for making computer chips. Across the country, 40% of the water drawn from lakes and aquifers goes toward cooling power plants. The link between water and energy is strong and largely unappreciated, but not by industry insiders.
"According to a recent survey by the Marsh Center for Risk Insights, 40% of Fortune 100 companies recognize that the impact of a water shortage on their businesses would be 'severe' or 'catastrophic.' "
Frank Barbera: "Since mid-July, stocks have experienced a lot of short term volatility with the DJIA posting 13 sessions of the last 30 days with daily closes in excess of 150 points up or down. Today, was more evidence of this wild volatility with the market soaring higher at the opening and then giving back all of the gains. Since roughly mid-July 18th to present, the net gain thru last Friday's close was only a gain of 47.39 DJIA index points -- how ironic. Essentially, stocks have been riding the roller coaster up and down, but overall have really been going nowhere fast. Unfortunately, this is not a good sign in the larger outlook for stocks as very substantial oversold conditions, which had previously built up going into the lows in March and in mid-July, are beginning to unwind without the market averages having made enough progress to reverse the larger bearish tide. This type of failing price action is indicative of bear market rallies, rallies ultimately pre-disposed to roll over into even larger declines."
Sales of new imported vehicles in Japan plunged about 40% in August for the fourth straight monthly decline, affected by high gasoline prices and an economic slowdown in the country, industry sources said Tuesday.
Sales excluding Japanese-brand vehicles built overseas fell nearly 30%, the sources said.
Core capital equipment orders rose 2.5%, the government said. Overall new orders rose 1.3% in July, compared with 1% expected by economists surveyed by MarketWatch. Orders for durable goods rose 1.3% in July, while orders for nondurable goods rose 1.2%.
Ford Motor Co said on Wednesday that sales fell 26.6 percent in August amid steep declines in large pickup trucks and SUVs, and cut its second-half production plans.
GMAC LLC said on Wednesday it plans to cut 5,000 jobs at its Residential Capital LLC mortgage unit, or 60 percent of that work force, and shut its 200 GMAC Mortgage retail offices as it combats weak credit and housing markets.
GMAC also plans to stop offering home loans through its Homecomings wholesale brokerage channel, and is evaluating strategic alternatives for its GMAC Home Services and noncore mortgage servicing businesses.
The "headwinds" facing the economy are much stronger than those experienced during the last credit crunch in the early 1990s, said Eric Rosengren, the president of the Boston Federal Reserve Bank on Wednesday. This credit crunch is likely to hit consumers as well as businesses. The last crunch primarily impacted small businesses, he said. It may push the unemployment rate up to 6%, with more than 2 million people losing their jobs since the financial turmoil began last summer, Rosengren said in a speech in New Hampshire.
"As we continue to compete against record foreclosures, higher than normal levels of resale listings and poor consumer confidence, the housing market remains challenging," Ara Hovnanian, chief executive of the company, said in a statement.
October crude fell 36 cents to close at $109.35 per barrel on the New York Mercantile Exchange. Gold for December delivery fell $2.3, or 0.3%, to end at $808.20 an ounce on the New York Mercantile Exchange.
Coca-Cola Co will pay $2.5 billion for Chinese juice maker Huiyuan (1886.HK), triple its value, strengthening the world's leading drinks maker's hold on a booming market in the biggest foreign takeover in China. The U.S. firm will pay HK$12.20 a share in cash -- 43 times Huiyuan's forecast 2008 earnings and nearly three times its Friday close of HK$4.14, sending the Chinese firm's shares up 170 percent.
China's big banks, having trimmed their holdings of U.S. mortgage-related debt, are facing increasingly difficult decisions about how to invest their sizable foreign-currency holdings.
Amid jitters about the future of Fannie Mae and Freddie Mac, China's four biggest listed banks have pared back their holdings in debt related to the two U.S. mortgage giants. At the end of June, the four banks held a combined $23.28 billion of debt issued or guaranteed by Fannie and Freddie. That's a small fraction of the trillions of dollars outstanding, but the reductions attracted interest as a possible gauge of broader sentiment toward such securities.
Barack Obama met the 50 percent threshold for the first time Tuesday in the Gallup daily tracking poll, a symbolic hurdle that until now had eluded the Democratic nominee.
The Gallup daily tracking poll has found that since the conclusion of the Democratic convention, Obama has risen 5 percentage points in the polls and now leads John McCain 50 percent to 42 percent.
Brett Steenbarger: "I see that Rennie Yang, author of the excellent Market Tells service, observes that 20-day volume in the stock market has made a seven-year low. "Once in 2004 and a couple of times in the 70's NYSE volume hit a three-year low," he observes, "but this is the first time in the last fifty years we've seen it hit a 5-year+ low. Volume is not just low, it's really low." Of course, it's not just that volume is low; it's that we are seeing reduced volume following a bounce from the mid-July lows. If you think in Market Profile terms, this means that higher prices are failing to attract participation--not something you'd expect to see if this were a fresh bull market leg."
U.S. companies' announced layoffs in August fell from July, but were running above the level set a year ago, suggesting persistent weakness in the labor market, a report released Wednesday showed.
Downsizing at U.S. companies last month totaled 88,736, 14 percent lower than in July, but 12 percent higher than August 2007, employment consulting firm Challenger, Gray & Christmas Inc. said.
"We have not seen this level of summer job cutting since 2002, when the country was still struggling to recover in the wake of the 2001 recession and September 11 (attacks)," said John Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement.
Year-to-date, planned layoffs total 667,996, up 29 percent from 515,855 during the same eight-month period in 2007.
The Korean won is now at a near four-year low against even the dollar and has fallen almost 21 percent in the past year, and 11 percent in the past three months, including a 9 percent drop against an anemic yen. Those who forecast it would end 2008 below 900 to the dollar now talk about 1200. For sure, the US dollar has been experiencing a revival against most currencies (China’s excepted) but that does not explain why Korea’s has been so hard hit even compared with Asian ones with far worse political problems and no better economics.
Almost every statistic that comes out of Korea is now treated as a horror story by the analysts from houses with fine records of losing other people’s money while paying themselves huge amounts.
Falling exports and lower household spending caused the euro economy to shrink by 0.2 percent in the second quarter, EU statistics showed Wednesday.
Oil analysts doubted that Opec would agree to an output cut at its conference in Vienna on September 9, but unease over the price fall is being seen even in Saudi Arabia, the most moderate Opec member. Saudi Aramco has been cutting the discount at which it sells Arab heavy, a poor-quality crude which it uses to calm the oil price, off- ering large quantities at big discounts.
Leo Drollas, of the Centre for Global Energy Studies, said: “[The Saudis] . . . fear heavy oil price falls. They are trying to anticipate that by not putting much oil on the market.”
Chris Mayer: "The Economist ran a good piece recently highlighting industry's reliance on water and water's relationship in producing so many goods. In Silicon Valley, for instance, 25% of the water use is for making computer chips. Across the country, 40% of the water drawn from lakes and aquifers goes toward cooling power plants. The link between water and energy is strong and largely unappreciated, but not by industry insiders.
"According to a recent survey by the Marsh Center for Risk Insights, 40% of Fortune 100 companies recognize that the impact of a water shortage on their businesses would be 'severe' or 'catastrophic.' "
Frank Barbera: "Since mid-July, stocks have experienced a lot of short term volatility with the DJIA posting 13 sessions of the last 30 days with daily closes in excess of 150 points up or down. Today, was more evidence of this wild volatility with the market soaring higher at the opening and then giving back all of the gains. Since roughly mid-July 18th to present, the net gain thru last Friday's close was only a gain of 47.39 DJIA index points -- how ironic. Essentially, stocks have been riding the roller coaster up and down, but overall have really been going nowhere fast. Unfortunately, this is not a good sign in the larger outlook for stocks as very substantial oversold conditions, which had previously built up going into the lows in March and in mid-July, are beginning to unwind without the market averages having made enough progress to reverse the larger bearish tide. This type of failing price action is indicative of bear market rallies, rallies ultimately pre-disposed to roll over into even larger declines."
Sales of new imported vehicles in Japan plunged about 40% in August for the fourth straight monthly decline, affected by high gasoline prices and an economic slowdown in the country, industry sources said Tuesday.
Sales excluding Japanese-brand vehicles built overseas fell nearly 30%, the sources said.
Core capital equipment orders rose 2.5%, the government said. Overall new orders rose 1.3% in July, compared with 1% expected by economists surveyed by MarketWatch. Orders for durable goods rose 1.3% in July, while orders for nondurable goods rose 1.2%.
Ford Motor Co said on Wednesday that sales fell 26.6 percent in August amid steep declines in large pickup trucks and SUVs, and cut its second-half production plans.
GMAC LLC said on Wednesday it plans to cut 5,000 jobs at its Residential Capital LLC mortgage unit, or 60 percent of that work force, and shut its 200 GMAC Mortgage retail offices as it combats weak credit and housing markets.
GMAC also plans to stop offering home loans through its Homecomings wholesale brokerage channel, and is evaluating strategic alternatives for its GMAC Home Services and noncore mortgage servicing businesses.
The "headwinds" facing the economy are much stronger than those experienced during the last credit crunch in the early 1990s, said Eric Rosengren, the president of the Boston Federal Reserve Bank on Wednesday. This credit crunch is likely to hit consumers as well as businesses. The last crunch primarily impacted small businesses, he said. It may push the unemployment rate up to 6%, with more than 2 million people losing their jobs since the financial turmoil began last summer, Rosengren said in a speech in New Hampshire.
"As we continue to compete against record foreclosures, higher than normal levels of resale listings and poor consumer confidence, the housing market remains challenging," Ara Hovnanian, chief executive of the company, said in a statement.
October crude fell 36 cents to close at $109.35 per barrel on the New York Mercantile Exchange. Gold for December delivery fell $2.3, or 0.3%, to end at $808.20 an ounce on the New York Mercantile Exchange.
Wednesday, September 03, 2008
Volatility
9/3/08 Volatility
The Washington Post reported Alaska Gov. Sarah Palin employed a lobbying firm to secure almost $27 million in federal earmarks for a town of 6,700 residents while she was its mayor, according to an analysis by an independent government watchdog group...McCain's crusade against earmarks -- federal spending sought by members of Congress to benefit specific projects -- has been a hallmark of his campaign. He has said earmarks are wasteful and are often inserted into bills with little oversight, sometimes by a single powerful lawmaker...As mayor of Wasilla, however, Palin oversaw the hiring of Robertson, Monagle & Eastaugh, an Anchorage-based law firm with close ties to Alaska's most senior Republicans: Rep. Don Young and Sen. Ted Stevens, who was indicted in July on charges of accepting illegal gifts. The Wasilla account was handled by the former chief of staff to Stevens, Steven W. Silver, who is a partner in the firm.
Microsoft has released the second beta of Internet Explorer 8, the next version of its dominant Windows Web browser.
Liberty Shipping Group LLC on Tuesday offered $25.75 a share to buy International Shipholding Corp. The deal values International Shipholding at a 27% premium over its closing price of $20.25 a share on Aug. 29 for a total buyout offer worth about $308 million. Liberty Shipping Group currently owns and operates six U.S.-flag dry bulk vessels.
Gold futures Tuesday tumbled nearly $30 to below $810 an ounce as the U.S. dollar rallied, putting downward pressures on dollar-denominated gold prices. Gold futures for December delivery slumped $27.2, or 3.3%, to $808 an ounce in early electronic trading.
Brett Steenbarger: "With falling commodities and a strong U.S. dollar, stocks are finding some support; U.S. equities have been relatively strong compared with many global counterparts, particularly in Asia. Still, the weak money flow, lack of consistent trending across sectors, and modest new high/low strength have me questioning the upside, particularly if we make new price highs without meaningfully expanding those indicators."
Zman: " Computer models from Kinetic Analysis Corporation, a Silver Spring, Md.-based company, predict that 40% of Gulf of Mexico oil will be offline for 30 days and about 30% of natural gas will be offline for 30 days with marginal improvements after that. Estimate of 15% of U.S. refining capacity is off line due to the storm. Forecast is for rain, rain, and more rain through the end of the week. (VLO)’s 250,000 bopd St Charles refinery is relatively undamaged and has power. Valero plans further inspection work today before announcing a restart plan. (XOM) has shut its 503,000 bopd Baton Rouge refinery due to power loss. Refineries generally take several days to restart..Computer models developed by Kinetic Analysis Corporation, a Silver Spring, Md.-based company estimate that LOOP will be out of service for two or three weeks. ~ Forbes"
Hong Kong's purchasing managers index remained below the breakeven threshold of 50 for a second straight month in August, as output in the private sector fell at its fastest pace in more than five years, according to data released Monday by index compiler Markit Group Ltd.
Volatility: At the end of June the U.S. Natural Gas Fund (UNG) was $63. Two months later it is trading at $33+. During this time, natural gas dropped from $12+ to $7.40. The last time UNG traded at $33+ (Dec. 2007) natural gas was $6.50.
The ISM index inched lower to 49.9% in August from 50% in July. The new orders index rose to 48.3% in August from 45.0% in July. The price-paid index retreated in August.
Korea Development Bank is considering buying more than a 25% interest in Lehman Brothers with the Korean bank seeking enough of a stake to impact management, reported the Korean-language online news provider Edaily on Tuesday, citing a high-level financial industry official.
After a strong triple digit rally in the morning, the Dow Jones Industrial Average fell 26.38 points, or 0.2%, to 11,517.17. The S&P 500 declined 5.27 points, or 0.4%, to 1,277.56, while the Nasdaq Composite shed 18.28 points to end at 2,349.24.
October crude fell $5.75, or 5%, to close at $109.71 per barrel on the New York Mercantile Exchange Tuesday. Gold for December delivery slumped $24.7, or 3%, to $810.50 an ounce on the Chicago Board of Trade, the weakest closing level since Aug. 18.
Directors at three of the 12 Federal Reserve district banks voted in favor of hiking the central bank's benchmark interest rate by a quarter of one percentage point prior to the August meeting, according to documents released by the Fed on Monday.
Retail sales across the 15-nation euro zone fell more than expected in July, declining by 0.4% from June and decreasing by 2.8% from July 2007, according to data released Wednesday by the statistical agency Eurostat.
Rupert Murdoch is considering an acquisition of The New York Times, according to a report by Vanity Fair's Michael Wolff, who wrote a profile and interviewed the News Corp.chairman and chief executive.
The Washington Post reported Alaska Gov. Sarah Palin employed a lobbying firm to secure almost $27 million in federal earmarks for a town of 6,700 residents while she was its mayor, according to an analysis by an independent government watchdog group...McCain's crusade against earmarks -- federal spending sought by members of Congress to benefit specific projects -- has been a hallmark of his campaign. He has said earmarks are wasteful and are often inserted into bills with little oversight, sometimes by a single powerful lawmaker...As mayor of Wasilla, however, Palin oversaw the hiring of Robertson, Monagle & Eastaugh, an Anchorage-based law firm with close ties to Alaska's most senior Republicans: Rep. Don Young and Sen. Ted Stevens, who was indicted in July on charges of accepting illegal gifts. The Wasilla account was handled by the former chief of staff to Stevens, Steven W. Silver, who is a partner in the firm.
Microsoft has released the second beta of Internet Explorer 8, the next version of its dominant Windows Web browser.
Liberty Shipping Group LLC on Tuesday offered $25.75 a share to buy International Shipholding Corp. The deal values International Shipholding at a 27% premium over its closing price of $20.25 a share on Aug. 29 for a total buyout offer worth about $308 million. Liberty Shipping Group currently owns and operates six U.S.-flag dry bulk vessels.
Gold futures Tuesday tumbled nearly $30 to below $810 an ounce as the U.S. dollar rallied, putting downward pressures on dollar-denominated gold prices. Gold futures for December delivery slumped $27.2, or 3.3%, to $808 an ounce in early electronic trading.
Brett Steenbarger: "With falling commodities and a strong U.S. dollar, stocks are finding some support; U.S. equities have been relatively strong compared with many global counterparts, particularly in Asia. Still, the weak money flow, lack of consistent trending across sectors, and modest new high/low strength have me questioning the upside, particularly if we make new price highs without meaningfully expanding those indicators."
Zman: " Computer models from Kinetic Analysis Corporation, a Silver Spring, Md.-based company, predict that 40% of Gulf of Mexico oil will be offline for 30 days and about 30% of natural gas will be offline for 30 days with marginal improvements after that. Estimate of 15% of U.S. refining capacity is off line due to the storm. Forecast is for rain, rain, and more rain through the end of the week. (VLO)’s 250,000 bopd St Charles refinery is relatively undamaged and has power. Valero plans further inspection work today before announcing a restart plan. (XOM) has shut its 503,000 bopd Baton Rouge refinery due to power loss. Refineries generally take several days to restart..Computer models developed by Kinetic Analysis Corporation, a Silver Spring, Md.-based company estimate that LOOP will be out of service for two or three weeks. ~ Forbes"
Hong Kong's purchasing managers index remained below the breakeven threshold of 50 for a second straight month in August, as output in the private sector fell at its fastest pace in more than five years, according to data released Monday by index compiler Markit Group Ltd.
Volatility: At the end of June the U.S. Natural Gas Fund (UNG) was $63. Two months later it is trading at $33+. During this time, natural gas dropped from $12+ to $7.40. The last time UNG traded at $33+ (Dec. 2007) natural gas was $6.50.
The ISM index inched lower to 49.9% in August from 50% in July. The new orders index rose to 48.3% in August from 45.0% in July. The price-paid index retreated in August.
Korea Development Bank is considering buying more than a 25% interest in Lehman Brothers with the Korean bank seeking enough of a stake to impact management, reported the Korean-language online news provider Edaily on Tuesday, citing a high-level financial industry official.
After a strong triple digit rally in the morning, the Dow Jones Industrial Average fell 26.38 points, or 0.2%, to 11,517.17. The S&P 500 declined 5.27 points, or 0.4%, to 1,277.56, while the Nasdaq Composite shed 18.28 points to end at 2,349.24.
October crude fell $5.75, or 5%, to close at $109.71 per barrel on the New York Mercantile Exchange Tuesday. Gold for December delivery slumped $24.7, or 3%, to $810.50 an ounce on the Chicago Board of Trade, the weakest closing level since Aug. 18.
Directors at three of the 12 Federal Reserve district banks voted in favor of hiking the central bank's benchmark interest rate by a quarter of one percentage point prior to the August meeting, according to documents released by the Fed on Monday.
Retail sales across the 15-nation euro zone fell more than expected in July, declining by 0.4% from June and decreasing by 2.8% from July 2007, according to data released Wednesday by the statistical agency Eurostat.
Rupert Murdoch is considering an acquisition of The New York Times, according to a report by Vanity Fair's Michael Wolff, who wrote a profile and interviewed the News Corp.chairman and chief executive.
Tuesday, September 02, 2008
The LOOP
9/2/08 The LOOP
Gerard Jackson: "As the world's largest economy by far, American monetary policy has had a detrimental effect on the world economy. The first thing to consider is the effect of monetary expansion on a country's price structure. Money is not neutral. This means that by increasing the quantity of money the pattern of spending changes in response to the emergence of new monetary streams. The necessary adjustment to the price structure that the monetary expansion causes is not sustainable. As soon as the monetary brakes are applied the price distortions reveal themselves in the form of bankruptcies, 'excess' capital and rising unemployment...By running current account deficits fuelled by 'cheap money' policies the US has, in my opinion, badly distorted the pattern of international trade by causing its trading partners to direct more resources into producing exports to the US. Just how bad this situation is we cannot know until the Fed puts and end to its loose monetary policy...the Fed's monetary policy artificially raised the prices of home-produced goods relative to foreign goods. In effect, this inflationary policy was the equivalent of taxing domestic products while subsidising foreign goods*. What to do? The sensible thing is to implement a sound monetary policy. As that is highly unlikely to happen the next best thing is for the government not to make matters worse by imposing tariffs and more taxes."
The Louisiana Offshore Oil Port, or LOOP, and Port Fourchon, which has historically been a land base for offshore oil support services in the Gulf, was directly in the path of Gustav and is expected to be damaged.
Matthew Simmons: "LOOP is the only facility in the Gulf to unload VLCC tankers which carry over 2 million barrels of crude. They can in theory be "litered" by unloading onto smaller tankers that can make it into the Gulf Coast ports but this is very lengthy timewise and the spare capacity of these smaller tankers is slim. We get about 1.2 million b/d of crude imports through Loop. (+/- 10%)."
The punch of Hurricane Gustav appeared to fall softly Monday on the nation's vast energy complex along the U.S. Gulf Coast, and was overshadowed by growing anxiety over the state of the global economy.
Even as 110 mph winds raked refineries that line the coast and rushed over the deep-water rigs off the shores of Texas and Louisiana, the price for a barrel of oil plummeted by more than $4 a barrel amid a broad sell-off in European and Asian markets.
The storm's impact on production platforms, drilling rigs and other equipment will not likely be fully known for another day or so.
Assuming no damage, it typically takes two to four days to restart a refinery, depending on its size. It can take a day or two to get offshore oil and natural-gas production going again. In 2005, hurricanes Katrina and Rita knocked out the region's offshore energy infrastructure for several weeks.
Transocean Inc., the world's largest offshore drilling contractor, said Monday afternoon it appeared its three moored, semisubmersible rigs in the Gulf remained anchored in position during the storm.
The U.S. military handed over control of once brutally violent Anbar province to Iraqi forces Monday — marking a major milestone in America's plan to eventually send its troops home.
Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Nearly 6 million workers last year were 65 or over.
Over the next decade, the number of 55-and-up workers is expected to rise at more than five times the rate of the overall work force, the BLS reported.
A slowing economy and stock market, squeezing funds set aside for retirement, also are contributing.
In an April survey conducted for AARP, 27 percent of workers age 45 and over, and 32 percent of those 55-64 said they had pushed back their planned retirement date because of the economic downturn. The telephone poll by Woelfel Research interviewed 1,002 respondents and carried a sampling error margin of plus or minus 3.1 percentage points.
"We have people who are healthier, who are living longer and have more economic reasons to stay in the work force," said David Certner, AARP's legislative policy director. "On the employer side, you have greater demand for experienced (older) workers. That all adds up to longer work lives."
U.S. crude oil futures fell as much as $3.51 to a session low of $111.95 per barrel in electronic trading Monday as Hurricane Gustav weakened to a Category 2 storm before making landfall in Louisiana. U.S. natural gas futures fell more than 5 percent in electronic trading on Monday as Hurricane Gustav weakened to a Category 2 storm.
Many of the world's wealthiest people have moved their money out of stocks and bonds and into cash, the head of HSBC's Swiss private banking unit said on Monday.
"The first half of 2008 has seen a notable change in client expectations and investment choices," said Peter Braunwalder, chief executive of HSBC Private Bank (Suisse), the British-based bank's main affiliate catering to the ultra-rich.
"Faced with inflation worries, volatile asset prices and sudden changes in exchange rates, a majority of investors have reduced their transaction volumes in equities, bonds, and structured products," he told a news briefing in Geneva.
Total British mortgage approvals fell to 33,000 in July from a downwardly revised 35,000 in June, the Bank of England reported Monday, setting another all-time low since the start of the statistical series in 1993.
Google Inc is set to introduce on Tuesday a new Web browser designed to more quickly handle video-rich applications, posing a challenge to browsers designed originally to handle text and graphics.
Google officials confirmed news of long-rumored plans to offer its own Web browsing software, entitled Google Chrome, in a company blog post after it mistakenly mailed details of the project to a Google-watching blog, called Blogoscoped.com.
Key evangelical leaders rallied to Sarah Palin's support Monday amid news that her 17-year-old daughter, Bristol, was having a child.
According to the FT, the stricken US mortgage market is set to suffer further setbacks in the next two years as $96bn of risky home loans sold with initial flexible payment options switch to more stringent terms.These will raise borrowers’ monthly payments by about 60 per cent.
The amount of money Mexicans sent home suffered its sharpest drop on record in July as the U.S. economy slowed and the dollar fell, Mexico's central bank reported Monday.
Iran is considering lopping three to four zeros off its currency, a top official said Monday, in an apparent effort to fight out-of-control inflation that many critics blame on the country's hardline president.
The governor of the Central Bank of Iran, Tahmasb Mazaheri, told state-run radio that monetary experts are studying three options: Cutting three zeros off the rial, cutting four zeros, or boosting each rial's value to one-hundredth of a gram of gold, or about 2,500 rials at current rates.
"We are studying all these three options," Mazaheri said on state-run radio.
The Iranian rial is now traded at 9,600 rials to one U.S. dollar. That compares with 70 rials against the dollar in 1979, the year an Islamic revolution toppled the pro-Western Shah Mohammad Reza Pahlavi.
Chesapeake Energy Corp.of Oklahoma City, the No. 1 U.S. natural-gas producer, agreed to sell 25% of certain shale assets to BP America for $1.9 billion, the companies said on Tuesday.
Worldwide sales of semiconductors rose 7.6% to $22.2 billion in July, or up 2.8% from June levels, the Semiconductor Industry Association said.
Producer prices in the 15-nation euro-zone rose at a monthly pace of 1.1% in July, bringing the annual rise to 9%, Eurostat reported Tuesday.
October light sweet crude futures traded down $6.89 at $108.58 a barrel in electronic trading on Tuesday, extending losses from Monday. The contract hasn't traded traded below $109 a barrel since April.
Gerard Jackson: "As the world's largest economy by far, American monetary policy has had a detrimental effect on the world economy. The first thing to consider is the effect of monetary expansion on a country's price structure. Money is not neutral. This means that by increasing the quantity of money the pattern of spending changes in response to the emergence of new monetary streams. The necessary adjustment to the price structure that the monetary expansion causes is not sustainable. As soon as the monetary brakes are applied the price distortions reveal themselves in the form of bankruptcies, 'excess' capital and rising unemployment...By running current account deficits fuelled by 'cheap money' policies the US has, in my opinion, badly distorted the pattern of international trade by causing its trading partners to direct more resources into producing exports to the US. Just how bad this situation is we cannot know until the Fed puts and end to its loose monetary policy...the Fed's monetary policy artificially raised the prices of home-produced goods relative to foreign goods. In effect, this inflationary policy was the equivalent of taxing domestic products while subsidising foreign goods*. What to do? The sensible thing is to implement a sound monetary policy. As that is highly unlikely to happen the next best thing is for the government not to make matters worse by imposing tariffs and more taxes."
The Louisiana Offshore Oil Port, or LOOP, and Port Fourchon, which has historically been a land base for offshore oil support services in the Gulf, was directly in the path of Gustav and is expected to be damaged.
Matthew Simmons: "LOOP is the only facility in the Gulf to unload VLCC tankers which carry over 2 million barrels of crude. They can in theory be "litered" by unloading onto smaller tankers that can make it into the Gulf Coast ports but this is very lengthy timewise and the spare capacity of these smaller tankers is slim. We get about 1.2 million b/d of crude imports through Loop. (+/- 10%)."
The punch of Hurricane Gustav appeared to fall softly Monday on the nation's vast energy complex along the U.S. Gulf Coast, and was overshadowed by growing anxiety over the state of the global economy.
Even as 110 mph winds raked refineries that line the coast and rushed over the deep-water rigs off the shores of Texas and Louisiana, the price for a barrel of oil plummeted by more than $4 a barrel amid a broad sell-off in European and Asian markets.
The storm's impact on production platforms, drilling rigs and other equipment will not likely be fully known for another day or so.
Assuming no damage, it typically takes two to four days to restart a refinery, depending on its size. It can take a day or two to get offshore oil and natural-gas production going again. In 2005, hurricanes Katrina and Rita knocked out the region's offshore energy infrastructure for several weeks.
Transocean Inc., the world's largest offshore drilling contractor, said Monday afternoon it appeared its three moored, semisubmersible rigs in the Gulf remained anchored in position during the storm.
The U.S. military handed over control of once brutally violent Anbar province to Iraqi forces Monday — marking a major milestone in America's plan to eventually send its troops home.
Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Nearly 6 million workers last year were 65 or over.
Over the next decade, the number of 55-and-up workers is expected to rise at more than five times the rate of the overall work force, the BLS reported.
A slowing economy and stock market, squeezing funds set aside for retirement, also are contributing.
In an April survey conducted for AARP, 27 percent of workers age 45 and over, and 32 percent of those 55-64 said they had pushed back their planned retirement date because of the economic downturn. The telephone poll by Woelfel Research interviewed 1,002 respondents and carried a sampling error margin of plus or minus 3.1 percentage points.
"We have people who are healthier, who are living longer and have more economic reasons to stay in the work force," said David Certner, AARP's legislative policy director. "On the employer side, you have greater demand for experienced (older) workers. That all adds up to longer work lives."
U.S. crude oil futures fell as much as $3.51 to a session low of $111.95 per barrel in electronic trading Monday as Hurricane Gustav weakened to a Category 2 storm before making landfall in Louisiana. U.S. natural gas futures fell more than 5 percent in electronic trading on Monday as Hurricane Gustav weakened to a Category 2 storm.
Many of the world's wealthiest people have moved their money out of stocks and bonds and into cash, the head of HSBC's Swiss private banking unit said on Monday.
"The first half of 2008 has seen a notable change in client expectations and investment choices," said Peter Braunwalder, chief executive of HSBC Private Bank (Suisse), the British-based bank's main affiliate catering to the ultra-rich.
"Faced with inflation worries, volatile asset prices and sudden changes in exchange rates, a majority of investors have reduced their transaction volumes in equities, bonds, and structured products," he told a news briefing in Geneva.
Total British mortgage approvals fell to 33,000 in July from a downwardly revised 35,000 in June, the Bank of England reported Monday, setting another all-time low since the start of the statistical series in 1993.
Google Inc is set to introduce on Tuesday a new Web browser designed to more quickly handle video-rich applications, posing a challenge to browsers designed originally to handle text and graphics.
Google officials confirmed news of long-rumored plans to offer its own Web browsing software, entitled Google Chrome, in a company blog post after it mistakenly mailed details of the project to a Google-watching blog, called Blogoscoped.com.
Key evangelical leaders rallied to Sarah Palin's support Monday amid news that her 17-year-old daughter, Bristol, was having a child.
According to the FT, the stricken US mortgage market is set to suffer further setbacks in the next two years as $96bn of risky home loans sold with initial flexible payment options switch to more stringent terms.These will raise borrowers’ monthly payments by about 60 per cent.
The amount of money Mexicans sent home suffered its sharpest drop on record in July as the U.S. economy slowed and the dollar fell, Mexico's central bank reported Monday.
Iran is considering lopping three to four zeros off its currency, a top official said Monday, in an apparent effort to fight out-of-control inflation that many critics blame on the country's hardline president.
The governor of the Central Bank of Iran, Tahmasb Mazaheri, told state-run radio that monetary experts are studying three options: Cutting three zeros off the rial, cutting four zeros, or boosting each rial's value to one-hundredth of a gram of gold, or about 2,500 rials at current rates.
"We are studying all these three options," Mazaheri said on state-run radio.
The Iranian rial is now traded at 9,600 rials to one U.S. dollar. That compares with 70 rials against the dollar in 1979, the year an Islamic revolution toppled the pro-Western Shah Mohammad Reza Pahlavi.
Chesapeake Energy Corp.of Oklahoma City, the No. 1 U.S. natural-gas producer, agreed to sell 25% of certain shale assets to BP America for $1.9 billion, the companies said on Tuesday.
Worldwide sales of semiconductors rose 7.6% to $22.2 billion in July, or up 2.8% from June levels, the Semiconductor Industry Association said.
Producer prices in the 15-nation euro-zone rose at a monthly pace of 1.1% in July, bringing the annual rise to 9%, Eurostat reported Tuesday.
October light sweet crude futures traded down $6.89 at $108.58 a barrel in electronic trading on Tuesday, extending losses from Monday. The contract hasn't traded traded below $109 a barrel since April.
Monday, September 01, 2008
Labor Day
9/1/08 Labor Day
Rep. Ron Paul: " Removing governmental power to manipulate money, removes the temptation for government to spend, print and cheat. Sound money ensures that our government's spending priorities would be brought into sharp focus and reduced to only what we can afford.
Sound money also limits the ability to wage wars of aggression. Imagine how much more careful Washington would have to be about starting a war if they did not have this financial sleight of hand at their disposal! Fiat currency allows government do expensive things they should not be doing while paying the bills with cheap money. The Federal Reserve has lately been auctioning off large amounts of treasury bills as a way to finance the wars in Iraq and Afghanistan, and our crushing entitlement burden. The resulting devaluation of the dollar is quickly eroding our image as a good trading partner in the world. As a consequence, there is therefore more talk of economic isolation and war."
Obama leads McCain 49-41 percent in the most recent Gallup Poll daily tracking survey, which measured voter sentiment during a three-day period ending Aug. 28.
Brett Steenbarger: "Until we see greater evidence of sector strength and money flows, I will be viewing the recent market bounce as a countertrend rally in a broader bear market."
More than 75 percent of Gulf oil cut off for storm. The Gulf of Mexico area is home to a quarter of U.S. crude supplies and 40 percent of refining capacity.
Japanese Prime Minister Yasuo Fukuda announced his resignation in a news conference Monday night, news reports said. The surprise move comes as Fukuda wrestles with low approval ratings and an economy that's seen on the verge of recession. Fukuda didn't say when the resignation would take effect, the Associated Press reported.
Commerzbank said that it has agreed to buy Dresdner Bank from Allianz for 8.8 billion euros ($12.9 billion). Allianz will also receive a payment into a trust for specific ABS assets of Dresdner Bank of up to 975 million euros. 9000 jobs will be eliminated in the takeover.
The state-run Korea Development Bank of South Korea has not abandoned its efforts to buy a stake in Lehman Brothers, according to a report in the online edition of the Korea Economic Daily on Sunday, citing anonymous Korean government officials.
McCain canceled the first day of his Republican National Convention, and his campaign made plans to turn the gathering into a giant fundraiser as they braced for the fallout from Hurricane Gustav. Bush and Cheney both had earlier called off appearances.
Russia's Foreign Minister Sergei Lavrov warned the US and its allies that supporting Georgian President Mikhail Saakashvili would be a historic mistake, and called for an arms embargo "while a different government turns Georgia into a normal state".
Russia, the biggest market for American poultry exporters, will ban imports from 19 producers in the United States and warned on Friday that an additional 29 suppliers face a possible ban on health and safety grounds.
The ban will take effect Monday and includes three plants belonging to the meat giant Tyson Foods, Russia’s animal and plant health watchdog said, a day after Prime Minister Vladimir V. Putin first spoke of the measures.
“Joint Russian-U.S. inspections of U.S. poultry processing plants at the end of July and the beginning of August showed a number of inspected plants do not fully observe the agreed standards,” the watchdog, Rosselkhoznadzor, said in a statement.
“The inspection showed that many plants have not taken steps to eliminate faults discovered by previous inspections.”
Monday morning the National Hurricane Center downgraded Gustav to a Category 2 hurricane with top winds now at 110 mph.
Rep. Ron Paul: " Removing governmental power to manipulate money, removes the temptation for government to spend, print and cheat. Sound money ensures that our government's spending priorities would be brought into sharp focus and reduced to only what we can afford.
Sound money also limits the ability to wage wars of aggression. Imagine how much more careful Washington would have to be about starting a war if they did not have this financial sleight of hand at their disposal! Fiat currency allows government do expensive things they should not be doing while paying the bills with cheap money. The Federal Reserve has lately been auctioning off large amounts of treasury bills as a way to finance the wars in Iraq and Afghanistan, and our crushing entitlement burden. The resulting devaluation of the dollar is quickly eroding our image as a good trading partner in the world. As a consequence, there is therefore more talk of economic isolation and war."
Obama leads McCain 49-41 percent in the most recent Gallup Poll daily tracking survey, which measured voter sentiment during a three-day period ending Aug. 28.
Brett Steenbarger: "Until we see greater evidence of sector strength and money flows, I will be viewing the recent market bounce as a countertrend rally in a broader bear market."
More than 75 percent of Gulf oil cut off for storm. The Gulf of Mexico area is home to a quarter of U.S. crude supplies and 40 percent of refining capacity.
Japanese Prime Minister Yasuo Fukuda announced his resignation in a news conference Monday night, news reports said. The surprise move comes as Fukuda wrestles with low approval ratings and an economy that's seen on the verge of recession. Fukuda didn't say when the resignation would take effect, the Associated Press reported.
Commerzbank said that it has agreed to buy Dresdner Bank from Allianz for 8.8 billion euros ($12.9 billion). Allianz will also receive a payment into a trust for specific ABS assets of Dresdner Bank of up to 975 million euros. 9000 jobs will be eliminated in the takeover.
The state-run Korea Development Bank of South Korea has not abandoned its efforts to buy a stake in Lehman Brothers, according to a report in the online edition of the Korea Economic Daily on Sunday, citing anonymous Korean government officials.
McCain canceled the first day of his Republican National Convention, and his campaign made plans to turn the gathering into a giant fundraiser as they braced for the fallout from Hurricane Gustav. Bush and Cheney both had earlier called off appearances.
Russia's Foreign Minister Sergei Lavrov warned the US and its allies that supporting Georgian President Mikhail Saakashvili would be a historic mistake, and called for an arms embargo "while a different government turns Georgia into a normal state".
Russia, the biggest market for American poultry exporters, will ban imports from 19 producers in the United States and warned on Friday that an additional 29 suppliers face a possible ban on health and safety grounds.
The ban will take effect Monday and includes three plants belonging to the meat giant Tyson Foods, Russia’s animal and plant health watchdog said, a day after Prime Minister Vladimir V. Putin first spoke of the measures.
“Joint Russian-U.S. inspections of U.S. poultry processing plants at the end of July and the beginning of August showed a number of inspected plants do not fully observe the agreed standards,” the watchdog, Rosselkhoznadzor, said in a statement.
“The inspection showed that many plants have not taken steps to eliminate faults discovered by previous inspections.”
Monday morning the National Hurricane Center downgraded Gustav to a Category 2 hurricane with top winds now at 110 mph.
Sunday, August 31, 2008
Reject Government Numbers
8/31/08 Reject Phony Government Numbers
Leaders of Boeing Co.'s Machinists union called Friday for a strike after rejecting the aerospace giant's "best and final" contract offer. They urged union members to reject the offer in a vote set for Wednesday.
Doug Noland: "First of all, I am certainly of the view that the economy is much weaker than the headline 3.3% growth rate. At the minimum, I am skeptical that the 1.2% annualized increase in the GDP price index accurately captures what I believe is a significant inflationary component in current “output”. It is worth noting that the favored inflation gauge of Greenspan and the Fed, the PCE Deflator, was up 4.5% from a year earlier, the strongest year-over-year increase since 1991...the growth in Fannie and Freddie’s Combined Books of Business slowed sharply to a 3.7% rate during July, the slowest pace in two years. And while there is nothing really in the works to compare to the abrupt Credit tightening that emanated from collapsing subprime and Alt-A securitization markets, I’ll argue today’s tighter Credit is a more subtle dynamic resulting from various types of lending institutions restricting, on the margin, loans to even prime Credits...The private mortgage marketplace self-destructed, and now the entire “prime” mortgage/housing market is dependent upon ongoing cheap mortgage finance available only through American taxpayer backing and subsidies. The private sector simply cannot today – or at any time in the foreseeable future - provide the hundreds of billions of cheap ongoing new mortgage Credit necessary to forestall a systemic housing/economic/financial collapse. There will be no happy “recapitalize and privatize” ending to this saga. The bill to the taxpayer is now growing rapidly – along with GSE exposure – and will balloon into the trillions over the coming years and decades. And for how long the holders of GSE debt and MBS will be allowed such handsome returns at taxpayer expense is a quite intriguing question...there are some very dangerous “Ponzi Finance” Dynamics Still very much At Play. The most obvious resides with the GSEs. And there are closely related Bubbles throughout the agency and Treasury bond arena. Meanwhile, a view has gained adherents that the U.S. economy is actually in much better shape than Europe and elsewhere. The reality that Europe is not buoyed by their own government-sponsored mortgage behemoths and that their economies are more manufacturing based (and thus vulnerable to cyclical downturns) are only short-term relative disadvantages."
Commerzbank AG is close to buying Allianz SE's Dresdner Bank for about 9 billion euros ($13.3 billion) in a deal that would create Germany's largest bank by customers and branches, surpassing Deutsche Bank AG, two people with knowledge of the matter said.
John Mauldin: "Banks in the US are going to need to roll over almost $800 billion dollars in medium-term debt in the next 16 months. Banks borrowed heavily in 2006, a lot of it in 2-3 year floating-rate notes, and now they must refinance those notes. Say a bank borrowed at LIBOR plus 50bps. In today's environment, many banks are not going to be able to borrow at such low rates. Remember the two Ohio banks mentioned earlier? These regional banks will have to pay spreads of 7-9%, based on the price of their debt today. If you have to pay 12% to borrow money when prime is at 5% and you are lending at 6-8%, you clearly cannot make a profit. That means they will have to sell assets or raise very expensive equity capital.
There are a lot of small and regional banks that are in trouble. The FDIC has a list of 117. Out of (I think) 8500 banks that does not sound bad. But remember, Indy Mac, which failed a few months ago, was not on that list. Banks can get into trouble rather quickly if they cannot raise capital, sell assets, or borrow money due to perceived distress.
The problem is that these banks will have less money to lend and will be calling loans from otherwise good customers, which of course makes the economic situation even worse. It is a vicious cycle."
John Ing: "Market sentiment indicators showed commodities were simply overbought after reaching record highs. As a result, traders exited en masse when key chart support levels broke down. We also believe that the correction was due to commodity players who earlier drove up prices to record highs unwinding speculative positions as they sought to raise liquidity and pay for huge redemptions. In addition, the normal seasonal slowdown in the commodity markets made the moves much more exaggerated as over-leveraged hot money hedge players took profits to offset their dreary bets. We also believe the $7.5 billion bankruptcy of big oil player SemGroup LP depressed the oil markets as bankers unwound their positions. (SemGroup had hedged 21 million barrels of oil.)
But is this really the end of the boom? We think not. The super cycle in commodities is not even half over. This secular bull is intact. The fundamentals such as tightening supply/demand conditions remain. Indeed, the pullback has sparked such a run on physical gold supplies that the U.S. Mint suspended and then rationed American Eagle gold coin sales for the first time in two decades due to depleted stocks. Big gold banks such as HSBC and UBS also reported healthy demand for physical gold.
The laws of supply and demand have not been suspended. The lack of excess capacity, not speculation, is one of the major drivers, particularly since continued strong demand from fast growing Asia will support higher commodity prices. The demand destruction for oil in the U.S. is offset in part by growing Asian demand and by the fact that inventories, particularly in the U.S. have fallen to low levels. The other driver remains the U.S. dollar. And America's insatiable need to borrow to finance both consumption and Wall Street's bailouts will ensure the dollar rally is short-lived.
Our view is that a correction was needed, and provides a classic buying opportunity."
Giovanna Negretti: "I find it incredibly startling that McCain would choose a person he hardly knows for a job as important as the Vice Presidency of the United States. It is so obvious that he is doing this as a political tactic that it makes me question his judgment. Is that the way he will make decisions about our economy, our security, our well-being as a nation? If, God forbid, Senator McCain dies during his presidency then he will entrust this nation with a person with zero foreign affairs experience, whom he hardly knows to be the Commander in Chief? How irresponsible is that?
I can appreciate that this is a historic moment for women but what is insulting and shameful is that it comes as a result of political tactics and not merits. As a woman, I am insulted. I can't help but asking how does he dare insult the intelligence of millions of women who voted for Clinton with this tactic of trying to appeal to them by choosing a woman with no qualifications as a vice presidential candidate. What does he think, that women are stupid? Or is he implying that people supported Hillary just because she was a woman? People supported Hillary because they thought she was the best qualified person for the job. It just so happened that she was a woman, which made the decision to support her even more exciting."
According to the FT, Gordon Brown’s authority as British prime minister suffered a further setback when his own chancellor admitted on Saturday that Britain was facing its worst economic crisis in 60 years.
In an interview in Saturday’s Guardian newspaper, Alistair Darling admitted that he had been taken by surprise by the credit crunch, warning that the economic downturn would be more “profound and long-lasting” than most people had feared.
Dell warned that companies worldwide are cutting back on technology spending.
The mayor of New Orleans ordered a mandatory evacuation of the city as Hurricane Gustav neared. Gustav weakened slightly after slamming Cuba and entering the Gulf of Mexico, but forecasters warned the storm would regain strength. The Category 4 hurricane may slam into the Louisiana coast as early as Monday.
Mike Burk: "The market is playing a disappearing act. Volume and new highs are at their lowest levels in years. Identifying strength or weakness under these conditions is challenging...On July 15 there were 1304 new lows on the NYSE, a record. After every record or, with only one exception, after every time there were even half as many new lows as we saw on July 15 there has been a retest of the low by the blue chip indices. A retest of the July 15 low in the next several weeks is likely...On August 31, 1998 there were 1183 new lows on the NYSE, a record that held until last July. On October 10, 1998 there was a retest of the August 31 low on the retest there were 930 new lows and NY NL was considerably higher at the time. After the August 31 low the Fed opened the spigots and money supply was growing at a 24% annualized rate at the time of the October retest...By all measures the market has been up about 60% of the time during the coming week with modest gains."
Leaders of Boeing Co.'s Machinists union called Friday for a strike after rejecting the aerospace giant's "best and final" contract offer. They urged union members to reject the offer in a vote set for Wednesday.
Doug Noland: "First of all, I am certainly of the view that the economy is much weaker than the headline 3.3% growth rate. At the minimum, I am skeptical that the 1.2% annualized increase in the GDP price index accurately captures what I believe is a significant inflationary component in current “output”. It is worth noting that the favored inflation gauge of Greenspan and the Fed, the PCE Deflator, was up 4.5% from a year earlier, the strongest year-over-year increase since 1991...the growth in Fannie and Freddie’s Combined Books of Business slowed sharply to a 3.7% rate during July, the slowest pace in two years. And while there is nothing really in the works to compare to the abrupt Credit tightening that emanated from collapsing subprime and Alt-A securitization markets, I’ll argue today’s tighter Credit is a more subtle dynamic resulting from various types of lending institutions restricting, on the margin, loans to even prime Credits...The private mortgage marketplace self-destructed, and now the entire “prime” mortgage/housing market is dependent upon ongoing cheap mortgage finance available only through American taxpayer backing and subsidies. The private sector simply cannot today – or at any time in the foreseeable future - provide the hundreds of billions of cheap ongoing new mortgage Credit necessary to forestall a systemic housing/economic/financial collapse. There will be no happy “recapitalize and privatize” ending to this saga. The bill to the taxpayer is now growing rapidly – along with GSE exposure – and will balloon into the trillions over the coming years and decades. And for how long the holders of GSE debt and MBS will be allowed such handsome returns at taxpayer expense is a quite intriguing question...there are some very dangerous “Ponzi Finance” Dynamics Still very much At Play. The most obvious resides with the GSEs. And there are closely related Bubbles throughout the agency and Treasury bond arena. Meanwhile, a view has gained adherents that the U.S. economy is actually in much better shape than Europe and elsewhere. The reality that Europe is not buoyed by their own government-sponsored mortgage behemoths and that their economies are more manufacturing based (and thus vulnerable to cyclical downturns) are only short-term relative disadvantages."
Commerzbank AG is close to buying Allianz SE's Dresdner Bank for about 9 billion euros ($13.3 billion) in a deal that would create Germany's largest bank by customers and branches, surpassing Deutsche Bank AG, two people with knowledge of the matter said.
John Mauldin: "Banks in the US are going to need to roll over almost $800 billion dollars in medium-term debt in the next 16 months. Banks borrowed heavily in 2006, a lot of it in 2-3 year floating-rate notes, and now they must refinance those notes. Say a bank borrowed at LIBOR plus 50bps. In today's environment, many banks are not going to be able to borrow at such low rates. Remember the two Ohio banks mentioned earlier? These regional banks will have to pay spreads of 7-9%, based on the price of their debt today. If you have to pay 12% to borrow money when prime is at 5% and you are lending at 6-8%, you clearly cannot make a profit. That means they will have to sell assets or raise very expensive equity capital.
There are a lot of small and regional banks that are in trouble. The FDIC has a list of 117. Out of (I think) 8500 banks that does not sound bad. But remember, Indy Mac, which failed a few months ago, was not on that list. Banks can get into trouble rather quickly if they cannot raise capital, sell assets, or borrow money due to perceived distress.
The problem is that these banks will have less money to lend and will be calling loans from otherwise good customers, which of course makes the economic situation even worse. It is a vicious cycle."
John Ing: "Market sentiment indicators showed commodities were simply overbought after reaching record highs. As a result, traders exited en masse when key chart support levels broke down. We also believe that the correction was due to commodity players who earlier drove up prices to record highs unwinding speculative positions as they sought to raise liquidity and pay for huge redemptions. In addition, the normal seasonal slowdown in the commodity markets made the moves much more exaggerated as over-leveraged hot money hedge players took profits to offset their dreary bets. We also believe the $7.5 billion bankruptcy of big oil player SemGroup LP depressed the oil markets as bankers unwound their positions. (SemGroup had hedged 21 million barrels of oil.)
But is this really the end of the boom? We think not. The super cycle in commodities is not even half over. This secular bull is intact. The fundamentals such as tightening supply/demand conditions remain. Indeed, the pullback has sparked such a run on physical gold supplies that the U.S. Mint suspended and then rationed American Eagle gold coin sales for the first time in two decades due to depleted stocks. Big gold banks such as HSBC and UBS also reported healthy demand for physical gold.
The laws of supply and demand have not been suspended. The lack of excess capacity, not speculation, is one of the major drivers, particularly since continued strong demand from fast growing Asia will support higher commodity prices. The demand destruction for oil in the U.S. is offset in part by growing Asian demand and by the fact that inventories, particularly in the U.S. have fallen to low levels. The other driver remains the U.S. dollar. And America's insatiable need to borrow to finance both consumption and Wall Street's bailouts will ensure the dollar rally is short-lived.
Our view is that a correction was needed, and provides a classic buying opportunity."
Giovanna Negretti: "I find it incredibly startling that McCain would choose a person he hardly knows for a job as important as the Vice Presidency of the United States. It is so obvious that he is doing this as a political tactic that it makes me question his judgment. Is that the way he will make decisions about our economy, our security, our well-being as a nation? If, God forbid, Senator McCain dies during his presidency then he will entrust this nation with a person with zero foreign affairs experience, whom he hardly knows to be the Commander in Chief? How irresponsible is that?
I can appreciate that this is a historic moment for women but what is insulting and shameful is that it comes as a result of political tactics and not merits. As a woman, I am insulted. I can't help but asking how does he dare insult the intelligence of millions of women who voted for Clinton with this tactic of trying to appeal to them by choosing a woman with no qualifications as a vice presidential candidate. What does he think, that women are stupid? Or is he implying that people supported Hillary just because she was a woman? People supported Hillary because they thought she was the best qualified person for the job. It just so happened that she was a woman, which made the decision to support her even more exciting."
According to the FT, Gordon Brown’s authority as British prime minister suffered a further setback when his own chancellor admitted on Saturday that Britain was facing its worst economic crisis in 60 years.
In an interview in Saturday’s Guardian newspaper, Alistair Darling admitted that he had been taken by surprise by the credit crunch, warning that the economic downturn would be more “profound and long-lasting” than most people had feared.
Dell warned that companies worldwide are cutting back on technology spending.
The mayor of New Orleans ordered a mandatory evacuation of the city as Hurricane Gustav neared. Gustav weakened slightly after slamming Cuba and entering the Gulf of Mexico, but forecasters warned the storm would regain strength. The Category 4 hurricane may slam into the Louisiana coast as early as Monday.
Mike Burk: "The market is playing a disappearing act. Volume and new highs are at their lowest levels in years. Identifying strength or weakness under these conditions is challenging...On July 15 there were 1304 new lows on the NYSE, a record. After every record or, with only one exception, after every time there were even half as many new lows as we saw on July 15 there has been a retest of the low by the blue chip indices. A retest of the July 15 low in the next several weeks is likely...On August 31, 1998 there were 1183 new lows on the NYSE, a record that held until last July. On October 10, 1998 there was a retest of the August 31 low on the retest there were 930 new lows and NY NL was considerably higher at the time. After the August 31 low the Fed opened the spigots and money supply was growing at a 24% annualized rate at the time of the October retest...By all measures the market has been up about 60% of the time during the coming week with modest gains."
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