2/5/09 Formal Default?
James West: "The prospect of the United States defaulting on its debt is not just likely. It's inevitable, and imminent.The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index.
Is 2009 the year that the United States formally defaults? And with that, will the dollar collapse be rolled back ten for one or more?
There are a lot of reasons to support that theory. To Wall Street economists, such an event is heresy and therefore unthinkable. Yet Wall Street is the very La-la-land that bred the idea of a perpetually indebted nation in the first place.
Number one among the indicators favoring this scenario is what is happening in the U.S. Treasuries auction market.
Last Thursday, a $30 billion auction in five-year notes failed to stir the interest of traditional primary dealers. The auction itself was saved by an anonymous “indirect” bid.
Buyers are discouraged by the prospect of what is expected to amount to $2 trillion total issuance for the full year of 2009."
The Aaa-rating coveted by the U.S. is still stable, though it's unclear how much the government's interventions in financial markets and economic stimulus will affect its deteriorating financial position, Moody's Investors Service said Thursday.The government had $5.8 trillion in debt held by the public at the end of 2008, the rating agency said. The government's ratio of debt to gross domestic product, and debt and interest payments to federal revenue, will rise to levels that are high for a country rated Aaa-rated. "Whether in 2010 or after, interest rates are almost certain to rise from their current low levels and the affordability of the federal government debt will deteriorate," analysts said.
First-time claims for state unemployment benefits surged in the latest week to the highest level in over 26 years, the Labor Department reported Thursday. The number of initial claims in the week ending January 31 rose 35,000 to 626,000. It's the highest level since the week ended Oct. 30, 1982.Claims in the previous week were revised to an increase of 6,000 to 591,000 compared with the initial estimate of a rise of 3,000 to 588,000. The four-week average of initial claims rose 39,000 to 582,250. Meanwhile, the number of Americans receiving state jobless benefits rose 20,000 to a record 4.79 million in the week ending January 24. The four-week moving average of continuing claims rose 44,000 to 4.67 million.
Productivity of the U.S. non-farm business sector expanded at a 3.2% annual rate in the fourth quarter, the Labor Department estimated Thursday.Both output and hours worked fell in the fourth quarter. For all of 2008, productivity expanded at a 2.8% pace, the fastest since 2003. Durable goods manufacturing productivity was down 13.4% in the fourth quarter
The US economy is suffering its steepest downturn since at least the 1970s and could descend into a depression, Jeff Immelt,
General Electric’s chief executive, warned on Thursday.
He said businesses and consumers alike were struggling to contend with tumultuous markets and a financial-services industry under siege. “Unlike the other downturns that I’ve been a part of, this one is faced with limited liquidity,” Mr Immelt, GE’s chief since 2001 told a conference. “Once you break through ’74-’75, you don’t stop ’til you get to 1929.”
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British drug maker GlaxoSmithKline PLC said Thursday it would cut jobs and costs as fourth quarter net profit dropped 1 percent due to higher research and sales spending. Media reports have estimated as many as 10,000 layoffs, 10 percent of the company's work force.
The Estee Lauder Companies Inc said Thursday it would cut 2,000 jobs, or 6% of its work force, over the next two years as the apparel firm grappled with a 30% drop in its second-quarter profit and a difficult outlook for the coming year.
Wal-Mart Corp. said Thursday that January same-store sales, with fuel, rose 1.5%. January same-store sales excluding fuel rose 2.1%. January total world sales for the company rose 1.8%. Wal-Mart expects U.S. comparable sales without fuel during the period from January 31 through May 1 to increase between one and three percent.
Cardinal Health expects its full fiscal 2009 adjusted earnings to come in at $3.50 to $3.60 a share.
The Bank of England's rate-setting Monetary Policy Committee on Thursday dropped the central bank's key lending rate to 1% from 1.5%.
For 2009, Bunge expects to earn between $6.90 to $7.60 per share.
Gold for February delivery was last up $16.60, or 1.8%, at $918.20 an ounce in early North America electronic trading.
Gap Inc. said Thursday that its January sales at stores open at least one year fell 23%,
Saks down 23%, Nordstrom down 11%, Penney down 16% etc etc.
MasterCard Inc , the world's second-largest credit card network, reported a 21 percent decline in fourth-quarter earnings, hit by a slowdown in consumer spending as recession deepens.
Walter Wainwright, president of the Houston Automobile Dealers Association: “This is the toughest climate I’ve seen in the almost 35 years I’ve been in the business."
Electronic claim filing systems in New York, North Carolina and Ohio crashed recently because of the heavy volume and technical problems.
The problems have become so severe that legal aid offices in Northern Virginia, for example, report that complaints from people seeking unemployment benefits from the state have tripled since early last year.
“If you spent a million dollars every day since Jesus was born,
you would have spent three-quarters of a trillion dollars. A million seconds
is about 11.5 days. A billion seconds is about 32 years, and a trillion seconds
is 32,000 years.” - John Allen Paulos, Ph.D., Math Prof., Temple Univ.
Jon Markman: "ISI Group analysts figure that U.S. corporate profits will decline from their 2007 peak to a 2010 trough by a record 30%, though a 50% fall is not out of the question. They're already down 20%.
Customers are disappearing as wages and jobs falter and families raid their emergency funds. U.S. home equity decline has accelerated to a 30% annual rate, which combined with the stock market plunge, has slashed consumers' net worth by $12 trillion."
Bank of America traded below $4. The VIX has rallied back up to the 46 area.
Feb. 5 (Bloomberg) --General Electric Co. Chief Executive Officer Jeffrey Immelt said he’s prepared to run the company without the highest available credit rating.
“We’ve got a lot of cash inside the company, we philosophically run the company to be triple-A,” Immelt said today in New York. “We’ve said we’re going to reduce commercial paper and we’ve said we’re going to shrink the balance sheet. We will run it as a triple-A, we’re prepared to run the company as a double-A.”
The rating agencies ultimately “have the power” to decide, he said. On the divided, Immelt says the company the has cash flow to pay it. At $10+, the shares traded at a new 52-week low.
Orders placed with U.S. factories fell in December for a fifth month, reflecting a pullback in business spending that will extend the recession.
Bookings declined 3.9 percent, more than forecast, after a revised 6.5 percent drop in November, the Commerce Department said today in Washington. Other reports showed firings jumped at the end of January.
The peso touched a record low of 14.7059 yesterday and is down 27 percent over the past five months, the worst among the major currencies, as a deepening U.S. recession throttles demand for Mexican exports.
Moody’s Corp., the world’s second- largest credit rating company, reported a 30 percent drop in fourth-quarter profit and forecast further declines for 2009 as the financial market crisis damped demand for new bond ratings.
U.S. natural gas inventories fall 195 bcf last week: EIA. At 2,179 billion cubic feet, stocks were 60 billion cubic feet higher than last year at this time and 17 billion cubic feet above the five-year average, the EIA reported. After the data, March natural gas futures rose 1.1% to $4.641 per million British thermal units.
Fortunoff Fine Jewelry & Silverware LLC, the luxury goods chain that closed its flagship Manhattan store last month, filed for bankruptcy a year after it last sought Chapter 11 court protection.
There is no end yet to the global financial crisis, the IMF said in its latest report released Thursday. "Policy actions to resolve the financial crisis have been broad in scope, but have not yet achieved a decisive breakthrough," the IMF said.
Canada's Bombardier Aerospace said Thursday it is cutting 1,360 jobs, or about 4.5 percent of its work force, to deal with a drop in orders for business jets.
Feb. gold ends up $12, or 1.3%, at $913.60 an ounce.
Brent crude is back up to a 5 dollar premium to WTI crude. Crude oil for March delivery rose 85 cents to end at $41.17 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average added 106.41 points, or 1.3%, to 8,063.07. The S&P 500 climbed 13.6 points, or 1.6%, to 845.84. The Nasdaq Composite rose 31.19 points, or 2.1%, to end at 1,546.24.
Weyerhaeuser Co. said late Thursday that it will indefinitely close its veneer and lumber mills in Pine Hill, Ala., effective immediately. The closure will affect about 300 employees at the site.
Obama:"spending is 'the whole point' of stimulus." It sounds like Bush telling Americans to go out and shop after 9/11. How about cutting federal, state, and local spending and reducing the size of government.
According to the WSJ, unemployment filings have soared so high in recent months that seven states have already emptied their unemployment-insurance trust funds, which were supposed to see them through recessionary periods. Another 11 states are in jeopardy of depleting reserves by year's end, according to the National Conference of State Legislatures, which published a January report entitled "The Crisis in State Unemployment Trust Funds." So far, states have borrowed more than $2.3 billion in emergency funds from the federal government, money they are required to pay back.
Thursday, February 05, 2009
Wednesday, February 04, 2009
Job Losses
2/4/09 Job Losses
The U.S. private sector shed 522,000 jobs in January, according to the ADP employment index, pointing to another hefty month of job losses when the government reports its payroll figures on Friday. The ADP index, compiled from anonymous payroll data, showed the goods-producing industries lost 243,000 jobs, while the service-producing industries lost 279,000 jobs. The ADP index covers only private-sector jobs, adding in some 10,000 government jobs created in a typical month, the report suggests nonfarm payrolls fell by about 510,000 in January. Economists now expect payrolls to fall by 525,000, the fifth straight month of at least 400,000 jobs lost.
Japan's Panasonic to cut 15,000 jobs, shut 27 plants to cope with slump; forecasts annual loss.
The multi-family market is poised to weaken in the beginning half of 2009 due to significant local job loss and oversupply, according to the 2009 National Apartment Report issued by Marcus & Millichap.
Senator Charles Schumer, who closely follows the banking crisis, estimates the costs of the next stage of the bailout at between $3 and $4 trillion. If true, this means U.S. banks and broker dealers are effectively insolvent.
GM said it estimated the overall annualised selling rate for cars at 9.8m in the US in January, compared with 10.3m in December, and less than China’s estimated selling rate of 10.7m last month.
”This is the first time in history that China has surpassed the US,” said Michael DiGiovanni, GM’s head of global sales and industry analysis.
Allergan Inc. said it will lay off approximately 460 employees, or about 5% of its global workforce, primarily in the U.S. and Europe.
For 2009, Clorox affirmed earnings-per-share guidance of $3.60 to $3.75 and sales growth of 3% to 5%.
National Oilwell Varco said "While near term economic conditions are challenging, we enter 2009 with a healthy backlog of equipment and technology to deliver to our customers, and a balance sheet with considerably more cash than debt," the Houston based oil services firm said. "We believe that the oil and gas industry's challenge to replace depleting reserves will require upgrading the world's rig fleet, and we look forward to continuing to help our customers retool their rigs after years of underinvestment."
The Oil Drum: "Merrill Lynch on Tuesday said that crude oil production from non-OPEC nations may have already peaked, nothing that oil production decline rates were a function of investment rates, as well as the size and age of oil fields. 'All these factors point to steeper oil output declines going forward,' the firm wrote.
...'Should the credit crunch push decline rates to 6 percent, however, non-OPEC production could decline precipitously toward million barrels per day by 2015 from the current levels,' it wrote."
Cisco Systems Inc.reported a fiscal second quarter net income of $1.5 billion, or 26 cents a share, compared with $2.1 billion, or 33 cents a share, for the year-earlier period. Revenue was $9.1 billion, down from $9.8 billion for the same quarter last year. Cisco Systems Inc said it expects revenue in the current quarter to fall 15 percent to 20 percent from a year ago as the economic weakness deepens, sending its shares down 3 percent.
The Walt Disney Co. reported a 32 percent decline in quarterly profits Tuesday amid a downturn that Chief Executive Robert Iger called "likely to be the weakest economy in our lifetime."
Polo Ralph Lauren Corp. lowered its fiscal full-year earnings and revenue outlooks Wednesday, citing current economic conditions.
The apparel maker also reported its third-quarter profit dropped as sales slipped amid a pullback in consumer spending.
Nominal final sales to domestic producers -- GDP after stripping away the fudge factor for inflation and adjustments for inventories and exports -- collapsed at an astounding 9.4% annual rate in the fourth quarter, Robert Barbera, chief economist at ITG, points out.
Abu Dhabi says it will pump $4.36 billion into its banks to shore up confidence in the oil-rich Gulf emirate's financial sector.
UBS AG said today gold will average $1,000 an ounce this year, up 43 percent from its previous forecast. Investment in the
SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose to a record 853.4 metric tons on Feb. 2.
The industry-funded American Petroleum Institute reported yesterday that crude oil inventories rose 8.13 million barrels to 346.2 million last week. The EIA also reported that inventories at Cushing, Okla., the delivery point of Nymex futures, rose to a new record level of 34.3 million barrels. Meanwhile, gasoline inventories rose by 300,000 barrels and distillate stockpiles fell by 1.4 million barrels in the same week, the EIA reported.
Time Warner Cable Inc. says it is laying off 1,250 people over the next few weeks in the face of slowing growth at the nation's second largest cable operator.
AOL suffered a 27% hit in subscription revenue and an 18% drop in ad revenue. As of December 31, AOL had 6.9 million U.S. access subscribers, down 573,000 sequentially and off 2.4 million year over year.
The U.S. government's Small Business Administration said losses from loans made through its lending programs more than doubled in 2008, reaching nearly $1.3 billion. In 2007, the SBA charged off -- or took permanent losses against -- $504 million of the loans; in 2005, it charged off a much smaller $276 million. From October through December of last year, Bank of America Corp. said it took permanent losses on about 2.9% of its outstanding small business loans, an annual loss rate of almost 12%. As of one year ago, the Charlotte bank's permanent loss rate on small business loans was about half its current level, or about 6%.
U.S. nonmanufacturing sectors continued to contract but at a slower pace in January, according to a Wednesday report from the Institute for Supply Management, with the global slowdown taking its toll on demand. The ISM non-manufacturing index rose to 42.9% in January from 40.1% in December. In November, the index reached a record low of 37.4%.
Philip Morris International Inc. forecast 2009 earnings of $2.85 to $3 a share, compared with Wall Street's estimate of $3.42 a share.
Treasurys declined Wednesday, sending yields to the highest in at least two months, after the Treasury Department said it will sell $67 billion in notes and bonds next week.
The government also plans to resume issuing seven-year notes later this month and will sell its so-called long bonds more frequently.
Crude for March delivery fell 46 cents, or 1.1%, to end at $40.32 a barrel on the New York Mercantile Exchange. Gold for February delivery ended up $9.60, or 1.1%, at $901.60 an ounce on the Comex division of the New York Mercantile Exchange.
Pier 1 Imports may close up to 125 stores and a distribution center as well as reducing up to 10% of its permanent workforce.
The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry.
Visa said net income for the lastest quarter was $599 million, or 78 cents per class A common share. Visa shares were up 5.2 percent to $51.70 in after-hours trade.
BMC Software said it's raising guidance for earnings excluding items for the full fiscal year, to between $2.20 and $2.30 a share.
Pulte Homes narrowed its quarterly loss, and sales at the homebuilding company rose from the same period last year. The homebuilder reported a loss of $1.33 a share in its fourth quarter on sales of $1.65 billion, compared with a deficit of $3.54 a share on sales of $2.9 billion in the same period last year.
U.S. credit card delinquencies hit a record high in January, and further deterioration is likely as the economy slows down and unemployment rises, Fitch Ratings says. Payments at least 60 days late rose almost half a percentage point last month to a record 3.75 per cent, said Fitch. Credit card lenders also wrote off loans to delinquent borrowers at close to record levels, and such “charge-offs” were expected to breach records in the coming months.
The U.S. private sector shed 522,000 jobs in January, according to the ADP employment index, pointing to another hefty month of job losses when the government reports its payroll figures on Friday. The ADP index, compiled from anonymous payroll data, showed the goods-producing industries lost 243,000 jobs, while the service-producing industries lost 279,000 jobs. The ADP index covers only private-sector jobs, adding in some 10,000 government jobs created in a typical month, the report suggests nonfarm payrolls fell by about 510,000 in January. Economists now expect payrolls to fall by 525,000, the fifth straight month of at least 400,000 jobs lost.
Japan's Panasonic to cut 15,000 jobs, shut 27 plants to cope with slump; forecasts annual loss.
The multi-family market is poised to weaken in the beginning half of 2009 due to significant local job loss and oversupply, according to the 2009 National Apartment Report issued by Marcus & Millichap.
Senator Charles Schumer, who closely follows the banking crisis, estimates the costs of the next stage of the bailout at between $3 and $4 trillion. If true, this means U.S. banks and broker dealers are effectively insolvent.
GM said it estimated the overall annualised selling rate for cars at 9.8m in the US in January, compared with 10.3m in December, and less than China’s estimated selling rate of 10.7m last month.
”This is the first time in history that China has surpassed the US,” said Michael DiGiovanni, GM’s head of global sales and industry analysis.
Allergan Inc. said it will lay off approximately 460 employees, or about 5% of its global workforce, primarily in the U.S. and Europe.
For 2009, Clorox affirmed earnings-per-share guidance of $3.60 to $3.75 and sales growth of 3% to 5%.
National Oilwell Varco said "While near term economic conditions are challenging, we enter 2009 with a healthy backlog of equipment and technology to deliver to our customers, and a balance sheet with considerably more cash than debt," the Houston based oil services firm said. "We believe that the oil and gas industry's challenge to replace depleting reserves will require upgrading the world's rig fleet, and we look forward to continuing to help our customers retool their rigs after years of underinvestment."
The Oil Drum: "Merrill Lynch on Tuesday said that crude oil production from non-OPEC nations may have already peaked, nothing that oil production decline rates were a function of investment rates, as well as the size and age of oil fields. 'All these factors point to steeper oil output declines going forward,' the firm wrote.
...'Should the credit crunch push decline rates to 6 percent, however, non-OPEC production could decline precipitously toward million barrels per day by 2015 from the current levels,' it wrote."
Cisco Systems Inc.reported a fiscal second quarter net income of $1.5 billion, or 26 cents a share, compared with $2.1 billion, or 33 cents a share, for the year-earlier period. Revenue was $9.1 billion, down from $9.8 billion for the same quarter last year. Cisco Systems Inc said it expects revenue in the current quarter to fall 15 percent to 20 percent from a year ago as the economic weakness deepens, sending its shares down 3 percent.
The Walt Disney Co. reported a 32 percent decline in quarterly profits Tuesday amid a downturn that Chief Executive Robert Iger called "likely to be the weakest economy in our lifetime."
Polo Ralph Lauren Corp. lowered its fiscal full-year earnings and revenue outlooks Wednesday, citing current economic conditions.
The apparel maker also reported its third-quarter profit dropped as sales slipped amid a pullback in consumer spending.
Nominal final sales to domestic producers -- GDP after stripping away the fudge factor for inflation and adjustments for inventories and exports -- collapsed at an astounding 9.4% annual rate in the fourth quarter, Robert Barbera, chief economist at ITG, points out.
Abu Dhabi says it will pump $4.36 billion into its banks to shore up confidence in the oil-rich Gulf emirate's financial sector.
UBS AG said today gold will average $1,000 an ounce this year, up 43 percent from its previous forecast. Investment in the
SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose to a record 853.4 metric tons on Feb. 2.
The industry-funded American Petroleum Institute reported yesterday that crude oil inventories rose 8.13 million barrels to 346.2 million last week. The EIA also reported that inventories at Cushing, Okla., the delivery point of Nymex futures, rose to a new record level of 34.3 million barrels. Meanwhile, gasoline inventories rose by 300,000 barrels and distillate stockpiles fell by 1.4 million barrels in the same week, the EIA reported.
Time Warner Cable Inc. says it is laying off 1,250 people over the next few weeks in the face of slowing growth at the nation's second largest cable operator.
AOL suffered a 27% hit in subscription revenue and an 18% drop in ad revenue. As of December 31, AOL had 6.9 million U.S. access subscribers, down 573,000 sequentially and off 2.4 million year over year.
The U.S. government's Small Business Administration said losses from loans made through its lending programs more than doubled in 2008, reaching nearly $1.3 billion. In 2007, the SBA charged off -- or took permanent losses against -- $504 million of the loans; in 2005, it charged off a much smaller $276 million. From October through December of last year, Bank of America Corp. said it took permanent losses on about 2.9% of its outstanding small business loans, an annual loss rate of almost 12%. As of one year ago, the Charlotte bank's permanent loss rate on small business loans was about half its current level, or about 6%.
U.S. nonmanufacturing sectors continued to contract but at a slower pace in January, according to a Wednesday report from the Institute for Supply Management, with the global slowdown taking its toll on demand. The ISM non-manufacturing index rose to 42.9% in January from 40.1% in December. In November, the index reached a record low of 37.4%.
Philip Morris International Inc. forecast 2009 earnings of $2.85 to $3 a share, compared with Wall Street's estimate of $3.42 a share.
Treasurys declined Wednesday, sending yields to the highest in at least two months, after the Treasury Department said it will sell $67 billion in notes and bonds next week.
The government also plans to resume issuing seven-year notes later this month and will sell its so-called long bonds more frequently.
Crude for March delivery fell 46 cents, or 1.1%, to end at $40.32 a barrel on the New York Mercantile Exchange. Gold for February delivery ended up $9.60, or 1.1%, at $901.60 an ounce on the Comex division of the New York Mercantile Exchange.
Pier 1 Imports may close up to 125 stores and a distribution center as well as reducing up to 10% of its permanent workforce.
The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry.
Visa said net income for the lastest quarter was $599 million, or 78 cents per class A common share. Visa shares were up 5.2 percent to $51.70 in after-hours trade.
BMC Software said it's raising guidance for earnings excluding items for the full fiscal year, to between $2.20 and $2.30 a share.
Pulte Homes narrowed its quarterly loss, and sales at the homebuilding company rose from the same period last year. The homebuilder reported a loss of $1.33 a share in its fourth quarter on sales of $1.65 billion, compared with a deficit of $3.54 a share on sales of $2.9 billion in the same period last year.
U.S. credit card delinquencies hit a record high in January, and further deterioration is likely as the economy slows down and unemployment rises, Fitch Ratings says. Payments at least 60 days late rose almost half a percentage point last month to a record 3.75 per cent, said Fitch. Credit card lenders also wrote off loans to delinquent borrowers at close to record levels, and such “charge-offs” were expected to breach records in the coming months.
The Stimulus Plan Is A Spending Plan
2/3/09 The Stimulus Plan Is A Spending Plan Created By More Debt
Rep. Ron Paul: "First of all, just as the best cure for a hangover is not to drink so much, the best cure for a recession is a recession. It is time to sober up and return to free market sanity, risk and reward, supply and demand, without political intervention. Politicians are good at catering to the needs of special interests, but very bad at determining what needs to take place in the market. Government should stick to punishing fraud and enforcing contracts. When they use the tax code, bureaucratic departments and their manipulative rules and regulations to dictate social and economic behavior, we end up with distortions and malinvestments. Bailing out banks, continuing failed Fed policies and strapping the taxpayer with toxic debt will worsen the pain, and punish the innocent.
If Congress really wanted to do something helpful, it would cut taxes. Ideally, we would repeal the income tax altogether and get the IRS off the economy's back, which would be a huge boon. We should also cut spending. Cut every unconstitutional department and program, every wasteful governmental encroachment on the people's liberty and money, starting with our massive overseas empire. The cost of our empire is bringing us to our knees, just as the Soviets' empire did to them. Congress should also abolish the Federal Reserve and take back its responsibilities to ensure sound money, safe from the manipulations of powerful banking interests.
These things would constitute real change, real economic stimulus. The plans being bandied about Washington are just more of the same. As long as no one seriously considers the cure, we are unfortunately destined to prolong the disease."
Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is at the beginning of an economic depression that will help gold prices more than double.
Bullion may top $2,000 an ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.
“The trend is down, and there’s not one signpost that says it’s changing yet,” Sprott said yesterday from Toronto. “We’ll stand by to wait to see those, and until it does, you have to assume it gets worse.”
The Reserve Bank of Australia lowered interest rates by 1-percentage point to 3.25% Tuesday, citing moderating inflation pressures and the need to help spur demand to head off recession. In announcing its decision, the RBA said it took into account the stimulus package announced by the government earlier in the day. "The combination of expansionary monetary policies and fiscal policies now in place will help cushion the Australian economy from the contractionary forces coming from abroad," Gov. Glenn Stevens said in a statement.
The Hong Kong Monetary Authority has said the number of residential mortgage loans in negative equity nearly quadrupled in the quarter ended Dec. 31 as property prices dropped in the special administrative region in the wake of the global economic crisis.
“The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said. The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.
About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the $1.3 trillion lost in 2007, Zillow said.”
According to Zillow, 29% of homes in the Seattle-Tacoma-Bellevue area sold at a loss during the final three months of 2008.
Bay Area homes lost $202 billion in value in 2008, according to a real estate valuation service. The jaw-dropping number, courtesy of Zillow.com, totals the equity lost in all homes in the nine counties as real estate values tumbled under the pressure of foreclosures, recession and tightened lending standards.
"It's an increasingly negative picture in that market," said Stan Humphries, vice president of data and analytics for Zillow in Seattle.
Zillow said home values for the area fell 18.3 percent in the fourth quarter compared with a year ago, reaching a median value of $503,397. That was bigger than the overall U.S. decline of 11.6 percent in the quarter.
The Bay Area "is definitely in the pack of metropolitan areas that are declining worse than the national average," Humphries said. "Those areas are our usual suspects - metro areas in California, Florida, Phoenix, Las Vegas and Detroit."
The vacancy rate for homes typically occupied by the owner rose to 2.9% in the fourth quarter of 2008 from 2.8%, matching the all-time high set a year ago, the Commerce Department reported Tuesday. Prior to the housing bubble bursting in 2005, the vacancy rate had never been above 2%. For rental properties, the vacancy rate rose to 10.1% from 9.9%. The homeownership rate fell to 67.5%, the lowest since 2001. In the fourth quarter, 2.2 million homes were vacant and for sale, virtually unchanged from a year earlier. The nation's housing stock increased by 2.2 million in 2008 to 130.8 million.
"The high-end market relies on equities," says Walter Molony, spokesman for the National Association of Realtors. "If stocks are doing well, so too does high-end housing."
Though only 2 percent of the overall housing market, high-end home sales have seen a dramatic drop, according to Molony. Homes valued at $750,000 or more plunged a whopping 47 percent in the year ended in November. By comparison, homes valued at $400,000 or less fell by only 3 percent during the same period.
A look at the markets during the same time period shows the Dow Jones fell 33.1 percent, while the S&P shows a 37.5 percent drop in value.
Real estate professionals agree that sliding markets and a ravaged economy are hurting prospective high-end buyers and sellers. And that means prices will likely decline even more before there is any recovery.
"Unless they are forced to move, they are staying put," says Mary Cassidy, a licensed real estate broker in Bronxville, New York, a wealthy suburb of New York City that is home to many Wall Streeters. "People are not buying and people are not selling. When everyone’s uncertain as to whether they have a job, why go out and buy something?"
Willem Buiter: "There is little doubt that if the Buy American provisions of the Economic Stimulus Package were to become law, this would amount to an economic declaration of war on the rest of the world. The response of the assembled non-US finance ministers in Davos made this clear. Retaliation from the EU countries and the rest of the world would follow swiftly. Because this disastrous US Congressional actions follows so closely on Treasury Secretary Geithner’s declaration that China is manipulating its currency, it is essential that the Obama administration draw a clear line in the sand. If anything like the Buy American clause inserted by the House survives in the bill president Obama gets on his desk, he must veto it. The questionable value of the fiscal stimulus is overwhelmed by the unquestionable domestic and global harm caused by the Buy American clause. If president Obama fails to veto a protectionism-laced bill, it will be clear that we have a wuss in the White House. If such is the case, God help us all."
Avon Chief Executive Andrea Jung said 2009 "will be a challenging year."
Looking ahead, Celanese said it's engineering cost reductions of $100 million to $120 million a year. "With the current global economic recession and continued weak consumer demand, we would expect volumes to remain under pressure in 2009." The chemical maker will "adjust staffing with the short-term demand environment."
For 2009 Emerson expects to report earnings of $2.70 to $2.95 a share, with underlying sales falling between 3% and 6%.
Citigroup Inc., plans to use $36.5 billion for consumer and company lending and to fund U.S. mortgage loans from the $45 billion it got from the government in bailout funds last year, according to Bloomberg, which obtained a copy of a report the company is expected to issue on Tuesday. The bank will use $25.7 billion for mortgages, $1 billion for student loans, $5.8 billion for credit card lending and $1.5 billion for corporate loans, the report said, according to Bloomberg.
The Dow Chemical Co.swung to a $1.55 billion loss in the fourth quarter and said low demand will continue "for several quarters and possibly beyond." The Midland, Mich. firm lost $1.68 a share during the quarter, of 62 cents a share when excluding items. Sales fell 23% to $10.9 billion, with prices falling 6% and volume dropping 17%.
The U.K. FTSE 100 index declined 0.7% to 4,049.51, the German DAX 30 index lost 0.7% at 4,241.68 and the French CAC-40 index declined 0.9% to 2,905.10. The Nikkei 225 Average, which hit a high of 8,084.41 during the session, ended down 0.6% at 7,825.51, while the broader Topix fell 0.5% to 773.79. The decline came in spite of news that the Bank of Japan will revive a plan to purchase shares held by financial institutions and spend up to 1 trillion yen ($111.5 billion) through April 2010.
Scandinavian airline group SAS AB says its losses widened in the fourth quarter and that it plans to slash 3,000 jobs as part of a new savings plan.
Motorola says it lost $3.6 billion, or $1.57 per share, in the fourth quarter as it took massive non-cash charges for goodwill impairment and an increase in a deferred tax reserve.
Hammered by a decline in sales, the maker of telecommunications equipment also said it would suspend its dividend, and its
chief financial officer Paul Liska is leaving.
The company also says it is undertaking cost-cutting measures meant to save $1.5 billion in 2009.
“Subordinated bank debt is really, really suffering,” said
Phil Roantree, a portfolio manager who helps oversee $14 billion at New Star Asset Management in London. “Something is seriously wrong. Regulators need to restore confidence.”
D.R. Horton, the nation's biggest homebuilder, said Tuesday its fiscal first-quarter loss narrowed as it cut costs to cope with the worsening housing market slumpFort Worth, Texas-based Horton posted a loss of $62.6 million, or 20 cents per share, for the quarter ended Dec. 31. That compares with a loss of $128.8 million, or 41 cents per share, a year earlier.
The company said homebuilding revenue fell by more than 47 percent to $900.3 million from $1.71 billion as sales shrank. D.R. Horton sold 4,068 homes in the first quarter, compared with 6,549 in the period a year ago.
The number of homes under contract to be sold also fell sharply. D.R. Horton had 4,006 homes worth $900 million under contract at the end of the quarter. It had 8,138 homes valued at $2 billion under contract on the same day a year earlier.
Donald R. Horton, the company's chairman, said in a statement that the company is cutting the number of homes it has under construction and the amount of land it owns.
GMAC Financial Services said Tuesday that its fourth-quarter earnings were $7.45 billion compared to a year-ago loss of $724 million. Results in the quarter were largely driven by an $11.4 billion after-tax gain from the extinguishment of debt related to GMAC's fourth-quarter bond exchange, which was partially offset by losses in the global automotive finance and mortgage businesses.
Northrop expects 2009 earnings of $4.50 to $4.75 a share, compared to the Wall Street target of $5.06 a share.
BP Plc said replacement cost net profit fell in the fourth quarter to $2.587 billion and undershot forecasts as oil prices collapsed and its Russian unit reported a big loss.
Excluding non-operating items which amounted to a net charge of $18 million, the result was $2.605 billion, compared to an average forecast of $2.98 billion in a Reuters poll of 6 analysts.
Merck reaffirmed its 2009 financial forecasts, saying it expects earnings per share of $2.95 to $3.17, excluding up to about 20 cents' worth of one-time items, and revenue between $23.7 million and $24.2 billion.
United Parcel Service Inc., the world’s largest package-delivery company, forecast first-quarter profit of 52 cents to 68 cents a share, less than the 69 cents analyst estimate.
Gold prices may hit $1,500 (Dh5,509) an ounce in the next 12 to 15 months, Gary Dugan, the Chief Investment Officer (CIO) of Merrill Lynch, said yesterday.
Dugan termed his apprehensions of gold striking such a high as a "fear" that may come true. He reasoned that such a price would mean the other commodities and streams of investments have been shunned by investors.
With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of "the most trusted currency", Dugan said. "We have never seen such a rush to buy gold. It's bringing in security and it's still affordable."
PNC Financial Services Group said it plans to cut 5,800 jobs following its recent purchase of troubled lender National City, and posted a fourth-quarter loss tied to the transaction.
The job cuts cover 9.7 percent of the combined banks' 59,595-person workforce. Pittsburgh-based PNC expects to complete the cuts by 2011 to help save $1.2 billion annually.
Fashion company Liz Claiborne said Tuesday that it planned to cut 725 jobs, or 8 percent of its U.S. workforce, as it aims to reduce costs in a difficult retail market.
King Pharmaceuticals to cut 760 jobs or 22% of workforce.
"2008 was a year of extreme market volatility with record high crude prices at midyear, followed by a rapid and steep decline in crude prices," said Clarence P. Cazalot, Jr., Marathon president and CEO. "Through this cycle of volatility, Marathon delivered solid upstream production growth and continued high downstream operating reliability, resulting in income from our operating segments increasing 59 percent for the fourth quarter and 15 percent for the full year, compared to the fourth quarter and full year of 2007....In the Bakken Shale in North Dakota, the Company continues to achieve best-in-class drilling and completion performance, and improved drilling time and well costs. Marathon increased its year-over-year Bakken production by 215 percent, with a December 2008 production rate of 8,200 net boepd, compared to 2,600 boepd at the end of 2007."
According to Robert Shiler, housing prices from 1890 onward have increased at a real rate of 0.4%.
Ningbo Sunhu Chemical Products Co., China ’s biggest nickel trader, said its post-Lunar New Year sales slumped as 90% of its customers remained closed because of lack of demand. Sales in the first two days after the week-long holiday dropped 95% from the same period last year, Kevin Ji, chief analyst, said in a phone interview today. “The global nickel industry seems to be pinning much hope on post-vacation Chinese demand, yet we’re feeling pretty desperate right here,” Ji said. China accounts for about 25% of global nickel demand. Ningbo Sunhu, which trades around 50,000 metric tons of the metal yearly, sells most of its products in the weeks after the Lunar New Year holiday and in the fourth quarter.
Standard & Poor's Index Services on Tuesday said it expects the companies in the S&P 500 Index to post their first-ever negative "as reported" GAAP earnings for the fourth quarter of 2008 as the economy continued to weaken. S&P said 244 issues have already reported quarterly results. "Operating earnings for the S&P 500 companies are expected to remain positive, since unusual charges (layoff provisions, write-offs, & etc.) are not included," S&P said. "However, operating earnings are expected to be the worst in over a decade." It added that reported quarterly sales are down nearly 11% while financials are set for the fifth consecutive quarter of negative earnings per share.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, surged 6.3 percent to 87.7, rising for the first time since August. Compared with the same period a year-ago, pending homes sale were up 2.1 percent in December. It will be interesting to see what percentage were foreclosures. One must remember a record 19 million U.S. houses stood empty at the end of 2008 as banks seized homes faster than they could sell them and prices continued to fall.
Ford Motor Co posted a 40 percent drop in January sales in the United States, the sharpest decline for the No. 2 U.S. automaker in 10 months of double-digit sales declines in the world's largest market for new cars and trucks.
The results from Ford on Tuesday were among the first from major automakers for a month expected to show overall sales near 27-year lows, extending a stretch of 15 months of consecutive auto sales declines.
Toyota Motor Corp. said Tuesday that U.S. January sales fell 31.7% to 117,287 vehicles from 171,849 a year ago. Chrysler LLC on Tuesday reported its U.S. sales in January fell 54.8% to 62,157 vehicles from 137,392 in January 2008. General Motors Corp.on Tuesday reported a 48.9% drop in January U.S. light vehicle sales to 128,198 cars and trucks from 250,926 in January 2008. Sales of cars fell 57.9% to 43,943 while truck sales declined 42.5% to 84,255.
Electronic Arts to layoff 1,100 workers.
The United Steelworkers union on Tuesday said it reached a tentative agreement with a unit of Royal Dutch Shell, the lead company for the oil industry that becomes the minimum standard of wages, benefits and working conditions for all 30,000 refinery workers in the U.S. that belong to the union. The move effectively averts a possible strike at facilities that handle the majority of the U.S.'s crude oil refining.
The Dow Jones Industrial Average gained 141.61 points, or 1.8%, to finish at 8,078.36. The S&P 500 added 13.06 points, or 1.6%, to end at 838.50, while the Nasdaq Composite rose 21.87 points, or 1.5%, to 1,516.30.
Crude for March delivery ended up 70 cents, or 1.7%, at $40.78 a barrel on the New York Mercantile Exchange. Gold for February delivery closed down $14.70, or 1.6%, at $892 an ounce on the Comex division of the New York Mercantile Exchange.
Harley-Davidson says Berkshire and Harley's biggest shareholder, Davis Selected Advisers, L.P., have each committed to buying $300 million in senior unsecured notes, due in 2014. The interest rate is 15%.
The Senate voted Tuesday to give a tax break to new car buyers, setting aside bipartisan concerns over the size of an economic stimulus bill with a price tag approaching $900 billion. The vote was 71-26 to allow many car buyers to claim an income tax deduction for the cost of automobile sales taxes and interest payments on car loans.
Planned layoffs at U.S. firms in January reached their highest monthly level in seven years.
According to outplacement company Challenger, Gray & Christmas, job cuts announced in January totaled 241,749, up 45 percent from December's 166,348. Layoffs were up from 74,986 in the year-ago period.
Costco Wholesale Corp said it expects second-quarter earnings to be below analyst expectations as it reported a 2 percent fall in monthly sales at stores open at least a year, hurt mainly by lower gasoline prices and foreign exchange.
The warehouse club operator, which will report second-quarter results on March 4, also said it would not provide an earnings forecast for the rest of this fiscal year due to economic uncertainties.
Food makers Kraft Foods Inc and Sara Lee Corp cut their profit forecasts for the current year as a stronger dollar hurts international sales and U.S. consumers seek lower-priced products.
Rep. Ron Paul: "First of all, just as the best cure for a hangover is not to drink so much, the best cure for a recession is a recession. It is time to sober up and return to free market sanity, risk and reward, supply and demand, without political intervention. Politicians are good at catering to the needs of special interests, but very bad at determining what needs to take place in the market. Government should stick to punishing fraud and enforcing contracts. When they use the tax code, bureaucratic departments and their manipulative rules and regulations to dictate social and economic behavior, we end up with distortions and malinvestments. Bailing out banks, continuing failed Fed policies and strapping the taxpayer with toxic debt will worsen the pain, and punish the innocent.
If Congress really wanted to do something helpful, it would cut taxes. Ideally, we would repeal the income tax altogether and get the IRS off the economy's back, which would be a huge boon. We should also cut spending. Cut every unconstitutional department and program, every wasteful governmental encroachment on the people's liberty and money, starting with our massive overseas empire. The cost of our empire is bringing us to our knees, just as the Soviets' empire did to them. Congress should also abolish the Federal Reserve and take back its responsibilities to ensure sound money, safe from the manipulations of powerful banking interests.
These things would constitute real change, real economic stimulus. The plans being bandied about Washington are just more of the same. As long as no one seriously considers the cure, we are unfortunately destined to prolong the disease."
Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is at the beginning of an economic depression that will help gold prices more than double.
Bullion may top $2,000 an ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.
“The trend is down, and there’s not one signpost that says it’s changing yet,” Sprott said yesterday from Toronto. “We’ll stand by to wait to see those, and until it does, you have to assume it gets worse.”
The Reserve Bank of Australia lowered interest rates by 1-percentage point to 3.25% Tuesday, citing moderating inflation pressures and the need to help spur demand to head off recession. In announcing its decision, the RBA said it took into account the stimulus package announced by the government earlier in the day. "The combination of expansionary monetary policies and fiscal policies now in place will help cushion the Australian economy from the contractionary forces coming from abroad," Gov. Glenn Stevens said in a statement.
The Hong Kong Monetary Authority has said the number of residential mortgage loans in negative equity nearly quadrupled in the quarter ended Dec. 31 as property prices dropped in the special administrative region in the wake of the global economic crisis.
“The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said. The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.
About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the $1.3 trillion lost in 2007, Zillow said.”
According to Zillow, 29% of homes in the Seattle-Tacoma-Bellevue area sold at a loss during the final three months of 2008.
Bay Area homes lost $202 billion in value in 2008, according to a real estate valuation service. The jaw-dropping number, courtesy of Zillow.com, totals the equity lost in all homes in the nine counties as real estate values tumbled under the pressure of foreclosures, recession and tightened lending standards.
"It's an increasingly negative picture in that market," said Stan Humphries, vice president of data and analytics for Zillow in Seattle.
Zillow said home values for the area fell 18.3 percent in the fourth quarter compared with a year ago, reaching a median value of $503,397. That was bigger than the overall U.S. decline of 11.6 percent in the quarter.
The Bay Area "is definitely in the pack of metropolitan areas that are declining worse than the national average," Humphries said. "Those areas are our usual suspects - metro areas in California, Florida, Phoenix, Las Vegas and Detroit."
The vacancy rate for homes typically occupied by the owner rose to 2.9% in the fourth quarter of 2008 from 2.8%, matching the all-time high set a year ago, the Commerce Department reported Tuesday. Prior to the housing bubble bursting in 2005, the vacancy rate had never been above 2%. For rental properties, the vacancy rate rose to 10.1% from 9.9%. The homeownership rate fell to 67.5%, the lowest since 2001. In the fourth quarter, 2.2 million homes were vacant and for sale, virtually unchanged from a year earlier. The nation's housing stock increased by 2.2 million in 2008 to 130.8 million.
"The high-end market relies on equities," says Walter Molony, spokesman for the National Association of Realtors. "If stocks are doing well, so too does high-end housing."
Though only 2 percent of the overall housing market, high-end home sales have seen a dramatic drop, according to Molony. Homes valued at $750,000 or more plunged a whopping 47 percent in the year ended in November. By comparison, homes valued at $400,000 or less fell by only 3 percent during the same period.
A look at the markets during the same time period shows the Dow Jones fell 33.1 percent, while the S&P shows a 37.5 percent drop in value.
Real estate professionals agree that sliding markets and a ravaged economy are hurting prospective high-end buyers and sellers. And that means prices will likely decline even more before there is any recovery.
"Unless they are forced to move, they are staying put," says Mary Cassidy, a licensed real estate broker in Bronxville, New York, a wealthy suburb of New York City that is home to many Wall Streeters. "People are not buying and people are not selling. When everyone’s uncertain as to whether they have a job, why go out and buy something?"
Willem Buiter: "There is little doubt that if the Buy American provisions of the Economic Stimulus Package were to become law, this would amount to an economic declaration of war on the rest of the world. The response of the assembled non-US finance ministers in Davos made this clear. Retaliation from the EU countries and the rest of the world would follow swiftly. Because this disastrous US Congressional actions follows so closely on Treasury Secretary Geithner’s declaration that China is manipulating its currency, it is essential that the Obama administration draw a clear line in the sand. If anything like the Buy American clause inserted by the House survives in the bill president Obama gets on his desk, he must veto it. The questionable value of the fiscal stimulus is overwhelmed by the unquestionable domestic and global harm caused by the Buy American clause. If president Obama fails to veto a protectionism-laced bill, it will be clear that we have a wuss in the White House. If such is the case, God help us all."
Avon Chief Executive Andrea Jung said 2009 "will be a challenging year."
Looking ahead, Celanese said it's engineering cost reductions of $100 million to $120 million a year. "With the current global economic recession and continued weak consumer demand, we would expect volumes to remain under pressure in 2009." The chemical maker will "adjust staffing with the short-term demand environment."
For 2009 Emerson expects to report earnings of $2.70 to $2.95 a share, with underlying sales falling between 3% and 6%.
Citigroup Inc., plans to use $36.5 billion for consumer and company lending and to fund U.S. mortgage loans from the $45 billion it got from the government in bailout funds last year, according to Bloomberg, which obtained a copy of a report the company is expected to issue on Tuesday. The bank will use $25.7 billion for mortgages, $1 billion for student loans, $5.8 billion for credit card lending and $1.5 billion for corporate loans, the report said, according to Bloomberg.
The Dow Chemical Co.swung to a $1.55 billion loss in the fourth quarter and said low demand will continue "for several quarters and possibly beyond." The Midland, Mich. firm lost $1.68 a share during the quarter, of 62 cents a share when excluding items. Sales fell 23% to $10.9 billion, with prices falling 6% and volume dropping 17%.
The U.K. FTSE 100 index declined 0.7% to 4,049.51, the German DAX 30 index lost 0.7% at 4,241.68 and the French CAC-40 index declined 0.9% to 2,905.10. The Nikkei 225 Average, which hit a high of 8,084.41 during the session, ended down 0.6% at 7,825.51, while the broader Topix fell 0.5% to 773.79. The decline came in spite of news that the Bank of Japan will revive a plan to purchase shares held by financial institutions and spend up to 1 trillion yen ($111.5 billion) through April 2010.
Scandinavian airline group SAS AB says its losses widened in the fourth quarter and that it plans to slash 3,000 jobs as part of a new savings plan.
Motorola says it lost $3.6 billion, or $1.57 per share, in the fourth quarter as it took massive non-cash charges for goodwill impairment and an increase in a deferred tax reserve.
Hammered by a decline in sales, the maker of telecommunications equipment also said it would suspend its dividend, and its
chief financial officer Paul Liska is leaving.
The company also says it is undertaking cost-cutting measures meant to save $1.5 billion in 2009.
“Subordinated bank debt is really, really suffering,” said
Phil Roantree, a portfolio manager who helps oversee $14 billion at New Star Asset Management in London. “Something is seriously wrong. Regulators need to restore confidence.”
D.R. Horton, the nation's biggest homebuilder, said Tuesday its fiscal first-quarter loss narrowed as it cut costs to cope with the worsening housing market slumpFort Worth, Texas-based Horton posted a loss of $62.6 million, or 20 cents per share, for the quarter ended Dec. 31. That compares with a loss of $128.8 million, or 41 cents per share, a year earlier.
The company said homebuilding revenue fell by more than 47 percent to $900.3 million from $1.71 billion as sales shrank. D.R. Horton sold 4,068 homes in the first quarter, compared with 6,549 in the period a year ago.
The number of homes under contract to be sold also fell sharply. D.R. Horton had 4,006 homes worth $900 million under contract at the end of the quarter. It had 8,138 homes valued at $2 billion under contract on the same day a year earlier.
Donald R. Horton, the company's chairman, said in a statement that the company is cutting the number of homes it has under construction and the amount of land it owns.
GMAC Financial Services said Tuesday that its fourth-quarter earnings were $7.45 billion compared to a year-ago loss of $724 million. Results in the quarter were largely driven by an $11.4 billion after-tax gain from the extinguishment of debt related to GMAC's fourth-quarter bond exchange, which was partially offset by losses in the global automotive finance and mortgage businesses.
Northrop expects 2009 earnings of $4.50 to $4.75 a share, compared to the Wall Street target of $5.06 a share.
BP Plc said replacement cost net profit fell in the fourth quarter to $2.587 billion and undershot forecasts as oil prices collapsed and its Russian unit reported a big loss.
Excluding non-operating items which amounted to a net charge of $18 million, the result was $2.605 billion, compared to an average forecast of $2.98 billion in a Reuters poll of 6 analysts.
Merck reaffirmed its 2009 financial forecasts, saying it expects earnings per share of $2.95 to $3.17, excluding up to about 20 cents' worth of one-time items, and revenue between $23.7 million and $24.2 billion.
United Parcel Service Inc., the world’s largest package-delivery company, forecast first-quarter profit of 52 cents to 68 cents a share, less than the 69 cents analyst estimate.
Gold prices may hit $1,500 (Dh5,509) an ounce in the next 12 to 15 months, Gary Dugan, the Chief Investment Officer (CIO) of Merrill Lynch, said yesterday.
Dugan termed his apprehensions of gold striking such a high as a "fear" that may come true. He reasoned that such a price would mean the other commodities and streams of investments have been shunned by investors.
With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of "the most trusted currency", Dugan said. "We have never seen such a rush to buy gold. It's bringing in security and it's still affordable."
PNC Financial Services Group said it plans to cut 5,800 jobs following its recent purchase of troubled lender National City, and posted a fourth-quarter loss tied to the transaction.
The job cuts cover 9.7 percent of the combined banks' 59,595-person workforce. Pittsburgh-based PNC expects to complete the cuts by 2011 to help save $1.2 billion annually.
Fashion company Liz Claiborne said Tuesday that it planned to cut 725 jobs, or 8 percent of its U.S. workforce, as it aims to reduce costs in a difficult retail market.
King Pharmaceuticals to cut 760 jobs or 22% of workforce.
"2008 was a year of extreme market volatility with record high crude prices at midyear, followed by a rapid and steep decline in crude prices," said Clarence P. Cazalot, Jr., Marathon president and CEO. "Through this cycle of volatility, Marathon delivered solid upstream production growth and continued high downstream operating reliability, resulting in income from our operating segments increasing 59 percent for the fourth quarter and 15 percent for the full year, compared to the fourth quarter and full year of 2007....In the Bakken Shale in North Dakota, the Company continues to achieve best-in-class drilling and completion performance, and improved drilling time and well costs. Marathon increased its year-over-year Bakken production by 215 percent, with a December 2008 production rate of 8,200 net boepd, compared to 2,600 boepd at the end of 2007."
According to Robert Shiler, housing prices from 1890 onward have increased at a real rate of 0.4%.
Ningbo Sunhu Chemical Products Co., China ’s biggest nickel trader, said its post-Lunar New Year sales slumped as 90% of its customers remained closed because of lack of demand. Sales in the first two days after the week-long holiday dropped 95% from the same period last year, Kevin Ji, chief analyst, said in a phone interview today. “The global nickel industry seems to be pinning much hope on post-vacation Chinese demand, yet we’re feeling pretty desperate right here,” Ji said. China accounts for about 25% of global nickel demand. Ningbo Sunhu, which trades around 50,000 metric tons of the metal yearly, sells most of its products in the weeks after the Lunar New Year holiday and in the fourth quarter.
Standard & Poor's Index Services on Tuesday said it expects the companies in the S&P 500 Index to post their first-ever negative "as reported" GAAP earnings for the fourth quarter of 2008 as the economy continued to weaken. S&P said 244 issues have already reported quarterly results. "Operating earnings for the S&P 500 companies are expected to remain positive, since unusual charges (layoff provisions, write-offs, & etc.) are not included," S&P said. "However, operating earnings are expected to be the worst in over a decade." It added that reported quarterly sales are down nearly 11% while financials are set for the fifth consecutive quarter of negative earnings per share.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, surged 6.3 percent to 87.7, rising for the first time since August. Compared with the same period a year-ago, pending homes sale were up 2.1 percent in December. It will be interesting to see what percentage were foreclosures. One must remember a record 19 million U.S. houses stood empty at the end of 2008 as banks seized homes faster than they could sell them and prices continued to fall.
Ford Motor Co posted a 40 percent drop in January sales in the United States, the sharpest decline for the No. 2 U.S. automaker in 10 months of double-digit sales declines in the world's largest market for new cars and trucks.
The results from Ford on Tuesday were among the first from major automakers for a month expected to show overall sales near 27-year lows, extending a stretch of 15 months of consecutive auto sales declines.
Toyota Motor Corp. said Tuesday that U.S. January sales fell 31.7% to 117,287 vehicles from 171,849 a year ago. Chrysler LLC on Tuesday reported its U.S. sales in January fell 54.8% to 62,157 vehicles from 137,392 in January 2008. General Motors Corp.on Tuesday reported a 48.9% drop in January U.S. light vehicle sales to 128,198 cars and trucks from 250,926 in January 2008. Sales of cars fell 57.9% to 43,943 while truck sales declined 42.5% to 84,255.
Electronic Arts to layoff 1,100 workers.
The United Steelworkers union on Tuesday said it reached a tentative agreement with a unit of Royal Dutch Shell, the lead company for the oil industry that becomes the minimum standard of wages, benefits and working conditions for all 30,000 refinery workers in the U.S. that belong to the union. The move effectively averts a possible strike at facilities that handle the majority of the U.S.'s crude oil refining.
The Dow Jones Industrial Average gained 141.61 points, or 1.8%, to finish at 8,078.36. The S&P 500 added 13.06 points, or 1.6%, to end at 838.50, while the Nasdaq Composite rose 21.87 points, or 1.5%, to 1,516.30.
Crude for March delivery ended up 70 cents, or 1.7%, at $40.78 a barrel on the New York Mercantile Exchange. Gold for February delivery closed down $14.70, or 1.6%, at $892 an ounce on the Comex division of the New York Mercantile Exchange.
Harley-Davidson says Berkshire and Harley's biggest shareholder, Davis Selected Advisers, L.P., have each committed to buying $300 million in senior unsecured notes, due in 2014. The interest rate is 15%.
The Senate voted Tuesday to give a tax break to new car buyers, setting aside bipartisan concerns over the size of an economic stimulus bill with a price tag approaching $900 billion. The vote was 71-26 to allow many car buyers to claim an income tax deduction for the cost of automobile sales taxes and interest payments on car loans.
Planned layoffs at U.S. firms in January reached their highest monthly level in seven years.
According to outplacement company Challenger, Gray & Christmas, job cuts announced in January totaled 241,749, up 45 percent from December's 166,348. Layoffs were up from 74,986 in the year-ago period.
Costco Wholesale Corp said it expects second-quarter earnings to be below analyst expectations as it reported a 2 percent fall in monthly sales at stores open at least a year, hurt mainly by lower gasoline prices and foreign exchange.
The warehouse club operator, which will report second-quarter results on March 4, also said it would not provide an earnings forecast for the rest of this fiscal year due to economic uncertainties.
Food makers Kraft Foods Inc and Sara Lee Corp cut their profit forecasts for the current year as a stronger dollar hurts international sales and U.S. consumers seek lower-priced products.
Monday, February 02, 2009
Change
2/2/09 Change
With spending falling faster than incomes, the personal savings rate rose to 3.6% in December.
Gold for February delivery was last down $19.10, or 2.1%, at $908.20 an ounce in early North America electronic trading. Oil futures fell below $41 a barrel early Monday, pressured by ongoing worries over slowing energy demand. Crude oil for March delivery dropped $1.21, or 3%, to $40.45 a barrel in electronic trading on Globex.
Global sales of semiconductors dropped for the first year since 2001, the Semiconductor Industry Association reported Monday. Global semiconductor sales tumbled 22% in December from a year earlier, putting 2008's decline at 2.8%.
Conditions in China's manufacturing sector declined in January, marking the sixth straight month of falls, while the pace of layoffs jumped to the highest recorded in a four-year-old survey published by CLSA Asia-Pacific Markets. The headline PMI index stood at 42.2, rising slightly from 41.2 in December, but well below the 50-level that indicates the manufacturing sector is neither growing nor shirking. The reading was the third-sharpest deterioration on record, following declines in December and November.
The euro-zone manufacturing sector saw another sharp contraction in January, but shrank at a slower pace than December, according to the Markit euro-zone manufacturing purchasing managers index released Monday. January PMI came in at 34.4, slightly lower than a preliminary estimate of 34.5, but up from the all-time low of 33.9 posted in December.
Nouriel Roubini, 50, says worse lies ahead. Banks face bigger credit losses than they realize, more financial companies will require state takeovers and the world economy will keep shrinking throughout 2009, he says.
“The consensus is catching up with me, but it’s still behind,” Roubini said in an interview in Davos. “I don’t know what some people are smoking.”
"Everybody is concerned about this. The state of California is on the edge of going into the abyss," said Bill Hauck, president of the California Business Roundtable, which represents the state's largest employers.
Toyota has cut its production forecasts for 2009 for the third time.
Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications.
Ford Motor Co may need to access U.S. government aid in late 2009, an analyst at Barclays Capital said on Monday, just days after the automaker said it would have the cash to survive the worst downturn in auto sales in a decade without a state bailout.
Analyst Brian Johnson downgraded the U.S. automaker's stock to "underweight" from "equal-weight" and cut his price target on the stock to $1 from $4, citing cash concerns and an increase in the company's net debt.
“You don't have a clue what is going on and neither do the American people because if they did, there would be a revolution in this country.”
Former Texas Gov. John Connally to Gerald Celente, 1992
The cost of three-month dollar loans between banks rose Monday to the highest level since Jan. 9 on worries that a deeper economic downturn will keep the financial sector under pressure.
The rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — rose 0.05 percentage points to 2.23 percent, according to the British Bankers' Association. Since the start of the year, decreases in the rate have leveled off and become increases as concerns about the banking sector re-emerged.
The
ruble slumped to its weakest level against the dollar in 11 years.
Outlays for construction projects declined 1.4% in December after a revised 1.2% drop in November, the Commerce Department reported Monday. Spending on residential projects fell 3.2%. Spending on nonresidential projects fell 0.4%. Since December 2007, total outlays fell 3.6%. Residential spending fell 22.3%, while nonresidential outlays rose 8.9%.
Renew Energy LLC, the ethanol producer based in Jefferson, Wisconsin, filed for bankruptcy protection from creditors and plans to sell itself amid falling prices for the grain-based fuel and rising costs for corn.
Dallas Federal Reserve President Richard Fisher warned on Monday against "Buy America'' provisions in a proposed fiscal stimulus law and said it could lead to devastating protectionism.
"Protectionism is the crack cocaine of economics,'' Fisher told C-Span television in an interview for its "Washington Journal'' program.
"It provides an immediate high that leads to economic death. We cannot afford to go down that route,'' said Fisher, who is not a voting member of the Fed's policy-setting committee this year.
The $800 billion stimulus package passed by the U.S. House of Representatives includes "buy American" clauses that appear to unfairly favor U.S. steel producers.
"I hope the senators will be wise enough ... to make sure the U.S. complies with its international obligations," said Pascal Lamy, the head of the World Trade Organization.
On the same panel, Brazilian Foreign Minister said subsidies are the "most scandalous way of damaging developing countries."
Macy's Inc slashed about 7,000 jobs on Monday, cut its quarterly dividend and said it would integrate all its divisions into a single unit as it expects the remainder of 2009 to remain very tough for retail.
Personal bankruptcies surged to more than 1 million filings in the United States in 2008 -- the most since a rewrite of bankruptcy laws went into effect in 2005.
Filings of Chapter 7 and Chapter 13 bankruptcies rose 33% in 2008 as the economy worsened, according to data from U.S. bankruptcy courts and compiled by bankruptcy data firm Automated Access to Court Electronic Records.
The Dow Jones Industrial Average fell 64.11 points to 7,936.76. The S&P 500 lost half a point to 825.41, while the Nasdaq advanced 18.01 points to finish at 1,494.43.
Crude oil for March delivery lost $1.60, or 3.8%, to end at $40.08 a barrel on the New York Mercantile Exchange. Gold for February delivery ended down $20.60, or 2.2%, at $906.70 an ounce on the Comex division of the New York Mercantile Exchange.
Morgan Stanley may announce a cut up to 4% of its workforce this month, The Wall Street Journal reported Monday on its Web site, citing a source close to the investment bank's plans. The Journal said that Morgan Stanley is expected to announce 1,500 to 1,800 job cuts, or about 3% to 4% of its workforce.
During the campaign Obama talked about bringing change to Washington. I now have a clear picture of that change. In order to be chosen for a cabinet position it can work in one's favor to have cheated on one's tax return and/or having been fired from Harvard University for making disparaging remarks about women. These are the people to take a leadership role in the cabinet? What does that tell you about the regard for ethics, morals, honesty, and the like? How about the reflection on one's judgment? This country is in a lot deeper trouble than simply unemployment, underemplyment, foreclosures, bankruptcies, indebtedness, deflation, etc etc. Broken promises do not represent change in Washington.
George Carlin: "I know a transsexual guy who's only ambition is to eat, drink, and be Mary."
With spending falling faster than incomes, the personal savings rate rose to 3.6% in December.
Gold for February delivery was last down $19.10, or 2.1%, at $908.20 an ounce in early North America electronic trading. Oil futures fell below $41 a barrel early Monday, pressured by ongoing worries over slowing energy demand. Crude oil for March delivery dropped $1.21, or 3%, to $40.45 a barrel in electronic trading on Globex.
Global sales of semiconductors dropped for the first year since 2001, the Semiconductor Industry Association reported Monday. Global semiconductor sales tumbled 22% in December from a year earlier, putting 2008's decline at 2.8%.
Conditions in China's manufacturing sector declined in January, marking the sixth straight month of falls, while the pace of layoffs jumped to the highest recorded in a four-year-old survey published by CLSA Asia-Pacific Markets. The headline PMI index stood at 42.2, rising slightly from 41.2 in December, but well below the 50-level that indicates the manufacturing sector is neither growing nor shirking. The reading was the third-sharpest deterioration on record, following declines in December and November.
The euro-zone manufacturing sector saw another sharp contraction in January, but shrank at a slower pace than December, according to the Markit euro-zone manufacturing purchasing managers index released Monday. January PMI came in at 34.4, slightly lower than a preliminary estimate of 34.5, but up from the all-time low of 33.9 posted in December.
Nouriel Roubini, 50, says worse lies ahead. Banks face bigger credit losses than they realize, more financial companies will require state takeovers and the world economy will keep shrinking throughout 2009, he says.
“The consensus is catching up with me, but it’s still behind,” Roubini said in an interview in Davos. “I don’t know what some people are smoking.”
"Everybody is concerned about this. The state of California is on the edge of going into the abyss," said Bill Hauck, president of the California Business Roundtable, which represents the state's largest employers.
Toyota has cut its production forecasts for 2009 for the third time.
Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications.
Ford Motor Co may need to access U.S. government aid in late 2009, an analyst at Barclays Capital said on Monday, just days after the automaker said it would have the cash to survive the worst downturn in auto sales in a decade without a state bailout.
Analyst Brian Johnson downgraded the U.S. automaker's stock to "underweight" from "equal-weight" and cut his price target on the stock to $1 from $4, citing cash concerns and an increase in the company's net debt.
“You don't have a clue what is going on and neither do the American people because if they did, there would be a revolution in this country.”
Former Texas Gov. John Connally to Gerald Celente, 1992
The cost of three-month dollar loans between banks rose Monday to the highest level since Jan. 9 on worries that a deeper economic downturn will keep the financial sector under pressure.
The rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — rose 0.05 percentage points to 2.23 percent, according to the British Bankers' Association. Since the start of the year, decreases in the rate have leveled off and become increases as concerns about the banking sector re-emerged.
The
ruble slumped to its weakest level against the dollar in 11 years.
Outlays for construction projects declined 1.4% in December after a revised 1.2% drop in November, the Commerce Department reported Monday. Spending on residential projects fell 3.2%. Spending on nonresidential projects fell 0.4%. Since December 2007, total outlays fell 3.6%. Residential spending fell 22.3%, while nonresidential outlays rose 8.9%.
Renew Energy LLC, the ethanol producer based in Jefferson, Wisconsin, filed for bankruptcy protection from creditors and plans to sell itself amid falling prices for the grain-based fuel and rising costs for corn.
Dallas Federal Reserve President Richard Fisher warned on Monday against "Buy America'' provisions in a proposed fiscal stimulus law and said it could lead to devastating protectionism.
"Protectionism is the crack cocaine of economics,'' Fisher told C-Span television in an interview for its "Washington Journal'' program.
"It provides an immediate high that leads to economic death. We cannot afford to go down that route,'' said Fisher, who is not a voting member of the Fed's policy-setting committee this year.
The $800 billion stimulus package passed by the U.S. House of Representatives includes "buy American" clauses that appear to unfairly favor U.S. steel producers.
"I hope the senators will be wise enough ... to make sure the U.S. complies with its international obligations," said Pascal Lamy, the head of the World Trade Organization.
On the same panel, Brazilian Foreign Minister said subsidies are the "most scandalous way of damaging developing countries."
Macy's Inc slashed about 7,000 jobs on Monday, cut its quarterly dividend and said it would integrate all its divisions into a single unit as it expects the remainder of 2009 to remain very tough for retail.
Personal bankruptcies surged to more than 1 million filings in the United States in 2008 -- the most since a rewrite of bankruptcy laws went into effect in 2005.
Filings of Chapter 7 and Chapter 13 bankruptcies rose 33% in 2008 as the economy worsened, according to data from U.S. bankruptcy courts and compiled by bankruptcy data firm Automated Access to Court Electronic Records.
The Dow Jones Industrial Average fell 64.11 points to 7,936.76. The S&P 500 lost half a point to 825.41, while the Nasdaq advanced 18.01 points to finish at 1,494.43.
Crude oil for March delivery lost $1.60, or 3.8%, to end at $40.08 a barrel on the New York Mercantile Exchange. Gold for February delivery ended down $20.60, or 2.2%, at $906.70 an ounce on the Comex division of the New York Mercantile Exchange.
Morgan Stanley may announce a cut up to 4% of its workforce this month, The Wall Street Journal reported Monday on its Web site, citing a source close to the investment bank's plans. The Journal said that Morgan Stanley is expected to announce 1,500 to 1,800 job cuts, or about 3% to 4% of its workforce.
During the campaign Obama talked about bringing change to Washington. I now have a clear picture of that change. In order to be chosen for a cabinet position it can work in one's favor to have cheated on one's tax return and/or having been fired from Harvard University for making disparaging remarks about women. These are the people to take a leadership role in the cabinet? What does that tell you about the regard for ethics, morals, honesty, and the like? How about the reflection on one's judgment? This country is in a lot deeper trouble than simply unemployment, underemplyment, foreclosures, bankruptcies, indebtedness, deflation, etc etc. Broken promises do not represent change in Washington.
George Carlin: "I know a transsexual guy who's only ambition is to eat, drink, and be Mary."
Incomes and Spending Decline
2/1/09 Incomes and Spending Decline
U.S. consumers cut spending for a sixth straight month in December and their incomes shrank, according to a government report on Monday that underscored the rapid deterioration in the economy.
The Commerce Department said spending decreased by 1.0 percent after falling by a revised 0.8 percent in November. That figure was previously reported as a 0.6 percent drop. Incomes fell by 0.2 percent after November's 0.4 percent decline, previously reported as a 0.2 percent decline.
Cliffs Natural Resources Inc., the Cleveland miner of iron ore and coal, said it would suspend production at its Pinnacle metallurgical-coal complex near Pineville, W.Va., from Feb. 2 through Feb. 28.
The production halt will idle 360 workers.
"Metallurgical-coal demand has been reduced as the steel industry has cut back production in the face of the global economic slowdown," Cliffs said in the statement.
Major U.S. refiners and the United Steelworkers union have extended their talks on a new contract day to day, averting a strike for now.
The negotiations cover workers at plants representing about 64% of U.S. refining capacity, Bloomberg reported. About 24,000 workers are covered by the contract, the Associated Press reported.
British drugs company GlaxoSmithKline Plc. is set to announce about 6,000 job losses when it posts results on Thursday, the Sunday Telegraph newspaper said.
Federal Reserve Bank of Richmond President Jeffrey Lacker said Saturday that his recent monetary-policy dissent wasn't directed at the target for short-term interest rates but rather at the composition of the Fed's balance sheet.
The government’s civilian, nonmilitary work force peaked in the late 1960s at about 2.3 million. It was 2 million or more through the mid-1990s, when the government cut more than 400,000 jobs — many through military base closings. Since 2001, civilian employment in the executive branch, excluding postal employees, has edged upward from 1.7 million to about 2 million, largely because of new homeland security jobs.
More federal job openings are on the horizon.
A report released in January by Christina Romer, head of the White House Council of Economic Advisers, and Jared Bernstein, an economic policy adviser to Vice President Joe Biden, predicted that more than 90 percent of the 3 million to 4 million jobs that Obama proposes to save or create would be in the private sector.
But the report also estimated that 244,000 government jobs — some at the federal level, but more at the state and local level — would be created or saved.
That was based on a $600 billion stimulus package; the one being debated in Congress is more than $800 billion.
Tom Fowler: "LNG can be competitive priced as low as $3 per million British thermal units, said Zach Allen, head of Pan EurAsian Enterprises, a management advisory firm that follows LNG markets. That’s a price the U.S. hasn’t seen since 2002.
While LNG generally is sold in contracts between importers and exporters, its price is influenced by the price of natural gas traded on the New York Mercantile exchange, which closed Friday at $4.42 per million Btu.
“Some cash is better than none, especially for producers who rely heavily on that cash for social and other programs that would be politically explosive to cut off or cut back,” Allen said.
Some of Qatar’s natural gas fields produce other valuable liquids that are stripped out and sold at prices that essentially cover all production costs before the gas even makes it to market, Douglas said.
“They are essentially producing the gas for free,” Douglas said.
The cost of getting the LNG from its foreign origin to other markets can be relatively low, Johnson said.
The 43-day round trip from the huge export terminal in Qatar to the Lake Charles, La., LNG terminal costs $2.09 per million British thermal units.
From Egypt to Lake Charles takes 30 days and $1.29 per million Btu."
It was a remarkable accomplishment when Nadal beat Fernando Verdasco in the Australian Open semi finals in a 5-set five hour, 14 minute match and then in Sunday's finals beat Federer in another 5-set match lasting almost 4 1/2 hours.
LA Times: "The stimulus package offers the most direct benefits to Americans who have lost their jobs and their health insurance in the downturn, and to those already receiving public assistance.
Roughly 3.5 million Americans who lose their jobs will be able to receive unemployment benefits for 59 weeks, instead of being cut off after 26 weeks. And 20 million people would see a $25-a-week increase in their aid checks; the average weekly benefit is now $200.
The government also will provide $7.5 billion more to help states assist unemployed workers who otherwise might not have qualified for aid because they earned too little or only worked part time before losing their jobs. Democrats estimate that could help up to 650,000 workers.
The bill would provide an extra month's check -- about $450 -- for some 7.5 million poor and elderly disabled people who rely on Supplemental Security Income. Couples would get $630 more.
An estimated 8.5 million Americans would get help keeping their health insurance after losing their jobs.
The so-called COBRA law currently allows people to retain employer-based health insurance for 18 months if they pay the premiums. But that often costs more than $1,000 a month -- so much that relatively few people do it."
Mike Burk: "Since 1928 the SPX has been up 52% of the time in February with an average loss of 0.3% making it second to September as the worst month of the year. During the 1st year of the Presidential Cycle the SPX has only been up 40% of the time with an average loss of 1.7% making it second to September again as the worst month of the entire 4 year Presidential Cycle...The market appears to be hopeless. In spite of exploding money supply and a deeply oversold condition, it continues to fall. Seasonally we are entering one of the worst months of the entire 4 year Presidential Cycle.
I expect the major indices to be lower on Friday February 6 than they were on Friday January 30."
South Korean exports in January fell a record 32.8 percent over a year earlier, worse than analysts had expected, as the deepening global downturn batters Asian economies. South Korea is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand. Analysts say the poor outlook for trade may prompt its central bank to cut interest rates further. Imports fell 32.1 percent in January from a year earlier, data on the Korea Customs Service's website.
Cable television system operator Charter Communications, struggling with a $21 billion debt load, is preparing a bankruptcy filing, according to sources familiar with the situation.
The action comes after the company missed a $73.7 million interest payment in mid-January and as it continues to negotiate a financial restructuring with its bondholders, sources said on condition of anonymity.
A steep drop in sales to rental car companies and other fleet buyers is expected to weigh heavily on carmakers when they report their January sales results Tuesday. It remains to be seen whether injecting government cash into automakers' financing arms helped consumers make up the difference.
"It is an automotive hurricane moving through this industry," said Jim Farley, Ford Motor Co.'s marketing chief, at last weekend's National Automotive Dealers Association convention. Farley predicted a big drop in business from fleet buyers, which are keeping their current vehicles longer to pare costs.
Bad bank idea is simply a "covert way to recapitalize banks by paying more for the assets than the market would," Meredith Whitney tells Fortune. Besides which,
it won't even work.
An Iraqi oil official says Iraq's January oil exports inched up to about 1.89 million barrels a day from about 1.82 million in the previous month.
Falah al-Amiri, the head of the State Oil Marketing Organization, says about 1.38 million barrels per day were exported through the Persian Gulf, while 500,000 barrels a day were exported via Turkey's port of Ceyhan.
Al-Amiri told The Associated Press on Sunday that exports through Turkey were the biggest since 2003. Sabotage had left the pipeline generally idle until late August 2007.
The Nikkei 225 Average fell 1.7% to 7,856.10 and the broader Topix index gave up 1.7% to 780.64 in Tokyo. Australia's S&P/ASX 200 lost 1.4% to 3,490.10 and New Zealand's NZX 50 slipped 0.5% to 2,759.55.
According to the FT,Rio Tinto, the Anglo-Australian mining group, is in talks with Chinese state-owned aluminium producer Chinalco over potential asset sales and a purchase of shares that could help it avoid a rights issue.
.
U.S. consumers cut spending for a sixth straight month in December and their incomes shrank, according to a government report on Monday that underscored the rapid deterioration in the economy.
The Commerce Department said spending decreased by 1.0 percent after falling by a revised 0.8 percent in November. That figure was previously reported as a 0.6 percent drop. Incomes fell by 0.2 percent after November's 0.4 percent decline, previously reported as a 0.2 percent decline.
Cliffs Natural Resources Inc., the Cleveland miner of iron ore and coal, said it would suspend production at its Pinnacle metallurgical-coal complex near Pineville, W.Va., from Feb. 2 through Feb. 28.
The production halt will idle 360 workers.
"Metallurgical-coal demand has been reduced as the steel industry has cut back production in the face of the global economic slowdown," Cliffs said in the statement.
Major U.S. refiners and the United Steelworkers union have extended their talks on a new contract day to day, averting a strike for now.
The negotiations cover workers at plants representing about 64% of U.S. refining capacity, Bloomberg reported. About 24,000 workers are covered by the contract, the Associated Press reported.
British drugs company GlaxoSmithKline Plc. is set to announce about 6,000 job losses when it posts results on Thursday, the Sunday Telegraph newspaper said.
Federal Reserve Bank of Richmond President Jeffrey Lacker said Saturday that his recent monetary-policy dissent wasn't directed at the target for short-term interest rates but rather at the composition of the Fed's balance sheet.
The government’s civilian, nonmilitary work force peaked in the late 1960s at about 2.3 million. It was 2 million or more through the mid-1990s, when the government cut more than 400,000 jobs — many through military base closings. Since 2001, civilian employment in the executive branch, excluding postal employees, has edged upward from 1.7 million to about 2 million, largely because of new homeland security jobs.
More federal job openings are on the horizon.
A report released in January by Christina Romer, head of the White House Council of Economic Advisers, and Jared Bernstein, an economic policy adviser to Vice President Joe Biden, predicted that more than 90 percent of the 3 million to 4 million jobs that Obama proposes to save or create would be in the private sector.
But the report also estimated that 244,000 government jobs — some at the federal level, but more at the state and local level — would be created or saved.
That was based on a $600 billion stimulus package; the one being debated in Congress is more than $800 billion.
Tom Fowler: "LNG can be competitive priced as low as $3 per million British thermal units, said Zach Allen, head of Pan EurAsian Enterprises, a management advisory firm that follows LNG markets. That’s a price the U.S. hasn’t seen since 2002.
While LNG generally is sold in contracts between importers and exporters, its price is influenced by the price of natural gas traded on the New York Mercantile exchange, which closed Friday at $4.42 per million Btu.
“Some cash is better than none, especially for producers who rely heavily on that cash for social and other programs that would be politically explosive to cut off or cut back,” Allen said.
Some of Qatar’s natural gas fields produce other valuable liquids that are stripped out and sold at prices that essentially cover all production costs before the gas even makes it to market, Douglas said.
“They are essentially producing the gas for free,” Douglas said.
The cost of getting the LNG from its foreign origin to other markets can be relatively low, Johnson said.
The 43-day round trip from the huge export terminal in Qatar to the Lake Charles, La., LNG terminal costs $2.09 per million British thermal units.
From Egypt to Lake Charles takes 30 days and $1.29 per million Btu."
It was a remarkable accomplishment when Nadal beat Fernando Verdasco in the Australian Open semi finals in a 5-set five hour, 14 minute match and then in Sunday's finals beat Federer in another 5-set match lasting almost 4 1/2 hours.
LA Times: "The stimulus package offers the most direct benefits to Americans who have lost their jobs and their health insurance in the downturn, and to those already receiving public assistance.
Roughly 3.5 million Americans who lose their jobs will be able to receive unemployment benefits for 59 weeks, instead of being cut off after 26 weeks. And 20 million people would see a $25-a-week increase in their aid checks; the average weekly benefit is now $200.
The government also will provide $7.5 billion more to help states assist unemployed workers who otherwise might not have qualified for aid because they earned too little or only worked part time before losing their jobs. Democrats estimate that could help up to 650,000 workers.
The bill would provide an extra month's check -- about $450 -- for some 7.5 million poor and elderly disabled people who rely on Supplemental Security Income. Couples would get $630 more.
An estimated 8.5 million Americans would get help keeping their health insurance after losing their jobs.
The so-called COBRA law currently allows people to retain employer-based health insurance for 18 months if they pay the premiums. But that often costs more than $1,000 a month -- so much that relatively few people do it."
Mike Burk: "Since 1928 the SPX has been up 52% of the time in February with an average loss of 0.3% making it second to September as the worst month of the year. During the 1st year of the Presidential Cycle the SPX has only been up 40% of the time with an average loss of 1.7% making it second to September again as the worst month of the entire 4 year Presidential Cycle...The market appears to be hopeless. In spite of exploding money supply and a deeply oversold condition, it continues to fall. Seasonally we are entering one of the worst months of the entire 4 year Presidential Cycle.
I expect the major indices to be lower on Friday February 6 than they were on Friday January 30."
South Korean exports in January fell a record 32.8 percent over a year earlier, worse than analysts had expected, as the deepening global downturn batters Asian economies. South Korea is the first big Asian exporter to report trade data each month, providing an early indication of the state of global demand. Analysts say the poor outlook for trade may prompt its central bank to cut interest rates further. Imports fell 32.1 percent in January from a year earlier, data on the Korea Customs Service's website.
Cable television system operator Charter Communications, struggling with a $21 billion debt load, is preparing a bankruptcy filing, according to sources familiar with the situation.
The action comes after the company missed a $73.7 million interest payment in mid-January and as it continues to negotiate a financial restructuring with its bondholders, sources said on condition of anonymity.
A steep drop in sales to rental car companies and other fleet buyers is expected to weigh heavily on carmakers when they report their January sales results Tuesday. It remains to be seen whether injecting government cash into automakers' financing arms helped consumers make up the difference.
"It is an automotive hurricane moving through this industry," said Jim Farley, Ford Motor Co.'s marketing chief, at last weekend's National Automotive Dealers Association convention. Farley predicted a big drop in business from fleet buyers, which are keeping their current vehicles longer to pare costs.
Bad bank idea is simply a "covert way to recapitalize banks by paying more for the assets than the market would," Meredith Whitney tells Fortune. Besides which,
it won't even work.
An Iraqi oil official says Iraq's January oil exports inched up to about 1.89 million barrels a day from about 1.82 million in the previous month.
Falah al-Amiri, the head of the State Oil Marketing Organization, says about 1.38 million barrels per day were exported through the Persian Gulf, while 500,000 barrels a day were exported via Turkey's port of Ceyhan.
Al-Amiri told The Associated Press on Sunday that exports through Turkey were the biggest since 2003. Sabotage had left the pipeline generally idle until late August 2007.
The Nikkei 225 Average fell 1.7% to 7,856.10 and the broader Topix index gave up 1.7% to 780.64 in Tokyo. Australia's S&P/ASX 200 lost 1.4% to 3,490.10 and New Zealand's NZX 50 slipped 0.5% to 2,759.55.
According to the FT,Rio Tinto, the Anglo-Australian mining group, is in talks with Chinese state-owned aluminium producer Chinalco over potential asset sales and a purchase of shares that could help it avoid a rights issue.
.
Sunday, February 01, 2009
The Trend
1/31/09 The Trend
Goldman Sachs Group estimates that troubled assets could exceed $5 trillion in the U.S. financial system.
In the past week silver rose 5.9% to $12.64.
Doug Noland: "I find it regrettable that pundits paint deflation risks as so catastrophic as to not even discuss the risks associated with a full-fledged bout of Inflationism....The financial sector is a black hole right now. With myriad assets Bubbles having burst, there is an enormous amount of debt today insufficiently backed by asset values. At the same time, there is a tremendous amount of debt backed by households, businesses, municipalities and our federal government. In terminology I have used in the past, the Credit Bubble has left both the Financial Sphere and the Economic Sphere grossly inflated. Total system debt has been severely impaired....There is very real risk at this point that policymaking is about to set course for bankrupting the country....With the goal of avoiding national bankruptcy, I suggest that policymakers focus on incomes as opposed to both asset markets and incomes. And the key is promoting sound long-term investment in real economic wealth creation. “Money” created today to artificially inflate asset prices and incomes will simply require more inflationary fuel next year and the year after. The focus instead needs to be on real investment in real things that produce real wealth.... “Money” should be directed toward jobs rather than home and asset prices....The focus should instead be on supporting the financial and economic systems toward a path of much less dependency on Credit growth and the asset markets."
Randall Forsyth: "If you had bought the S&P just on days following a down day, the cumulative return since the beginning of 2008 would have been 36%. If you had only held the S&P on days following an up day, you would have lost 58%. (This ignores complications such as transaction costs.)
Measured on a daily basis, you would have made 0.28% a day following down days and lost an average of 0.62% on days following up days, a difference of 0.91 percentage points (after rounding.) Since October, this divergence has become more pronounced, according to Goldman. After down days, the average daily return on the S&P was 0.24%; after up days, it was minus 1.06%, a difference of 1.29 percentage points. Since December, the average gain following down days was 1.15% and the average decline after up days was 1.24%, a bigger difference of 1.39%.
Goldman's researchers found that this anomaly was the most pronounced in its records, which go back to the Great Depression. In other words, the trend has not been your friend."
Amidst parent Tribune Co.'s struggle to emerge from bankruptcy protection, the Los Angeles Times said Friday it is cutting 300 positions and will shrink the number of daily sections to four from five.
GE is only a small fraction of a point from making a new 52-week low.
We’re ready to do “whatever it takes” to get prices rising again, says the new U.S. Treasury Secretary, Tim Geithner.
The Obama administration has asked the military's Joint Chiefs of Staff to cut the Pentagon's budget request for the fiscal year 2010 by more than 10 percent -- about $55 billion -- a senior U.S. defense official tells FOX News.
Last year's defense budget was $512 billion.
Zman: "At this point gas storage is only slightly above the five year average and year ago levels and is below 2007 and 2006 levels at this time of the year. Those years saw much higher January gas prices. The perception remains that we will see storage at the end of the withdrawal season well above the seasonal troughs." At $4.40 natural gas is taking into account the most negative storage and production forecasts going forward. I believe the forecasts will prove inaccurate.
Pres. Obama: "No one bill, no matter how comprehensive, can cure what ails our economy."
China's consumer spending rose strongly during the week-long Lunar New Year holiday period which just ended, despite the slowdown in the Chinese economy, the Ministry of Commerce said on Saturday.
Retail sales climbed to 290 billion yuan ($42.5 billion) in the week through Saturday, up 13.8 percent from the equivalent holiday week in 2008, the ministry estimated.
According to Bloomberg, IndyMac Bank and four unidentified U.S. savings and loan associations violated Office of Thrift Supervision policies when revising their capital reports, a disclosure the agency admitted may further erode its reputation.
The agency let IndyMac backdate a capital injection that helped the lender avoid regulatory restrictions, and also found four other cases where lenders failed to follow reporting policies, OTS Director
John Reich wrote yesterday to Treasury Secretary Timothy Geithner, his boss, and four U.S. lawmakers.
“Let me assure you that the OTS takes this matter very seriously, and fully appreciates its potential impact on the reputation of the agency and the perception of the quality of OTS bank supervision,” Reich wrote.
“The recession is going to last through most of 2009, and we’ll be lucky to have growth back at zero by the end of the year,”
Kenneth Rogoff, a Harvard University economics professor, said in a Bloomberg Television interview from Davos, Switzerland, yesterday. Economic growth “will be pretty tepid for a long time.”
Nobel laureate Joseph Stiglitz said any decision by President Barack Obama to establish a so-called bad bank to rid financial companies of toxic assets risks swelling the national debt.That amounts to swapping taxpayers’ “cash for trash,” Stiglitz said in a panel discussion at the World Economic Forum in Davos, Switzerland today. “You shouldn’t chase good money after bad. We’re talking about a national debt that’s very hard to manage.”
“The U.S. needs to show some proof they have a plan to get out of the fiscal problem,” said
Ernesto Zedillo, the former Mexican president who helped steer his country through a financial crisis in 1994. “We, as developing countries, need to know we won’t be crowded out of the capital markets, which is already happening.”
Mr. Zedillo said that Washington, unlike most other countries, had the option of simply printing more money, because
the dollar was a reserve currency for the rest of the world.
Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status.
24/7wallst.com mentioned Macy's may layoff as many as a thousand people next week.
Michael Panzner: "Although some people claim that stocks are "cheap," history suggests that during turbulent times -- e.g., the Great Depression, World War II, the late-1970s stagflation -- P-E ratios fell to single digits, while dividend yields were two to four times higher than they are now. Since most people agree that the current crisis is one of the worst this century, that would imply that we have a long way to go before we reach bottom."
With a third contract offer rejected, some 24,000 refinery workers from the Gulf of Mexico to Montana prepared to head to the picket lines Saturday just hours before an existing labor agreement expires.
The nation's biggest refiner, Valero Energy Corp., said it would shut down some facilities if workers strike. So did European oil company BP PLC.
Shell Oil Co., the lead negotiator for the industry, along with Exxon Mobil Corp., said its refineries would continue to make gasoline, diesel and other fuels using nonunion or replacement workers.
Chemical refiners would also be affected. LyondellBassell Industries said it was bringing in managers from locations not involved in contract negotiations to keep refineries going.
A strike would affect 60 producers, according to Lynne Baker, a spokeswoman for the United Steelworkers, which represents more than 30,000 oil workers nationwide.
Bobby Hollis, chairman of the negotiating committee for the Steelworkers at Valero, said it was doubtful that there would be an agreement by the midnight deadline.
Thursday, union negotiators turned down the most recent offer of a 2.5 percent wage increase for each of the next three years, in addition to changes in medical coverage.
On Jan. 23 Alcoa'S board declared a regular quarterly dividend of 17 cents per share.
The dividend is payable Feb. 25 to shareholders of record Feb. 6. The shares are trading at $7+ or about oone point above their 52-week low which is also a 21-year low. Is the board irresponsible in declaring and paying this dividend? I would think not from a long-term perspective. Is the company going through a tough time? Yes. Will it survive? I think so and therefore it might be worthy of consideration for those willing to look beyond the immediate situation.
Goldman Sachs Group estimates that troubled assets could exceed $5 trillion in the U.S. financial system.
In the past week silver rose 5.9% to $12.64.
Doug Noland: "I find it regrettable that pundits paint deflation risks as so catastrophic as to not even discuss the risks associated with a full-fledged bout of Inflationism....The financial sector is a black hole right now. With myriad assets Bubbles having burst, there is an enormous amount of debt today insufficiently backed by asset values. At the same time, there is a tremendous amount of debt backed by households, businesses, municipalities and our federal government. In terminology I have used in the past, the Credit Bubble has left both the Financial Sphere and the Economic Sphere grossly inflated. Total system debt has been severely impaired....There is very real risk at this point that policymaking is about to set course for bankrupting the country....With the goal of avoiding national bankruptcy, I suggest that policymakers focus on incomes as opposed to both asset markets and incomes. And the key is promoting sound long-term investment in real economic wealth creation. “Money” created today to artificially inflate asset prices and incomes will simply require more inflationary fuel next year and the year after. The focus instead needs to be on real investment in real things that produce real wealth.... “Money” should be directed toward jobs rather than home and asset prices....The focus should instead be on supporting the financial and economic systems toward a path of much less dependency on Credit growth and the asset markets."
Randall Forsyth: "If you had bought the S&P just on days following a down day, the cumulative return since the beginning of 2008 would have been 36%. If you had only held the S&P on days following an up day, you would have lost 58%. (This ignores complications such as transaction costs.)
Measured on a daily basis, you would have made 0.28% a day following down days and lost an average of 0.62% on days following up days, a difference of 0.91 percentage points (after rounding.) Since October, this divergence has become more pronounced, according to Goldman. After down days, the average daily return on the S&P was 0.24%; after up days, it was minus 1.06%, a difference of 1.29 percentage points. Since December, the average gain following down days was 1.15% and the average decline after up days was 1.24%, a bigger difference of 1.39%.
Goldman's researchers found that this anomaly was the most pronounced in its records, which go back to the Great Depression. In other words, the trend has not been your friend."
Amidst parent Tribune Co.'s struggle to emerge from bankruptcy protection, the Los Angeles Times said Friday it is cutting 300 positions and will shrink the number of daily sections to four from five.
GE is only a small fraction of a point from making a new 52-week low.
We’re ready to do “whatever it takes” to get prices rising again, says the new U.S. Treasury Secretary, Tim Geithner.
The Obama administration has asked the military's Joint Chiefs of Staff to cut the Pentagon's budget request for the fiscal year 2010 by more than 10 percent -- about $55 billion -- a senior U.S. defense official tells FOX News.
Last year's defense budget was $512 billion.
Zman: "At this point gas storage is only slightly above the five year average and year ago levels and is below 2007 and 2006 levels at this time of the year. Those years saw much higher January gas prices. The perception remains that we will see storage at the end of the withdrawal season well above the seasonal troughs." At $4.40 natural gas is taking into account the most negative storage and production forecasts going forward. I believe the forecasts will prove inaccurate.
Pres. Obama: "No one bill, no matter how comprehensive, can cure what ails our economy."
China's consumer spending rose strongly during the week-long Lunar New Year holiday period which just ended, despite the slowdown in the Chinese economy, the Ministry of Commerce said on Saturday.
Retail sales climbed to 290 billion yuan ($42.5 billion) in the week through Saturday, up 13.8 percent from the equivalent holiday week in 2008, the ministry estimated.
According to Bloomberg, IndyMac Bank and four unidentified U.S. savings and loan associations violated Office of Thrift Supervision policies when revising their capital reports, a disclosure the agency admitted may further erode its reputation.
The agency let IndyMac backdate a capital injection that helped the lender avoid regulatory restrictions, and also found four other cases where lenders failed to follow reporting policies, OTS Director
John Reich wrote yesterday to Treasury Secretary Timothy Geithner, his boss, and four U.S. lawmakers.
“Let me assure you that the OTS takes this matter very seriously, and fully appreciates its potential impact on the reputation of the agency and the perception of the quality of OTS bank supervision,” Reich wrote.
“The recession is going to last through most of 2009, and we’ll be lucky to have growth back at zero by the end of the year,”
Kenneth Rogoff, a Harvard University economics professor, said in a Bloomberg Television interview from Davos, Switzerland, yesterday. Economic growth “will be pretty tepid for a long time.”
Nobel laureate Joseph Stiglitz said any decision by President Barack Obama to establish a so-called bad bank to rid financial companies of toxic assets risks swelling the national debt.That amounts to swapping taxpayers’ “cash for trash,” Stiglitz said in a panel discussion at the World Economic Forum in Davos, Switzerland today. “You shouldn’t chase good money after bad. We’re talking about a national debt that’s very hard to manage.”
“The U.S. needs to show some proof they have a plan to get out of the fiscal problem,” said
Ernesto Zedillo, the former Mexican president who helped steer his country through a financial crisis in 1994. “We, as developing countries, need to know we won’t be crowded out of the capital markets, which is already happening.”
Mr. Zedillo said that Washington, unlike most other countries, had the option of simply printing more money, because
the dollar was a reserve currency for the rest of the world.
Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status.
24/7wallst.com mentioned Macy's may layoff as many as a thousand people next week.
Michael Panzner: "Although some people claim that stocks are "cheap," history suggests that during turbulent times -- e.g., the Great Depression, World War II, the late-1970s stagflation -- P-E ratios fell to single digits, while dividend yields were two to four times higher than they are now. Since most people agree that the current crisis is one of the worst this century, that would imply that we have a long way to go before we reach bottom."
With a third contract offer rejected, some 24,000 refinery workers from the Gulf of Mexico to Montana prepared to head to the picket lines Saturday just hours before an existing labor agreement expires.
The nation's biggest refiner, Valero Energy Corp., said it would shut down some facilities if workers strike. So did European oil company BP PLC.
Shell Oil Co., the lead negotiator for the industry, along with Exxon Mobil Corp., said its refineries would continue to make gasoline, diesel and other fuels using nonunion or replacement workers.
Chemical refiners would also be affected. LyondellBassell Industries said it was bringing in managers from locations not involved in contract negotiations to keep refineries going.
A strike would affect 60 producers, according to Lynne Baker, a spokeswoman for the United Steelworkers, which represents more than 30,000 oil workers nationwide.
Bobby Hollis, chairman of the negotiating committee for the Steelworkers at Valero, said it was doubtful that there would be an agreement by the midnight deadline.
Thursday, union negotiators turned down the most recent offer of a 2.5 percent wage increase for each of the next three years, in addition to changes in medical coverage.
On Jan. 23 Alcoa'S board declared a regular quarterly dividend of 17 cents per share.
The dividend is payable Feb. 25 to shareholders of record Feb. 6. The shares are trading at $7+ or about oone point above their 52-week low which is also a 21-year low. Is the board irresponsible in declaring and paying this dividend? I would think not from a long-term perspective. Is the company going through a tough time? Yes. Will it survive? I think so and therefore it might be worthy of consideration for those willing to look beyond the immediate situation.
Friday, January 30, 2009
The Worst January
1/30/09 The Worst January
Procter & Gamble Co.'s sales fell 3% to $20.4 billion. "We expect the environment will remain difficult and highly volatile - at least in the near term," the company said. Procter & Gamble expects earnings of 78 to 86 cents for its third quarter, compared to the Wall Street target of 85 cents a share.
Honeywell still expects to report 2009 earnings of $3.20 to $3.55 a share. Honeywell International Inc.forecast first-quarter earnings in the range of 50 cents to 60 cents a share, with sales falling 10% to 17% to a range of $7.4 billion to $8 billion. "Our expectation is for a much weaker first half for both earnings and cash while the second half will benefit from much easier comps," said Honeywell Chairman and Chief Executive Dave Cote on a post-earnings call.
Euro-area unemployment hit 8% in December, up from 7.9% in November and 7.2% in Dec. 2007, the Eurostat statistics agency said. Unemployment was last at those levels in late 2006.
Roche Holdings cut its offer for Genentech and took it directly to shareholders after the South San Francisco biotech refused previous buyout approaches from its majority owner. The Swiss firm is now offering $86.50 a share, down from $89, for the 44% of Genentech it doesn't previously own. The new all-cash bid is worth roughly $42.5 billion.
Honda reduced its profit outlook for the full fiscal year ending March 31 to 80 billion yen, which would mark an 87% drop from the previous year's results.
Japan's NEC Corp said on Friday it would cut its groupwide workforce by 20,000 people, and look for ways to exit its industrial liquid-crystal display-related business.
Nippon Steel, the world’s second-largest steelmaker, slashed its full-year profit forecast by a third on Thursday to reflect plunging demand from the hard-hit Japanese motor industry.
The steelmaker’s revised outlook implies a Y50bn operating loss in its fourth quarter to March and marks a reversal for the company after a run of record profits.
Charles Schwab Corp. said Thursday it will eliminate 500 to 600 jobs to prepare for a possible decline in revenue of as much as 20 percent in 2009, due to the continuing market downturn.
The Fed on Thursday said commercial banks averaged nearly $65 billion in daily borrowing over the week ending Wednesday. That was up from $61.6 billion in average daily borrowing logged over the week that ended Jan. 21.
Investment firms drew $32 billion over the past week.
Hitachi forecasts loss of $7.7 billion and will cut 7,000 jobs.
The U.S. economy contracted at a 3.8% seasonally adjusted annual rate in the fourth quarter, the Commerce Department estimated Friday. This is the largest contraction since the first quarter of 1982. Economists surveyed by MarketWatch were expecting a negative 5.5% growth rate in the fourth quarter. The weakness in the fourth quarter was masked by a buildup in inventories, which adds to output even if they are unwanted. Real final sales for domestic product, which excludes inventories, decreased 5.1% in the fourth quarter. This is the biggest drop since 1980. Inflation moderated in the fourth quarter. The core consumer prices increased as a 0.6% rate in the quarter, and rose 2.2% for the year. Headline PCE declined at a record 5.5% in the fourth quarter. For all of 2008, the economy grew at a 1.3% rate, the weakest since 2001.
George Ure: "Port or Tacoma (Washington) container cargo was down 12.3% compared with December a year ago. TEU container load was down 8.5% YTD in December at Portland, Oregon. Inbound container traffic at Long Beach was down 16.2% while outbound was down 22.1%. Across the viaduct, Los Angeles was down 12.83% inbound while outbound was down a shad under 26% Port of Seattle was down 13.6% for the year while December crashed down 27.6%." That sounds a good deal worse than the GDP drop.
Gold for February delivery was last up $15.80, or 1.8%, at $920.90 an ounce. Crude oil for March delivery rose 69 cents, or 1.6%, to $42.12 a barrel in electronic trading on Globex.
U.S. employment costs rose at the slowest pace in at least 26 years in 2008, the Labor Department reported Friday, a sign that rising unemployment was keeping a lid on wages and benefits. Employment costs increased 0.5% in the final three months of the year, down from 0.7% in the third quarter. For the entire year, employment costs increased 2.6%, the lowest since the government began tracking the data in 1982. In the third quarter, wages and salaries for civilian workers increased 0.5%, the slowest in four years. Benefit costs increased 0.4%. For the entire year, wages and salaries for civilian workers increased 2.7% and benefit costs rose 2.2%.
Chevron Corp.said fourth-quarter net income edged up to $4.90 billion, or $2.44 a share, from $4.88 billion, or $2.32 a share in the year-ago period. The latest period included a $600 million gain on an asset exchange transaction as well as a $478 million boost from currency exchange.
Exxon Mobil Corp's fourth-quarter net income fell 33 percent as a steep drop in crude oil prices hurt results.Net profit in the quarter was $7.8 billion, or $1.55 per share, compared with $11.7 billion, or $2.13 per share, in the same period a year earlier.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$334 million in the week ended 1/28/09 with Domestic funds reporting net inflows of $1.433 billion and Non-domestic funds reporting net outflows of -$1.768 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$847 million with Domestic funds reporting net outflows of -$880 million and Non-domestic funds reporting net inflows totaling $34 million;
Exchange Traded (Equity) funds report net inflows of $512 million with the largest flows:
$2.107 Bil to the SPDR Tr Series I fund;
-$1.169 Bil from the iShares MSCI EAFE Index fund;
$774 Mil to the SPDR Gold Shr fund;
-$655 Mil from the iShares MSCI Emerg Mkt Index fund;
Excluding ETF activity International Equity funds report net inflows of $181 million as Emerging Markets funds report net inflows of $49 Mil;
Excluding ETF activity Taxable Bond funds report net inflows totaling $613 million.
Morgan Stanley and Goldman Sachs are considering further cuts in staff, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Morgan Stanley is considering laying off up to 5 percent of its 47,000 employees, while Goldman Sachs is also contemplating further cuts in staff after letting go about 10 percent of its employees late last year, the paper said.
Treasuries are moving into a “full- blown” bear market as global stimulus packages increase demand for capital, according to Citigroup Inc.
“This may sound a bit ridiculous, but we think we have begun a full-blown bear market in fixed income,” wrote
Tom Fitzpatrick, Citigroup’s New York-based chief technical analyst, and London-based strategist Shyam Devani. “The commodity that is going to be the most in demand as far as the eye can see is capital. As a consequence, the cost of capital can only go one way -- up.”
Arch Coal: "It is extremely difficult to forecast 2009 with any precision at this time due to the current state of flux in the economy and in global steam and metallurgical coal markets."
In NYC there will be a reduction of 23,000 jobs through layoffs and attrition. That's more than 7 percent of the city's employees.
Sources say expect fewer cops, firefighters and sanitation workers.
Caterpillar Inc. will cut about 2,110 production jobs at three of its manufacturing facilities in Illinois. The layoffs are in addition to those announced by the company on Jan. 26. At the $30 level, the shares are trading near a 5-year low.
Paccar Inc.said Friday that fourth-quarter earnings fell to $113 million, or 31 cents a share, from $261 million, or 71 cents a share, in the same period a year ago.
Gannett said publishing revenue fell 19% to $1.4 billion, reflecting among other factors a 37% plunge in classified advertising sales.
Allstate Corp.said it would cut 1,000 jobs in its financial services unit over the next two years.
Shelters across the country report that more people are seeking emergency shelter and more are being turned away. In a report published in December, 330 school districts identified the same number or more homeless students in the first few months of the school year than they identified in the entire previous year. Meantime, demand is sharply up at soup kitchens, an indication of deepening hardship and potential homelessness.
“Everything we are seeing is indicating an increase,” says Laurel Weir, policy director at the National Law Center on Homelessness and Poverty. “And homelessness tends to lag the economy. So we’re probably seeing the tip of the iceberg here.”
In the foreclosure crisis, the people being displaced from homes won’t likely be on the street immediately, explains Michael Stoops, director of National Coalition for the Homeless.
The Institute for Supply Management-Chicago said today its business barometer decreased to 33.3, lower than forecast, from 35.1 the prior month.
Brent crude is $47 a barrel versus WTI crude at $43.
Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations plan an unscheduled meeting next month to forge a pact to pool $120 billion of foreign exchange reserves to help defend their currencies.
India, the world’s biggest consumer of sugar, permitted duty free imports of the sweetener for sale domestically to prevent an increase in prices as output slumps.
Abdalla el-Badri, OPEC secretary- general, said $70 to $90 a barrel is a “reasonable” oil price to support investment in new production.
Ford plans to access its entire $10.1-billion line of credit. Ford expects to receive that money Tuesday.
Meanwhile, Ford said it would continue to examine restructuring opportunities and that it wouldn't rule out additional job cuts.
The Reuters/University of Michigan Surveys of Consumers said its final index reading of confidence for January rose to 61.2 from December's 60.1.
At the $14+ level, Pfizer is trading at a 12-year low.
Freddie Mac, the second-largest provider of funding for U.S. home mortgages, on Friday said it would offer leases to borrowers who lose their homes under foreclosure.
Tenants of borrowers will also be offered leases, a feature of a new plan implemented this month by Fannie Mae, according to statements from the two government-controlled companies.
Both extended their suspensions of evictions of borrowers or renters due to foreclosure through Feb. 28.
James “Jes” Staley, head of JPMorgan Chase & Co.’s investment unit, said the $4 trillion money-market fund industry is the “greatest systemic risk” to the financial system that hasn’t been adequately addressed.
“What keeps me up at night most of anything we do at JPMorgan Asset Management is the money-market fund space,” Staley said at a lunch discussion hosted today by Credit Suisse Group AG in Davos, Switzerland. “One of the things that has to come out and get a lot more attention and discussion is how do we take the systemic risk posed by money funds out of the system?”
JPMorgan Asset Management oversees about $500 billion of money-market funds, Staley said. The funds aren’t allowed to set aside capital to protect for investment losses, leaving no “margin for error” against a potential collapse, he said.
“If you’re running a money-fund and all of a sudden you think there may be a slight run or a problem in the credit markets you have to liquefy your portfolio as fast as you possibly can,” he said. “Your margin of error is zero because there’s no shock absorber or capital insurance protecting that.”
March crude ends up 24 cents, or 0.6%, at $41.68 a barrel. Gold for February delivery closed up $22.20, or 2.4%, at $927.30 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest closing level for a front-month contract since July. Natural gas dipped to $4.40 and is having a difficult time finding traction.
Last year China overtook Japan as the largest foreign holder of U.S. government debt and held $681.9 billion in U.S. Treasuries as of November.
Russia's economic growth would be close to zero in 2009 due to the global financial crisis, Russian Deputy Prime Minister and Finance Minister Alexei Kudrin said Friday.
"Our economic growth will most likely be close to zero, and the situation to a great extent will depend on our own measures," Kudrin was quoted by the Itar-Tass news agency as saying in the State Duma, the lower house of parliament.
Russia's budgetary revenues in 2009 could decline from 10.9 trillion rubles (321 billion U.S. dollars) to 6.5 trillion (191.5 billion U.S. dollars) amid the financial meltdown, Kudrin said.
Igor Shuvalov, Russia's first deputy prime minister, said Friday in the State Duma that the country's economic situation will be "fairly harsh" in 2009.
U.S. bank regulators closed small banks in Utah, Florida and Maryland on Friday, bringing the total of U.S. bank failures this year to six.
The Dow Jones Industrial Average finished down 148 points, or 1.8%, at 8,000. For January, the blue-chip index fell 8.8%. The S&P 500 index fell 19 points, or 2.3%, to 825. For the month, the broad index fell 8.6%, its worst performance on record. The Nasdaq Composite lost 31 points, or 2%, to 1,476. The technology heavy index fell 6.4% during the month.
Sears Holdings , which operates Kmart and Sears department stores, laid off 300 corporate workers on Friday.
Dow Chemical shares are trading at $11+ and that's back to where they were in March 1986. Meanwhile, in October and November there was inside buying at twice the present price. One might take a look at this on a risk/reward basis.
Wal-Mart traded at a new 52-week low on Friday. Costco is about 1 1/2 points from the 52-week low. The best retailers are in the dog house.
Procter & Gamble Co.'s sales fell 3% to $20.4 billion. "We expect the environment will remain difficult and highly volatile - at least in the near term," the company said. Procter & Gamble expects earnings of 78 to 86 cents for its third quarter, compared to the Wall Street target of 85 cents a share.
Honeywell still expects to report 2009 earnings of $3.20 to $3.55 a share. Honeywell International Inc.forecast first-quarter earnings in the range of 50 cents to 60 cents a share, with sales falling 10% to 17% to a range of $7.4 billion to $8 billion. "Our expectation is for a much weaker first half for both earnings and cash while the second half will benefit from much easier comps," said Honeywell Chairman and Chief Executive Dave Cote on a post-earnings call.
Euro-area unemployment hit 8% in December, up from 7.9% in November and 7.2% in Dec. 2007, the Eurostat statistics agency said. Unemployment was last at those levels in late 2006.
Roche Holdings cut its offer for Genentech and took it directly to shareholders after the South San Francisco biotech refused previous buyout approaches from its majority owner. The Swiss firm is now offering $86.50 a share, down from $89, for the 44% of Genentech it doesn't previously own. The new all-cash bid is worth roughly $42.5 billion.
Honda reduced its profit outlook for the full fiscal year ending March 31 to 80 billion yen, which would mark an 87% drop from the previous year's results.
Japan's NEC Corp said on Friday it would cut its groupwide workforce by 20,000 people, and look for ways to exit its industrial liquid-crystal display-related business.
Nippon Steel, the world’s second-largest steelmaker, slashed its full-year profit forecast by a third on Thursday to reflect plunging demand from the hard-hit Japanese motor industry.
The steelmaker’s revised outlook implies a Y50bn operating loss in its fourth quarter to March and marks a reversal for the company after a run of record profits.
Charles Schwab Corp. said Thursday it will eliminate 500 to 600 jobs to prepare for a possible decline in revenue of as much as 20 percent in 2009, due to the continuing market downturn.
The Fed on Thursday said commercial banks averaged nearly $65 billion in daily borrowing over the week ending Wednesday. That was up from $61.6 billion in average daily borrowing logged over the week that ended Jan. 21.
Investment firms drew $32 billion over the past week.
Hitachi forecasts loss of $7.7 billion and will cut 7,000 jobs.
The U.S. economy contracted at a 3.8% seasonally adjusted annual rate in the fourth quarter, the Commerce Department estimated Friday. This is the largest contraction since the first quarter of 1982. Economists surveyed by MarketWatch were expecting a negative 5.5% growth rate in the fourth quarter. The weakness in the fourth quarter was masked by a buildup in inventories, which adds to output even if they are unwanted. Real final sales for domestic product, which excludes inventories, decreased 5.1% in the fourth quarter. This is the biggest drop since 1980. Inflation moderated in the fourth quarter. The core consumer prices increased as a 0.6% rate in the quarter, and rose 2.2% for the year. Headline PCE declined at a record 5.5% in the fourth quarter. For all of 2008, the economy grew at a 1.3% rate, the weakest since 2001.
George Ure: "Port or Tacoma (Washington) container cargo was down 12.3% compared with December a year ago. TEU container load was down 8.5% YTD in December at Portland, Oregon. Inbound container traffic at Long Beach was down 16.2% while outbound was down 22.1%. Across the viaduct, Los Angeles was down 12.83% inbound while outbound was down a shad under 26% Port of Seattle was down 13.6% for the year while December crashed down 27.6%." That sounds a good deal worse than the GDP drop.
Gold for February delivery was last up $15.80, or 1.8%, at $920.90 an ounce. Crude oil for March delivery rose 69 cents, or 1.6%, to $42.12 a barrel in electronic trading on Globex.
U.S. employment costs rose at the slowest pace in at least 26 years in 2008, the Labor Department reported Friday, a sign that rising unemployment was keeping a lid on wages and benefits. Employment costs increased 0.5% in the final three months of the year, down from 0.7% in the third quarter. For the entire year, employment costs increased 2.6%, the lowest since the government began tracking the data in 1982. In the third quarter, wages and salaries for civilian workers increased 0.5%, the slowest in four years. Benefit costs increased 0.4%. For the entire year, wages and salaries for civilian workers increased 2.7% and benefit costs rose 2.2%.
Chevron Corp.said fourth-quarter net income edged up to $4.90 billion, or $2.44 a share, from $4.88 billion, or $2.32 a share in the year-ago period. The latest period included a $600 million gain on an asset exchange transaction as well as a $478 million boost from currency exchange.
Exxon Mobil Corp's fourth-quarter net income fell 33 percent as a steep drop in crude oil prices hurt results.Net profit in the quarter was $7.8 billion, or $1.55 per share, compared with $11.7 billion, or $2.13 per share, in the same period a year earlier.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$334 million in the week ended 1/28/09 with Domestic funds reporting net inflows of $1.433 billion and Non-domestic funds reporting net outflows of -$1.768 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$847 million with Domestic funds reporting net outflows of -$880 million and Non-domestic funds reporting net inflows totaling $34 million;
Exchange Traded (Equity) funds report net inflows of $512 million with the largest flows:
$2.107 Bil to the SPDR Tr Series I fund;
-$1.169 Bil from the iShares MSCI EAFE Index fund;
$774 Mil to the SPDR Gold Shr fund;
-$655 Mil from the iShares MSCI Emerg Mkt Index fund;
Excluding ETF activity International Equity funds report net inflows of $181 million as Emerging Markets funds report net inflows of $49 Mil;
Excluding ETF activity Taxable Bond funds report net inflows totaling $613 million.
Morgan Stanley
Morgan Stanley is considering laying off up to 5 percent of its 47,000 employees, while Goldman Sachs is also contemplating further cuts in staff after letting go about 10 percent of its employees late last year, the paper said.
Treasuries are moving into a “full- blown” bear market as global stimulus packages increase demand for capital, according to Citigroup Inc.
“This may sound a bit ridiculous, but we think we have begun a full-blown bear market in fixed income,” wrote
Tom Fitzpatrick, Citigroup’s New York-based chief technical analyst, and London-based strategist Shyam Devani. “The commodity that is going to be the most in demand as far as the eye can see is capital. As a consequence, the cost of capital can only go one way -- up.”
Arch Coal: "It is extremely difficult to forecast 2009 with any precision at this time due to the current state of flux in the economy and in global steam and metallurgical coal markets."
In NYC there will be a reduction of 23,000 jobs through layoffs and attrition. That's more than 7 percent of the city's employees.
Sources say expect fewer cops, firefighters and sanitation workers.
Caterpillar Inc. will cut about 2,110 production jobs at three of its manufacturing facilities in Illinois. The layoffs are in addition to those announced by the company on Jan. 26. At the $30 level, the shares are trading near a 5-year low.
Paccar Inc.said Friday that fourth-quarter earnings fell to $113 million, or 31 cents a share, from $261 million, or 71 cents a share, in the same period a year ago.
Gannett said publishing revenue fell 19% to $1.4 billion, reflecting among other factors a 37% plunge in classified advertising sales.
Allstate Corp.said it would cut 1,000 jobs in its financial services unit over the next two years.
Shelters across the country report that more people are seeking emergency shelter and more are being turned away. In a report published in December, 330 school districts identified the same number or more homeless students in the first few months of the school year than they identified in the entire previous year. Meantime, demand is sharply up at soup kitchens, an indication of deepening hardship and potential homelessness.
“Everything we are seeing is indicating an increase,” says Laurel Weir, policy director at the National Law Center on Homelessness and Poverty. “And homelessness tends to lag the economy. So we’re probably seeing the tip of the iceberg here.”
In the foreclosure crisis, the people being displaced from homes won’t likely be on the street immediately, explains Michael Stoops, director of National Coalition for the Homeless.
The Institute for Supply Management-Chicago said today its business barometer decreased to 33.3, lower than forecast, from 35.1 the prior month.
Brent crude is $47 a barrel versus WTI crude at $43.
Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations plan an unscheduled meeting next month to forge a pact to pool $120 billion of foreign exchange reserves to help defend their currencies.
India, the world’s biggest consumer of sugar, permitted duty free imports of the sweetener for sale domestically to prevent an increase in prices as output slumps.
Abdalla el-Badri, OPEC secretary- general, said $70 to $90 a barrel is a “reasonable” oil price to support investment in new production.
Ford plans to access its entire $10.1-billion line of credit. Ford expects to receive that money Tuesday.
Meanwhile, Ford said it would continue to examine restructuring opportunities and that it wouldn't rule out additional job cuts.
The Reuters/University of Michigan Surveys of Consumers said its final index reading of confidence for January rose to 61.2 from December's 60.1.
At the $14+ level, Pfizer is trading at a 12-year low.
Freddie Mac, the second-largest provider of funding for U.S. home mortgages, on Friday said it would offer leases to borrowers who lose their homes under foreclosure.
Tenants of borrowers will also be offered leases, a feature of a new plan implemented this month by Fannie Mae, according to statements from the two government-controlled companies.
Both extended their suspensions of evictions of borrowers or renters due to foreclosure through Feb. 28.
James “Jes” Staley, head of JPMorgan Chase & Co.’s investment unit, said the $4 trillion money-market fund industry is the “greatest systemic risk” to the financial system that hasn’t been adequately addressed.
“What keeps me up at night most of anything we do at JPMorgan Asset Management is the money-market fund space,” Staley said at a lunch discussion hosted today by Credit Suisse Group AG in Davos, Switzerland. “One of the things that has to come out and get a lot more attention and discussion is how do we take the systemic risk posed by money funds out of the system?”
JPMorgan Asset Management oversees about $500 billion of money-market funds, Staley said. The funds aren’t allowed to set aside capital to protect for investment losses, leaving no “margin for error” against a potential collapse, he said.
“If you’re running a money-fund and all of a sudden you think there may be a slight run or a problem in the credit markets you have to liquefy your portfolio as fast as you possibly can,” he said. “Your margin of error is zero because there’s no shock absorber or capital insurance protecting that.”
March crude ends up 24 cents, or 0.6%, at $41.68 a barrel. Gold for February delivery closed up $22.20, or 2.4%, at $927.30 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest closing level for a front-month contract since July. Natural gas dipped to $4.40 and is having a difficult time finding traction.
Last year China overtook Japan as the largest foreign holder of U.S. government debt and held $681.9 billion in U.S. Treasuries as of November.
Russia's economic growth would be close to zero in 2009 due to the global financial crisis, Russian Deputy Prime Minister and Finance Minister Alexei Kudrin said Friday.
"Our economic growth will most likely be close to zero, and the situation to a great extent will depend on our own measures," Kudrin was quoted by the Itar-Tass news agency as saying in the State Duma, the lower house of parliament.
Russia's budgetary revenues in 2009 could decline from 10.9 trillion rubles (321 billion U.S. dollars) to 6.5 trillion (191.5 billion U.S. dollars) amid the financial meltdown, Kudrin said.
Igor Shuvalov, Russia's first deputy prime minister, said Friday in the State Duma that the country's economic situation will be "fairly harsh" in 2009.
U.S. bank regulators closed small banks in Utah, Florida and Maryland on Friday, bringing the total of U.S. bank failures this year to six.
The Dow Jones Industrial Average finished down 148 points, or 1.8%, at 8,000. For January, the blue-chip index fell 8.8%. The S&P 500 index fell 19 points, or 2.3%, to 825. For the month, the broad index fell 8.6%, its worst performance on record. The Nasdaq Composite lost 31 points, or 2%, to 1,476. The technology heavy index fell 6.4% during the month.
Sears Holdings , which operates Kmart and Sears department stores, laid off 300 corporate workers on Friday.
Dow Chemical shares are trading at $11+ and that's back to where they were in March 1986. Meanwhile, in October and November there was inside buying at twice the present price. One might take a look at this on a risk/reward basis.
Wal-Mart traded at a new 52-week low on Friday. Costco is about 1 1/2 points from the 52-week low. The best retailers are in the dog house.
Thursday, January 29, 2009
The Market Economy
1/29/08 The Market Economy
Vaclav Havel, the First President of the Czech Republic: "I have always known that the only economic system that works is a market economy. This is the only natural economy, the only kind that makes sense, the only one that leads to prosperity, because it is the only one that reflects the nature of life itself. The essence of life is infinitely and mysteriously multiform, and therefore it cannot be contained or planned for, in its fullness and variability, by any central intelligence."
Continuing jobless claims rose by 159,000 in the week ending Jan. 17 to a seasonally adjusted 4.78 million, the most since the government's records begin in 1967. Meanwhile, the number of new claims for state unemployment benefits rose by 3,000 to a seasonally adjusted 588,000 in the week ending Jan. 24, just 1,000 below a 26-year high for initial claims set a month ago. The four-week average of new claims - which smooth out distortions caused by bad weather, strikes or the timing of holidays - rose by 24,250 to 542,500.
Orders for U.S.-made durable goods sank in December, falling 2.6% on weaker demand for a wide range of products, the Commerce Department reported Thursday. Excluding the 0.6% gain in transportation goods, orders fell 3.6%. Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $1.3 billion or 0.4 percent to $343.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 0.3 percent November increase.
U.S. natural gas inventories fell 186 billion cubic feet in the week ended Jan. 23, the Energy Information Administration reported Thursday. Stocks were 34 billion cubic feet higher than last year at this time and 29 billion cubic feet above the five-year average. Analysts at IHS Global Insight had expected a storage withdrawal of 192 billion cubic feet. After the data, March natural gas rose 7 cents, or 1.6%, to $4.49 per million British thermal units.
Wal-Mart has not participated in the latest rally and is only one point above its 52-week low.
When the best retailer can't generate investor enthusiasm, it's time to sell the group.
Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter and will tap a revolving credit line after the worst annual performance in its 105-year history.
The second-biggest U.S. automaker posted a full-year loss of $14.6 billion, eclipsing 2006’s record of $12.6 billion.
Cash in Ford’s automotive business fell to $13.4 billion, the company said today in a statement.
“These losses are not sustainable,”
Sean Egan, president of bond ratings firm Egan-Jones Ratings Co., said in a Bloomberg Television interview. “Even if they draw down their lines and the money from the government, it begs the question of whether or not the overall situation is going to improve.”
3M forecast 2009 earnings of $4.30 to $4.70 per share, down from a previous range of $4.50 to $4.95, based on an assumption that organic sales volume would fall 5 percent to 9 percent. This is still quite optimistic in my view.
Two days after Pfizer said it would buy Wyeth for $68 billion, Pfizer shares have fallen to nearly a 12-year low and some shareholders are questioning the wisdom of the planned union.
U.S. housing prices are likely to decline another 6 to 7 percent in 2009, with no signs yet of bottoming out, a leading economist said Thursday.
Ken Rosen, a University of California at Berkeley professor of real estate economics, said housing prices are about three-quarters through their slide, and should reach a cumulative decline of 23 percent to 24 percent this year.
"I think the sign of the bottom will be when housing price decline slows down, instead of 1 to 2 percent decline a month, to half a percent," Rosen said on the sidelines of the World Economic Forum in Davos.
Rob Hanna: "Days that gap higher, don’t fill their gap and close above their open have a tendency to pull back over the next several days."
Brett Steenbarger: "
One pattern that I've seen play out on multiple timeframes is that price breakouts that lead to a surge in the number of stocks making new highs tend to be followed by consolidation/reversal in the short run, but continuation thereafter. This sets up useful trades in which initial pullbacks following these surges can make nice entry points for subsequent upside moves.
Going back to late 2002, when I first began collecting these data (N = 1572), I looked at what happened in the S&P 500 Index (SPY) following days in which the number of stocks making new 20-day highs across the NYSE, NASDAQ, and ASE exceeded 1500 (N = 213). Interestingly, ten days after the surge in new highs, SPY averaged a gain of only .05% (122 up, 91 down), compared with an average gain of .08% (787 up, 572 down) for the remainder of the sample.
When we go out 30 days, however, we find that the surge in new highs leads to an average gain of .85% (143 up, 70 down), compared with an average rise of only .13% for the rest of the sample (801 up, 598 down). The surge in strength does not necessarily result in significant near-term gains, but it is common to see momentum carry the market higher in the longer run. In a future post, I will illustrate this pattern at intraday time frames. The links below illustrate the importance of understanding momentum dynamics in markets."
Robert McHugh: "Use any rallies to raise cash, and prepare for the coming Depression and cataclysmic market collapse."
Even with a recent rally, the VIX hovers around the 42 level.
Robert W. Baird analyst Kenneth Muth today repeated his Neutral rating on Cisco, but cut his FY ‘09 estimate to $1.28 from $1.33; for FY 2010 he goes to $1.32, from $1.37.
Eric Savitz: " Drive down U.S. highway 101 in Santa Clara, and you can’t miss a pair of twin eight-story towers on the east side of the road, one festooned with a big purple Yahoo logo. Want to rent them?
According to
the Silicon Valley/San Jose Business Journal, Yahoo is exiting almost 400,000 square feet of space in the buildings, which are owned by the Sobrato Organization, and offering to sublet the Class A space for $1 a square foot. Yahoo plans to vacate the space in May; the lease on the buildings expires in July 2010.
Yahoo plans to consolidate its offices on its main campus in Sunnyvale.
Nintendo cut its forecast on Wii unit sales for the year by 1 million consoles to 26.5 million.
Jabil will cut its workforce by about 3,000 in response to the global economic slowdown. The company has about 85,000 employees worldwide.
Global air traffic for cargo plunged nearly 23% in December from the same month last year, according to data released Thursday by the International Air Transport Association. "The 22.6% free fall in global cargo is unprecedented and shocking," said Giovanni Bisignani, IATA's director general and chief executive. "There is no clearer description of the slowdown in world trade." Air cargo carries 35% of the value of goods traded internationally, the trade group said. For the full year, cargo traffic fell 4% while passenger traffic rose 1.6%. For December, international passenger traffic fell 4.6% compared to a year ago.
Some 30,000 refinery workers that operate half of the U.S. fuel-making capacity could go on strike if they fail to renew a union contract that expires early Sunday, union officials said on Thursday.
Talks between the United Steelworkers union and the lead refiner negotiator, Shell Oil Co , continued on Thursday, Shell and USW representatives said, though both declined to disclose details of the talks.
The union rejected a third contract offer from Shell, according to a memo from USW International Vice President Gary Beevers posted on a local union website.
More than a million public sector workers in France staged a massive strike on Thursday to protest President Nicolas Sarkozy's handling of the economic crisis, the AFP news agency reported. Twenty-three percent of France's five million public sector workers participated in the strike, which caused some disruption to the Paris transport network, according to the report. More than a third of teachers, a quarter of postal, telecoms and state electricity workers and 15% of air traffic controllers were on strike, according to the AFP.
the Dow Jones Industrial Average declined 227.64 points, or 2.7%, to 8,147.81. Snapping a four-day advance, the S&P 500 dropped 28.99 points, or 3.3%, to 845.1, while the Nasdaq Composite shed 50.5 points, or 3.2%, to 1,507.84.
Crude for March delivery fell 72 cents, or 1.7%, to end at $41.44 a barrel on the New York Mercantile Exchange. Gold for February delivery ended up $16.90, or 1.9%, at $905.10 an ounce on the Comex division of the New York Mercantile Exchange.
Amazon.com Inc on Thursday posted a higher-than-expected quarterly profit and an 18 percent revenue rise, helped by market share gains during the holiday season, and shares of the online retailer rose 8 percent.
Black & Decker Corp.said it was laying off 1,200 workers amid slumping profits and offered a grim outlook for its 2009 performance. The shares dropped $8 to the $31 level. The company said it expected first-quarter sales to drop about 20 percent on weakening demand, retail inventory adjustments and the stronger U.S. dollar.
Cessna plans on 2,000 more job cuts.
Textron's report: "Looking to 2009, the company expects the economy will continue to impact results at TFC and result in lower volumes at Cessna and Industrial. On this basis, the company estimates 2009 revenues will be approximately $12.5 billion, free cash flow from continuing operations of the manufacturing group will be about $450 million and earnings per share from continuing operations will be in the range of $1.00 to $1.50, excluding expected pre-tax restructuring charges of about $40 million.
Campbell continued, “Our priorities this year are clear – maximize cash flow and operating performance in our manufacturing businesses and aggressively convert finance receivables at TFC to cash. We’re aligning production to match expected lower commercial demand, reducing non-essential capital spending, freezing salaries, curtailing most discretionary spending, including reductions in non-critical product development, and reducing working capital.”The stock dropped $4+ to the $9 level.
Japan's Nikkei was down 3.1%, while Australia's S&P/ASX 200 fell 1.1%, South Korea's Composite was off 0.8%, and New Zealand's NZX-50 fell 0.4%.
Japan said Friday its industrial production fell by a record margin, with exporters showing a hit to demand. The government reported production fell a seasonally adjusted 9.6% in December from November, breaking the previous month's record decline of 8.5%
Walt Disney Co plans to lay off 200 people at its ABC division, a Disney executive familiar with the situation said, underscoring the media industry's struggle with sliding ad sales.
The media giant intends to also freeze 200 vacant jobs, resulting in an overall, 5-percent reduction of ABC's workforce of about 6,500 to 7,000, said the Disney source, who declined to be identified because the company had not announced the cuts publicly.
.
Vaclav Havel, the First President of the Czech Republic: "I have always known that the only economic system that works is a market economy. This is the only natural economy, the only kind that makes sense, the only one that leads to prosperity, because it is the only one that reflects the nature of life itself. The essence of life is infinitely and mysteriously multiform, and therefore it cannot be contained or planned for, in its fullness and variability, by any central intelligence."
Continuing jobless claims rose by 159,000 in the week ending Jan. 17 to a seasonally adjusted 4.78 million, the most since the government's records begin in 1967. Meanwhile, the number of new claims for state unemployment benefits rose by 3,000 to a seasonally adjusted 588,000 in the week ending Jan. 24, just 1,000 below a 26-year high for initial claims set a month ago. The four-week average of new claims - which smooth out distortions caused by bad weather, strikes or the timing of holidays - rose by 24,250 to 542,500.
Orders for U.S.-made durable goods sank in December, falling 2.6% on weaker demand for a wide range of products, the Commerce Department reported Thursday. Excluding the 0.6% gain in transportation goods, orders fell 3.6%. Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $1.3 billion or 0.4 percent to $343.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 0.3 percent November increase.
U.S. natural gas inventories fell 186 billion cubic feet in the week ended Jan. 23, the Energy Information Administration reported Thursday. Stocks were 34 billion cubic feet higher than last year at this time and 29 billion cubic feet above the five-year average. Analysts at IHS Global Insight had expected a storage withdrawal of 192 billion cubic feet. After the data, March natural gas rose 7 cents, or 1.6%, to $4.49 per million British thermal units.
Wal-Mart has not participated in the latest rally and is only one point above its 52-week low.
When the best retailer can't generate investor enthusiasm, it's time to sell the group.
Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter and will tap a revolving credit line after the worst annual performance in its 105-year history.
The second-biggest U.S. automaker posted a full-year loss of $14.6 billion, eclipsing 2006’s record of $12.6 billion.
Cash in Ford’s automotive business fell to $13.4 billion, the company said today in a statement.
“These losses are not sustainable,”
Sean Egan, president of bond ratings firm Egan-Jones Ratings Co., said in a Bloomberg Television interview. “Even if they draw down their lines and the money from the government, it begs the question of whether or not the overall situation is going to improve.”
3M forecast 2009 earnings of $4.30 to $4.70 per share, down from a previous range of $4.50 to $4.95, based on an assumption that organic sales volume would fall 5 percent to 9 percent. This is still quite optimistic in my view.
Two days after Pfizer said it would buy Wyeth for $68 billion, Pfizer shares have fallen to nearly a 12-year low and some shareholders are questioning the wisdom of the planned union.
U.S. housing prices are likely to decline another 6 to 7 percent in 2009, with no signs yet of bottoming out, a leading economist said Thursday.
Ken Rosen, a University of California at Berkeley professor of real estate economics, said housing prices are about three-quarters through their slide, and should reach a cumulative decline of 23 percent to 24 percent this year.
"I think the sign of the bottom will be when housing price decline slows down, instead of 1 to 2 percent decline a month, to half a percent," Rosen said on the sidelines of the World Economic Forum in Davos.
Rob Hanna: "Days that gap higher, don’t fill their gap and close above their open have a tendency to pull back over the next several days."
Brett Steenbarger: "
One pattern that I've seen play out on multiple timeframes is that price breakouts that lead to a surge in the number of stocks making new highs tend to be followed by consolidation/reversal in the short run, but continuation thereafter. This sets up useful trades in which initial pullbacks following these surges can make nice entry points for subsequent upside moves.
Going back to late 2002, when I first began collecting these data (N = 1572), I looked at what happened in the S&P 500 Index (SPY) following days in which the number of stocks making new 20-day highs across the NYSE, NASDAQ, and ASE exceeded 1500 (N = 213). Interestingly, ten days after the surge in new highs, SPY averaged a gain of only .05% (122 up, 91 down), compared with an average gain of .08% (787 up, 572 down) for the remainder of the sample.
When we go out 30 days, however, we find that the surge in new highs leads to an average gain of .85% (143 up, 70 down), compared with an average rise of only .13% for the rest of the sample (801 up, 598 down). The surge in strength does not necessarily result in significant near-term gains, but it is common to see momentum carry the market higher in the longer run. In a future post, I will illustrate this pattern at intraday time frames. The links below illustrate the importance of understanding momentum dynamics in markets."
Robert McHugh: "Use any rallies to raise cash, and prepare for the coming Depression and cataclysmic market collapse."
Even with a recent rally, the VIX hovers around the 42 level.
Robert W. Baird analyst Kenneth Muth today repeated his Neutral rating on Cisco, but cut his FY ‘09 estimate to $1.28 from $1.33; for FY 2010 he goes to $1.32, from $1.37.
Eric Savitz: " Drive down U.S. highway 101 in Santa Clara, and you can’t miss a pair of twin eight-story towers on the east side of the road, one festooned with a big purple Yahoo logo. Want to rent them?
According to
the Silicon Valley/San Jose Business Journal, Yahoo is exiting almost 400,000 square feet of space in the buildings, which are owned by the Sobrato Organization, and offering to sublet the Class A space for $1 a square foot. Yahoo plans to vacate the space in May; the lease on the buildings expires in July 2010.
Yahoo plans to consolidate its offices on its main campus in Sunnyvale.
Nintendo cut its forecast on Wii unit sales for the year by 1 million consoles to 26.5 million.
Jabil will cut its workforce by about 3,000 in response to the global economic slowdown. The company has about 85,000 employees worldwide.
Global air traffic for cargo plunged nearly 23% in December from the same month last year, according to data released Thursday by the International Air Transport Association. "The 22.6% free fall in global cargo is unprecedented and shocking," said Giovanni Bisignani, IATA's director general and chief executive. "There is no clearer description of the slowdown in world trade." Air cargo carries 35% of the value of goods traded internationally, the trade group said. For the full year, cargo traffic fell 4% while passenger traffic rose 1.6%. For December, international passenger traffic fell 4.6% compared to a year ago.
Some 30,000 refinery workers that operate half of the U.S. fuel-making capacity could go on strike if they fail to renew a union contract that expires early Sunday, union officials said on Thursday.
Talks between the United Steelworkers union and the lead refiner negotiator, Shell Oil Co , continued on Thursday, Shell and USW representatives said, though both declined to disclose details of the talks.
The union rejected a third contract offer from Shell, according to a memo from USW International Vice President Gary Beevers posted on a local union website.
More than a million public sector workers in France staged a massive strike on Thursday to protest President Nicolas Sarkozy's handling of the economic crisis, the AFP news agency reported. Twenty-three percent of France's five million public sector workers participated in the strike, which caused some disruption to the Paris transport network, according to the report. More than a third of teachers, a quarter of postal, telecoms and state electricity workers and 15% of air traffic controllers were on strike, according to the AFP.
the Dow Jones Industrial Average declined 227.64 points, or 2.7%, to 8,147.81. Snapping a four-day advance, the S&P 500 dropped 28.99 points, or 3.3%, to 845.1, while the Nasdaq Composite shed 50.5 points, or 3.2%, to 1,507.84.
Crude for March delivery fell 72 cents, or 1.7%, to end at $41.44 a barrel on the New York Mercantile Exchange. Gold for February delivery ended up $16.90, or 1.9%, at $905.10 an ounce on the Comex division of the New York Mercantile Exchange.
Amazon.com Inc on Thursday posted a higher-than-expected quarterly profit and an 18 percent revenue rise, helped by market share gains during the holiday season, and shares of the online retailer rose 8 percent.
Black & Decker Corp.said it was laying off 1,200 workers amid slumping profits and offered a grim outlook for its 2009 performance. The shares dropped $8 to the $31 level. The company said it expected first-quarter sales to drop about 20 percent on weakening demand, retail inventory adjustments and the stronger U.S. dollar.
Cessna plans on 2,000 more job cuts.
Textron's report: "Looking to 2009, the company expects the economy will continue to impact results at TFC and result in lower volumes at Cessna and Industrial. On this basis, the company estimates 2009 revenues will be approximately $12.5 billion, free cash flow from continuing operations of the manufacturing group will be about $450 million and earnings per share from continuing operations will be in the range of $1.00 to $1.50, excluding expected pre-tax restructuring charges of about $40 million.
Campbell continued, “Our priorities this year are clear – maximize cash flow and operating performance in our manufacturing businesses and aggressively convert finance receivables at TFC to cash. We’re aligning production to match expected lower commercial demand, reducing non-essential capital spending, freezing salaries, curtailing most discretionary spending, including reductions in non-critical product development, and reducing working capital.”The stock dropped $4+ to the $9 level.
Japan's Nikkei was down 3.1%, while Australia's S&P/ASX 200 fell 1.1%, South Korea's Composite was off 0.8%, and New Zealand's NZX-50 fell 0.4%.
Japan said Friday its industrial production fell by a record margin, with exporters showing a hit to demand. The government reported production fell a seasonally adjusted 9.6% in December from November, breaking the previous month's record decline of 8.5%
Walt Disney Co plans to lay off 200 people at its ABC division, a Disney executive familiar with the situation said, underscoring the media industry's struggle with sliding ad sales.
The media giant intends to also freeze 200 vacant jobs, resulting in an overall, 5-percent reduction of ABC's workforce of about 6,500 to 7,000, said the Disney source, who declined to be identified because the company had not announced the cuts publicly.
.
Insolvent
1/28/08 Insolvent
Nouriel Roubini: "The US Banking System is Insolvent"
Karl Marx: “Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take on more and more expensive debt, until their debt becomes unbearable. The unpaid debt will lead to the bankruptcy of all banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism.”
Bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion, the IMF said in a
report released today, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report.
U.S. gross domestic product will contract 1.6 percent, Japan’s will shrink 2.6 percent and the euro area will decline 2 percent in 2009, the IMF said. The fund in November foresaw a 0.7 percent U.S. contraction, with declines of 0.2 percent in Japan and 0.5 percent in the euro zone.
Leading the Group of Seven nations in contraction this year will be the U.K. economy, which the IMF predicted would slide 2.8 percent, compared with the fund’s forecast in November for a 1.3 percent drop.
The Oil Drum: "Our imports from non-OPEC countries have dropped from over 8 million barrels a day to less than 7 million barrels a day. Given what we know about decline rates, this situation is likely to get worse."
Boeing, which lost out to rival Airbus in the race for plane orders last year, reported a quarterly loss of $56 million, or 8 cents per share, compared with a profit of $1.03 billion, or $1.36 per share, a year earlier.
The loss was caused by the 58-day strike by Boeing's machinists union, which straddled the third and fourth quarters, cutting plane deliveries in both. Extra costs on the new 747, which has been set back by design changes and lack of engineering resources, also hurt results.
For 2009, Boeing forecast earnings of $5.05 to $5.35 per share. Analysts were expecting $5.74, on average.
Gold for February delivery was last down $10.30, or 1.2%, at $889.20 an ounce in early North America electronic trading.
Wells Fargo & Co.said it swung to a fourth-quarter loss of $2.55 billion, or 79 cents a share, compared with net income of $1.36 billion, or 41 cents a share, in the year-ago period.
Excluding one-time costs, AT&T said it would have earned 64 cents a share, compared with 71 cents a share, a year earlier. AT&T was forecast to earn an adjusted 65 cents a share on revenue of $31.4 billion, according to the average projection of analysts surveyed by FactSet Research. For the current fiscal year, AT&T said revenue would continue to expand despite a U.S. recession, but the company plans to cut annual capital expenditures by 10% to 15%.
Becton, Dickinson and Co raised its guidance for fiscal 2009, saying it expects earnings from continuing operations in the year to increase between 9% and 11% from from $4.46 in 2008.
Baker Hughes Inc., Chairman, President and Chief Executive Chad C. Deaton, in a statement on Wednesday said "The global economic recession, lower oil prices, and reduced access to credit will negatively impact customer spending globally."
The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up, Bloomberg News reported, citing two people familiar with the matter. The news helped lift U.S. stock futures and European stock markets.
About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007. Jumbo mortgages average about $750,000 and can run as high as $5 million or more.
Richard Daughty: "The national debt right now, in January 2009, is $10,635 billion, whereas last year at this exact time it was only $9,210 billion, a difference of a sizzling $1,435 billion! A trillion and a half dollars more debt in twelve months, yet these guys say that it is only $454.8 billion!"
ConocoPhillips revenue fell 18 percent to $44.5 billion from $52.7 billion a year ago.
Adjusted earnings for the fourth quarter were $1.9 billion, or $1.28 a share, versus $4.1 billion, or $2.55 a share, a year ago.
Global oil prices need to stay above $40 a barrel to keep deep offshore oil production and exploration economically viable in Nigeria, the head of the country's state-run oil firm said on Tuesday. "Deepwater developments in the region, particularly in the ultra-deep, require a sustainable crude price in excess of $40/bbl to support continued production, exploration and development," Mohammed Sanusi Barkindo, head of the NNPC, said at an offshore oil and gas conference.
Credit Suisse cut their estimates for Coca-Cola for 2009 to $3.11 for 2009.
Terra Industries Inc.said Wednesday that its board unanimously rejected an unsolicited acquisition bid from CF Industries Holdings Inc., a deal that would have joined two major producers of nitrogen and phosphate. Earlier this month, CF Industries made an all-stock offer for Terra valued at about $2 billion. In Wednesday's statement, Terra said that the bid "substantially undervalues" the company.
Trends Journal forecasts 2009 economic depression.
Projections by the International Labour Organization, a UN agency, on global employment trends predict that on a worst-case scenario, recorded unemployment could rise by more than 50m from baseline 2007 levels to 230m or 7.1 per cent of the world’s labour force by the end of 2009.
Alan Reynolds: "House Democrats propose to spend $550 billion of their two-year, $825 billion "stimulus bill" (the rest of it being tax cuts). Most of the spending is unlikely to be timely or temporary. Strangely, most of it is targeted toward sectors of the economy where unemployment is the lowest.
The December unemployment rate was only 2.3% for government workers and 3.8% in education and health. Unemployment rates in manufacturing and construction, by contrast, were 8.3% and 15.2% respectively. Yet 39% of the $550 billion in the bill would go to state and local governments. Another 17.3% would go to health and education -- sectors where relatively secure government jobs are also prevalent.
If the intent of the plan is to alleviate unemployment, why spend over half of the money on sectors where unemployment is lowest? Another 22.5% of the $550 billion would go to social programs, such as expanding food stamps and extending benefits for the unemployed and subsidizing their health insurance.
After subtracting what House Democrats hope to spend on government payrolls, health, education and welfare, only a fifth of the original $550 billion is left for notoriously slow infrastructure projects, such as rebuilding highways and the electricity grid....Spending $214.5 billion to create or save 330,400 government jobs implies that taxpayers are being asked to spend $646,214 per job."
Net private capital flows to emerging markets will likely decline sharply this year, slowing to $165 billion compared with an estimated $466 billion in 2008, according to the Institute of International Finance.
Forty-eight states lost nonfarm payroll jobs last month, according the Labor Department. The exceptions were Louisiana, which is benefiting from the recovery from Hurricane Katrina, and the District of Columbia, which is cushioned by federal spending. Employment was unchanged in Oklahoma.
The recession has gone "from a housing-led downturn to an everything-led downturn," said Christopher Thornberg, a principal at Beacon Economics, a research firm in Los Angeles.
The Energy Information Administration reported Wednesday that crude stockpiles rose 6.2 million barrels in the week ended Jan. 23, much higher than the 3.4 million gain expected by analysts surveyed by Platts. Gasoline inventories, however, showed a surprise decline, and distillate fuel inventories fell less than expected. After the data, crude for March delivery was almost flat at $41.52 a barrel on the New York Mercantile Exchange. It was down less than 1% before the data.
Chinese Premier Wen Jiabao said Wednesday the pervasive global financial meltdown has had a "big impact" on his country, adding that growth would slow this year.
In a speech to business leaders, politicians and experts at the annual World Economic Forum, he said the crisis was posing challenges including "rising unemployment in urban areas."
Wen said the robustness of China's economy, which grew at 9 percent last year, could help restore confidence in global markets and stem the financial crisis.
"China remains on the track of steady and fast development," he said, adding that in the fourth quarter, growth slowed to 6.8 percent.
For 2009, he said China set a target of 8 percent economic growth for 2009.
"We think that is obtainable," he said, but it called it "a tall order."
Boeing Co. said Wednesday it plans to slash about 10,000 jobs across its businesses, compared to a prior announcement of 4,500 job cuts from its commercial airplane unit. "The global economy continues to weaken and is adversely affecting air traffic growth and financing," said Chairman and Chief Executive Jim McNerney in a post-earnings call with analysts. "We are also expecting pressure on defense budgets in light of the economic recovery and financial rescue packages." Job reductions will primarily occur in areas that support productivity and infrastructure, driven through a combination of attrition, retirements, cuts in some contracted labor, and layoffs.
With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.
Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan. It's unclear how many homeowners would benefit.
George Soros: ""The storm that started in the financial system has now spread, in a very big way, to the real economy," he said. "It has fallen off the cliff following the Lehman thing."
He believes still more must be done to turn the slowing of decline into real economic growth, including the reorganization of the mortgage system, and skillful handling of the international repercussions."
Faced with dwindling mail volume and rising costs, the post office was $2.8 billion in the red last year. "If current trends continue, we could experience a net loss of $6 billion or more this fiscal year," Potter said in testimony for a Senate Homeland Security and Governmental Affairs subcommittee.
Total mail volume was 202 billion items last year, over 9 billion less than the year before, the largest single volume drop in history.
Ryland's new orders fell 65.3% to 554 units and its inventory of unsold homes stood at 639 units at the end of December, down 22.4% from Dec. 31, 2007.
Meritage Homes Corp. home closing revenue decreased to $386.6 million from $615.6 million a year ago. Number of homes closed fell 30% to 1,488 units while sales orders were down 52% to 500 units.
Starbucks, battered by slower store traffic and restructuring charges, reported Wednesday its quarterly net profit dropped 69% and announced plans to shut down 300 more coffee shops and lay off 6,700 workers.
The Dow Jones Industrial Average climbed 201.72 points, or 2.5%, to 8,375.45. Up for a fourth consecutive session, the S&P 500 advanced 28.37 points, or 3.4%, to 874.08. The Nasdaq Composite added 53.44 points, or 3.6%, to finish at 1,558.34.
The Reserve Bank of New Zealand Thursday cut its benchmark rate to 3.5% from 5%, a deeper cut than the 100 basis points expected by many economists.
Gold for February delivery was down $1.90, or 0.2%, at $886.60 an ounce. Crude for March delivery was last up $1.91, or 4.6%, at $43.49 a barrel on the New York Mercantile Exchange.
The Federal Reserve said Wednesday that it would keep intact its current policy of record-low interest rates. In a statement following its meeting, the central bank also said it's prepared to buy U.S. Treasurys if warranted. The Fed said the economy was weakening, but that it still expected a recovery in the second half. The Fed said it was worried about deflation. The Fed said it would continue to pump money into the various credit channels. Richmond Fed president Jeffrey Lacker dissented. He wanted the central bank to buy Treasurys instead of other assets.
Qualcomm, the biggest maker of chips for cell phones, cut its outlook for full-year 2009 revenue to a range of $9.3 billion to $9.8 billion from its previous estimate of $10.2 billion to $10.8 billion, an estimate that was already well below earlier analysts expectations.
Time Warner online unit AOL is cutting 700 employees due to the weak economy and the ensuing falloff in advertising revenue, but also because of recent structural changes made to refocus the once-mighty service
Michael Pento: "The problem with inflation is real. The Fed Funds rate is currently at an historic low of 0-.25%. Meanwhile, the increase in the monetary base (high powered money) is unprecedented in history and now stands at nearly $2 trillion dollars, up from just $850 billion in September of 2008. The rate of increase is now over 300% annually. The monetary aggregates (M1, M2, M3 and MZM) have increased by double digit rates on a year-over- year basis and the fiscal 2009 deficit should eclipse $2 trillion for the first time in U.S. history.
This level of debt should lead to an even further expansion of the money supply and cause the rate of inflation to increase significantly. Yet, as the free market demands rates to rise, they must be kept under wrap by an intervening Central Bank that is forced into printing money to keep them low.
But creating inflation in order to keep interest rates low is a diametrically opposing force that cannot coexist for any extended period of time. On the losing side will be government, as free market forces will ultimately prevail in the long run.
So not only can gold appreciate in a rising rate environment, it now seems clear that any increase in rates is a long way off (if the Fed has its way). Thus, the only two bull markets that exist at this juncture are gold and U.S. debt, a condition that cannot last for long either. Investors who believe in the free market have to believe that one of those assets is in a bubble and that one is undervalued, perhaps dramatically so.
Figuring out which one is which seems simple enough to this observer."
3M's fourth-quarter profit fell 37% to $536 million, or 77 cents a share, from $851 million, or $1.17 a share in the fourth quarter of 2007.
AutoNation Chairman and Chief Executive Mike Jackson said in a statement that "Automotive retail sales collapsed from one day to the next as credit for our customers was withdrawn from the market. This panic continued to erode consumer confidence and accelerated the decline in the U.S. economy and the auto retail market."
For the fourth quarter, Ford said it lost $5.9 billion, or $2.46 a share amid a sharp decline in vehicle demand, compared to a loss of $2.8 billion, or $1.33 a share in the year-ago period. Revenue fell sharply to $29.2 billion from $44.1 billion. Ford said it finished 2008 with $24 billion in available automotive liquidity, including $13.4 billion in gross cash.
Eastman Kodak Co.will reduce its worldwide employment by 3,500 to 4,500 positions during 2009, or approximately 14% to 18% of its total workforce.
The National Credit Union Administration will guarantee tens of billions of dollars in uninsured deposits at corporate credit unions in a move to protect the industry from mortgage-related losses, The Wall Street Journal reported late Wednesday on its Web site.
Cabot to cut 500 jobs.
Ford Motor Credit to shed1200 employees.
.
Nouriel Roubini: "The US Banking System is Insolvent"
Karl Marx: “Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take on more and more expensive debt, until their debt becomes unbearable. The unpaid debt will lead to the bankruptcy of all banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism.”
Bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion, the IMF said in a
report released today, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report.
U.S. gross domestic product will contract 1.6 percent, Japan’s will shrink 2.6 percent and the euro area will decline 2 percent in 2009, the IMF said. The fund in November foresaw a 0.7 percent U.S. contraction, with declines of 0.2 percent in Japan and 0.5 percent in the euro zone.
Leading the Group of Seven nations in contraction this year will be the U.K. economy, which the IMF predicted would slide 2.8 percent, compared with the fund’s forecast in November for a 1.3 percent drop.
The Oil Drum: "Our imports from non-OPEC countries have dropped from over 8 million barrels a day to less than 7 million barrels a day. Given what we know about decline rates, this situation is likely to get worse."
Boeing, which lost out to rival Airbus in the race for plane orders last year, reported a quarterly loss of $56 million, or 8 cents per share, compared with a profit of $1.03 billion, or $1.36 per share, a year earlier.
The loss was caused by the 58-day strike by Boeing's machinists union, which straddled the third and fourth quarters, cutting plane deliveries in both. Extra costs on the new 747, which has been set back by design changes and lack of engineering resources, also hurt results.
For 2009, Boeing forecast earnings of $5.05 to $5.35 per share. Analysts were expecting $5.74, on average.
Gold for February delivery was last down $10.30, or 1.2%, at $889.20 an ounce in early North America electronic trading.
Wells Fargo & Co.said it swung to a fourth-quarter loss of $2.55 billion, or 79 cents a share, compared with net income of $1.36 billion, or 41 cents a share, in the year-ago period.
Excluding one-time costs, AT&T said it would have earned 64 cents a share, compared with 71 cents a share, a year earlier. AT&T was forecast to earn an adjusted 65 cents a share on revenue of $31.4 billion, according to the average projection of analysts surveyed by FactSet Research. For the current fiscal year, AT&T said revenue would continue to expand despite a U.S. recession, but the company plans to cut annual capital expenditures by 10% to 15%.
Becton, Dickinson and Co raised its guidance for fiscal 2009, saying it expects earnings from continuing operations in the year to increase between 9% and 11% from from $4.46 in 2008.
Baker Hughes Inc., Chairman, President and Chief Executive Chad C. Deaton, in a statement on Wednesday said "The global economic recession, lower oil prices, and reduced access to credit will negatively impact customer spending globally."
The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up, Bloomberg News reported, citing two people familiar with the matter. The news helped lift U.S. stock futures and European stock markets.
About 6.9% of prime “jumbo” loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007. Jumbo mortgages average about $750,000 and can run as high as $5 million or more.
Richard Daughty: "The national debt right now, in January 2009, is $10,635 billion, whereas last year at this exact time it was only $9,210 billion, a difference of a sizzling $1,435 billion! A trillion and a half dollars more debt in twelve months, yet these guys say that it is only $454.8 billion!"
ConocoPhillips revenue fell 18 percent to $44.5 billion from $52.7 billion a year ago.
Adjusted earnings for the fourth quarter were $1.9 billion, or $1.28 a share, versus $4.1 billion, or $2.55 a share, a year ago.
Global oil prices need to stay above $40 a barrel to keep deep offshore oil production and exploration economically viable in Nigeria, the head of the country's state-run oil firm said on Tuesday. "Deepwater developments in the region, particularly in the ultra-deep, require a sustainable crude price in excess of $40/bbl to support continued production, exploration and development," Mohammed Sanusi Barkindo, head of the NNPC, said at an offshore oil and gas conference.
Credit Suisse cut their estimates for Coca-Cola for 2009 to $3.11 for 2009.
Terra Industries Inc.said Wednesday that its board unanimously rejected an unsolicited acquisition bid from CF Industries Holdings Inc., a deal that would have joined two major producers of nitrogen and phosphate. Earlier this month, CF Industries made an all-stock offer for Terra valued at about $2 billion. In Wednesday's statement, Terra said that the bid "substantially undervalues" the company.
Trends Journal forecasts 2009 economic depression.
Projections by the International Labour Organization, a UN agency, on global employment trends predict that on a worst-case scenario, recorded unemployment could rise by more than 50m from baseline 2007 levels to 230m or 7.1 per cent of the world’s labour force by the end of 2009.
Alan Reynolds: "House Democrats propose to spend $550 billion of their two-year, $825 billion "stimulus bill" (the rest of it being tax cuts). Most of the spending is unlikely to be timely or temporary. Strangely, most of it is targeted toward sectors of the economy where unemployment is the lowest.
The December unemployment rate was only 2.3% for government workers and 3.8% in education and health. Unemployment rates in manufacturing and construction, by contrast, were 8.3% and 15.2% respectively. Yet 39% of the $550 billion in the bill would go to state and local governments. Another 17.3% would go to health and education -- sectors where relatively secure government jobs are also prevalent.
If the intent of the plan is to alleviate unemployment, why spend over half of the money on sectors where unemployment is lowest? Another 22.5% of the $550 billion would go to social programs, such as expanding food stamps and extending benefits for the unemployed and subsidizing their health insurance.
After subtracting what House Democrats hope to spend on government payrolls, health, education and welfare, only a fifth of the original $550 billion is left for notoriously slow infrastructure projects, such as rebuilding highways and the electricity grid....Spending $214.5 billion to create or save 330,400 government jobs implies that taxpayers are being asked to spend $646,214 per job."
Net private capital flows to emerging markets will likely decline sharply this year, slowing to $165 billion compared with an estimated $466 billion in 2008, according to the Institute of International Finance.
Forty-eight states lost nonfarm payroll jobs last month, according the Labor Department. The exceptions were Louisiana, which is benefiting from the recovery from Hurricane Katrina, and the District of Columbia, which is cushioned by federal spending. Employment was unchanged in Oklahoma.
The recession has gone "from a housing-led downturn to an everything-led downturn," said Christopher Thornberg, a principal at Beacon Economics, a research firm in Los Angeles.
The Energy Information Administration reported Wednesday that crude stockpiles rose 6.2 million barrels in the week ended Jan. 23, much higher than the 3.4 million gain expected by analysts surveyed by Platts. Gasoline inventories, however, showed a surprise decline, and distillate fuel inventories fell less than expected. After the data, crude for March delivery was almost flat at $41.52 a barrel on the New York Mercantile Exchange. It was down less than 1% before the data.
Chinese Premier Wen Jiabao said Wednesday the pervasive global financial meltdown has had a "big impact" on his country, adding that growth would slow this year.
In a speech to business leaders, politicians and experts at the annual World Economic Forum, he said the crisis was posing challenges including "rising unemployment in urban areas."
Wen said the robustness of China's economy, which grew at 9 percent last year, could help restore confidence in global markets and stem the financial crisis.
"China remains on the track of steady and fast development," he said, adding that in the fourth quarter, growth slowed to 6.8 percent.
For 2009, he said China set a target of 8 percent economic growth for 2009.
"We think that is obtainable," he said, but it called it "a tall order."
Boeing Co. said Wednesday it plans to slash about 10,000 jobs across its businesses, compared to a prior announcement of 4,500 job cuts from its commercial airplane unit. "The global economy continues to weaken and is adversely affecting air traffic growth and financing," said Chairman and Chief Executive Jim McNerney in a post-earnings call with analysts. "We are also expecting pressure on defense budgets in light of the economic recovery and financial rescue packages." Job reductions will primarily occur in areas that support productivity and infrastructure, driven through a combination of attrition, retirements, cuts in some contracted labor, and layoffs.
With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes.
Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan. It's unclear how many homeowners would benefit.
George Soros: ""The storm that started in the financial system has now spread, in a very big way, to the real economy," he said. "It has fallen off the cliff following the Lehman thing."
He believes still more must be done to turn the slowing of decline into real economic growth, including the reorganization of the mortgage system, and skillful handling of the international repercussions."
Faced with dwindling mail volume and rising costs, the post office was $2.8 billion in the red last year. "If current trends continue, we could experience a net loss of $6 billion or more this fiscal year," Potter said in testimony for a Senate Homeland Security and Governmental Affairs subcommittee.
Total mail volume was 202 billion items last year, over 9 billion less than the year before, the largest single volume drop in history.
Ryland's new orders fell 65.3% to 554 units and its inventory of unsold homes stood at 639 units at the end of December, down 22.4% from Dec. 31, 2007.
Meritage Homes Corp. home closing revenue decreased to $386.6 million from $615.6 million a year ago. Number of homes closed fell 30% to 1,488 units while sales orders were down 52% to 500 units.
Starbucks, battered by slower store traffic and restructuring charges, reported Wednesday its quarterly net profit dropped 69% and announced plans to shut down 300 more coffee shops and lay off 6,700 workers.
The Dow Jones Industrial Average climbed 201.72 points, or 2.5%, to 8,375.45. Up for a fourth consecutive session, the S&P 500 advanced 28.37 points, or 3.4%, to 874.08. The Nasdaq Composite added 53.44 points, or 3.6%, to finish at 1,558.34.
The Reserve Bank of New Zealand Thursday cut its benchmark rate to 3.5% from 5%, a deeper cut than the 100 basis points expected by many economists.
Gold for February delivery was down $1.90, or 0.2%, at $886.60 an ounce. Crude for March delivery was last up $1.91, or 4.6%, at $43.49 a barrel on the New York Mercantile Exchange.
The Federal Reserve said Wednesday that it would keep intact its current policy of record-low interest rates. In a statement following its meeting, the central bank also said it's prepared to buy U.S. Treasurys if warranted. The Fed said the economy was weakening, but that it still expected a recovery in the second half. The Fed said it was worried about deflation. The Fed said it would continue to pump money into the various credit channels. Richmond Fed president Jeffrey Lacker dissented. He wanted the central bank to buy Treasurys instead of other assets.
Qualcomm, the biggest maker of chips for cell phones, cut its outlook for full-year 2009 revenue to a range of $9.3 billion to $9.8 billion from its previous estimate of $10.2 billion to $10.8 billion, an estimate that was already well below earlier analysts expectations.
Time Warner online unit AOL is cutting 700 employees due to the weak economy and the ensuing falloff in advertising revenue, but also because of recent structural changes made to refocus the once-mighty service
Michael Pento: "The problem with inflation is real. The Fed Funds rate is currently at an historic low of 0-.25%. Meanwhile, the increase in the monetary base (high powered money) is unprecedented in history and now stands at nearly $2 trillion dollars, up from just $850 billion in September of 2008. The rate of increase is now over 300% annually. The monetary aggregates (M1, M2, M3 and MZM) have increased by double digit rates on a year-over- year basis and the fiscal 2009 deficit should eclipse $2 trillion for the first time in U.S. history.
This level of debt should lead to an even further expansion of the money supply and cause the rate of inflation to increase significantly. Yet, as the free market demands rates to rise, they must be kept under wrap by an intervening Central Bank that is forced into printing money to keep them low.
But creating inflation in order to keep interest rates low is a diametrically opposing force that cannot coexist for any extended period of time. On the losing side will be government, as free market forces will ultimately prevail in the long run.
So not only can gold appreciate in a rising rate environment, it now seems clear that any increase in rates is a long way off (if the Fed has its way). Thus, the only two bull markets that exist at this juncture are gold and U.S. debt, a condition that cannot last for long either. Investors who believe in the free market have to believe that one of those assets is in a bubble and that one is undervalued, perhaps dramatically so.
Figuring out which one is which seems simple enough to this observer."
3M's fourth-quarter profit fell 37% to $536 million, or 77 cents a share, from $851 million, or $1.17 a share in the fourth quarter of 2007.
AutoNation Chairman and Chief Executive Mike Jackson said in a statement that "Automotive retail sales collapsed from one day to the next as credit for our customers was withdrawn from the market. This panic continued to erode consumer confidence and accelerated the decline in the U.S. economy and the auto retail market."
For the fourth quarter, Ford said it lost $5.9 billion, or $2.46 a share amid a sharp decline in vehicle demand, compared to a loss of $2.8 billion, or $1.33 a share in the year-ago period. Revenue fell sharply to $29.2 billion from $44.1 billion. Ford said it finished 2008 with $24 billion in available automotive liquidity, including $13.4 billion in gross cash.
Eastman Kodak Co.will reduce its worldwide employment by 3,500 to 4,500 positions during 2009, or approximately 14% to 18% of its total workforce.
The National Credit Union Administration will guarantee tens of billions of dollars in uninsured deposits at corporate credit unions in a move to protect the industry from mortgage-related losses, The Wall Street Journal reported late Wednesday on its Web site.
Cabot to cut 500 jobs.
Ford Motor Credit to shed1200 employees.
.
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