11/20/09 Negative Rates
Dell, which is battling a slump that's caused it to lose its ranking as the world's No. 2 personal computer maker, reported third-quarter earnings of 23 cents a share excluding one-time items. Last year this time, Dell earned 37 cents a share.
Sales for the most recent quarter fell to $12.9 billion, compared with $15.16 billion last year.
Rates turned negative on some bills maturing in January, according to Sarah Sobeck, a Treasury trader at primary dealer Jefferies & Co. The three-month bill rate was at 0.0051 percent, the least this year. Six-month bill rates dropped to the lowest since 1958. Treasury bills turned negative last December for the first time since the government began selling them in 1929 as investors scrambled to preserve principal and were willing to sacrifice returns in the months following the collapse of Lehman Brothers Holdings Inc.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the “systemic risk” of new asset bubbles is rising with the Fed keeping interest rates at record lows.
Treasury prices rallied again on Friday, sending yields on 2-year notes to the lowest this year, as investors step away from riskier assets to lock in profits as 2009 winds down amid increasing concerns that the U.S. economy won't rebound from the recession as quickly or strongly as markets had accounted for. Yields on 2-year notes, which move inversely to prices, fell 3 basis points to 0.68%.
Randall W. Forsyth: "What a two-year yield of 0.70% (where the note ended Thursday) means is that the market believes short-term rates won't rise much for a long time. The 12-month Treasury rate is just 0.25%, so the market implicitly expects the 12-month rate a year hence would be 1.15%, all else being equal. (The sum of 0.25% and 1.15% averages out to 0.70% over two years.)....What's incongruous is the confluence of miniscule short-term Treasury yields with the stock market sitting at its highest perch in the past 13-plus months. If the recovery and the bull market are for real, who would settle for such niggardly note yields? Especially if the Treasury is about to auction another $118 billion of notes next week?
Part of the reason relates to diminishing expectations of the Federal Reserve to raise interest rates any time soon. In a speech Wednesday, St. Louis Fed President James Bullard pointed out that the federal-funds rate target typically isn't raised for 2 ½-to-three years after the end of a recession....One in 10 mortgage borrowers were at least one payment behind schedule in the third quarter, according to the latest numbers released Thursday by the Mortgage Bankers Association. Add in the nearly 4.5% of mortgage borrowers who are actually in foreclosure and you find that one in seven American homeowners with mortgages are in serious trouble.
Given this level of debt distress, the likelihood of the Fed raising rates dwindles to insignificance until well into 2010 and perhaps beyond.
And this may be like the proverbial butterfly flapping its wings on the other side of the globe, but the opposition Labour Party in New Zealand this week withdrew its support for its central bank's policy of targeting inflation as its touchstone....that means the Fed will likely maintain a rock-bottom fed-funds target as long as the debt deflation exemplified by mortgage delinquencies foreclosures persists. That's the message of the two-year Treasury note. And it isn't a bullish one."
More than 14 percent of borrowers were in trouble on their mortgage during the third quarter, a new record, according to an industry survey released Thursday, which also suggests that the foreclosure rate is likely not to peak until next year as unemployment rates continue to rise.
Unemployment remains a big driver of the problem, according to the Mortgage Bankers Association, which conducts the survey. Those with delinquent loans now include a growing portion of people traditionally considered creditworthy and people whose mortgages are insured by the Federal Housing Administration.
"The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve," said Jay Brinkmann, the group's chief economist.
According to Bloomberg, Asian policy makers are studying capital controls to limit “hot money” inflows that may stoke asset bubbles and force their currencies to appreciate.
Officials from India, South Korea and Indonesia are among those expressing concern over overseas capital stoking stock and real estate prices. Indonesia’s central bank is “seriously” studying a limit on inflows to short-term bills, Senior Deputy Governor Darmin Nasution said yesterday. Taiwan last week banned international investors from placing funds in time deposits.
Global commodity demand will have a steady recovery in the first half next year, with China leading consumption, according to Macquarie Securities Group.
China, the world’s largest consumer of metals, accounted for about 50 percent of global commodity demand this year, up from about a third a year ago, analyst Jim Lennon said today at a conference in Hong Kong. Oil prices may reach $80 a barrel next year, oil economist Jan Stuart said at the same conference.
Bay Area home prices rose nearly 7 percent last month from September as foreclosures comprised a smaller percentage of sales and the higher-end market saw a modest increase in activity.
Analysts caution that while the numbers may show the housing market moving toward a more traditional model - with fewer distressed properties and bargain-basement buyers - they must be taken in the context of historic price declines.
The median price paid for all new and resale houses and condos rose to $390,000, up 6.8 percent in October from $365,000 in September, according to numbers crunched by MDA DataQuick, a San Diego real estate research firm.
The prices were up 4 percent from $375,000 in October 2008 and represented the first year-over-year gains in nearly two years.
However, last month's median price was still 41.4 percent below the $665,000 peak in June and July 2007.
"The median number is bouncing around a little bit because the pendulum is still swinging back to normal territory from a very unusual market where there have been abnormally high levels of distressed properties," said DataQuick analyst Andrew LePage.
Foreclosure resales made up 31.9 percent of all October resale activity in the nine-county Bay Area, according to DataQuick numbers. That was down from 32.3 percent in September and 44 percent in October 2008. Foreclosure resales peaked at 52 percent of Bay Area resales in February.
Higher-end counties, including Marin, San Francisco, Santa Clara and San Mateo, comprised 42.2 percent of October sales, up from 35.3 percent a year ago.
Consumers can send up to $200 anywhere in the U.S., or internationally, at a Wal-Mart MoneyCenter or customer service desk for $7. (It used to cost $11.) The transaction can be completed without a bank account or credit card, and Wal-Mart says funds are available in 10 minutes.
To send $200 from Los Angeles to Mexico, Western Union charges $14.99 for an immediate transfer and $9.99 for a next-day transfer, according to the company's website.
Valero Energy said it's shutting down its refinery in Delaware City, Del. in a move that will eliminate 550 jobs.
D.R. Horton Inc , the No. 2 U.S. homebuilder, reported a narrower fourth-quarter loss but missed analysts' expectations, sending its shares down almost 7 percent in premarket trading.
ZeroHedge: "Are the dominoes about to start falling? From Morgan Stanley's London desk:
Ukrainian Railway defaulted on a Barclays bond. They have another, government guaranteed obligation with DB. If DB accelerates the payment & IF it is then not paid, it will count as a government default."
David Rosenberg: “Money supply will increase, but money velocity will not. We are getting asked repeatedly these days how it is that the government debt creation we are about to see is not going to be inflationary. After all, aren’t we going to see a boom in the money supply? Well, we’re sure that the money supply is going to increase, but at the same time, we are going to see the turnover rate of that money, or what is called money velocity, decline.”
Ilya Spivak: "With the unemployment level set to continue climbing well into next year, there is little reason to expect shell-shocked Americans to resume borrowing in earnest any time soon. This suggests that the fear of runaway inflation that has fueled the breakneck rise in gold has been more than a little overstated and hints that a meaningful correction is likely in the months ahead as disappointing CPI figures undermine the premise behind current bullish momentum."
According to AMG Data, for the week ending Nov. 18, Equity Fund Inflows $2.8 Bil; Taxable Bond Fund Inflows $4.5 Bil
xETFs - Equity Fund Inflows $450 Mil; Taxable Bond Fund Inflows $3.8 Bil
San Francisco Mayor Gavin Newsom Thursday asked the heads of all city departments to trim their budgets by 20 percent, and prepare to cut an additional 10 percent, after his office projected a $522.2 million general fund deficit for the coming fiscal year.
The Dow Jones industrials were off a modest 14 points to 10,318. The Standard & Poor's 500 Index was down 4 points to 1,091, and the Nasdaq Composite Index was off 11 points to 2,146.
Friday, November 20, 2009
Thursday, November 19, 2009
More Layoffs
11/19/09 More Layoffs
The Federal Housing Administration, the agency that insures home purchases made with down payments as small as 3.5 percent, may create another lending crisis, Toll Brothers Inc. Chief Executive Officer Robert Toll said.
“Yesterday’s subprime is today’s FHA,” Toll said today at a New York conference for builders sponsored by UBS AG. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.” Toll Brothers is largest U.S. luxury homes builder.
The FHA’s insurance reserve ratio fell to 0.53 percent, the lowest level in history, and more steps are needed to shore up the agency that guarantees one of every five single family loans, Housing and Urban Development Secretary Shaun Donovan said Nov. 12.
While the insurance fund’s capital ratio is at an all-time low, Donovan said those who say FHA is the next subprime- mortgage crisis are “dead wrong.”
AOL Inc. said Thursday that it has told workers of a proposed restructuring plan that may include cutting about a third of its staff, according to a filing with the Securities and Exchange Commission. The Internet unit of Time Warner Inc. is slated to be spun off Dec. 9.
Sweden's central bank on Thursday announced the cancellation of an auction of loans in U.S. dollars scheduled for Dec. 8, citing a lack of demand for its recent dollar auctions. The facility for providing dollar loans, which was established in Oct. 2008, will be terminated, the Riksbank said. Financial market conditions have improved over the last six months, the bank said. "Access to credits in U.S. dollars has increased at the same time as the cost of these has decreased. This has contributed towards decreased interest in the Riksbank's U.S. dollar loans," the bank said. The Riksbank, however, said it was prepared to establish a new credit facility in dollars if needed.
Recovery still too timid to halt rising unemployment, says OECD Economic Outlook.
According to the National Retail Federation's
most recent survey found that on average, holiday shoppers plan to spend $139.91 on gift cards this year, a 5% drop from $147.33 last year. Total spending on gift cards is expected to reach $23.63 billion.
In another sign of the times, recipients can expect gift cards with lower monetary values. The average value per card this year will be $39.80, down from $40.54 last year, according to the survey, which polled 8,692 consumers from Nov. 3 to 10.
Daily Reckoning: " This year, “almost 47% of households in the US currently have zero or negative federal tax liability,” according to Mint. For a nation struggling financially that’s a mighty large group to exempt from pitching in. Still, that leaves another 53 percent of households to pick up the slack… or so one would think.
In actuality, that’s not how the tax cookie crumbles. Mint has put together a graphic showing that 5 percent of taxpayers are paying about 60.6 percent of all taxes. And, as lopsided as that already sounds, the tax situation is likely to get even worse as the nation continues to bury itself in debt."
Contrarian Questions: How many bearish on gold? How many bullish on the dollar and natural gas? How many believe interest rates in the U.S. will remain at record low levels? How many believe the U.S. government is too big to fail? How many believe Social Security and Medicare are safe for the next 5 years? How many believe the government can pay back the principal on the national debt?
C. Wright Mills: "Freedom is not merely the opportunity to do as one pleases; neither is it merely the opportunity to choose between set alternatives. Freedom is, first of all, the chance to formulate the available choices, to argue over them -- and then, the opportunity to choose."
In the can you believe this shit category? The Federal Reserve's lender of last resort authority would be limited to $4 trillion, according to a provision approved by a key congressional committee on Thursday. "It's good to tell the American people that while the lenders of last resort's authority is enormous it is limited," said Rep. Brad Sherman, D-Calif., the measure's sponsor.
Maybe castration is a viable alternative for Sherman.
The Philly Fed index improved to 16.7 from 11.5. The new orders improved to 14.8 and the shipments indexes rose to 15.7. The employment index increased to negative 0.5%, showing continued, but smaller job losses.
Job losses caused more Americans to fall behind on their mortgage payments in the third quarter, leading to a record 14.41% of loans in foreclosure or with at least one payment past due, the Mortgage Bankers Association's chief economist said on Thursday. The delinquency rate for mortgage loans on one- to four-unit residential properties rose to a seasonally adjusted 9.64% of all loans outstanding at the end of the third quarter, up from 9.24% in the second quarter and 6.99% a year ago, according to the MBA's quarterly delinquency survey. The delinquency rate includes loans at least one payment past due but not yet in foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47%, up from 4.3% in the second quarter and 2.97% a year ago. Both delinquencies and foreclosures hit their highest levels in the history of the survey.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the “systemic risk” of new asset bubbles is rising with the Federal Reserve keeping interest rates at record lows.
“The Fed is trying to reflate the U.S. economy,” Gross wrote in his December investment outlook posted on the company’s Website today. “The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher- risk bonds or stocks.”
U.S. natural gas inventories rose 20 billion cubic feet in the week ended Nov. 13, the Energy Information Administration reported Thursday. That's largely in line with analysts' expectations. At 3,833 billion cubic feet, stocks were 347 billion cubic feet higher than last year at this time and 419 billion cubic feet above the five-year average. After the data, December natural gas futures lost 1% to $4.211 per million British thermal units.
Two bankruptcy reorganizations and the mass closing of stores and warehouses during the past decade could not save the parent company of the P&C Foods supermarkets chain.
Syracuse-based The Penn Traffic Co. has filed for bankruptcy for the third time in 10 years. This time, it plans to sell all or most of its assets, consisting mainly of 79 supermarkets in four states, by Jan. 10.
Penn Traffic made the announcement Wednesday afternoon, days after troubling flares were sent up to investors and customers in the form of missed loan payments and empty store shelves. The company made the filing in federal bankruptcy court in Wilmington, Del.
Penn Traffic plans to continue to operate its stores under court protection from its creditors while it seeks a buyer. It might already have a buyer in mind, considering it has locked in a date. “We intend to continue to work closely with our vendor partners to provide the fresh products and good value that our customers have come to expect from our stores,” said Gregory J. Young, Penn Traffic’s president and chief executive officer.
Microsoft Corp.said it sold twice as many copies of Windows 7 than previous versions of its operating system during the same time frame, the Wall Street Journal reported Thursday in its online edition. Windows 7, the latest version of Microsoft's operating system, has received favorable reviews and is considered to be better than its predecessor, Vista.
Applied Materials. plans to cut about 10-12 percent of its workforce.The company plans to cut 1,300 to 1,500 positions worldwide in the next 18 months and streamline its supply chain.
New Era Cap Co. plans to sharply reduce its manufacturing operations in the United States and will decide whether to keep or close its plant in Derby, sources familiar with the situation said.
New Era will cut its number of U.S. manufacturing plants from three to one, and will close one of its distribution centers, sources said.
When contacted for comment, New Era released a statment saying it will shut a production plant in Jackson, Ala., likely in the first quarter of next year.
New Era said it would meet with representatives of the Communications Workers of America to determine which one of its two other U.S. plants, in Derby and Demopolis, Ala., it will keep open. The one selected for closing is projected to be shut down in the second quarter of next year.
The Derby production plant has about 300 employees, including some now on layoff.
New Era also plans to close a distribution center in Mobile, Ala., in the second quarter of 2010.
"This is a very difficult decision for us but in the face of significantly reduced consumer demand, we feel we have no option but to restructure our manufacturing operations," the company said in its statement. "There is simply not enough consumer demand to support three manufacturing plants in the U.S."
New Era was founded locally in 1920. In 2006, it shifted its corporate headquarters to downtown Buffalo, into a site that also houses its flagship retail store.
The Dow Jones Industrial Average lost 93.87 points, or 0.9%, at 10,332.44. The S&P 500 Index dropped 14.9 points, or 1.3%, at 1,094.90, while the tech-laden Nasdaq Composite Index declined 36.32 points, or 1.7%, at 2,156.82.
A key congressional committee approved legislation on Thursday that would allow for government audits of Federal Reserve monetary policy as well as how much the central bank has lent and will lend to specific banks in response to the financial crisis, despite major opposition from the central bank. The measure, introduced by Rep. Ron Paul, R-Texas, has the support of 309 members of Congress. Better late than never!
The Federal Housing Administration, the agency that insures home purchases made with down payments as small as 3.5 percent, may create another lending crisis, Toll Brothers Inc. Chief Executive Officer Robert Toll said.
“Yesterday’s subprime is today’s FHA,” Toll said today at a New York conference for builders sponsored by UBS AG. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.” Toll Brothers is largest U.S. luxury homes builder.
The FHA’s insurance reserve ratio fell to 0.53 percent, the lowest level in history, and more steps are needed to shore up the agency that guarantees one of every five single family loans, Housing and Urban Development Secretary Shaun Donovan said Nov. 12.
While the insurance fund’s capital ratio is at an all-time low, Donovan said those who say FHA is the next subprime- mortgage crisis are “dead wrong.”
AOL Inc. said Thursday that it has told workers of a proposed restructuring plan that may include cutting about a third of its staff, according to a filing with the Securities and Exchange Commission. The Internet unit of Time Warner Inc. is slated to be spun off Dec. 9.
Sweden's central bank on Thursday announced the cancellation of an auction of loans in U.S. dollars scheduled for Dec. 8, citing a lack of demand for its recent dollar auctions. The facility for providing dollar loans, which was established in Oct. 2008, will be terminated, the Riksbank said. Financial market conditions have improved over the last six months, the bank said. "Access to credits in U.S. dollars has increased at the same time as the cost of these has decreased. This has contributed towards decreased interest in the Riksbank's U.S. dollar loans," the bank said. The Riksbank, however, said it was prepared to establish a new credit facility in dollars if needed.
Recovery still too timid to halt rising unemployment, says OECD Economic Outlook.
According to the National Retail Federation's
most recent survey found that on average, holiday shoppers plan to spend $139.91 on gift cards this year, a 5% drop from $147.33 last year. Total spending on gift cards is expected to reach $23.63 billion.
In another sign of the times, recipients can expect gift cards with lower monetary values. The average value per card this year will be $39.80, down from $40.54 last year, according to the survey, which polled 8,692 consumers from Nov. 3 to 10.
Daily Reckoning: " This year, “almost 47% of households in the US currently have zero or negative federal tax liability,” according to Mint. For a nation struggling financially that’s a mighty large group to exempt from pitching in. Still, that leaves another 53 percent of households to pick up the slack… or so one would think.
In actuality, that’s not how the tax cookie crumbles. Mint has put together a graphic showing that 5 percent of taxpayers are paying about 60.6 percent of all taxes. And, as lopsided as that already sounds, the tax situation is likely to get even worse as the nation continues to bury itself in debt."
Contrarian Questions: How many bearish on gold? How many bullish on the dollar and natural gas? How many believe interest rates in the U.S. will remain at record low levels? How many believe the U.S. government is too big to fail? How many believe Social Security and Medicare are safe for the next 5 years? How many believe the government can pay back the principal on the national debt?
C. Wright Mills: "Freedom is not merely the opportunity to do as one pleases; neither is it merely the opportunity to choose between set alternatives. Freedom is, first of all, the chance to formulate the available choices, to argue over them -- and then, the opportunity to choose."
In the can you believe this shit category? The Federal Reserve's lender of last resort authority would be limited to $4 trillion, according to a provision approved by a key congressional committee on Thursday. "It's good to tell the American people that while the lenders of last resort's authority is enormous it is limited," said Rep. Brad Sherman, D-Calif., the measure's sponsor.
Maybe castration is a viable alternative for Sherman.
The Philly Fed index improved to 16.7 from 11.5. The new orders improved to 14.8 and the shipments indexes rose to 15.7. The employment index increased to negative 0.5%, showing continued, but smaller job losses.
Job losses caused more Americans to fall behind on their mortgage payments in the third quarter, leading to a record 14.41% of loans in foreclosure or with at least one payment past due, the Mortgage Bankers Association's chief economist said on Thursday. The delinquency rate for mortgage loans on one- to four-unit residential properties rose to a seasonally adjusted 9.64% of all loans outstanding at the end of the third quarter, up from 9.24% in the second quarter and 6.99% a year ago, according to the MBA's quarterly delinquency survey. The delinquency rate includes loans at least one payment past due but not yet in foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47%, up from 4.3% in the second quarter and 2.97% a year ago. Both delinquencies and foreclosures hit their highest levels in the history of the survey.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the “systemic risk” of new asset bubbles is rising with the Federal Reserve keeping interest rates at record lows.
“The Fed is trying to reflate the U.S. economy,” Gross wrote in his December investment outlook posted on the company’s Website today. “The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher- risk bonds or stocks.”
U.S. natural gas inventories rose 20 billion cubic feet in the week ended Nov. 13, the Energy Information Administration reported Thursday. That's largely in line with analysts' expectations. At 3,833 billion cubic feet, stocks were 347 billion cubic feet higher than last year at this time and 419 billion cubic feet above the five-year average. After the data, December natural gas futures lost 1% to $4.211 per million British thermal units.
Two bankruptcy reorganizations and the mass closing of stores and warehouses during the past decade could not save the parent company of the P&C Foods supermarkets chain.
Syracuse-based The Penn Traffic Co. has filed for bankruptcy for the third time in 10 years. This time, it plans to sell all or most of its assets, consisting mainly of 79 supermarkets in four states, by Jan. 10.
Penn Traffic made the announcement Wednesday afternoon, days after troubling flares were sent up to investors and customers in the form of missed loan payments and empty store shelves. The company made the filing in federal bankruptcy court in Wilmington, Del.
Penn Traffic plans to continue to operate its stores under court protection from its creditors while it seeks a buyer. It might already have a buyer in mind, considering it has locked in a date. “We intend to continue to work closely with our vendor partners to provide the fresh products and good value that our customers have come to expect from our stores,” said Gregory J. Young, Penn Traffic’s president and chief executive officer.
Microsoft Corp.said it sold twice as many copies of Windows 7 than previous versions of its operating system during the same time frame, the Wall Street Journal reported Thursday in its online edition. Windows 7, the latest version of Microsoft's operating system, has received favorable reviews and is considered to be better than its predecessor, Vista.
Applied Materials. plans to cut about 10-12 percent of its workforce.The company plans to cut 1,300 to 1,500 positions worldwide in the next 18 months and streamline its supply chain.
New Era Cap Co. plans to sharply reduce its manufacturing operations in the United States and will decide whether to keep or close its plant in Derby, sources familiar with the situation said.
New Era will cut its number of U.S. manufacturing plants from three to one, and will close one of its distribution centers, sources said.
When contacted for comment, New Era released a statment saying it will shut a production plant in Jackson, Ala., likely in the first quarter of next year.
New Era said it would meet with representatives of the Communications Workers of America to determine which one of its two other U.S. plants, in Derby and Demopolis, Ala., it will keep open. The one selected for closing is projected to be shut down in the second quarter of next year.
The Derby production plant has about 300 employees, including some now on layoff.
New Era also plans to close a distribution center in Mobile, Ala., in the second quarter of 2010.
"This is a very difficult decision for us but in the face of significantly reduced consumer demand, we feel we have no option but to restructure our manufacturing operations," the company said in its statement. "There is simply not enough consumer demand to support three manufacturing plants in the U.S."
New Era was founded locally in 1920. In 2006, it shifted its corporate headquarters to downtown Buffalo, into a site that also houses its flagship retail store.
The Dow Jones Industrial Average lost 93.87 points, or 0.9%, at 10,332.44. The S&P 500 Index dropped 14.9 points, or 1.3%, at 1,094.90, while the tech-laden Nasdaq Composite Index declined 36.32 points, or 1.7%, at 2,156.82.
A key congressional committee approved legislation on Thursday that would allow for government audits of Federal Reserve monetary policy as well as how much the central bank has lent and will lend to specific banks in response to the financial crisis, despite major opposition from the central bank. The measure, introduced by Rep. Ron Paul, R-Texas, has the support of 309 members of Congress. Better late than never!
Wednesday, November 18, 2009
Home Construction
11/18/09 Home Construction
The number of homes under construction last month fell 3.4 percent to 560,000, the lowest on records dating to 1970.
New construction of U.S. houses fell sharply in October to the lowest level in six months, the Commerce Department estimated Wednesday. Starts fell 10.6% in October to a seasonally adjusted 529,000 annualized units weaker than the 590,000 pace expected by economists surveyed by MarketWatch. This is the lowest level since April. Starts of new single-family homes fell by 6.8% to 476,000 in October, while starts of large apartment units fell 34.6% to 53,000. Building permits, a leading indicator of housing construction, fell 4% to a seasonally adjusted annual rate of 552,000. This is the lowest level of permits since May. That compared to analysts' forecasts for 580,000 units. Compared to the same period a year-ago, building permits fell 24.3 percent.
The inventory of total houses under construction dropped to a record low 560,000 units last month, the department said, while the total number of permits authorized but not yet started tumbled to an all-time low of 93,900 units.
Real average hourly earnings fell 0.1 percent from September to October 2009.
U.S. consumer prices rose a seasonally adjusted 0.3% in October as energy prices increased for the fifth time in six months to offset another rare decline in rents, the Labor Department reported. The consumer price index has fallen 0.2% in the past year. The core CPI - which excludes food and energy prices - rose 0.2% in October, led by higher prices for cars and trucks, due in part to the unwinding of the government's cash-for-clunkers deal. New car prices rose 1.6%, the most in 28 years. Used car prices increased 3.4%. The core CPI is up 1.7% in the past year.
Stocks are overvalued and the US economy is likely to fall back into a recession next year, well-known analyst Meredith Whitney told CNBC.
"I haven't been this bearish in a year," she said in a live interview.
Sol Palha: "Right now we have an extreme development in the natural gas market; natural gas prices have dropped to a multi year low and the oil to natural gas ratio and Gold to natural gas ratio are both trading in the extreme ranges. History illustrates that all extreme moves nearly always produce counter moves in the opposite direction which are just as strong if not stronger....The Oil to the natural gas ratio is now currently at 26 after spiking as high as 29.
The gold to the natural gas ratio is also at an extreme inflection point; we also have multiple trend lines in place here. For the past 3 years, the ratio has traded between the 220-260 ranges so this massive spike up to 400 is definitely a move into the extreme....We are in no way stating that Gold is not a good investment, what we are simply stating is that right now Natural gas could make for a better investment for those seeking a higher rate of return. In May 2008, we stated Gold made for a far better investment than oil when everyone was busy proclaiming oil was going to surge to the 160-200 ranges. We are in the midst of a commodity boom and thus at certain points in time certain commodities will provide a better rate of return than others and that's the point we are trying to make....if we adjust these prices for inflation, natural gas is almost being given away for free. From a long term perspective such extreme developments never last and there is always a turn around. Individuals simply want things to turn around over night and thus in most cases miss the opportunity because they cannot take the pain that goes with waiting. Patience always rewards handsomely, while haste always leads to waste.
Natural gas mounted a very strong short term move up, and so it would be normal for it consolidate and trade sideways before building up energy for the upward phase. From a long term perspective natural gas might have finally put in a multi decade bottom. Its one of the few hard assets that has virtually done nothing in the past 10 years and as such this is a very huge anomaly given that the dollar has shed almost 40% from its 2001 highs."
President Barack Obama’s approval rating has fallen below 50 percent for the first time in polling by Quinnipiac University as U.S. voter discontent grows over the war in Afghanistan.
Obama’s job approval rating fell to 48 percent in the Nov. 9-16 survey of registered voters nationwide by the Hamden, Connecticut-based university, with 42 percent polled saying they disapproved of the job he is doing.
“In politics, symbols matter, and this is not a good symbol for the White House,” Peter Brown, assistant director of the Quinnipiac University Polling Institute, said in a statement.
Improper payments by the U.S. government to people, firms and contractors rose sharply to $98 billion in fiscal 2009 and President Barack Obama plans new rules to clamp down, the White House said Tuesday.
Daily Reckoning: " Here’s a new abbreviation to add to our crisis vernacular: FAS 167
That’s short for Federal Accounting Standards revision 167, effective Jan. 1, 2010. In essence, it’s a new accounting rule that will force financials to bring bad, off-balance sheet assets onto their books… thus a potential trigger for more Wall Street carnage.
“FAS 167 will be a larger and larger issue for the financial markets in the coming months,” explains Dan Amoss, our resident CFA, “and an emerging story in the financial media.
“In short, the banks with large off-balance sheet variable interest rate entity exposures will have to hold more capital against these exposures. So they’re actively going to shrink the potential size of these VIEs, which are used to house things like credit card receivables.
“This coming consolidation of VIEs is likely one reason that banks have been hoarding cash and jacking rates on business credit cards — for creditworthy customers — up to 30% with no advance warning.
“This ultimately means slower formation of new credit, and in many cases — i.e., Citigroup — the outright shrinking of its balance sheet to a degree that starves a credit-addicted U.S. economy.”
Over half the mistakes were made in the Medicare and Medicaid programs, and although some of the deterioration reflected stricter measurement, it also showed the need for healthcare reform, Office of Management and Budget Director Peter Orszag told reporters.
Serious mortgage delinquencies are still rising in the nation – and have jumped above 10% in California, according to a report today from TransUnion.
Economic Disconnect: "Sad Times for the Silverdome
In an example of what happens with monster government run spending projects, the Pontiac Silverdome in Detroit today was sold at auction for $583,000. I did not miss a zero, I swear!:
Silverdome sale price disappoints
Pontiac officials wanted more than $583K for stadium
The Silverdome consumed $55 million dollars to build, and it sells for quite the discount."
Crude supplies dropped by 4.37 million barrels during the week ended Nov. 13, the API said late Tuesday. Analysts polled by Platts expected a rise of 1.2 million barrels.
U.S. crude oil production for October averaged 5.36 million barrels per day, standing at the highest level since 2005, the American Petroleum Institute reported Wednesday. "The October production figures continue to detail the industry's success story in the Gulf of Mexico, particularly the deep waters, as well as the way new technologies have helped bring on new production both offshore and onshore," said API Statistics Manager Ron Planting in a statement.
Crude inventories fell 900,000 barrels in the week ended Nov. 13, the Energy Information Administration reported. Analysts polled by Platts had expected a rise of 1.2 million barrels. Crude imports fell 0.9% to 8.58 million barrels a day, and total petroleum demand rose 1% to 18.5 million barrels a day, the EIA data showed. The data also showed a decline of 1.7 million barrels in gasoline stockpiles and a drop of 300,000 barrels in distillates, which include heating oil and diesel. After the data, December crude rose 1.2% to $80.14 a barrel.
Autodesk said its earnings and revenue both fell from the same period a year ago, and the company also gave a fourth-quarter outlook that could miss analysts' current sales forecasts.
Gold futures up $1.80 to end at $1,141.20 an ounce.
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, hit another 2009 high on Wednesday helped by strong cargo demand.
The index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, rose 5.98 percent or 262 points to 4,643 points, exceeding the previous 2009 peak set on Tuesday and was at its highest since Sept. 23 last year.According to Reuters, Buoyant Chinese demand for iron ore and coal, growing port congestion in China and Australia and tight ship availability have helped drive a rally in recent sessions.
California's top fiscal analyst now thinks the state's gaping budget deficit will expand to nearly $21B next fiscal year, now that several provisions in this summer's plan are falling short on revenue projections.
Aetna said late Wednesday that it is cutting about 625 positions, or roughly 1.75% of its total workforce, and warned that it expects additional cuts in the future.
The Dow Jones Industrial Average lost 11 points, or 0.1%, to end at 10,426.The S&P 500 index fell 0.5 points to 1,109.80. The Nasdaq Composite fell 6 points, or 0.3%, at 2,197.
The number of homes under construction last month fell 3.4 percent to 560,000, the lowest on records dating to 1970.
New construction of U.S. houses fell sharply in October to the lowest level in six months, the Commerce Department estimated Wednesday. Starts fell 10.6% in October to a seasonally adjusted 529,000 annualized units weaker than the 590,000 pace expected by economists surveyed by MarketWatch. This is the lowest level since April. Starts of new single-family homes fell by 6.8% to 476,000 in October, while starts of large apartment units fell 34.6% to 53,000. Building permits, a leading indicator of housing construction, fell 4% to a seasonally adjusted annual rate of 552,000. This is the lowest level of permits since May. That compared to analysts' forecasts for 580,000 units. Compared to the same period a year-ago, building permits fell 24.3 percent.
The inventory of total houses under construction dropped to a record low 560,000 units last month, the department said, while the total number of permits authorized but not yet started tumbled to an all-time low of 93,900 units.
Real average hourly earnings fell 0.1 percent from September to October 2009.
U.S. consumer prices rose a seasonally adjusted 0.3% in October as energy prices increased for the fifth time in six months to offset another rare decline in rents, the Labor Department reported. The consumer price index has fallen 0.2% in the past year. The core CPI - which excludes food and energy prices - rose 0.2% in October, led by higher prices for cars and trucks, due in part to the unwinding of the government's cash-for-clunkers deal. New car prices rose 1.6%, the most in 28 years. Used car prices increased 3.4%. The core CPI is up 1.7% in the past year.
Stocks are overvalued and the US economy is likely to fall back into a recession next year, well-known analyst Meredith Whitney told CNBC.
"I haven't been this bearish in a year," she said in a live interview.
Sol Palha: "Right now we have an extreme development in the natural gas market; natural gas prices have dropped to a multi year low and the oil to natural gas ratio and Gold to natural gas ratio are both trading in the extreme ranges. History illustrates that all extreme moves nearly always produce counter moves in the opposite direction which are just as strong if not stronger....The Oil to the natural gas ratio is now currently at 26 after spiking as high as 29.
The gold to the natural gas ratio is also at an extreme inflection point; we also have multiple trend lines in place here. For the past 3 years, the ratio has traded between the 220-260 ranges so this massive spike up to 400 is definitely a move into the extreme....We are in no way stating that Gold is not a good investment, what we are simply stating is that right now Natural gas could make for a better investment for those seeking a higher rate of return. In May 2008, we stated Gold made for a far better investment than oil when everyone was busy proclaiming oil was going to surge to the 160-200 ranges. We are in the midst of a commodity boom and thus at certain points in time certain commodities will provide a better rate of return than others and that's the point we are trying to make....if we adjust these prices for inflation, natural gas is almost being given away for free. From a long term perspective such extreme developments never last and there is always a turn around. Individuals simply want things to turn around over night and thus in most cases miss the opportunity because they cannot take the pain that goes with waiting. Patience always rewards handsomely, while haste always leads to waste.
Natural gas mounted a very strong short term move up, and so it would be normal for it consolidate and trade sideways before building up energy for the upward phase. From a long term perspective natural gas might have finally put in a multi decade bottom. Its one of the few hard assets that has virtually done nothing in the past 10 years and as such this is a very huge anomaly given that the dollar has shed almost 40% from its 2001 highs."
President Barack Obama’s approval rating has fallen below 50 percent for the first time in polling by Quinnipiac University as U.S. voter discontent grows over the war in Afghanistan.
Obama’s job approval rating fell to 48 percent in the Nov. 9-16 survey of registered voters nationwide by the Hamden, Connecticut-based university, with 42 percent polled saying they disapproved of the job he is doing.
“In politics, symbols matter, and this is not a good symbol for the White House,” Peter Brown, assistant director of the Quinnipiac University Polling Institute, said in a statement.
Improper payments by the U.S. government to people, firms and contractors rose sharply to $98 billion in fiscal 2009 and President Barack Obama plans new rules to clamp down, the White House said Tuesday.
Daily Reckoning: " Here’s a new abbreviation to add to our crisis vernacular: FAS 167
That’s short for Federal Accounting Standards revision 167, effective Jan. 1, 2010. In essence, it’s a new accounting rule that will force financials to bring bad, off-balance sheet assets onto their books… thus a potential trigger for more Wall Street carnage.
“FAS 167 will be a larger and larger issue for the financial markets in the coming months,” explains Dan Amoss, our resident CFA, “and an emerging story in the financial media.
“In short, the banks with large off-balance sheet variable interest rate entity exposures will have to hold more capital against these exposures. So they’re actively going to shrink the potential size of these VIEs, which are used to house things like credit card receivables.
“This coming consolidation of VIEs is likely one reason that banks have been hoarding cash and jacking rates on business credit cards — for creditworthy customers — up to 30% with no advance warning.
“This ultimately means slower formation of new credit, and in many cases — i.e., Citigroup — the outright shrinking of its balance sheet to a degree that starves a credit-addicted U.S. economy.”
Over half the mistakes were made in the Medicare and Medicaid programs, and although some of the deterioration reflected stricter measurement, it also showed the need for healthcare reform, Office of Management and Budget Director Peter Orszag told reporters.
Serious mortgage delinquencies are still rising in the nation – and have jumped above 10% in California, according to a report today from TransUnion.
Economic Disconnect: "Sad Times for the Silverdome
In an example of what happens with monster government run spending projects, the Pontiac Silverdome in Detroit today was sold at auction for $583,000. I did not miss a zero, I swear!:
Silverdome sale price disappoints
Pontiac officials wanted more than $583K for stadium
The Silverdome consumed $55 million dollars to build, and it sells for quite the discount."
Crude supplies dropped by 4.37 million barrels during the week ended Nov. 13, the API said late Tuesday. Analysts polled by Platts expected a rise of 1.2 million barrels.
U.S. crude oil production for October averaged 5.36 million barrels per day, standing at the highest level since 2005, the American Petroleum Institute reported Wednesday. "The October production figures continue to detail the industry's success story in the Gulf of Mexico, particularly the deep waters, as well as the way new technologies have helped bring on new production both offshore and onshore," said API Statistics Manager Ron Planting in a statement.
Crude inventories fell 900,000 barrels in the week ended Nov. 13, the Energy Information Administration reported. Analysts polled by Platts had expected a rise of 1.2 million barrels. Crude imports fell 0.9% to 8.58 million barrels a day, and total petroleum demand rose 1% to 18.5 million barrels a day, the EIA data showed. The data also showed a decline of 1.7 million barrels in gasoline stockpiles and a drop of 300,000 barrels in distillates, which include heating oil and diesel. After the data, December crude rose 1.2% to $80.14 a barrel.
Autodesk said its earnings and revenue both fell from the same period a year ago, and the company also gave a fourth-quarter outlook that could miss analysts' current sales forecasts.
Gold futures up $1.80 to end at $1,141.20 an ounce.
The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, hit another 2009 high on Wednesday helped by strong cargo demand.
The index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, rose 5.98 percent or 262 points to 4,643 points, exceeding the previous 2009 peak set on Tuesday and was at its highest since Sept. 23 last year.According to Reuters, Buoyant Chinese demand for iron ore and coal, growing port congestion in China and Australia and tight ship availability have helped drive a rally in recent sessions.
California's top fiscal analyst now thinks the state's gaping budget deficit will expand to nearly $21B next fiscal year, now that several provisions in this summer's plan are falling short on revenue projections.
Aetna said late Wednesday that it is cutting about 625 positions, or roughly 1.75% of its total workforce, and warned that it expects additional cuts in the future.
The Dow Jones Industrial Average lost 11 points, or 0.1%, to end at 10,426.The S&P 500 index fell 0.5 points to 1,109.80. The Nasdaq Composite fell 6 points, or 0.3%, at 2,197.
Tuesday, November 17, 2009
U.S. Debt
11/17/09 U.S. Debt
Our national debt now exceeds $12 trillion.
For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That's up 58 percent from 3.96 percent a year ago.
U.S. wholesale prices rose a seasonally adjusted 0.3% on higher food and energy costs, the Labor Department reported Tuesday. Excluding volatile food and energy goods, the core producer price index fell 0.6%, the biggest decline in three years. Falling prices for light trucks and cars led the way lower. The producer price index has fallen 1.9% in the past year, while the core PPI has risen 0.7%. Inflation at the wholesale level was lower than forecast by economists surveyed by MarketWatch, who looked for a 0.5% increase in the headline PPI and a 0.1% gain in the core.
Home Depot reported fiscal third-quarter earnings fell 8.9% on 8% lower sales. For the quarter ended Nov. 1, net income was $689 million, or 41 cents a share, compared with $756 million, or 45 cents, in the year-earlier quarter. Sales declined to $16.36 billion from $17.78 billion. A survey of analysts by FactSet Research produced consensus estimates of 36 cents of profit on $16.36 billion of sales. Comparable-store sales for the quarter were down 6.9%, reflecting a drop of 7.1% at the U.S. stores. "There is still a great deal of pressure in the housing and home-improvement markets, though there are some positive signs of stabilization," Chairman and Chief Executive Frank Blake said in a statement on Tuesday. Home Depot now expects earnings from continuing operations for the year of $1.50 a share, up 9.5% from a year earlier. The retailer expects adjusted earnings of $1.55, a 13% drop from a year earlier.
Semitool is being acquired by Applied Materials for $11.00 per share in cash.
Target Corp.said Tuesday that its third-quarter profit jumped 18% to $436 million, or 58 cents a share, from $369 million, or 49 cents, a year earlier. Sales rose 1.4% to $14.8 billion while credit-card revenue declined 7.5% to $487 million. Same-store sales dropped 1.6%. Analysts, on average, estimated Target would earn 50 cents a share on sales of $14.8 billion, according to FactSet. For the fourth-quarter, the retailer said it's planning conservatively and remains cautious in light of the current and projected economic environment and expectations for a highly promotional holiday season.
George Ure: " The October figures from the Port of Long Beach: Inbound container traffic is down 22.4% compared with year ago levels when youi look at TEU's (twenty foot [container] equivalents. The good news - such as it is - has to be the export (outbound loaded) for October was down only 10.1%. And the shuffling of empties has slowed, too: Down 37.6%. Containers shipped through the Port of Los Angeles last month increased 10.9 percent compared to September, making October the strongest month yet for the Port this calendar year. Both containerized imports and exports reached their highest levels for 2009, with loaded outbound containers seeing an 11.8 percent rise over October 2008 volumes. Still, loaded inbound containers were 8.3 percent below October 2008 levels. Year to date in 2009, total TEU volume is at 5,606,798.65, 15.4 percent lower than the same 10-month period in 2008. Tracking by the Port’s fiscal year beginning July 2009, container volumes are 15.2 percent lower than 2008.... Oakland was down 6.7% in October and down 11.1% year-to-date. They'd been down YTD 6.4% last year....
Tacoma is reporting foreign container traffic down 19.3% for the month with domestic down 9.3%
The Port of Seattle was up actually up 6% for the month of October, but remains down 11.9% year to date."
"Trade volumes have begun to creep up," said Paul Bingham, managing director of the global commerce and transportation practice for IHS Global Insight. "You are seeing some strengths in the Chinese economy from the positive effects of their stimulus package. They are buying more, and not just raw materials but also finished goods in electronic equipment and automotive equipment."
The output of the nation's factories, mines and utilities rose 0.1% in October, less than expected by economists surveyed by MarketWatch. Capacity utilization -- a gauge of slack in the economy -- rose to 70.7% last month from 70.5% in September.
Net foreign purchases of long-term U.S. securities increased to $40.7 billion in September from $34.2 billion in August. Overall, foreign capital inflows into the U.S. rose to $133.5 billion in September, up sharply from $25.3 billion in August.
Chinese and U.S. regulators are negotiating a pact aimed at encouraging Chinese financial institutions to buy into small and medium-sized banks in the United States, bankers briefed on the plan said on Tuesday.
The latest chain to go the way of the irrelevant is Trans World Entertainment Corp (TWMC), which announced that it would be adding 125 f.y.e (for your entertainment) stores to the 2009 Store Closings list at the end of the holiday shopping season. This is just the latest downsizing move after the retail CD and DVD chain closed 101 stores last year and has operated for 11 consecutive quarters without turning a profit.
A new Panera restaurant has opened just about every five days. In a year when Americans started buying store brand vegetables instead of eating out, Panera added 80 locations to the 2009 Store Openings tally.
A new Edible Arrangements store was being added to the 2009 Store Openings list about once every three days.
The International Monetary Fund announced Monday it has sold two tons of gold to the central bank of the Indian Ocean island of Mauritius for nearly $72 million.
The sale came as gold prices surged Monday to an all-time high of $1,136.72 per ounce.
The sale to Mauritius "was conducted on the basis of market prices prevailing on November 11, 2009 with proceeds equivalent to U.S. 71.7 million dollars," the IMF said in a statement.
The National Association of Home Builders said its sentiment index held steady at 17 in November, but October's index was revised lower to 17 from the 18 previously reported.
Chocolate giant Hershey Co.has been holding executive-level talks with Italian chocolate maker Ferrero on a possible joint bid for Cadbury PLC, the Wall Street Journal reported late Tuesday in its online edition, citing people familiar with the matter. However, the discussions have yet to yield an offer and it is unclear at this point whether they will, the newspaper said. The talks have been in progress for several weeks, with Hershey executives more aggressive about pursuing a deal, the Journal said.
The Dow Jones Industrial Average finished at 10,437.42, up 30.46 points, or 0.3%. The S&P 500 Index added 1.02 points, or 0.1%, to 1,110.32. The Nasdaq Composite rose 5.64 points, or 0.3%, to 2,203.49.
ComScore's latest search rankings have Google and Microsoft gaining, and Yahoo slipping - again. Google grows to 65.4% from 64.9%; Bing goes to 9.9% from 9.4%; and Yahoo slips to 18% from 18.8%.
Steve Keen: "US Debt to GDP before the Great Depression: 170%
Current US debt to GDP: 300%
So the only way the roughly US$1 trillion of money that the Federal Reserve has injected into the banks will result in additional spending is if American families and businesses take out another US$8-10 trillion in loans....I’ve recently developed a genuinely monetary, credit-driven model of the economy, and one of its first insights is that Obama has been sold a pup on the right way to stimulate the economy: he would have got far more bang for his buck by giving the stimulus to the debtors rather than the creditors."
Our national debt now exceeds $12 trillion.
For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That's up 58 percent from 3.96 percent a year ago.
U.S. wholesale prices rose a seasonally adjusted 0.3% on higher food and energy costs, the Labor Department reported Tuesday. Excluding volatile food and energy goods, the core producer price index fell 0.6%, the biggest decline in three years. Falling prices for light trucks and cars led the way lower. The producer price index has fallen 1.9% in the past year, while the core PPI has risen 0.7%. Inflation at the wholesale level was lower than forecast by economists surveyed by MarketWatch, who looked for a 0.5% increase in the headline PPI and a 0.1% gain in the core.
Home Depot reported fiscal third-quarter earnings fell 8.9% on 8% lower sales. For the quarter ended Nov. 1, net income was $689 million, or 41 cents a share, compared with $756 million, or 45 cents, in the year-earlier quarter. Sales declined to $16.36 billion from $17.78 billion. A survey of analysts by FactSet Research produced consensus estimates of 36 cents of profit on $16.36 billion of sales. Comparable-store sales for the quarter were down 6.9%, reflecting a drop of 7.1% at the U.S. stores. "There is still a great deal of pressure in the housing and home-improvement markets, though there are some positive signs of stabilization," Chairman and Chief Executive Frank Blake said in a statement on Tuesday. Home Depot now expects earnings from continuing operations for the year of $1.50 a share, up 9.5% from a year earlier. The retailer expects adjusted earnings of $1.55, a 13% drop from a year earlier.
Semitool is being acquired by Applied Materials for $11.00 per share in cash.
Target Corp.said Tuesday that its third-quarter profit jumped 18% to $436 million, or 58 cents a share, from $369 million, or 49 cents, a year earlier. Sales rose 1.4% to $14.8 billion while credit-card revenue declined 7.5% to $487 million. Same-store sales dropped 1.6%. Analysts, on average, estimated Target would earn 50 cents a share on sales of $14.8 billion, according to FactSet. For the fourth-quarter, the retailer said it's planning conservatively and remains cautious in light of the current and projected economic environment and expectations for a highly promotional holiday season.
George Ure: " The October figures from the Port of Long Beach: Inbound container traffic is down 22.4% compared with year ago levels when youi look at TEU's (twenty foot [container] equivalents. The good news - such as it is - has to be the export (outbound loaded) for October was down only 10.1%. And the shuffling of empties has slowed, too: Down 37.6%. Containers shipped through the Port of Los Angeles last month increased 10.9 percent compared to September, making October the strongest month yet for the Port this calendar year. Both containerized imports and exports reached their highest levels for 2009, with loaded outbound containers seeing an 11.8 percent rise over October 2008 volumes. Still, loaded inbound containers were 8.3 percent below October 2008 levels. Year to date in 2009, total TEU volume is at 5,606,798.65, 15.4 percent lower than the same 10-month period in 2008. Tracking by the Port’s fiscal year beginning July 2009, container volumes are 15.2 percent lower than 2008.... Oakland was down 6.7% in October and down 11.1% year-to-date. They'd been down YTD 6.4% last year....
Tacoma is reporting foreign container traffic down 19.3% for the month with domestic down 9.3%
The Port of Seattle was up actually up 6% for the month of October, but remains down 11.9% year to date."
"Trade volumes have begun to creep up," said Paul Bingham, managing director of the global commerce and transportation practice for IHS Global Insight. "You are seeing some strengths in the Chinese economy from the positive effects of their stimulus package. They are buying more, and not just raw materials but also finished goods in electronic equipment and automotive equipment."
The output of the nation's factories, mines and utilities rose 0.1% in October, less than expected by economists surveyed by MarketWatch. Capacity utilization -- a gauge of slack in the economy -- rose to 70.7% last month from 70.5% in September.
Net foreign purchases of long-term U.S. securities increased to $40.7 billion in September from $34.2 billion in August. Overall, foreign capital inflows into the U.S. rose to $133.5 billion in September, up sharply from $25.3 billion in August.
Chinese and U.S. regulators are negotiating a pact aimed at encouraging Chinese financial institutions to buy into small and medium-sized banks in the United States, bankers briefed on the plan said on Tuesday.
The latest chain to go the way of the irrelevant is Trans World Entertainment Corp (TWMC), which announced that it would be adding 125 f.y.e (for your entertainment) stores to the 2009 Store Closings list at the end of the holiday shopping season. This is just the latest downsizing move after the retail CD and DVD chain closed 101 stores last year and has operated for 11 consecutive quarters without turning a profit.
A new Panera restaurant has opened just about every five days. In a year when Americans started buying store brand vegetables instead of eating out, Panera added 80 locations to the 2009 Store Openings tally.
A new Edible Arrangements store was being added to the 2009 Store Openings list about once every three days.
The International Monetary Fund announced Monday it has sold two tons of gold to the central bank of the Indian Ocean island of Mauritius for nearly $72 million.
The sale came as gold prices surged Monday to an all-time high of $1,136.72 per ounce.
The sale to Mauritius "was conducted on the basis of market prices prevailing on November 11, 2009 with proceeds equivalent to U.S. 71.7 million dollars," the IMF said in a statement.
The National Association of Home Builders said its sentiment index held steady at 17 in November, but October's index was revised lower to 17 from the 18 previously reported.
Chocolate giant Hershey Co.has been holding executive-level talks with Italian chocolate maker Ferrero on a possible joint bid for Cadbury PLC, the Wall Street Journal reported late Tuesday in its online edition, citing people familiar with the matter. However, the discussions have yet to yield an offer and it is unclear at this point whether they will, the newspaper said. The talks have been in progress for several weeks, with Hershey executives more aggressive about pursuing a deal, the Journal said.
The Dow Jones Industrial Average finished at 10,437.42, up 30.46 points, or 0.3%. The S&P 500 Index added 1.02 points, or 0.1%, to 1,110.32. The Nasdaq Composite rose 5.64 points, or 0.3%, to 2,203.49.
ComScore's latest search rankings have Google and Microsoft gaining, and Yahoo slipping - again. Google grows to 65.4% from 64.9%; Bing goes to 9.9% from 9.4%; and Yahoo slips to 18% from 18.8%.
Steve Keen: "US Debt to GDP before the Great Depression: 170%
Current US debt to GDP: 300%
So the only way the roughly US$1 trillion of money that the Federal Reserve has injected into the banks will result in additional spending is if American families and businesses take out another US$8-10 trillion in loans....I’ve recently developed a genuinely monetary, credit-driven model of the economy, and one of its first insights is that Obama has been sold a pup on the right way to stimulate the economy: he would have got far more bang for his buck by giving the stimulus to the debtors rather than the creditors."
Monday, November 16, 2009
Significant Weaknesses
11/16/09 Significant Weaknesses
Fiorello LaGuardia: "An industry that cannot pay its workers a decent living wage has no right to exist. You cannot preach self-government and liberty to people in a starving land.
Only a well-fed, well-housed, well-schooled people can enjoy the blessings of liberty."
A Federal Reserve official said on Monday that the U.S. economy still faced "significant weaknesses" and urged policymakers to allow large financial institutions to fail if needed.
"We still have significant weaknesses to work through in the economy in the U.S. and coupled with a rapidly rising level ... (of) debt and enormous moral hazard issues, we have a great deal of work ahead of us," said Kansas City Fed President Thomas Hoenig.
Champion Enterprises Inc said Sunday it and its domestic operating subsidiaries have filed petitions for reorganization under Chapter 11 bankruptcy. Champion also said it has obtained a $40 million debtor-in-possession credit facility from some of its current lenders that will be available to fund post-petition operating expenses and to ensure that it meets obligations to employees, customers, and trade partners. The firm, which makes factory-built housing, said it made the move "to improve its capital structure and further strengthen its competitive position." The filing won't include Champion's operations in the U.K. and Canada.
U.S. retail sales rose 1.4% in October, more than analysts expected. A large downward revision to September's sales offset the upside surprise. Sales of durable goods, other than autos, were weak. Separately, manufacturing activity in the New York area expanded at a slower pace in November, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index fell to 23.5 in November from 34.6 in October.
The August to September 2009 percent change was revised from -1.5 percent (±0.5%) to -2.3 percent (±0.3%).
Capital One Financial Corp.said the annualized net charge-off rate at its U.S. credit card business fell to 9.04% in October from 9.77% in the previous month. However, accounts that are at least 30 days delinquent rose to 5.72% from 5.38%, the company said in a regulatory filing.
Lowe's Cos Inc , the second-largest U.S. home improvement chain, posted a 30 percent drop in quarterly profit as consumers put off big renovations as the U.S. housing market remains sluggish, sending shares down 2.1 percent in premarket trading.
Rob Hanna: "Notable about Friday’s action was that volume was again light on the rally. This has often led to a short-term pullback in the past."
George Ure: "The only paper that I put my full faith in (since it hasn't been diluted over time) is Charmin."
Guy Lerner: "After 15 weeks of being neutral, the "smart money" indicator has turned towards a more bearish reading. The "dumb money" indicator remains in the extreme bullish zone. While not there yet, the indicators are heading in the direction that one would expect to see at a market top."
In an interview over the weekend, Sony CEO Howard Stringer said the consumer electronics industry continues to languish and that "we are waiting for a signal that hasn't arrived." Stringer noted a stronger yen and tougher competition from Korea and China had hurt the Japanese market, while in the U.S. he warned the recovery "will be neither a V nor a W, but an L."
Businesses slashed inventories for a 13th consecutive month in September although the pace of reductions slowed from the previous month. The economic rebound is expected to remain tentative until businesses switch to rebuilding their stockpiles.
The Commerce Department said Monday that businesses reduced inventories 0.4 percent in September. That's slightly better than the 0.7 percent drop economists expected and much improved from a 1.6 percent decline in August.
Sales also fell 0.3 percent in September, the first setback since May.
The Federal Reserve is proposing limits on fees and expiration dates on retail gift cards, the Fed announced Monday. The rules would limit fees for not using the card and would require that gift cards expire no earlier than five years. "The rules would protect consumers from certain unexpected costs and would require that gift card terms and conditions be clearly stated," the Fed said. The proposed rules come after the Fed came under fire for not doing more to protect consumers during the credit bubble.
More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.
Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department's inspector general for tax administration.
A new survey from Zillow.com shows that even in those markets where investor competition has returned and prices on the low end are beginning to stabilize, homeowners still owe far more on their mortgages than their homes are currently worth.
Las Vegas leads the way with 81.8 percent of borrowers underwater on their loans in the third quarter of this year, down barely one percent from the second quarter but still up 10 percent from the first quarter.
The bulk of underwater borrowers are in California, Florida, Arizona and Nevada. While home prices nationwide were down 8.5 percent in September from a year ago, prices in these states are still way down -- 34 percent in Las Vegas, 26 percent in Orlando, 23 percent in Phoenix and 11 percent in Los Angeles (National Association of Realtors). Again, that's from a year ago, but many of these cities have seen over 50 percent price declines from the peak of the market.
John Hussman: "The big picture is this. There is most probably a second wave of mortgage defaults in the immediate future as a result of Alt-A and Option-ARM resets. Yet our capacity to deal with these losses has already been strained by the first round that largely ended in March.....Since June of this year, outstanding bank credit (loans and leases) has plunged at the steepest rate observed in the available post-war history, while at the same time, bank cash reserves have soared (Prieur du Plessis offers a good overview here). This surge in reserves is a mirror image of the Fed's balance sheet, which has taken on over a trillion dollars in new assets – primarily mortgage backed securities. The problem here is that the underlying quality of agency paper continues to deteriorate, which means that Fannie Mae, Freddie Mac and other agencies will likely sustain major additional losses – eventually footed by the public – because they accepted a negligible fee from mortgage lenders in return for slapping the government's Good Housekeeping Seal of Approval on these garbage loans."
European shares advanced for a fourth consecutive session to hit a 13-month closing high on Monday, boosted by commodity stocks, which tracked stronger crude and metal prices.
Mae West: "When it comes to finances, remember that there are no withholding taxes on the wages of sin."
With the Dollar Index down 0.6% and back near 52-week lows, the CRB Commodity Index has advanced 2.8% this session. That's the best single-session percentage move since September, thanks to broad-based buying among commodities.
Gold shined as the price of the yellow metal made its way to a new record high of $1143.40 per ounce before it settled with a gain of 2.0% at $1139.20 per ounce. Silver was also stellar; it settled at $18.41 per ounce,up 5.9%.
Oil prices were up sharply, too. Crude contracts closed pit trade with oil priced 3.4% higher at $78.94 per barrel. Meanwhile, natural gas prices were pushed 5.0% higher to $4.61 each.
Goldman Sachs Group Inc. sold 158 condominiums in a foreclosed project outside Miami for about $113,000 each, roughly one-third the cost of land and construction.
The Dow Jones Industrial Average rallied 139.49 points, or 1.3%, to end at 10,406.96, its highest close since Oct. 2, 2008, according to FactSet Research. The S&P 500 index gained 15.82 points, or 1.5%, to 1,109.30, marking its first close above the key 1,100 level since October of last year. The Nasdaq Composite rose 29.97 points, or 1.4%, to 2,197.85, its highest close since Sept. 19, 2008.
Fiorello LaGuardia: "An industry that cannot pay its workers a decent living wage has no right to exist. You cannot preach self-government and liberty to people in a starving land.
Only a well-fed, well-housed, well-schooled people can enjoy the blessings of liberty."
A Federal Reserve official said on Monday that the U.S. economy still faced "significant weaknesses" and urged policymakers to allow large financial institutions to fail if needed.
"We still have significant weaknesses to work through in the economy in the U.S. and coupled with a rapidly rising level ... (of) debt and enormous moral hazard issues, we have a great deal of work ahead of us," said Kansas City Fed President Thomas Hoenig.
Champion Enterprises Inc said Sunday it and its domestic operating subsidiaries have filed petitions for reorganization under Chapter 11 bankruptcy. Champion also said it has obtained a $40 million debtor-in-possession credit facility from some of its current lenders that will be available to fund post-petition operating expenses and to ensure that it meets obligations to employees, customers, and trade partners. The firm, which makes factory-built housing, said it made the move "to improve its capital structure and further strengthen its competitive position." The filing won't include Champion's operations in the U.K. and Canada.
U.S. retail sales rose 1.4% in October, more than analysts expected. A large downward revision to September's sales offset the upside surprise. Sales of durable goods, other than autos, were weak. Separately, manufacturing activity in the New York area expanded at a slower pace in November, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index fell to 23.5 in November from 34.6 in October.
The August to September 2009 percent change was revised from -1.5 percent (±0.5%) to -2.3 percent (±0.3%).
Capital One Financial Corp.said the annualized net charge-off rate at its U.S. credit card business fell to 9.04% in October from 9.77% in the previous month. However, accounts that are at least 30 days delinquent rose to 5.72% from 5.38%, the company said in a regulatory filing.
Lowe's Cos Inc , the second-largest U.S. home improvement chain, posted a 30 percent drop in quarterly profit as consumers put off big renovations as the U.S. housing market remains sluggish, sending shares down 2.1 percent in premarket trading.
Rob Hanna: "Notable about Friday’s action was that volume was again light on the rally. This has often led to a short-term pullback in the past."
George Ure: "The only paper that I put my full faith in (since it hasn't been diluted over time) is Charmin."
Guy Lerner: "After 15 weeks of being neutral, the "smart money" indicator has turned towards a more bearish reading. The "dumb money" indicator remains in the extreme bullish zone. While not there yet, the indicators are heading in the direction that one would expect to see at a market top."
In an interview over the weekend, Sony CEO Howard Stringer said the consumer electronics industry continues to languish and that "we are waiting for a signal that hasn't arrived." Stringer noted a stronger yen and tougher competition from Korea and China had hurt the Japanese market, while in the U.S. he warned the recovery "will be neither a V nor a W, but an L."
Businesses slashed inventories for a 13th consecutive month in September although the pace of reductions slowed from the previous month. The economic rebound is expected to remain tentative until businesses switch to rebuilding their stockpiles.
The Commerce Department said Monday that businesses reduced inventories 0.4 percent in September. That's slightly better than the 0.7 percent drop economists expected and much improved from a 1.6 percent decline in August.
Sales also fell 0.3 percent in September, the first setback since May.
The Federal Reserve is proposing limits on fees and expiration dates on retail gift cards, the Fed announced Monday. The rules would limit fees for not using the card and would require that gift cards expire no earlier than five years. "The rules would protect consumers from certain unexpected costs and would require that gift card terms and conditions be clearly stated," the Fed said. The proposed rules come after the Fed came under fire for not doing more to protect consumers during the credit bubble.
More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.
Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department's inspector general for tax administration.
A new survey from Zillow.com shows that even in those markets where investor competition has returned and prices on the low end are beginning to stabilize, homeowners still owe far more on their mortgages than their homes are currently worth.
Las Vegas leads the way with 81.8 percent of borrowers underwater on their loans in the third quarter of this year, down barely one percent from the second quarter but still up 10 percent from the first quarter.
The bulk of underwater borrowers are in California, Florida, Arizona and Nevada. While home prices nationwide were down 8.5 percent in September from a year ago, prices in these states are still way down -- 34 percent in Las Vegas, 26 percent in Orlando, 23 percent in Phoenix and 11 percent in Los Angeles (National Association of Realtors). Again, that's from a year ago, but many of these cities have seen over 50 percent price declines from the peak of the market.
John Hussman: "The big picture is this. There is most probably a second wave of mortgage defaults in the immediate future as a result of Alt-A and Option-ARM resets. Yet our capacity to deal with these losses has already been strained by the first round that largely ended in March.....Since June of this year, outstanding bank credit (loans and leases) has plunged at the steepest rate observed in the available post-war history, while at the same time, bank cash reserves have soared (Prieur du Plessis offers a good overview here). This surge in reserves is a mirror image of the Fed's balance sheet, which has taken on over a trillion dollars in new assets – primarily mortgage backed securities. The problem here is that the underlying quality of agency paper continues to deteriorate, which means that Fannie Mae, Freddie Mac and other agencies will likely sustain major additional losses – eventually footed by the public – because they accepted a negligible fee from mortgage lenders in return for slapping the government's Good Housekeeping Seal of Approval on these garbage loans."
European shares advanced for a fourth consecutive session to hit a 13-month closing high on Monday, boosted by commodity stocks, which tracked stronger crude and metal prices.
Mae West: "When it comes to finances, remember that there are no withholding taxes on the wages of sin."
With the Dollar Index down 0.6% and back near 52-week lows, the CRB Commodity Index has advanced 2.8% this session. That's the best single-session percentage move since September, thanks to broad-based buying among commodities.
Gold shined as the price of the yellow metal made its way to a new record high of $1143.40 per ounce before it settled with a gain of 2.0% at $1139.20 per ounce. Silver was also stellar; it settled at $18.41 per ounce,up 5.9%.
Oil prices were up sharply, too. Crude contracts closed pit trade with oil priced 3.4% higher at $78.94 per barrel. Meanwhile, natural gas prices were pushed 5.0% higher to $4.61 each.
Goldman Sachs Group Inc. sold 158 condominiums in a foreclosed project outside Miami for about $113,000 each, roughly one-third the cost of land and construction.
The Dow Jones Industrial Average rallied 139.49 points, or 1.3%, to end at 10,406.96, its highest close since Oct. 2, 2008, according to FactSet Research. The S&P 500 index gained 15.82 points, or 1.5%, to 1,109.30, marking its first close above the key 1,100 level since October of last year. The Nasdaq Composite rose 29.97 points, or 1.4%, to 2,197.85, its highest close since Sept. 19, 2008.
Sunday, November 15, 2009
Asia Paciifc
11/15/09 Asia Pacific
Bloomberg: "Asia-Pacific leaders agreed to fight protectionism while refraining from mentioning currency distortions that contribute to such actions, backing China’s stance as critics increase calls for the yuan to strengthen.
The 21-member Asia-Pacific Economic Cooperation group said “structural reforms” were necessary to unwind global imbalances, without detailing specific changes, according to a statement after leaders including U.S. President Barack Obama and China’s Hu Jintao met in Singapore. They dropped language from an earlier draft on specific cuts in carbon emissions, a decision that resonates with China’s refusal to give targets.
The meeting concluded hours before Obama travels to China, where he aims to defuse tensions over U.S. duties on Chinese imports. The lack of any APEC commitment to ending currency controls by China, the region’s biggest economy without a floating exchange rate, signals that most of the region won’t join the U.S. in pressing for a stronger yuan.
“China’s got big issues of its own and certainly doesn’t want to move on the currency, and it’s concerned about some protectionist rumblings from the United States,” said Stephen Roach, Morgan Stanley’s Asia Chairman. “The ultimate verdict is that there’s no major breakthrough on any of these large global issues.”
Barry Ritholtz: "Jonathan J. Miller, the president of the appraisal firm Miller Samuel, estimated that two-thirds of the roughly 4,000 apartments for sale in Manhattan are priced too high for the current market."
The decline of the dollar and decisions in the U.S. not to raise interest rates have caused “huge” speculation in foreign exchange trading and seriously affected global asset prices, said Liu Mingkang, chairman of the China Banking Regulatory Commission.
“The continuous depreciation in the dollar, and the U.S. government’s indication, that in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” he told reporters in Beijing today at the International Finance Forum.
Liu said this has “seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies.”
His view echoes that of Donald Tsang, the chief executive of Hong Kong, who said the Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis.
“I’m scared and leaders should look out,” Tsang said in Singapore Nov. 13. “America is doing exactly what Japan did last time,” he said, adding that Japan’s zero interest rate policy contributed to the 1997 Asian financial crisis and U.S. mortgage meltdown.
A “disconnection” exists between demand for crude oil and the current price, according to Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.
Oil prices aren't reflecting demand fundamentals, just as they didn't when crude rose to a record above $147 a barrel in July 2008, Tillerson said Friday at an energy round table in Singapore as part of the Asia-Pacific Economic Cooperation meeting.
“There is clearly, and has been in my view for some time, somewhat of a disconnection in the fundamentals of supply and demand and the current day market price, and I can't really explain that to you,” Tillerson said.
Tillerson said the price of oil would probably be around $55 a barrel if the dollar hadn't depreciated against the euro during the last 18 months.
“You could say oil is about $20 to $25 a barrel higher simply it's priced in dollars and there's a weak dollar,” he said.
In the face of greatly increased demand for services, providers are likely to charge higher fees or take patients with better-paying private insurance over Medicaid recipients, "exacerbating existing access problems" in that program, according to the report from Richard S. Foster of the Centers for Medicare and Medicaid Services. In its most recent analysis of the House bill, the CBO noted that Medicare spending per beneficiary would have to grow at roughly half the rate it has over the past two decades to meet the measure's savings targets, a dramatic reduction that many budget and health policy experts consider unrealistic.
Because Thanksgiving Day doesn't really count, Friday, Nov. 27, officially begins the rest of Arnold Minicucci's life. It will also be the first day in 90 years — not counting holidays, Sundays or Mondays — that gentlemen from throughout Greater Waterbury, CT will not be able to purchase an article of clothing from a Minicucci. Minicucci, 84, plans to close his venerable men's apparel store for good — either on Wednesday, Nov. 26, or when he sells the last article of clothing in the rapidly emptying Bank Street emporium, whichever come first.
The recession apparently claimed another retail victim as the Target store in the Port Richey, Fla. area will close in January after 18 years in business, company officials announced.
After 42 years in business, the Value Village store in Renton, WA closes today.
SHAKER HEIGHTS, Ohio -- Specialty grocery Chandler & Rudd Co. built its business by catering to affluent customers and surprising them with imported delicacies they couldn't get anywhere else.
But owners Ruta and Fred Marino's reputation for exemplary customer service and incredible attention to detail ultimately couldn't compete with the larger chain supermarkets in an especially brutal recession.
On Nov. 2, after 145 storied years in the food business, the Marinos gathered their seven employees, handed out paychecks and told them it was over.
Courtesy of ZeroHedge: "Resisting – and thereby achieving success as a contrarian – isn’t easy. Things combine to make it difficult, including natural herd tendencies and the pain imposed by being out of step, since momentum invariably makes pro-cyclical actions look correct for a while. (That’s why it’s essential to remember that “being too far ahead of your time is indistinguishable from being wrong.”) Given the uncertain nature of the future, and thus the difficulty of being confident your position is the right one – especially as price moves against you – it’s challenging to be a lonely contrarian." Howard Marks, Oaktree
Bloomberg: "Asia-Pacific leaders agreed to fight protectionism while refraining from mentioning currency distortions that contribute to such actions, backing China’s stance as critics increase calls for the yuan to strengthen.
The 21-member Asia-Pacific Economic Cooperation group said “structural reforms” were necessary to unwind global imbalances, without detailing specific changes, according to a statement after leaders including U.S. President Barack Obama and China’s Hu Jintao met in Singapore. They dropped language from an earlier draft on specific cuts in carbon emissions, a decision that resonates with China’s refusal to give targets.
The meeting concluded hours before Obama travels to China, where he aims to defuse tensions over U.S. duties on Chinese imports. The lack of any APEC commitment to ending currency controls by China, the region’s biggest economy without a floating exchange rate, signals that most of the region won’t join the U.S. in pressing for a stronger yuan.
“China’s got big issues of its own and certainly doesn’t want to move on the currency, and it’s concerned about some protectionist rumblings from the United States,” said Stephen Roach, Morgan Stanley’s Asia Chairman. “The ultimate verdict is that there’s no major breakthrough on any of these large global issues.”
Barry Ritholtz: "Jonathan J. Miller, the president of the appraisal firm Miller Samuel, estimated that two-thirds of the roughly 4,000 apartments for sale in Manhattan are priced too high for the current market."
The decline of the dollar and decisions in the U.S. not to raise interest rates have caused “huge” speculation in foreign exchange trading and seriously affected global asset prices, said Liu Mingkang, chairman of the China Banking Regulatory Commission.
“The continuous depreciation in the dollar, and the U.S. government’s indication, that in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” he told reporters in Beijing today at the International Finance Forum.
Liu said this has “seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies.”
His view echoes that of Donald Tsang, the chief executive of Hong Kong, who said the Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis.
“I’m scared and leaders should look out,” Tsang said in Singapore Nov. 13. “America is doing exactly what Japan did last time,” he said, adding that Japan’s zero interest rate policy contributed to the 1997 Asian financial crisis and U.S. mortgage meltdown.
A “disconnection” exists between demand for crude oil and the current price, according to Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.
Oil prices aren't reflecting demand fundamentals, just as they didn't when crude rose to a record above $147 a barrel in July 2008, Tillerson said Friday at an energy round table in Singapore as part of the Asia-Pacific Economic Cooperation meeting.
“There is clearly, and has been in my view for some time, somewhat of a disconnection in the fundamentals of supply and demand and the current day market price, and I can't really explain that to you,” Tillerson said.
Tillerson said the price of oil would probably be around $55 a barrel if the dollar hadn't depreciated against the euro during the last 18 months.
“You could say oil is about $20 to $25 a barrel higher simply it's priced in dollars and there's a weak dollar,” he said.
In the face of greatly increased demand for services, providers are likely to charge higher fees or take patients with better-paying private insurance over Medicaid recipients, "exacerbating existing access problems" in that program, according to the report from Richard S. Foster of the Centers for Medicare and Medicaid Services. In its most recent analysis of the House bill, the CBO noted that Medicare spending per beneficiary would have to grow at roughly half the rate it has over the past two decades to meet the measure's savings targets, a dramatic reduction that many budget and health policy experts consider unrealistic.
Because Thanksgiving Day doesn't really count, Friday, Nov. 27, officially begins the rest of Arnold Minicucci's life. It will also be the first day in 90 years — not counting holidays, Sundays or Mondays — that gentlemen from throughout Greater Waterbury, CT will not be able to purchase an article of clothing from a Minicucci. Minicucci, 84, plans to close his venerable men's apparel store for good — either on Wednesday, Nov. 26, or when he sells the last article of clothing in the rapidly emptying Bank Street emporium, whichever come first.
The recession apparently claimed another retail victim as the Target store in the Port Richey, Fla. area will close in January after 18 years in business, company officials announced.
After 42 years in business, the Value Village store in Renton, WA closes today.
SHAKER HEIGHTS, Ohio -- Specialty grocery Chandler & Rudd Co. built its business by catering to affluent customers and surprising them with imported delicacies they couldn't get anywhere else.
But owners Ruta and Fred Marino's reputation for exemplary customer service and incredible attention to detail ultimately couldn't compete with the larger chain supermarkets in an especially brutal recession.
On Nov. 2, after 145 storied years in the food business, the Marinos gathered their seven employees, handed out paychecks and told them it was over.
Courtesy of ZeroHedge: "Resisting – and thereby achieving success as a contrarian – isn’t easy. Things combine to make it difficult, including natural herd tendencies and the pain imposed by being out of step, since momentum invariably makes pro-cyclical actions look correct for a while. (That’s why it’s essential to remember that “being too far ahead of your time is indistinguishable from being wrong.”) Given the uncertain nature of the future, and thus the difficulty of being confident your position is the right one – especially as price moves against you – it’s challenging to be a lonely contrarian." Howard Marks, Oaktree
Exchange Rates
11/14/09 Exchange Rates
U.S.bank failures number 123 in 2009. According to Bloomberg, Iberiabank Corp., the Louisiana- based lender that exited a federal government assistance program this year, purchased two banks as the U.S. economy’s expansion fails to halt financial-firm collapses.
Iberiabank added $2.5 billion in deposits and 34 branches by acquiring Florida-based lenders Orion Bank and Century Bank, the company said in a statement. The southern Florida deals will boost earnings in coming years, Iberiabank said.
Orion and Century “possess very strong deposit market- share positions in five very attractive Florida” areas, Iberiabank Chief Executive Officer Daryl Byrd said yesterday in the statement.
Banks are failing at the fastest pace in 17 years even as the U.S. economy shows signs of pulling out of the recession. The world’s largest economy grew at a 3.5 percent annual pace in the third quarter, the first gain in more than a year, according to the Commerce Department. The number of failed banks reached 179 in 1992.
Puru Saxena: "Over the past six years, American unfunded obligations increased by almost 50% from US$79 trillion to US$114.7 trillion! Alarmingly, over the same period, American government revenue rose by only 12%! Now, you do not have to be a genius to figure out that no entity can continue to increase its liabilities by more than four times the rate of its revenue. If this spending frenzy continues, commonsense dictates that at some point in the future, the solvency of the American government will come into question. When that happens, foreign capital will flee America, interest-rates will sky-rocket and we will witness an epic currency crisis."
John Mauldin: "Sadly, the private sector has shed over 300,000 jobs since 1999. Think about that. We have had a decade where there have been no new jobs added by the private sector. Real incomes are roughly where they were, and the stock market is down. Talk about a lost decade."
The FHA has just $3.6 billion in reserves to back up a $679 billion book.No worries. Obama will make a speech and tell us everything is safe and sound.
Controlling currency levels is a form of protectionism that policy makers must avoid “by all means,” said the incoming chair of the Asia-Pacific Economic Cooperation’s Business Advisory Council.
“Foreign-exchange rates are a crucial factor in global trade, and guiding them to benefit a certain country is protectionism,” said Gempachiro Aihara, who’s also the current co-chair of the APEC business group and counselor to Mitsui & Co. “We want policy makers to reject such policies.”
The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, pointing to tricky talks ahead for President Barack Obama when he flies to China to address economic tensions.
The discord surfaced at a summit of the Asia Pacific Economic Cooperation (APEC) forum in Singapore when a reference to "market-oriented exchange rates" was cut from a communique issued at the end of two days of talks. An APEC delegation official said Washington and Beijing could not agree on the wording.
John Mauldin: "The Liscio Report notes that all states had negative year-over-year sales tax collections in October, and the weighted average decrease was 10.2%, down from a negative 7.2% in September. "According to CBO estimates, only 21% of [the stimulus] spending will occur in 2009; another 38% will come in 2010, and 22% in 2011. After that, its effect will dissipate quickly....."
The Asia-Pacific Economic Cooperation group faces “political” hurdles in its vision to form a region-wide free trade area, Singapore Prime Minister Lee Hsien Loong said.
The 21 APEC economies will step up efforts to achieve their “long-term” goal for the Free Trade Area of the Asia- Pacific, or FTAAP, leaders including China’s Hu Jintao and Japan’s Yukio Hatoyama said in discussions in Singapore today. U.S. President Barack Obama, who arrived in Singapore tonight, will meet his counterparts tomorrow.
“Political conditions need to be right before negotiations for a region-wide FTAAP could be launched,” according to a summary of Lee’s comments as he chaired the two- day gathering today. “There was consensus among the leaders that APEC economies should step up their efforts to realize this vision, by laying the necessary building blocks and exploring possible pathways.”
"Never has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance," said Allen Sinai, head of Decision Economics Inc.
The Reuters/University of Michigan consumer confidence index for November, reported Friday, fell to 66.0 from 70.6 last month, the second straight decline. The index has crashed from nearly 100 in January 2007, though it's up from the 19-year low of 55.3 reached one year ago.
One statistic in the confidence survey is particularly telling, said Richard Curtin, the survey's director: A mere one in 10 consumers said their household income had risen in the last 12 months, the lowest reading in the survey's 63-year history.
Mike Burk: "The market appears to be at or near its short term high. The secondaries and breadth indicators did not confirm the recent highs so, if it continues to follow the cyclical pattern of the past several months, a decline for the next week or so is likely.
I expect the major indices to be lower on Friday November 20 than they were on Friday November 13."
Robert Prechter: "As the dollar advances from its lows, things denominated in dollars lose value against the dollar. As long as the dollar remains the global senior currency, assets will depreciate: not just stocks and commodities but residential and commercial property, works of art, collectible cars, pretty much everything. Of course, this outlook presumes a deflationary environment and that's been our view for quite some time. But that's another conversation. The topic here is stocks down/gold up - or not.
The long-time editor of the Elliott Wave Financial Forecast Short Term Update, Steven Hochberg summed it up succinctly in a recent issue:
"The other important aspect to a dollar bottom is the implication to all the other markets that have been moving opposite to this senior currency. The start of a major dollar rally should roughly coincide with a turn down in stocks, commodities, oil and the precious metals. So there are likely to be important trend reversals across nearly all major markets."
U.S.bank failures number 123 in 2009. According to Bloomberg, Iberiabank Corp., the Louisiana- based lender that exited a federal government assistance program this year, purchased two banks as the U.S. economy’s expansion fails to halt financial-firm collapses.
Iberiabank added $2.5 billion in deposits and 34 branches by acquiring Florida-based lenders Orion Bank and Century Bank, the company said in a statement. The southern Florida deals will boost earnings in coming years, Iberiabank said.
Orion and Century “possess very strong deposit market- share positions in five very attractive Florida” areas, Iberiabank Chief Executive Officer Daryl Byrd said yesterday in the statement.
Banks are failing at the fastest pace in 17 years even as the U.S. economy shows signs of pulling out of the recession. The world’s largest economy grew at a 3.5 percent annual pace in the third quarter, the first gain in more than a year, according to the Commerce Department. The number of failed banks reached 179 in 1992.
Puru Saxena: "Over the past six years, American unfunded obligations increased by almost 50% from US$79 trillion to US$114.7 trillion! Alarmingly, over the same period, American government revenue rose by only 12%! Now, you do not have to be a genius to figure out that no entity can continue to increase its liabilities by more than four times the rate of its revenue. If this spending frenzy continues, commonsense dictates that at some point in the future, the solvency of the American government will come into question. When that happens, foreign capital will flee America, interest-rates will sky-rocket and we will witness an epic currency crisis."
John Mauldin: "Sadly, the private sector has shed over 300,000 jobs since 1999. Think about that. We have had a decade where there have been no new jobs added by the private sector. Real incomes are roughly where they were, and the stock market is down. Talk about a lost decade."
The FHA has just $3.6 billion in reserves to back up a $679 billion book.No worries. Obama will make a speech and tell us everything is safe and sound.
Controlling currency levels is a form of protectionism that policy makers must avoid “by all means,” said the incoming chair of the Asia-Pacific Economic Cooperation’s Business Advisory Council.
“Foreign-exchange rates are a crucial factor in global trade, and guiding them to benefit a certain country is protectionism,” said Gempachiro Aihara, who’s also the current co-chair of the APEC business group and counselor to Mitsui & Co. “We want policy makers to reject such policies.”
The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, pointing to tricky talks ahead for President Barack Obama when he flies to China to address economic tensions.
The discord surfaced at a summit of the Asia Pacific Economic Cooperation (APEC) forum in Singapore when a reference to "market-oriented exchange rates" was cut from a communique issued at the end of two days of talks. An APEC delegation official said Washington and Beijing could not agree on the wording.
John Mauldin: "The Liscio Report notes that all states had negative year-over-year sales tax collections in October, and the weighted average decrease was 10.2%, down from a negative 7.2% in September. "According to CBO estimates, only 21% of [the stimulus] spending will occur in 2009; another 38% will come in 2010, and 22% in 2011. After that, its effect will dissipate quickly....."
The Asia-Pacific Economic Cooperation group faces “political” hurdles in its vision to form a region-wide free trade area, Singapore Prime Minister Lee Hsien Loong said.
The 21 APEC economies will step up efforts to achieve their “long-term” goal for the Free Trade Area of the Asia- Pacific, or FTAAP, leaders including China’s Hu Jintao and Japan’s Yukio Hatoyama said in discussions in Singapore today. U.S. President Barack Obama, who arrived in Singapore tonight, will meet his counterparts tomorrow.
“Political conditions need to be right before negotiations for a region-wide FTAAP could be launched,” according to a summary of Lee’s comments as he chaired the two- day gathering today. “There was consensus among the leaders that APEC economies should step up their efforts to realize this vision, by laying the necessary building blocks and exploring possible pathways.”
"Never has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance," said Allen Sinai, head of Decision Economics Inc.
The Reuters/University of Michigan consumer confidence index for November, reported Friday, fell to 66.0 from 70.6 last month, the second straight decline. The index has crashed from nearly 100 in January 2007, though it's up from the 19-year low of 55.3 reached one year ago.
One statistic in the confidence survey is particularly telling, said Richard Curtin, the survey's director: A mere one in 10 consumers said their household income had risen in the last 12 months, the lowest reading in the survey's 63-year history.
Mike Burk: "The market appears to be at or near its short term high. The secondaries and breadth indicators did not confirm the recent highs so, if it continues to follow the cyclical pattern of the past several months, a decline for the next week or so is likely.
I expect the major indices to be lower on Friday November 20 than they were on Friday November 13."
Robert Prechter: "As the dollar advances from its lows, things denominated in dollars lose value against the dollar. As long as the dollar remains the global senior currency, assets will depreciate: not just stocks and commodities but residential and commercial property, works of art, collectible cars, pretty much everything. Of course, this outlook presumes a deflationary environment and that's been our view for quite some time. But that's another conversation. The topic here is stocks down/gold up - or not.
The long-time editor of the Elliott Wave Financial Forecast Short Term Update, Steven Hochberg summed it up succinctly in a recent issue:
"The other important aspect to a dollar bottom is the implication to all the other markets that have been moving opposite to this senior currency. The start of a major dollar rally should roughly coincide with a turn down in stocks, commodities, oil and the precious metals. So there are likely to be important trend reversals across nearly all major markets."
Friday, November 13, 2009
Plant Closings
11/13/09 Store Closings
The U.S. trade balance widened more than forecast to $36.5 billion in September and import prices rose 0.7% last month. "While trade is not a prime driver of currencies, the combination of rising imbalances and extremely low rates is typically a U.S. dollar negative," said strategists at Barclays Capital. The dollar index ($DXY), a measure of the U.S. unit against a trade-weighted basket of rival currencies, declined to 75.359 compared to 75.648 in late New York trading on Thursday. This is the biggest percentage increase in the monthly trade gap since February 1999. The data suggests that third quarter growth will be revised down from its initial estimate of a 3.5% gain. Imports rose faster than exports in September. Trade activity has recovered to levels not seen since the financial crisis hit in the fall of 2008. The U.S. trade deficit with China widened to $22.1 billion, the largest since last October. The deficit for the year-to-date now totals $274.58 billion, down from $551.44 billion in the first nine months of 2008.
The Federal Housing Administration’s mortgage insurance reserves fell to the lowest level in history and the government said more steps are needed to shore up the agency that guarantees one of every five single-family loans.
The net capital ratio, or reserves after accounting for projected losses, fell to 0.53 percent in the year ended in September, from 3 percent in fiscal 2008 and 6.4 percent in 2007, according to an annual review sent today. While FHA said the fund “has good prospects,” it is changing its risk models to account for the possibility of the ratio falling below zero.
“Additional actions” will be needed to shore up the agency, Housing and Urban Development Secretary Shaun Donovan said at a news conference in Washington today. The insurance fund tripled in size last year and has taken on more risk as private industry sources for lenders to finance and insure home loans dried up and mortgage default rates rose to record highs.
United Commercial was the 120th bank seized by federal regulators so far this year. Last November, it received $298.7 million under the federal government's Troubled Asset Relief Program.
"This is the first failed bank that had received TARP money," said Matthew Anderson of Foresight Analytics in Oakland, which tracks real estate and banks.
Besides understanding his own state’s finances, New York Gov. David Paterson apparently has an excellent grasp of California’s fiscal situation.
So much so, in fact, that Paterson feels confident speculating publicly about the probability of California eventually defaulting on its municipal bond debt.
“The market is sending many errant signals right now,” notes Dan Amoss. “U.S. policymakers are trying to reinflate stocks, houses and wages, while also recapitalizing an undercapitalized banking system with overt and covert subsidies. All of these actions are extraordinarily costly — so costly that creditors are getting nervous.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for November fell to 66.0, the lowest since August, from 70.6 in October.
This was well below economists' median expectation of a reading of 71.0, according to a Reuters poll.
The index of consumer expectations fell to 63.7 in early November from 68.6 in October.
Blockbuster closing another 115 stores.
Working gas in storage was 3,813 Bcf as of Friday, November 6, 2009, according
to EIA estimates. This represents a net increase of 25 Bcf from the previous
week. Stocks were 350 Bcf higher than last year at this time and 409 Bcf above
the 5-year average of 3,404 Bcf. In the East Region, stocks were 118 Bcf above
the 5-year average following net injections of 8 Bcf. Stocks in the Producing
Region were 223 Bcf above the 5-year average of 976 Bcf after a net injection of
10 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a
net addition of 7 Bcf. At 3,813 Bcf, total working gas is above the 5-year
historical range.
Movie Gallery to Shutter 450 stores by Year's end. 200 stores in the Waldenbooks Specialty Retail segment will be closed across the country.
Naples, Fla.-based Orion Bank, which had $2.7 billion in assets as of last month, was closed by regulators Friday.
The Dow Jones Industrial Average added 73 points, or 0.7%, to end at 10,270.47, leaving the blue-chips average up 2.5% for the week. The S&P 500 Index rose 6.24 points, or 0.6%, to 1,093.48, leaving the broader index up 2.3% from the week ago close. The Nasdaq Composite gained 18.86 points, or 0.9%, to 2,167.88, up 2.6% for the week.
The U.S. trade balance widened more than forecast to $36.5 billion in September and import prices rose 0.7% last month. "While trade is not a prime driver of currencies, the combination of rising imbalances and extremely low rates is typically a U.S. dollar negative," said strategists at Barclays Capital. The dollar index ($DXY), a measure of the U.S. unit against a trade-weighted basket of rival currencies, declined to 75.359 compared to 75.648 in late New York trading on Thursday. This is the biggest percentage increase in the monthly trade gap since February 1999. The data suggests that third quarter growth will be revised down from its initial estimate of a 3.5% gain. Imports rose faster than exports in September. Trade activity has recovered to levels not seen since the financial crisis hit in the fall of 2008. The U.S. trade deficit with China widened to $22.1 billion, the largest since last October. The deficit for the year-to-date now totals $274.58 billion, down from $551.44 billion in the first nine months of 2008.
The Federal Housing Administration’s mortgage insurance reserves fell to the lowest level in history and the government said more steps are needed to shore up the agency that guarantees one of every five single-family loans.
The net capital ratio, or reserves after accounting for projected losses, fell to 0.53 percent in the year ended in September, from 3 percent in fiscal 2008 and 6.4 percent in 2007, according to an annual review sent today. While FHA said the fund “has good prospects,” it is changing its risk models to account for the possibility of the ratio falling below zero.
“Additional actions” will be needed to shore up the agency, Housing and Urban Development Secretary Shaun Donovan said at a news conference in Washington today. The insurance fund tripled in size last year and has taken on more risk as private industry sources for lenders to finance and insure home loans dried up and mortgage default rates rose to record highs.
United Commercial was the 120th bank seized by federal regulators so far this year. Last November, it received $298.7 million under the federal government's Troubled Asset Relief Program.
"This is the first failed bank that had received TARP money," said Matthew Anderson of Foresight Analytics in Oakland, which tracks real estate and banks.
Besides understanding his own state’s finances, New York Gov. David Paterson apparently has an excellent grasp of California’s fiscal situation.
So much so, in fact, that Paterson feels confident speculating publicly about the probability of California eventually defaulting on its municipal bond debt.
“The market is sending many errant signals right now,” notes Dan Amoss. “U.S. policymakers are trying to reinflate stocks, houses and wages, while also recapitalizing an undercapitalized banking system with overt and covert subsidies. All of these actions are extraordinarily costly — so costly that creditors are getting nervous.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for November fell to 66.0, the lowest since August, from 70.6 in October.
This was well below economists' median expectation of a reading of 71.0, according to a Reuters poll.
The index of consumer expectations fell to 63.7 in early November from 68.6 in October.
Blockbuster closing another 115 stores.
Working gas in storage was 3,813 Bcf as of Friday, November 6, 2009, according
to EIA estimates. This represents a net increase of 25 Bcf from the previous
week. Stocks were 350 Bcf higher than last year at this time and 409 Bcf above
the 5-year average of 3,404 Bcf. In the East Region, stocks were 118 Bcf above
the 5-year average following net injections of 8 Bcf. Stocks in the Producing
Region were 223 Bcf above the 5-year average of 976 Bcf after a net injection of
10 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a
net addition of 7 Bcf. At 3,813 Bcf, total working gas is above the 5-year
historical range.
Movie Gallery to Shutter 450 stores by Year's end. 200 stores in the Waldenbooks Specialty Retail segment will be closed across the country.
Naples, Fla.-based Orion Bank, which had $2.7 billion in assets as of last month, was closed by regulators Friday.
The Dow Jones Industrial Average added 73 points, or 0.7%, to end at 10,270.47, leaving the blue-chips average up 2.5% for the week. The S&P 500 Index rose 6.24 points, or 0.6%, to 1,093.48, leaving the broader index up 2.3% from the week ago close. The Nasdaq Composite gained 18.86 points, or 0.9%, to 2,167.88, up 2.6% for the week.
Thursday, November 12, 2009
Wal-Mart
11/12/09 Wal-Mart
The government said jobless claims fell by 12,000 to 502,000 in the week ended Nov. 7. Initial jobless claims have hovered above 500,000 for 52 straight weeks. Economists surveyed by MarketWatch expected initial claims to drop to about 510,000. Continuing state claims declined 139,000 to a seasonally adjusted 5.63 million, the lowest since March.
Wal-Mart Stores Inc.said Thursday that its third-quarter profit rose to $3.24 billion, or 84 cents a share, from $3.14 billion, or 80 cents a share, a year earlier. Sales rose to $99.4 billion from $98.3 billion. Analysts, on average, estimated profit of 81 cents a share on sales of $99.2 billion, according to FactSet. The company had forecast profit of 78 cents to 82 cents a share. Wal-Mart forecast fourth-quarter profit of $1.08 to $1.12 a share in the fourth quarter and raised its full-year outlook to $3.57 to $3.61 a share from a previous projection of $3.50 to $3.60. Analysts estimated profit of $1.12 a share in the fourth quarter and $3.58 for the year, FactSet data showed. The company said U.S. comparable-store sales during the 13 weeks from October 31 to January 29 would be flat.
Kohl's expects fourth-quarter earnings of $1.14 to $1.24 a share, compared to the Wall Street target of $1.23 a share.
The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 30% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -10 (see trends). Republicans have opened a six-point lead on the Generic Congressional Ballot.
“Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
Never is a long time.
Rob Hanna: "Apparently the VIX should not be on the rise when the SPX is hitting new highs. The fact that it rose Wednesday implies a short-term pullback."
Sam Foucher: " Based on data from the 2009 BP Statistical Review, the OECD oil consumption in 2008 decreased by -3.2% while demand within emerging economies increased by +3.1%. The report also indicates that oil production from OECD countries has been declining since 1997 and is now below 23% of the world production."
The number of Americans receiving foreclosure notices was down 3 percent on a month-to-month basis, as 332,292 properties generated a foreclosure notice. That was 18.9 percent higher than last October. (Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.)
“It’s good to see that foreclosures have slowed down marginally, but we don’t really think it’s a trend,” said Rick Sharga, vice president of marketing at foreclosure tracking Web site RealtyTrac, which released the report.
British Gas said wholesale gas prices will rise from about 31p to 49p a therm for winter 2010-11 and 57p for the following winter.
Mike Shedlock: "In a separate study released Wednesday, the Center on Budget and Policy Priorities found that states will likely have to make steep cuts in their fiscal 2011 budgets, which start next July 1 in most states. That's because the critical federal stimulus dollars will run out by the end of 2010.
These cuts could take nearly a percentage point off the national gross domestic product and cost the nation 900,000 jobs, the study found.
The Center on Budget and Policy Priorities, a liberal research group, says the states need additional federal fiscal relief to avoid budget cuts that will hurt both the economy and people. State and local spending accounts for about one-eighth of the GDP.
And in California, Gov. Arnold Schwarzenegger said Tuesday that his state is facing a budget gap of up to $7 billion. The state will likely announce across-the-board spending cuts in January."
"There's just too many houses out there for the population we have," said Brian Peterson, an economist at Indiana University who focuses on housing. "The market's going to take a couple years to clear."
The homeowner vacancy rate dropped to 2.6% in the third quarter from 2.8% a year ago, when homeowner vacancies hit their all-time high. But a jump in the rental vacancy rate, to 11.1% from 9.9% a year earlier, more than offset that decline.
The latest forecast from the International Research Institute for Climate and Society (IRI), is calling for a cold winter in the Eastern U.S., down through east Texas, a normal winter in the Midwest, out through the Rockies and into California, but a warm winter through the Pacific Northwest and Plains and through all of Canada.
After three consecutive months of sequential growth, freight traffic in the U.S. declined 0.5% in September from August, the Bureau of Transportation Statistics said Thursday. On a year-to-year basis, September is the tenth of the past 14 months to post a decline. The Freight TSI index, which measures changes in freight shipments in ton-miles, was 95.7, up 2.3% from its 12-year low in May
Playboy Enterprises Inc is in talks to sell itself to Iconix Brand Group Inc., Bloomberg News reported Thursday, citing two unidentified sources close to the situation. Shares of Playboy rose 31.1% to $3.75 in recent trading..
The Pierce County Council ( WA) has approved a 2010 budget that cuts more than 300 jobs, raises fees and paves the way for a major consolidation of county government in the year ahead.
Crude stockpiles rose by 1.8 million barrels in the week ended Nov. 6, the Energy Information Administration reported. Analysts polled by Platts had expected an increase of 1 million barrels. Gasoline inventories rose 2.5 million barrels and distillate stockpiles, which include heating oil and diesel, added 300,000 barrels. Demand for gasoline dropped 1.9% from a week ago to 8.8 million barrels a day, the EIA said. After the data, December crude futures remained lower, down 2.5% at $77.37 a barrel.
"Consumers have entered a period of stabilization," said Kamalesh Rao, director of Economic Research for MasterCard Advisors. "We are not seeing robust measures of acceleration."
SpendingPulse estimates that sales, excluding autos, rose 2.4 percent in August and 0.6 percent in September but stayed at September's level during October.
Nordstrom Inc. reported late Thursday fiscal third-quarter net income rose to $83 million, or 38 cents a share, from $71 million, or 33 cents, a year ago. Net sales for the three months ended Oct. 31 rose 3.5% to $1.87 billion as shoppers hit by the recession gradually returned to stores. Same-store sales for the quarter slipped 1.2% from a year ago. The results matched what analysts polled by FactSet Research had expected. Nordstrom, citing continued improvement through the third quarter, raised its full-year earnings outlook to $1.83 to $1.88 a share from $1.50 to $1.65 previously.
The Dow Jones Industrial Average lost 93.79 points, or 0.9%, to finish at 10,197.47, near its lowest level of the session. The S&P 500 Index dipped 11.27 points, or 1%, to 1,087.24. The energy sector sank 2% along with crude-oil futures, which also hit by a buildup in U.S. crude inventories. The Nasdaq Composite fell 17.88 points, or 0.8%, to 2,149.02.
The United States federal government ran a deficit of $176 billion in October, the first month of the 2010 fiscal year, the Treasury Department reported Thursday. Receipts were $135 billion, the Treasury said, while outlays were $311 billion. The deficit was a little higher than a congressional estimate of $175 billion and marked the 13th consecutive monthly budget shortfall. A year ago in October the deficit was $156 billion.
The government said jobless claims fell by 12,000 to 502,000 in the week ended Nov. 7. Initial jobless claims have hovered above 500,000 for 52 straight weeks. Economists surveyed by MarketWatch expected initial claims to drop to about 510,000. Continuing state claims declined 139,000 to a seasonally adjusted 5.63 million, the lowest since March.
Wal-Mart Stores Inc.said Thursday that its third-quarter profit rose to $3.24 billion, or 84 cents a share, from $3.14 billion, or 80 cents a share, a year earlier. Sales rose to $99.4 billion from $98.3 billion. Analysts, on average, estimated profit of 81 cents a share on sales of $99.2 billion, according to FactSet. The company had forecast profit of 78 cents to 82 cents a share. Wal-Mart forecast fourth-quarter profit of $1.08 to $1.12 a share in the fourth quarter and raised its full-year outlook to $3.57 to $3.61 a share from a previous projection of $3.50 to $3.60. Analysts estimated profit of $1.12 a share in the fourth quarter and $3.58 for the year, FactSet data showed. The company said U.S. comparable-store sales during the 13 weeks from October 31 to January 29 would be flat.
Kohl's expects fourth-quarter earnings of $1.14 to $1.24 a share, compared to the Wall Street target of $1.23 a share.
The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 30% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -10 (see trends). Republicans have opened a six-point lead on the Generic Congressional Ballot.
“Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
Never is a long time.
Rob Hanna: "Apparently the VIX should not be on the rise when the SPX is hitting new highs. The fact that it rose Wednesday implies a short-term pullback."
Sam Foucher: " Based on data from the 2009 BP Statistical Review, the OECD oil consumption in 2008 decreased by -3.2% while demand within emerging economies increased by +3.1%. The report also indicates that oil production from OECD countries has been declining since 1997 and is now below 23% of the world production."
The number of Americans receiving foreclosure notices was down 3 percent on a month-to-month basis, as 332,292 properties generated a foreclosure notice. That was 18.9 percent higher than last October. (Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.)
“It’s good to see that foreclosures have slowed down marginally, but we don’t really think it’s a trend,” said Rick Sharga, vice president of marketing at foreclosure tracking Web site RealtyTrac, which released the report.
British Gas said wholesale gas prices will rise from about 31p to 49p a therm for winter 2010-11 and 57p for the following winter.
Mike Shedlock: "In a separate study released Wednesday, the Center on Budget and Policy Priorities found that states will likely have to make steep cuts in their fiscal 2011 budgets, which start next July 1 in most states. That's because the critical federal stimulus dollars will run out by the end of 2010.
These cuts could take nearly a percentage point off the national gross domestic product and cost the nation 900,000 jobs, the study found.
The Center on Budget and Policy Priorities, a liberal research group, says the states need additional federal fiscal relief to avoid budget cuts that will hurt both the economy and people. State and local spending accounts for about one-eighth of the GDP.
And in California, Gov. Arnold Schwarzenegger said Tuesday that his state is facing a budget gap of up to $7 billion. The state will likely announce across-the-board spending cuts in January."
"There's just too many houses out there for the population we have," said Brian Peterson, an economist at Indiana University who focuses on housing. "The market's going to take a couple years to clear."
The homeowner vacancy rate dropped to 2.6% in the third quarter from 2.8% a year ago, when homeowner vacancies hit their all-time high. But a jump in the rental vacancy rate, to 11.1% from 9.9% a year earlier, more than offset that decline.
The latest forecast from the International Research Institute for Climate and Society (IRI), is calling for a cold winter in the Eastern U.S., down through east Texas, a normal winter in the Midwest, out through the Rockies and into California, but a warm winter through the Pacific Northwest and Plains and through all of Canada.
After three consecutive months of sequential growth, freight traffic in the U.S. declined 0.5% in September from August, the Bureau of Transportation Statistics said Thursday. On a year-to-year basis, September is the tenth of the past 14 months to post a decline. The Freight TSI index, which measures changes in freight shipments in ton-miles, was 95.7, up 2.3% from its 12-year low in May
Playboy Enterprises Inc is in talks to sell itself to Iconix Brand Group Inc., Bloomberg News reported Thursday, citing two unidentified sources close to the situation. Shares of Playboy rose 31.1% to $3.75 in recent trading..
The Pierce County Council ( WA) has approved a 2010 budget that cuts more than 300 jobs, raises fees and paves the way for a major consolidation of county government in the year ahead.
Crude stockpiles rose by 1.8 million barrels in the week ended Nov. 6, the Energy Information Administration reported. Analysts polled by Platts had expected an increase of 1 million barrels. Gasoline inventories rose 2.5 million barrels and distillate stockpiles, which include heating oil and diesel, added 300,000 barrels. Demand for gasoline dropped 1.9% from a week ago to 8.8 million barrels a day, the EIA said. After the data, December crude futures remained lower, down 2.5% at $77.37 a barrel.
"Consumers have entered a period of stabilization," said Kamalesh Rao, director of Economic Research for MasterCard Advisors. "We are not seeing robust measures of acceleration."
SpendingPulse estimates that sales, excluding autos, rose 2.4 percent in August and 0.6 percent in September but stayed at September's level during October.
Nordstrom Inc. reported late Thursday fiscal third-quarter net income rose to $83 million, or 38 cents a share, from $71 million, or 33 cents, a year ago. Net sales for the three months ended Oct. 31 rose 3.5% to $1.87 billion as shoppers hit by the recession gradually returned to stores. Same-store sales for the quarter slipped 1.2% from a year ago. The results matched what analysts polled by FactSet Research had expected. Nordstrom, citing continued improvement through the third quarter, raised its full-year earnings outlook to $1.83 to $1.88 a share from $1.50 to $1.65 previously.
The Dow Jones Industrial Average lost 93.79 points, or 0.9%, to finish at 10,197.47, near its lowest level of the session. The S&P 500 Index dipped 11.27 points, or 1%, to 1,087.24. The energy sector sank 2% along with crude-oil futures, which also hit by a buildup in U.S. crude inventories. The Nasdaq Composite fell 17.88 points, or 0.8%, to 2,149.02.
The United States federal government ran a deficit of $176 billion in October, the first month of the 2010 fiscal year, the Treasury Department reported Thursday. Receipts were $135 billion, the Treasury said, while outlays were $311 billion. The deficit was a little higher than a congressional estimate of $175 billion and marked the 13th consecutive monthly budget shortfall. A year ago in October the deficit was $156 billion.
Wednesday, November 11, 2009
Veterans Day
11/11/09 Veterans Day
LPS' October Mortgage Monitor also cites large "shadow" foreclosure and real estate owned property inventories. The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline.
Nearly one-third of foreclosures remain in pre-sale status after 12 months - twice as many as the previous year. The six-month average deterioration ratio has risen the past two months to 300%, showing that for every loan that improves in status, three more deteriorate further.
Robert McHugh: "At this point we have an inter-market Bearish divergence between the Industrials and the S&P 500, the NASDAQ Composite, the NDX, and the Trannies. On Monday, the Industrials hit a new high for the rally from March 2009. The S&P 500, NASDAQ Composite, NDX and the Trannies did not. We believe a major top is coming, and soon, if it did not arrive Monday. Monday’s rally came on low volume, which is indicative of terminal rallies."
Rocky Vega: " Billionaire hedge fund investor Jim Chanos, the famous Enron short seller, is in the camp of professionals who view China as headed toward a crash. The China bears suspect that the economy is not as healthy as portrayed, and that many of its components that are actually stronger have become overheated. Basically, they believe that the “entire system is teetering toward collapse.”
Employers initiated 1,776 extended mass layoff events that resulted in 277,924 job separations in the third quarter of 2009. The total number of events reached a record high for any third quarter. Nine major industry sectors had a record high number of events for a third quarter.
Macy's reported a narrower than expected loss in its third quarter, but shares fell as its forecast for the holiday season fell short.
FedEx said it sees holiday shipping up 8%. UPS will raise their prices in 2010.
Wal Mart is offering an amazing deal on the Xbox 360 on Saturday, giving customers who purchase the $200 Arcade bundle a $100 gift card! Wal-Mart Stores Inc. said Wednesday it will offer a $100 gift card with each purchase of a BlackBerry mobile phone and two-year contract, the discounter's latest incentive ahead of the holiday season.
Gold rose to record highs above $1,115 an ounce on Monday as the dollar slid to 15-month lows, with hopes for a global economic recovery and gains in equity markets boosting the appeal of higher-yielding currencies.
Stubbornly high joblessness threatens to trigger loan defaults and drag on consumption next year, hobbling a U.S. economy struggling to rebound from recession, World Bank President Robert Zoellick said Wednesday.
ZeroHedge: "Let's do the math: the US Gov't needs to roll about $5 trillion (and increasing) every year, Commercial Real Estate has a $3 trillion refi cliff around 2014 and the banking system has a $7 trillion roll maturity by 2012. In other words at or about 2012, or at the time Barack Obama is sure to be enjoying record approval ratings (high or low, your choice) courtesy of 30% unemployment, the American economy will be straddled with not just the ongoing burden of issuing about $2 trillion in debt each year to finance what can only be characterized as a budget concocted by the most hard-core, raving lunatics in the Federal Insane Asylum Reserve, but will have to deal with roughly $15 trillion of rolling maturities."
Pragmatic Capitalist: "I don’t know if any characteristic of this massive 6 month rally has been more apparent than the huge futures run-ups we’ve seen at random points during the trading day. Without news, the S&P 500 futures get gunned on huge volume and surge higher. I’ve seen it at least every other day for 6 months. It tends to occur on low volume days such as the one we’re currently experiencing. As you can see in the chart below, the futures are getting gunned on massive volume without any coinciding volume in SPY. This means an institution is jamming the futures higher knowing that they can drive the market higher on no volume. Effectively, they can take out every asking price with a large enough order and immediately create a 0.25% bump in the market in no time. If you’ve been wondering why we’ve seen huge surges on low volume days and conviction high volume selling on down days this explains much of it.
I don’t know if there is malfeasance behind this or if the buyer is simply too stupid to input trades at the bid (like most rational investors do as they try to achieve the best low price), but this is certainly an odd phenomenon that I cannot recall occurring so routinely over the course of my career. Who is the mystery institutional buyer that just needs to place their huge block orders with such urgency?"
Ucilia Wang: "General Electric plans to close its only U.S. solar panel factory because production costs have exceeded sale prices.
The Fairfield, Conn.-based company told the Dow Jones Clean Technology Insight that silicon panel manufacturing at its facility in Delaware, will stop in January.
GE will shutter the factory altogether by June. The factory can produce 34 megawatts of solar panels per year and employs 82 people. GE plans to layoff the workers with severance packages.
The move reflects the tough times experienced by solar energy equipment makers worldwide as supply far exceeded demand over the past year. Recession and a big reduction in solar subsidies in Spain - once a booming market - are key contributors.
Some manufacturers have seen prices for their products fall by anywhere from 30 percent to 50 percent over the past year."
“I think stocks are topping out, commodities are topping out and the dollar is making a bottom,” says Robert Prechter, president of Elliott Wave International and author of “Conquer the Crash“.
According to Yahoo Finance - Tech Ticker, Prechter also makes the seemingly counterintuitive argument that the dollar will rally because there’s so much debt, rather than being doomed because of it.
The New Zealand dollar fell after central bank Governor Alan Bollard said the “significant” increase in the currency is unlikely to be sustainable and may slow an improvement in the nation’s current-account deficit.
Bloomberg reports: "China, rejecting calls from Europe and Japan, will keep the yuan from gaining against the dollar until exports revive, state researchers said. Policy makers are unlikely to allow the currency to resume its appreciation this year after keeping it almost unchanged since July 2008, Beijing-based Zhu Baoliang, the chief economist at the State Information Center, said in an interview yesterday. China will stick with its 'tough stance' on the currency, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said in a separate interview."
The U.S. has agreed to pay $3 million to a former government worker who accused officials with the CIA and State Department of spying on him with a bugged coffee table.
Rather than comply with a court order to provide lawyers in the case with what the U.S. government says is classified information, the government has agreed to settle to end the 15-year-old suit.
A close review of the case suggests that the Justice Department may have also decided to pay off the plaintiff in order to quash the series of damaging legal rulings issued by the influential judge overseeing the case that would have forced them to disclose the classified information. Those decisions may have a bearing on the “state secrets privilege” that the Bush and Obama administrations have used to try and thwart a high-profile lawsuit in California over illegal wiretapping conducted in the war on terror.
Whether it's over or not, the recession has made retirement at age 65 more difficult. New analysis from the Center for Retirement Research at Boston College found that 51 percent of Americans have a high risk of not being able to maintain their current lifestyle in retirement, up from 44 percent in 2007. "If they retire at age 65, they will not be able to maintain the same standard of living as they did before," says the center's director, Alicia Munnell, about the households at risk. These Americans will have to significantly cut their expenses when they leave the workforce at age 65--or delay retirement. "The later you retire, the more likely you are to be able to maintain your standard of living," Munnell says.
China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.
In its third-quarter monetary policy report, the People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.
Just one in 20 Americans say they plan to buy a home within the next year, and they're most likely to be 34 years old or younger and living in the South or West, according to a survey released Wednesday.
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices appear to have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.
Hewlett-Packard Co. said Wednesday it has agreed to buy networking software and equipment maker 3Com Corp. in a deal the companies valued at $2.7 billion. The company said it will give 3Com stockholders $7.90 per share. Both HP's and 3Com's boards have approved the deal, which HP expects will close in the first half of 2010. HP also issued a preliminary report Wednesday for the three months that ended in October. On an adjusted basis, HP said it earned $1.14 per share, about 11 percent higher than a year ago. Revenue fell 8 percent from the same period a year ago, to $30.8 billion.
Applied Materials said it expects net sales to grow by more than 30% in fiscal 2010.
The Dow industrials gained 44.29 points, or 0.4%, to end at 10,291.26. The S&P 500 Index rose 5.5 points, or 0.5%, to 1,098.51. The Nasdaq Composite added 15.82 points, or 0.7%, to end at 2,166.90.
Gold for December delivery finished at a new record close of $1,114.60, up $12.10, or 1%, on the day at the New York Mercantile Exchange.
The most significant change at Wal-Mart is that the majority of its discount stores (as opposed to its Supercenters) will open Thanksgiving morning at 6 a.m. and stay open through Friday evening. Last year, those stores closed Thanksgiving evening and reopened early Friday morning. By keeping the stores open for 24 hours, Wal-Mart is hoping for a steady flow of shoppers instead of mammoth crowds swelling outside its stores in the wee hours of Friday.
LPS' October Mortgage Monitor also cites large "shadow" foreclosure and real estate owned property inventories. The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline.
Nearly one-third of foreclosures remain in pre-sale status after 12 months - twice as many as the previous year. The six-month average deterioration ratio has risen the past two months to 300%, showing that for every loan that improves in status, three more deteriorate further.
Robert McHugh: "At this point we have an inter-market Bearish divergence between the Industrials and the S&P 500, the NASDAQ Composite, the NDX, and the Trannies. On Monday, the Industrials hit a new high for the rally from March 2009. The S&P 500, NASDAQ Composite, NDX and the Trannies did not. We believe a major top is coming, and soon, if it did not arrive Monday. Monday’s rally came on low volume, which is indicative of terminal rallies."
Rocky Vega: " Billionaire hedge fund investor Jim Chanos, the famous Enron short seller, is in the camp of professionals who view China as headed toward a crash. The China bears suspect that the economy is not as healthy as portrayed, and that many of its components that are actually stronger have become overheated. Basically, they believe that the “entire system is teetering toward collapse.”
Employers initiated 1,776 extended mass layoff events that resulted in 277,924 job separations in the third quarter of 2009. The total number of events reached a record high for any third quarter. Nine major industry sectors had a record high number of events for a third quarter.
Macy's reported a narrower than expected loss in its third quarter, but shares fell as its forecast for the holiday season fell short.
FedEx said it sees holiday shipping up 8%. UPS will raise their prices in 2010.
Wal Mart is offering an amazing deal on the Xbox 360 on Saturday, giving customers who purchase the $200 Arcade bundle a $100 gift card! Wal-Mart Stores Inc. said Wednesday it will offer a $100 gift card with each purchase of a BlackBerry mobile phone and two-year contract, the discounter's latest incentive ahead of the holiday season.
Gold rose to record highs above $1,115 an ounce on Monday as the dollar slid to 15-month lows, with hopes for a global economic recovery and gains in equity markets boosting the appeal of higher-yielding currencies.
Stubbornly high joblessness threatens to trigger loan defaults and drag on consumption next year, hobbling a U.S. economy struggling to rebound from recession, World Bank President Robert Zoellick said Wednesday.
ZeroHedge: "Let's do the math: the US Gov't needs to roll about $5 trillion (and increasing) every year, Commercial Real Estate has a $3 trillion refi cliff around 2014 and the banking system has a $7 trillion roll maturity by 2012. In other words at or about 2012, or at the time Barack Obama is sure to be enjoying record approval ratings (high or low, your choice) courtesy of 30% unemployment, the American economy will be straddled with not just the ongoing burden of issuing about $2 trillion in debt each year to finance what can only be characterized as a budget concocted by the most hard-core, raving lunatics in the Federal Insane Asylum Reserve, but will have to deal with roughly $15 trillion of rolling maturities."
Pragmatic Capitalist: "I don’t know if any characteristic of this massive 6 month rally has been more apparent than the huge futures run-ups we’ve seen at random points during the trading day. Without news, the S&P 500 futures get gunned on huge volume and surge higher. I’ve seen it at least every other day for 6 months. It tends to occur on low volume days such as the one we’re currently experiencing. As you can see in the chart below, the futures are getting gunned on massive volume without any coinciding volume in SPY. This means an institution is jamming the futures higher knowing that they can drive the market higher on no volume. Effectively, they can take out every asking price with a large enough order and immediately create a 0.25% bump in the market in no time. If you’ve been wondering why we’ve seen huge surges on low volume days and conviction high volume selling on down days this explains much of it.
I don’t know if there is malfeasance behind this or if the buyer is simply too stupid to input trades at the bid (like most rational investors do as they try to achieve the best low price), but this is certainly an odd phenomenon that I cannot recall occurring so routinely over the course of my career. Who is the mystery institutional buyer that just needs to place their huge block orders with such urgency?"
Ucilia Wang: "General Electric plans to close its only U.S. solar panel factory because production costs have exceeded sale prices.
The Fairfield, Conn.-based company told the Dow Jones Clean Technology Insight that silicon panel manufacturing at its facility in Delaware, will stop in January.
GE will shutter the factory altogether by June. The factory can produce 34 megawatts of solar panels per year and employs 82 people. GE plans to layoff the workers with severance packages.
The move reflects the tough times experienced by solar energy equipment makers worldwide as supply far exceeded demand over the past year. Recession and a big reduction in solar subsidies in Spain - once a booming market - are key contributors.
Some manufacturers have seen prices for their products fall by anywhere from 30 percent to 50 percent over the past year."
“I think stocks are topping out, commodities are topping out and the dollar is making a bottom,” says Robert Prechter, president of Elliott Wave International and author of “Conquer the Crash“.
According to Yahoo Finance - Tech Ticker, Prechter also makes the seemingly counterintuitive argument that the dollar will rally because there’s so much debt, rather than being doomed because of it.
The New Zealand dollar fell after central bank Governor Alan Bollard said the “significant” increase in the currency is unlikely to be sustainable and may slow an improvement in the nation’s current-account deficit.
Bloomberg reports: "China, rejecting calls from Europe and Japan, will keep the yuan from gaining against the dollar until exports revive, state researchers said. Policy makers are unlikely to allow the currency to resume its appreciation this year after keeping it almost unchanged since July 2008, Beijing-based Zhu Baoliang, the chief economist at the State Information Center, said in an interview yesterday. China will stick with its 'tough stance' on the currency, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said in a separate interview."
The U.S. has agreed to pay $3 million to a former government worker who accused officials with the CIA and State Department of spying on him with a bugged coffee table.
Rather than comply with a court order to provide lawyers in the case with what the U.S. government says is classified information, the government has agreed to settle to end the 15-year-old suit.
A close review of the case suggests that the Justice Department may have also decided to pay off the plaintiff in order to quash the series of damaging legal rulings issued by the influential judge overseeing the case that would have forced them to disclose the classified information. Those decisions may have a bearing on the “state secrets privilege” that the Bush and Obama administrations have used to try and thwart a high-profile lawsuit in California over illegal wiretapping conducted in the war on terror.
Whether it's over or not, the recession has made retirement at age 65 more difficult. New analysis from the Center for Retirement Research at Boston College found that 51 percent of Americans have a high risk of not being able to maintain their current lifestyle in retirement, up from 44 percent in 2007. "If they retire at age 65, they will not be able to maintain the same standard of living as they did before," says the center's director, Alicia Munnell, about the households at risk. These Americans will have to significantly cut their expenses when they leave the workforce at age 65--or delay retirement. "The later you retire, the more likely you are to be able to maintain your standard of living," Munnell says.
China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.
In its third-quarter monetary policy report, the People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.
Just one in 20 Americans say they plan to buy a home within the next year, and they're most likely to be 34 years old or younger and living in the South or West, according to a survey released Wednesday.
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices appear to have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.
Hewlett-Packard Co. said Wednesday it has agreed to buy networking software and equipment maker 3Com Corp. in a deal the companies valued at $2.7 billion. The company said it will give 3Com stockholders $7.90 per share. Both HP's and 3Com's boards have approved the deal, which HP expects will close in the first half of 2010. HP also issued a preliminary report Wednesday for the three months that ended in October. On an adjusted basis, HP said it earned $1.14 per share, about 11 percent higher than a year ago. Revenue fell 8 percent from the same period a year ago, to $30.8 billion.
Applied Materials said it expects net sales to grow by more than 30% in fiscal 2010.
The Dow industrials gained 44.29 points, or 0.4%, to end at 10,291.26. The S&P 500 Index rose 5.5 points, or 0.5%, to 1,098.51. The Nasdaq Composite added 15.82 points, or 0.7%, to end at 2,166.90.
Gold for December delivery finished at a new record close of $1,114.60, up $12.10, or 1%, on the day at the New York Mercantile Exchange.
The most significant change at Wal-Mart is that the majority of its discount stores (as opposed to its Supercenters) will open Thanksgiving morning at 6 a.m. and stay open through Friday evening. Last year, those stores closed Thanksgiving evening and reopened early Friday morning. By keeping the stores open for 24 hours, Wal-Mart is hoping for a steady flow of shoppers instead of mammoth crowds swelling outside its stores in the wee hours of Friday.
Tuesday, November 10, 2009
Unemployment
11/10/09 Unemployment
John Crudele: "My friend John Williams of Shadow Government Stats thinks the true unemployment rate would be 22.1 percent if everyone -- all discouraged former workers, encouraged, involuntary part-timers and the like -- were included."
Electronic Arts Inc. reported a wider quarterly loss on Monday and announced plans to lay off as many as 1,500 workers in an effort to reduce costs, as the video-game publisher tries to shift its focus away from retail-based game sales.
The layoffs amount to about 17% of the company's current workforce, with 900 positions being cut from the game development units. The company says the layoffs will help it save about $100 million a year in expenses
ICSC sees November sales could be up 5% to 8% against easy comparisons. In November 2008, sales tumbled by a historic 7.7%.
The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.
...The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008.
"Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty," the IEA said in its annual World Energy Outlook report.
Rep. Ron Paul: "If healthcare reform does indeed pass, we should not be under the illusion that it will be free. The money to pay for it will have to come from somewhere. They say they will get the money from cutting waste, fraud and abuse, but all of that is seemingly intrinsic to government programs. Since they want to expand the government's reach we have to assume we will be trading waste, fraud and abuse for waste, fraud and abuse with a bigger budget. The powers that be have insisted the money won't come from higher taxes, it won't come from rationing of care, and it won't come from higher premiums. This can only then put more pressure on the Fed to print the money out of thin air. We already have a weakening dollar. They are accelerating everything that weakened it in the past. Adding this new, monumental pressure could very well be the straw that will break the dollar's back.
Foreign creditors are already nervous about continuing to invest in the US because of our skyrocketing debt. The explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness."
Charles Goyette: "Gold's recent advances signal that we are in a period of major transition now. The American dollar's role as the world's reserve currency is inherently unstable and the signs of a breakdown are all around. Just as the monetary authorities have been unable to reinflate the high-tech bubble or the real estate bubble, when the dollar bubble is finally burst, no other paper currency will be able to take its place."
Energy companies shut 29.6 percent of oil production and 27.5 percent of natural gas output by Monday in the Gulf of Mexico as Tropical Storm Ida spun through the region.Ida came ashore at Dauphin Island, Alabama, near Mobile Bay, Tuesday at 5:40 a.m. CST (1140 GMT).The Gulf is the source of 25 percent of U.S. domestically produced oil and 15 percent of natural gas. About 40 percent of U.S. refining capacity is located on the Gulf Coast.
CBS is reporting President Obama has decided to send 40,000 more troops to Afghanistan. The decision indicates one direction of the Obama administration's foreign policy - a large, long term force in Afghanistan. Former Soviet President Mikhail Gorbachev, drawing on his experience of military failure in Afghanistan in the 1980s, said the U.S. can’t win the conflict there and should begin pulling out its soldiers.
The UK government's credit rating is "absolutely" safe, despite a warning earlier from Fitch Ratings that Britain is the major economy most at risk of losing its AAA status, UK Trade Minister Mervyn Davies said Tuesday.
Home prices fell in the third quarter from year-ago levels in about 80 percent of U.S. metropolitan areas, the National Association of Realtors said Tuesday.
The industry trade group said median prices fell compared to a year earlier in 123 of 153 metro areas, while 30 areas saw prices rise.The national median price fell 11.2%.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index slipped to 47.9 in November from 48.7 in October. Had the figures been reversed and were higher, the main stream news would have made it a big headline.
Advanta Corp. files for bankruptcy, may turn over its banking unit to regulators.
ZeroHedge: "..S&P Price Oscillator Is Three Standard Deviations From Mean: 99% Outlier Market."
Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
If Asia's loose monetary policy is left unaddressed it will ultimately blow a bubble of "mind-boggling size" that could become uncontrollable without fiscal tightening, Frederic Neumann, economist at HSBC, told CNBC Tuesday.
The housing market has improved slightly and prices are starting to stabilize, but we could see another downswing this winter, James Lockhart, vice chairman of WL Ross & Co. and former director of the Federal Housing Financial Agency, told CNBC Tuesday. “We are bouncing along the bottom in the housing market, but we’re not out of the woods yet,” he said. “I think we still have a ways to go.”
Copper stockpiles held in duty-free warehouses in China, the top user, may be re-exported after surging to as much as 350,000 tons from almost none at the start of the year, according to Xi’an Maike Metal International Group.
The Dow Jones Industrial Average gained 20.03 points to 10,246.97. But the broad S&P 500 Index was less than 1 point lower at 1,093.01, while the Nasdaq Composite fell 2.98 points to end at 2,151.08.
Adobe Systems said Tuesday it is cutting 680 full-time jobs, or about 9 percent of its work force, to align costs with its fiscal 2010 budget.
The American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 1.22 million barrels to 337.5 million. December oil dropped 75 cents, or 0.9 percent, to $78.68 a barrel in electronic trading at 4:31 p.m. Energy producers in the U.S. idled about 43 percent of oil and 28 percent of natural-gas output in the Gulf because of Ida, the Minerals Management Service said in a statement today. About 560,000 barrels of oil output and 1.9 billion cubic feet of daily gas production remain shut.
U.S. workers were reluctant to quit their jobs in September as businesses showed no signs of increased hiring, a government report showed Tuesday.
The job separations rate, a measure that covers all terminations of employment, stood at 3.3 percent in September, unchanged from the previous month, the Labor Department said in its monthly Job Openings and Labor Turnover Survey.
The quits rate, a subset of total separations and a barometer of how easy it is for workers to change jobs, remained unchanged in September at 1.4 percent, suggesting a lack of confidence in the economy jump-starting job growth.
John Crudele: "My friend John Williams of Shadow Government Stats thinks the true unemployment rate would be 22.1 percent if everyone -- all discouraged former workers, encouraged, involuntary part-timers and the like -- were included."
Electronic Arts Inc. reported a wider quarterly loss on Monday and announced plans to lay off as many as 1,500 workers in an effort to reduce costs, as the video-game publisher tries to shift its focus away from retail-based game sales.
The layoffs amount to about 17% of the company's current workforce, with 900 positions being cut from the game development units. The company says the layoffs will help it save about $100 million a year in expenses
ICSC sees November sales could be up 5% to 8% against easy comparisons. In November 2008, sales tumbled by a historic 7.7%.
The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.
...The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008.
"Falling energy investment will have far-reaching and, depending on how governments respond, potentially serious consequences for energy security, climate change and energy poverty," the IEA said in its annual World Energy Outlook report.
Rep. Ron Paul: "If healthcare reform does indeed pass, we should not be under the illusion that it will be free. The money to pay for it will have to come from somewhere. They say they will get the money from cutting waste, fraud and abuse, but all of that is seemingly intrinsic to government programs. Since they want to expand the government's reach we have to assume we will be trading waste, fraud and abuse for waste, fraud and abuse with a bigger budget. The powers that be have insisted the money won't come from higher taxes, it won't come from rationing of care, and it won't come from higher premiums. This can only then put more pressure on the Fed to print the money out of thin air. We already have a weakening dollar. They are accelerating everything that weakened it in the past. Adding this new, monumental pressure could very well be the straw that will break the dollar's back.
Foreign creditors are already nervous about continuing to invest in the US because of our skyrocketing debt. The explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness."
Charles Goyette: "Gold's recent advances signal that we are in a period of major transition now. The American dollar's role as the world's reserve currency is inherently unstable and the signs of a breakdown are all around. Just as the monetary authorities have been unable to reinflate the high-tech bubble or the real estate bubble, when the dollar bubble is finally burst, no other paper currency will be able to take its place."
Energy companies shut 29.6 percent of oil production and 27.5 percent of natural gas output by Monday in the Gulf of Mexico as Tropical Storm Ida spun through the region.Ida came ashore at Dauphin Island, Alabama, near Mobile Bay, Tuesday at 5:40 a.m. CST (1140 GMT).The Gulf is the source of 25 percent of U.S. domestically produced oil and 15 percent of natural gas. About 40 percent of U.S. refining capacity is located on the Gulf Coast.
CBS is reporting President Obama has decided to send 40,000 more troops to Afghanistan. The decision indicates one direction of the Obama administration's foreign policy - a large, long term force in Afghanistan. Former Soviet President Mikhail Gorbachev, drawing on his experience of military failure in Afghanistan in the 1980s, said the U.S. can’t win the conflict there and should begin pulling out its soldiers.
The UK government's credit rating is "absolutely" safe, despite a warning earlier from Fitch Ratings that Britain is the major economy most at risk of losing its AAA status, UK Trade Minister Mervyn Davies said Tuesday.
Home prices fell in the third quarter from year-ago levels in about 80 percent of U.S. metropolitan areas, the National Association of Realtors said Tuesday.
The industry trade group said median prices fell compared to a year earlier in 123 of 153 metro areas, while 30 areas saw prices rise.The national median price fell 11.2%.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index slipped to 47.9 in November from 48.7 in October. Had the figures been reversed and were higher, the main stream news would have made it a big headline.
Advanta Corp. files for bankruptcy, may turn over its banking unit to regulators.
ZeroHedge: "..S&P Price Oscillator Is Three Standard Deviations From Mean: 99% Outlier Market."
Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
If Asia's loose monetary policy is left unaddressed it will ultimately blow a bubble of "mind-boggling size" that could become uncontrollable without fiscal tightening, Frederic Neumann, economist at HSBC, told CNBC Tuesday.
The housing market has improved slightly and prices are starting to stabilize, but we could see another downswing this winter, James Lockhart, vice chairman of WL Ross & Co. and former director of the Federal Housing Financial Agency, told CNBC Tuesday. “We are bouncing along the bottom in the housing market, but we’re not out of the woods yet,” he said. “I think we still have a ways to go.”
Copper stockpiles held in duty-free warehouses in China, the top user, may be re-exported after surging to as much as 350,000 tons from almost none at the start of the year, according to Xi’an Maike Metal International Group.
The Dow Jones Industrial Average gained 20.03 points to 10,246.97. But the broad S&P 500 Index was less than 1 point lower at 1,093.01, while the Nasdaq Composite fell 2.98 points to end at 2,151.08.
Adobe Systems said Tuesday it is cutting 680 full-time jobs, or about 9 percent of its work force, to align costs with its fiscal 2010 budget.
The American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 1.22 million barrels to 337.5 million. December oil dropped 75 cents, or 0.9 percent, to $78.68 a barrel in electronic trading at 4:31 p.m. Energy producers in the U.S. idled about 43 percent of oil and 28 percent of natural-gas output in the Gulf because of Ida, the Minerals Management Service said in a statement today. About 560,000 barrels of oil output and 1.9 billion cubic feet of daily gas production remain shut.
U.S. workers were reluctant to quit their jobs in September as businesses showed no signs of increased hiring, a government report showed Tuesday.
The job separations rate, a measure that covers all terminations of employment, stood at 3.3 percent in September, unchanged from the previous month, the Labor Department said in its monthly Job Openings and Labor Turnover Survey.
The quits rate, a subset of total separations and a barometer of how easy it is for workers to change jobs, remained unchanged in September at 1.4 percent, suggesting a lack of confidence in the economy jump-starting job growth.
Monday, November 09, 2009
Kraft and Cadbury
11/9/09 Kraft and Cadbury
Kraft Foods Inc. has made a 9.8 billion pound ($16.4 billion) cash-and-stock offer for British candy maker Cadbury PLC.
Monday's hostile offer values each Cadbury share at 717 pence, lower than Kraft's previous rebuffed approach of 745 pence.
Kraft says the price "represents a substantial premium to the unaffected share price of Cadbury," referring to a surge in the British company's stock since Kraft's previous bid was made public in September. Kraft Foods said the bid is priced 37% above Cadbury's close on July 3 and said no other potential offeror has publicly declared its interest in acquiring Cadbury.
Cadbury immediately said no to the renewed approach, with chairman Roger Carr saying "Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model."
The U.S.Dollar Index made a new 15-month low at 74.93. The standard of living for all Americans continues to decline-- year after year. Where is the outcry?
McDonald's Corp. said Monday that its October same-store sales rose 3.3%. Comparable sales, or constant-currency sales at restaurants in operation at least 13 months, were down 0.1% in the U.S., up 6.4% in Europe and climbed 4.7% in Asia, Middle East and Africa. Total systemwide sales rose 10.3% and were up 5.2% excluding the impact of currency translations, McDonald's said.
General Electric Co. and Comcast Corp have agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far, a source familiar with the matter said on Sunday.
The resolution of that issue brings the parties one step closer to an agreement, but French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, the source said.
The euro pushed back up above $1.50 Monday after finance ministers from the Group of 20 rich and developing countries steered clear from addressing the weakness of the U.S. currency against most of its competitors at a meeting over the weekend.
At the meeting in St. Andrews, Scotland, the finance ministers pledged to "continue to provide support for the economy until the recovery is assured" -- in effect telling the markets that borrowing costs will not be rising any time soon.
The thinly traded November gold contract rose $14.20, or 1.3%, to $1,109.30 an ounce, the highest level for a front-month gold contract.
Gold for December delivery, the most-active contract, climbed $13.50, or 1.2%, to $1,109.20 an ounce on the Comex division of the New York Mercantile Exchange, after hitting $1,111.70.
"While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines," according to the report.
That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2. In September, the National Association of Realtors reports that nearly 70 percent of all sales were on homes priced $250,000 or lower.
Home values are still worst in the local markets that saw the biggest housing boom and bust. These are in California, Florida, Arizona and Nevada.
John Hussman: "“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”
While the news itself is no surprise in the sense that we have expected and written about this situation repeatedly in recent months, the phrase “sharp increases in foreclosure activity” is notable in the context of widespread views that credit difficulties are abating. Below is a reminder of where we stand in relation to the reset curve. This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave. The pleasant lull in the reset schedule is decidedly behind us."
Brad Setser: "In my view, it will be hard for the dollar to emerge as major funding currency."
“Bullion is likely to begin outperforming its producers”, the mining stocks, John Roque, managing director at WJB Capital Group, told Bloomberg. According to his technical analysis, “gold should do better than gold equities … it doesn’t mean the stocks won’t perform, but they will likely do less well relative to the metal.”
Louis Uchitelle,
The New York Times
"A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation....The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country....American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”
“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.
China will raise retail fuel prices later on Monday, an industry source familiar with the situation told Reuters, with gasoline and diesel likely to hit their highest prices ever following the widely expected rise.
The source did not elaborate or say how big the price rise would be, but industry website C1, which has correctly predicted price movements in the past, said the government would add 480 yuan ($70.32) per ton to the pump price of both diesel and gasoline.
Tom Burghardt: "As AT&T whistleblower Mark Klein revealed in a sworn affidavit that described how the company physically split and copied the traffic that flowed into its offices, NSA was virtually duplicating, sifting and storing the entire Internet. Klein wrote in his self-published book:
What screams out at you when examining this physical arrangement is that the NSA was vacuuming up everything flowing in the Internet stream: e-mail, web browsing, Voice-Over-Internet phone calls, pictures, streaming video, you name it. The splitter has no intelligence at all, it just makes a blind copy. There could not possibly be a legal warrant for this, since according to the 4th Amendment warrants have to be specific, "particularly describing the place to be searched, and the persons or things to be seized." ...
This was a massive blind copying of the communications of millions of people, foreign and domestic, randomly mixed together. From a legal standpoint, it does not matter what they claim to throw away later in the their secret rooms, the violation has already occurred at the splitter. (Mark Klein, Wiring Up the Big Brother Machine... And Fighting It, Charleston, South Carolina: BookSurge, 2009, pp. 38-39.)
Klein's revelations were confirmed by former NSA analyst and whistleblower Russell Tice, who told MSNBC's Countdown with Keith Olbermann in January that the NSA "had access to all Americans' communications" and spied "24/7" on domestic political activist groups and "U.S. news organizations and reporters and journalists."
In demanding that the independent federal judiciary toss these cases, the Obama administration is asserting a broad interpretation of Executive Branch privileges that caused much outrage and hand-wringing by congressional Democrats--when they were out of power.
Under the "change" regime however, what were once viewed by Democrats and their supporters as prime examples of Bushist lawlessness and contempt for constitutional safeguards, are now deemed vital state secrets that "protect" the American people, even as the capitalist state wages an endless "War on Terror" to seize other people's resources for geostrategic advantage over the competition. As Glenn Greenwald wrote:
That was the principal authoritarian instrument used by Bush/Cheney to shield itself from judicial accountability, and it is now the instrument used by the Obama DOJ to do the same. Initially, consider this: if Obama's argument is true--that national security would be severely damaged from any disclosures about the government's surveillance activities, even when criminal--doesn't that mean that the Bush administration and its right-wing followers were correct all along when they insisted that The New York Times had damaged American national security by revealing the existence of the illegal NSA program? Isn't that the logical conclusion from Obama's claim that no court can adjudicate the legality of the program without making us Unsafe? (Glenn Greenwald, "Obama's latest use of 'secrecy' to shield presidential lawbreaking," Salon, Democrat or Republican, "liberal" or "conservative:" what matters most for all factions in Washington is the defense and preservation of the class privileges of the capitalist elite. Criminality on such a scale requires that the armed fist of the state is mobilized and ever-vigilant; ready at the nonce to crush anyone who would challenge the prerogatives of our masters."
Business Week: "While the Oracle-Sun merger still is likely to be O.K.'d in the end, the EU will probably ask Oracle's CEO to give up some control over MySQL, Sun's open-source software."
Pfizer Inc.will "significantly" reduce research and development at some of its sites and shut down six out its 20 sites. Pfizer said it will shut down its R&D operations at Princeton, N.J.; Chazy, Rouses Point and Plattsburgh, N.Y.; Sanford and Research Triangle Park, N.C.; and at Gosport, Slough/Taplow in the United Kingdom. The company will also move a number of functions from Collegeville, Pa.; Pearl River, N.Y.; and St. Louis to other locations. Pfizer said the moves will result in staff reductions, but it did not specify how many.
Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, will eliminate as many as 2,500 jobs to reduce costs after losing subscribers to rivals.
Electronic Arts to cut 900 workers.
The Dow Jones Industrial Average rose 203.52 points, or 2%, to 10,226.64. The S&P 500 added 23.78 points, or 2.2%, to 1,093.08. The Nasdaq Composite rose 41.62 points, or 2%, to 2,154.06.
Kraft Foods Inc. has made a 9.8 billion pound ($16.4 billion) cash-and-stock offer for British candy maker Cadbury PLC.
Monday's hostile offer values each Cadbury share at 717 pence, lower than Kraft's previous rebuffed approach of 745 pence.
Kraft says the price "represents a substantial premium to the unaffected share price of Cadbury," referring to a surge in the British company's stock since Kraft's previous bid was made public in September. Kraft Foods said the bid is priced 37% above Cadbury's close on July 3 and said no other potential offeror has publicly declared its interest in acquiring Cadbury.
Cadbury immediately said no to the renewed approach, with chairman Roger Carr saying "Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model."
The U.S.Dollar Index made a new 15-month low at 74.93. The standard of living for all Americans continues to decline-- year after year. Where is the outcry?
McDonald's Corp. said Monday that its October same-store sales rose 3.3%. Comparable sales, or constant-currency sales at restaurants in operation at least 13 months, were down 0.1% in the U.S., up 6.4% in Europe and climbed 4.7% in Asia, Middle East and Africa. Total systemwide sales rose 10.3% and were up 5.2% excluding the impact of currency translations, McDonald's said.
General Electric Co. and Comcast Corp have agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far, a source familiar with the matter said on Sunday.
The resolution of that issue brings the parties one step closer to an agreement, but French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, the source said.
The euro pushed back up above $1.50 Monday after finance ministers from the Group of 20 rich and developing countries steered clear from addressing the weakness of the U.S. currency against most of its competitors at a meeting over the weekend.
At the meeting in St. Andrews, Scotland, the finance ministers pledged to "continue to provide support for the economy until the recovery is assured" -- in effect telling the markets that borrowing costs will not be rising any time soon.
The thinly traded November gold contract rose $14.20, or 1.3%, to $1,109.30 an ounce, the highest level for a front-month gold contract.
Gold for December delivery, the most-active contract, climbed $13.50, or 1.2%, to $1,109.20 an ounce on the Comex division of the New York Mercantile Exchange, after hitting $1,111.70.
"While 116 metropolitan areas experienced Q3 year-over-year declines in home values, only nine metropolitan areas saw accelerating year-over year home value declines," according to the report.
That is resulting in slightly improved negative equity. Zillow finds 21 percent of single-family home owners are in a negative equity position in Q3, as compared to 23 percent at the end of Q2. In September, the National Association of Realtors reports that nearly 70 percent of all sales were on homes priced $250,000 or lower.
Home values are still worst in the local markets that saw the biggest housing boom and bust. These are in California, Florida, Arizona and Nevada.
John Hussman: "“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A and Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”
While the news itself is no surprise in the sense that we have expected and written about this situation repeatedly in recent months, the phrase “sharp increases in foreclosure activity” is notable in the context of widespread views that credit difficulties are abating. Below is a reminder of where we stand in relation to the reset curve. This news of a shift in the character of foreclosure activity comes precisely in tandem with the beginning of the predictable second wave. The pleasant lull in the reset schedule is decidedly behind us."
Brad Setser: "In my view, it will be hard for the dollar to emerge as major funding currency."
“Bullion is likely to begin outperforming its producers”, the mining stocks, John Roque, managing director at WJB Capital Group, told Bloomberg. According to his technical analysis, “gold should do better than gold equities … it doesn’t mean the stocks won’t perform, but they will likely do less well relative to the metal.”
Louis Uchitelle,
The New York Times
"A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation....The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country....American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.
“We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”
“What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.
China will raise retail fuel prices later on Monday, an industry source familiar with the situation told Reuters, with gasoline and diesel likely to hit their highest prices ever following the widely expected rise.
The source did not elaborate or say how big the price rise would be, but industry website C1, which has correctly predicted price movements in the past, said the government would add 480 yuan ($70.32) per ton to the pump price of both diesel and gasoline.
Tom Burghardt: "As AT&T whistleblower Mark Klein revealed in a sworn affidavit that described how the company physically split and copied the traffic that flowed into its offices, NSA was virtually duplicating, sifting and storing the entire Internet. Klein wrote in his self-published book:
What screams out at you when examining this physical arrangement is that the NSA was vacuuming up everything flowing in the Internet stream: e-mail, web browsing, Voice-Over-Internet phone calls, pictures, streaming video, you name it. The splitter has no intelligence at all, it just makes a blind copy. There could not possibly be a legal warrant for this, since according to the 4th Amendment warrants have to be specific, "particularly describing the place to be searched, and the persons or things to be seized." ...
This was a massive blind copying of the communications of millions of people, foreign and domestic, randomly mixed together. From a legal standpoint, it does not matter what they claim to throw away later in the their secret rooms, the violation has already occurred at the splitter. (Mark Klein, Wiring Up the Big Brother Machine... And Fighting It, Charleston, South Carolina: BookSurge, 2009, pp. 38-39.)
Klein's revelations were confirmed by former NSA analyst and whistleblower Russell Tice, who told MSNBC's Countdown with Keith Olbermann in January that the NSA "had access to all Americans' communications" and spied "24/7" on domestic political activist groups and "U.S. news organizations and reporters and journalists."
In demanding that the independent federal judiciary toss these cases, the Obama administration is asserting a broad interpretation of Executive Branch privileges that caused much outrage and hand-wringing by congressional Democrats--when they were out of power.
Under the "change" regime however, what were once viewed by Democrats and their supporters as prime examples of Bushist lawlessness and contempt for constitutional safeguards, are now deemed vital state secrets that "protect" the American people, even as the capitalist state wages an endless "War on Terror" to seize other people's resources for geostrategic advantage over the competition. As Glenn Greenwald wrote:
That was the principal authoritarian instrument used by Bush/Cheney to shield itself from judicial accountability, and it is now the instrument used by the Obama DOJ to do the same. Initially, consider this: if Obama's argument is true--that national security would be severely damaged from any disclosures about the government's surveillance activities, even when criminal--doesn't that mean that the Bush administration and its right-wing followers were correct all along when they insisted that The New York Times had damaged American national security by revealing the existence of the illegal NSA program? Isn't that the logical conclusion from Obama's claim that no court can adjudicate the legality of the program without making us Unsafe? (Glenn Greenwald, "Obama's latest use of 'secrecy' to shield presidential lawbreaking," Salon, Democrat or Republican, "liberal" or "conservative:" what matters most for all factions in Washington is the defense and preservation of the class privileges of the capitalist elite. Criminality on such a scale requires that the armed fist of the state is mobilized and ever-vigilant; ready at the nonce to crush anyone who would challenge the prerogatives of our masters."
Business Week: "While the Oracle-Sun merger still is likely to be O.K.'d in the end, the EU will probably ask Oracle's CEO to give up some control over MySQL, Sun's open-source software."
Pfizer Inc.will "significantly" reduce research and development at some of its sites and shut down six out its 20 sites. Pfizer said it will shut down its R&D operations at Princeton, N.J.; Chazy, Rouses Point and Plattsburgh, N.Y.; Sanford and Research Triangle Park, N.C.; and at Gosport, Slough/Taplow in the United Kingdom. The company will also move a number of functions from Collegeville, Pa.; Pearl River, N.Y.; and St. Louis to other locations. Pfizer said the moves will result in staff reductions, but it did not specify how many.
Sprint Nextel Corp., the third- largest U.S. mobile-phone carrier, will eliminate as many as 2,500 jobs to reduce costs after losing subscribers to rivals.
Electronic Arts to cut 900 workers.
The Dow Jones Industrial Average rose 203.52 points, or 2%, to 10,226.64. The S&P 500 added 23.78 points, or 2.2%, to 1,093.08. The Nasdaq Composite rose 41.62 points, or 2%, to 2,154.06.
Sunday, November 08, 2009
Rules of the Investing Road
11/8/09 Rules of the Investing Road
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
Rules of the Investing Road
11/8/09 Rules of the Investing Road
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
1. Do not lose money
2. Mistakes will be made. Cut your losses short.
3. Fully grasp your risk tolerance prior to investing.
4. Be patient. Wait for the opportunity that fits your risk tolerance
5. Understand the worst case scenario before investing.
6. Investing is not day trading.
7. Day trading is not investing.
8. Investing is not simple. It requires lots of homework.
9. Run from tipsters and those offering inside information.
10. Get acquainted with the company's price history and the stock trend
11. Take the company out for a coffee date. Study the figures on the balance sheet.
12. Make certain to understand cash flow and free cash flow.
13. Avoid investing in companies living on life support---those increasing indebtedness.
14. Ask yourself whether you can live comfortably with the management
15. Leave home without government numbers. Do not rely on them.
16. The U.S. dollar is not worth the paper it's printed on.
17. Intelligent investors avoid long-term bonds. Their value erodes along with the value of the dollar.
18. Love your family. Do not fall in love with your investments.
19. You cannot lose money by taking a profit.
20. You will not buy at the bottom and/or sell at the top.
21. Make notes of why you made the investment. Keep checking the validity of your thinking.
22. Make notes on why you sold the investment. Keep checking the vailidity of your thinking
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