March 1
Floyd Norris: "More than $1 in every $10 that American banks have
outstanding in loans is lent to a troubled borrower, a ratio far higher
than previously seen in the quarter-century that such numbers have been
compiled."
Mike Burk: "The market comfortably consolidated its mid February gains last week. That consolidation may continue for a few more days, but, the 1st few days of March are seasonally very strong.
I expect the major averages to be higher on Friday March 5 than they were on Friday February 26."
U.S. consumer spending rose 0.5% in January, while income increased 0.1%.
Real disposable income decreased 0.6 percent in January, in contrast to an increase of 0.2 percent in December. Real PCE increased 0.3 percent, compared with an increase of 0.1 percent.
Government wage and salary disbursements increased $6.1 billion, compared with an increase of $2.7 billion. Pay raises for federal civilian and military personnel added $7.1 billion to government payrolls in January.
Prudential Plc, Britain’s biggest
insurer, agreed to buy an Asian life insurance unit from
American International Group Inc. for $35.5 billion in cash and
stock to gain more than 20 million customers in the region.
“Natural gas prices, as if wounded by the
resiliency of domestic production, continue to weaken despite steady
draws on inventories that well exceed last year's pace,” analysts at
Barclays Capital wrote in a note today. Technically,
the charts are bearish, says MF Global’s Mike Fitzpatrick, who expects
$4 natural gas to be tested very soon. Optimists at the U.S. Energy
Information Administration see natural gas futures averaging
$5.37/mmBTU this year.
Germany and France will help bail out Greece by taking 50% of a 30 billion euro offering by the troubled nation.
A winter storm that pummeled New York
City for two days broke a monthly record for snowfall in Central Park
that stood for 114 years, according to the National Weather Service.
China Manufacturing Slows More Sharply Than Expected. The
pace of Chinese manufacturing slowed more sharply than expected last
month, an official survey of purchasing managers showed on Monday.
Output and new orders -- both aggregate and overseas orders -- remained
above the threshold of 50 that indicates an expansion of activity. But
backlogs of orders, employment and stocks of purchases all fell below
the boom-bust line, according to the survey, which is compiled by the
China Federation of Logistics and Purchasing (CFLP) for the National
Bureau of Statistics.
The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 25%
of the nation's voters Strongly Approve of the way that Barack Obama is
performing his role as President. Forty-two percent (42%) Strongly
Disapprove giving Obama a Presidential Approval Index rating of -17.
“I’ll tell you one thing, if Speaker
Pelosi rams this bill through the House using a reconciliation process,
they will lose their majority in Congress in November,” House Minority
Whip Eric Cantor (R-Va.) said on NBC’s “Meet the Press.”
March 1 (Bloomberg) -- Federal Reserve Vice Chairman Donald
Kohn said he will leave in June after four decades at the
central bank, where he helped Ben S. Bernanke and Alan Greenspan steer the U.S. through recessions and crises.
Kohn, 67, said he is resigning effective June 23, the end
of his four-year term as vice chairman. History will judge
Chairman Bernanke and the Fed to have met challenges over the
last several years “with great speed, imagination and
effectiveness,” Kohn said in his resignation letter to
President Barack Obama, released today by the Fed.
The departure opens a third vacancy on the seven-member Fed
Board of Governors, giving Obama the chance to pick a majority
of the panel after appointing Daniel Tarullo in 2009.
"Reconciliation cannot be used to pass comprehensive health care
reform," Sen. Kent Conrad, D-North Dakota, chairman of the Budget
Committee, told CBS' "Face the Nation." He added, "It won't work
because it was never designed for that kind of significant legislation."
But
under the scenario Democrats are considering, the procedure could prove
to be the key to enacting the full package of reforms.
To get to
the president's desk, a bill must first win passage in the House of
Representatives and Senate. Last year, the two chambers voted -- and
passed -- different versions of the bill. They differ on key points.
Africa’s biggest gold mines face an indefinite strike
from March 7 unless owner Gold Fields Ltd. resolves a dispute over a
fitness test with South Africa’s largest labor union.
The National Union of Mineworkers threatened to stop
work at all of the company’s operations unless the test for new
recruits is abolished, Johannesburg-based Gold Fields said in a
statement today. Gold Fields is Africa’s third-largest producer of the
precious metal.
South Africa has the world’s deepest and most
dangerous mines, where workers drill the metal out of rock as deep as
2.35 miles (3.8 kilometers) underground in hot, dark and damp
conditions. Some 164 miners died in rockfalls, transportation and other
accidents at the mines last year, the NUM said.
The Institute for Supply Management said Monday its manufacturing index
read 56.5 last month, slightly slower than the 58.4 growth in January.
It was also slower than the 58 level expected by economists polled by
Thomson Reuters.
Spending on
U.S. construction projects fell at a seasonally adjusted rate of 0.6%
in January, the Commerce Department estimated Monday. The decline was
wider than the 0.5% drop expected by economists surveyed by
MarketWatch. Spending in December dropped an unrevised 1.2%.
Residential outlays in January rose 1.1%, while nonresidential outlays
fell 1.4%, and public outlays fell 0.7%.
Exxon Mobil Corp.'s spending exceeded its cash flow in 2009, drawing
down one of the oil industry's largest treasure troves in a year of
weak energy prices.
The Texas oil giant received $29.9 billion in cash from operations
and asset sales last year while spending $53.12 billion in capital
investments and money given to investors via dividends and share
buybacks. Exxon's cash reserves -- padded by years of booming energy
prices -- shrank to $10.7 billion at the end of 2009 from $31.4 billion
at the close of 2008, according to an annual filing Friday with the
Securities and Exchange Commission.“
Caixin: What is your attitude toward China now? Positive or negative?
“Soros: I’m very cautious, until the economy cools off a little. When it does, I will be more optimistic again.
“James Dunne, senior managing principal of Sandler O’Neill, said 300 to
400 banks could be seized this year, especially as institutions start
to deal with deteriorating commercial real estate loans.
“Monetary policy has worked very well,” said Sebastien
Lavoie, an economist at Laurentian Bank Securities in Montreal.
The Bank of Canada estimates consumers will account for more
than half of a 2.9 percent expansion this year.
When the bank raises rates “it won’t be baby steps; it
will be major jumps,” Lavoie said. The first increase could be
three-quarters of a percentage point, he said, and the rate
could reach 3 percent next year, he said.
The main runway at New York's John F. Kennedy International will be
closed for four months starting March 1. Millions of travelers will
experience delays — including some not flying anywhere near the Big
Apple.
With about one-third of JFK's
traffic and half of its departures being diverted to three smaller
runways, planes will wait on longer lines on the ground for takeoffs
and in the air for landings. Delays at one of the nation's largest
airports will ripple to cities across the U.S., including Los Angeles, San Francisco and Orlando.
Two thousand federal transportation workers were furloughed without
pay on Monday, and the Obama administration said they have a Kentucky
senator to blame for it.
Federal reimbursements to states for
highway programs will also be halted, the Transportation Department
said in a statement late Sunday. The reimbursements amount to about
$190 million a day, according to the House Transportation and
Infrastructure Committee.
The furloughs and freeze on payments
were the result of a decision last week by Republican Sen. Jim Bunning
to block passage of legislation that would have extended federal
highway and transit programs, the department said. Those programs
expired at midnight Sunday.
The extension of transportation
programs was part of a larger package of government programs that also
expired Sunday, including unemployment benefits for about 400,000
Americans.
Bunning objected to the $10 billion measure, saying it
would add to the budget deficit. He didn't respond to a request Monday for comment.
Oil futures closed lower Monday,
undercut by a higher dollar, worse-than-expected manufacturing data
that suggested lingering pressure on energy demand, and profit-taking
after the contract topped $80 a barrel. Oil for April delivery closed
New York floor trade at $78.70 a barrel, off 96 cents, or 1.2%. Natural
gas for Aril delivery closed at $4.679 per million British thermal
units, down 13 cents, or 2.8%. The most active heating-oil and
natural-gas futures also closed lower.
The Dow Jones industrials closed up 79 points to 10,404. The Nasdaq Composite Index added 35 points to 2,270, and the Standard & Poor's 500 Index gained 11 points to 1,116. Here's how the market compares with a year ago. On March 2, 2009, the first day of trading in March, the Dow fell a whopping 300 point, or 4.2%, to 6,763. A week later, the blue-chip index bottomed at 6,547.
Monday, March 01, 2010
Saturday, February 27, 2010
Chile
2/27/10 Chile
Doug Noland: "Massive Treasury and agency MBS issuance – in concert with enormous
Federal Reserve monetization – stabilized an inherently unsound Credit
system. This unprecedented expansion of government finance either
reflated (in the case of financial assets) or stabilized (in the case
of real estate) asset markets, which stabilized the level of finance
flowing to the real economy. Much of the post-Bubble Credit system
remains impaired, resulting in an especially uneven flow of finance
throughout.....Nowhere does the temptation for higher inflation seem as indomitable as
it does here at home. And the markets are fine with it. In the old
days, at least the bond “vigilantes” would have objected. But we live
in the financial age where “spread trades,” myriad Credit instruments,
and speculator profits are all bolstered by reflationary policymaking.
Throughout the system, many feel they would benefit from some
additional inflation, while few fear they would be disadvantaged.
Federal Reserve monetization is cheered. Inflationism dogma is as
beloved as ever....For now, the markets are pleased to accommodate U.S. reflationary
policymaking. The dollar has been strong of late, with
Treasury/agency/GSE MBS yields remaining incredibly low. The market
backdrop kind of makes ECB comments extolling the virtues of price
stability – while lambasting inflationism - seem arcane and out of
touch. Meanwhile, the markets have begun to impose discipline on
profligate borrowers in Europe, while rewarding profligacy here at home
(and elsewhere). One would not expect such a divergence to last
forever. And I don’t expect our current competitive advantage in all
things “inflationism” to pay lasting dividends for our nation’s
currency, debt markets or economy."
John Mauldin: "Without showing yet another chart, bank lending has fallen percentagewise the most in 67 years. The actual amount of bank loans is falling each and every quarter, with no signs of a bottom. Consumers are reducing their debt and leverage. Bank loans are being written off at staggering rates. Over 700 banks (I think that is the figure I saw) are officially on watch by the FDIC, with more banks being closed each week.
There is at least $300-400 billion in losses on commercial real estate waiting to be written down. Housing foreclosures are rising and hundreds of billions have yet to be written off. As more families fall into unemployment or underemployment, there will be more writedowns. Is it any wonder that banks are having to shore up their balance sheets and make fewer loans?
With capacity utilization just off all-time lows, why should we expect businesses to borrow to increase capacity? Inventory levels are much lower than two years ago. Businesses no longer need to finance as much inventory. They simply need less."
Berkshire's net worth rose
19.8% in 2009, while the Standard & Poor's 500 index returned
26.5%, including dividends. Change in net worth is the way Berkshire
Chairman Warren Buffett prefers to measure the company's performance.
The number of rigs drilling
for natural gas in the United States climbed by 12 this week to
near a one-year high of 905, according to a report on Friday by
oil services firm Baker Hughes in Houston.
It was the ninth straight weekly gain and puts the gas rig
count at its highest level since March 6, 2009, when there were
916 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded 36
percent since bottoming at 665 on July 17, its lowest level
since May 3, 2002, when there were 640 active gas rigs.
But the rig count is still well off its recent peak above
1,600 in September 2008, and stands at 65 rigs, or 7 percent,
below the same week last year.
Gross daily natural-gas production in the lower-48
states edged 0.7% lower in December as cold winter stymied output, the U.S.
Energy Information Administration said Friday.
Gross output in the lower-48 states was 62.82 billion cubic feet a day, a
slight decrease from November. The EIA revised its November production figure
slightly higher to 63.28 billion cubic feet a day. Production from Louisiana
continued its climb in December as producers continued to exploit the
Haynesville Shale, a rapidly developing natural-gas field in that state.
However, gas production fell 0.3% in Texas and 2.4% in Wyoming. The biggest
production drop came from New Mexico--where output fell 6.1% as "cold weather
hampered operations," the EIA said.
Analysts and traders have been eyeing the EIA's monthly production report for
signs that the big pullback in drilling activity last year is cutting
significantly into production. Output in the lower-48 states has fallen 0.9%
since August 2008--when the natural-gas rig count was at a peak of 1,606 and
gross output stood at 63.38 billion cubic feet a day.
The Chile quake is on par with the Boxing Day quake and tsunami of 2004 which was a 9 on the Richter Scale.
An iceberg the size of
Luxembourg has broken off from a glacier in Antarctica after being
rammed by another giant iceberg, scientists said on Friday, in an event
that could affect ocean circulation patterns.
The 2,500 sq km (965 sq mile)
iceberg broke off earlier this month from the Mertz Glacier's 160 km
(100 miles) floating tongue of ice that sticks out into the Southern
Ocean.
The collision has since halved the size of the tongue that drains ice from the vast East Antarctic ice sheet.
"The calving itself hasn't been
directly linked to climate change but it is related to the natural
processes occurring on the ice sheet," said Rob Massom, a senior
scientist at the Australian Antarctic Division and the Antarctic
Climate and Ecosystems Cooperative Research Centre in Hobart, Tasmania.
Both organisations, along with
French scientists, have been studying existing giant cracks in the ice
tongue and monitored the bumper-car-like collision by the second
iceberg, B-9B.
This 97 km long slab of ice is
a remnant of an iceberg of more than 5,000 sq km that broke off, or
calved, in 1987, making it one of the largest icebergs ever recorded in
Antarctica.
Bloomberg (Dawn Kopecki): “Fannie Mae, the mortgage-finance company
under federal conservatorship, said it will seek $15.3 billion in aid
from the U.S. Treasury after posting a 10th straight quarterly loss. A
fourth-quarter net loss of $16.3 billion… pushed the company to request
its fifth draw on an unlimited lifeline from the government…”
Mark Hanson about the home-building market:
"In January, builders sold a whopping 1000 houses per day nationally. During the same month, Foreclosures rang up at 4300 and Notice-of-Defaults at 5100 per day nationally. What a mess. I really thought earlier in the year with massive mortgage rate and tax stimuli -- and the purposeful lack of distressed inventory due to HAMP and other mortgage mod and foreclosure prevention initiatives -- that builders had a shot at some volume.
"But their window of opportunity has now passed. With HAFA coming on line and foreclosures, short sales and deeds-in-lieu about to dump significantly more distressed inventory on the market throughout 2010, the odds that of any meaningful pickup in builder output or sales is significantly decreasing daily."
15 San Francisco hotel owners have defaulted on loans, with the Four
Seasons among them. The number falls in line with 12 hotel defaults in
New York City and 20 in San Diego.
Doug Noland: "Massive Treasury and agency MBS issuance – in concert with enormous
Federal Reserve monetization – stabilized an inherently unsound Credit
system. This unprecedented expansion of government finance either
reflated (in the case of financial assets) or stabilized (in the case
of real estate) asset markets, which stabilized the level of finance
flowing to the real economy. Much of the post-Bubble Credit system
remains impaired, resulting in an especially uneven flow of finance
throughout.....Nowhere does the temptation for higher inflation seem as indomitable as
it does here at home. And the markets are fine with it. In the old
days, at least the bond “vigilantes” would have objected. But we live
in the financial age where “spread trades,” myriad Credit instruments,
and speculator profits are all bolstered by reflationary policymaking.
Throughout the system, many feel they would benefit from some
additional inflation, while few fear they would be disadvantaged.
Federal Reserve monetization is cheered. Inflationism dogma is as
beloved as ever....For now, the markets are pleased to accommodate U.S. reflationary
policymaking. The dollar has been strong of late, with
Treasury/agency/GSE MBS yields remaining incredibly low. The market
backdrop kind of makes ECB comments extolling the virtues of price
stability – while lambasting inflationism - seem arcane and out of
touch. Meanwhile, the markets have begun to impose discipline on
profligate borrowers in Europe, while rewarding profligacy here at home
(and elsewhere). One would not expect such a divergence to last
forever. And I don’t expect our current competitive advantage in all
things “inflationism” to pay lasting dividends for our nation’s
currency, debt markets or economy."
John Mauldin: "Without showing yet another chart, bank lending has fallen percentagewise the most in 67 years. The actual amount of bank loans is falling each and every quarter, with no signs of a bottom. Consumers are reducing their debt and leverage. Bank loans are being written off at staggering rates. Over 700 banks (I think that is the figure I saw) are officially on watch by the FDIC, with more banks being closed each week.
There is at least $300-400 billion in losses on commercial real estate waiting to be written down. Housing foreclosures are rising and hundreds of billions have yet to be written off. As more families fall into unemployment or underemployment, there will be more writedowns. Is it any wonder that banks are having to shore up their balance sheets and make fewer loans?
With capacity utilization just off all-time lows, why should we expect businesses to borrow to increase capacity? Inventory levels are much lower than two years ago. Businesses no longer need to finance as much inventory. They simply need less."
Berkshire's net worth rose
19.8% in 2009, while the Standard & Poor's 500 index returned
26.5%, including dividends. Change in net worth is the way Berkshire
Chairman Warren Buffett prefers to measure the company's performance.
The number of rigs drilling
for natural gas in the United States climbed by 12 this week to
near a one-year high of 905, according to a report on Friday by
oil services firm Baker Hughes in Houston.
It was the ninth straight weekly gain and puts the gas rig
count at its highest level since March 6, 2009, when there were
916 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded 36
percent since bottoming at 665 on July 17, its lowest level
since May 3, 2002, when there were 640 active gas rigs.
But the rig count is still well off its recent peak above
1,600 in September 2008, and stands at 65 rigs, or 7 percent,
below the same week last year.
Gross daily natural-gas production in the lower-48
states edged 0.7% lower in December as cold winter stymied output, the U.S.
Energy Information Administration said Friday.
Gross output in the lower-48 states was 62.82 billion cubic feet a day, a
slight decrease from November. The EIA revised its November production figure
slightly higher to 63.28 billion cubic feet a day. Production from Louisiana
continued its climb in December as producers continued to exploit the
Haynesville Shale, a rapidly developing natural-gas field in that state.
However, gas production fell 0.3% in Texas and 2.4% in Wyoming. The biggest
production drop came from New Mexico--where output fell 6.1% as "cold weather
hampered operations," the EIA said.
Analysts and traders have been eyeing the EIA's monthly production report for
signs that the big pullback in drilling activity last year is cutting
significantly into production. Output in the lower-48 states has fallen 0.9%
since August 2008--when the natural-gas rig count was at a peak of 1,606 and
gross output stood at 63.38 billion cubic feet a day.
The Chile quake is on par with the Boxing Day quake and tsunami of 2004 which was a 9 on the Richter Scale.
An iceberg the size of
Luxembourg has broken off from a glacier in Antarctica after being
rammed by another giant iceberg, scientists said on Friday, in an event
that could affect ocean circulation patterns.
The 2,500 sq km (965 sq mile)
iceberg broke off earlier this month from the Mertz Glacier's 160 km
(100 miles) floating tongue of ice that sticks out into the Southern
Ocean.
The collision has since halved the size of the tongue that drains ice from the vast East Antarctic ice sheet.
"The calving itself hasn't been
directly linked to climate change but it is related to the natural
processes occurring on the ice sheet," said Rob Massom, a senior
scientist at the Australian Antarctic Division and the Antarctic
Climate and Ecosystems Cooperative Research Centre in Hobart, Tasmania.
Both organisations, along with
French scientists, have been studying existing giant cracks in the ice
tongue and monitored the bumper-car-like collision by the second
iceberg, B-9B.
This 97 km long slab of ice is
a remnant of an iceberg of more than 5,000 sq km that broke off, or
calved, in 1987, making it one of the largest icebergs ever recorded in
Antarctica.
Bloomberg (Dawn Kopecki): “Fannie Mae, the mortgage-finance company
under federal conservatorship, said it will seek $15.3 billion in aid
from the U.S. Treasury after posting a 10th straight quarterly loss. A
fourth-quarter net loss of $16.3 billion… pushed the company to request
its fifth draw on an unlimited lifeline from the government…”
Mark Hanson about the home-building market:
"In January, builders sold a whopping 1000 houses per day nationally. During the same month, Foreclosures rang up at 4300 and Notice-of-Defaults at 5100 per day nationally. What a mess. I really thought earlier in the year with massive mortgage rate and tax stimuli -- and the purposeful lack of distressed inventory due to HAMP and other mortgage mod and foreclosure prevention initiatives -- that builders had a shot at some volume.
"But their window of opportunity has now passed. With HAFA coming on line and foreclosures, short sales and deeds-in-lieu about to dump significantly more distressed inventory on the market throughout 2010, the odds that of any meaningful pickup in builder output or sales is significantly decreasing daily."
15 San Francisco hotel owners have defaulted on loans, with the Four
Seasons among them. The number falls in line with 12 hotel defaults in
New York City and 20 in San Diego.
Friday, February 26, 2010
Another Storm
2/26/10 Another Storm
Working gas in storage was 1,853 Bcf as of Friday, February 19, 2010, according to EIA estimates. This represents a net decline of 172 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 13 Bcf above the 5-year average of 1,840 Bcf. In the East Region, stocks were 23 Bcf below the 5-year average following net withdrawals of 95 Bcf. Stocks in the Producing Region were 20 Bcf below the 5-year average of 627 Bcf after a net withdrawal of 66 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 1,853 Bcf, total working gas is within the 5-year historical range.
Currently being hammered by very cold temps and wind chills in Western Pa. Looking at the NG supply numbers for 2005-2009 (EIA Web site), we had a drop of slighly less than 100 Bcf per week in the 3 week period from 2/19 thru 3/12. This resulted in a total decrease in overall supply numbers from 1840 to 1542. We should easily be able to surpass this cumulative drop given the weather we have just experienced this past week and the extend North/South Central and Eastern US forecast through 3/12. We could/should easily end up with a remaining storage number below 1500 Bcf for come the 3/12 report!
The U.S. economy grew slightly
faster than previously reported in the fourth quarter, but details of
the revision to gross domestic product show final sales in the United
States were actually weaker than reported a month ago, the Commerce
Department estimated Friday.
U.S. real gross domestic product increased at a 5.9% seasonally
adjusted annualized pace, revised up from 5.7% estimated last month.
The revision was exactly in line with expectations. Nearly two thirds
of the growth was accounted for by changes in inventories, not by final
sales. Compared with the first GDP estimate, inventories were bigger,
business investments were higher, and exports were higher.
The Obama administration may expand
efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the
government’s Home Affordable Modification Program.
The proposal, reviewed by lenders last week on a White
House conference call, “prohibits referral to foreclosure until
borrower is evaluated and found ineligible for HAMP or
reasonable contact efforts have failed,” according to a
Treasury Department document outlining the plan.
“It is one of the many ideas under consideration in the
administration’s ongoing housing stabilization efforts,”
Treasury spokeswoman Meg Reilly said in an e-mail. “This
proposal has not been approved and there are no immediate
planned announcements on the issue.”
George Ure: "
* If the price index was up nearly 2% in Q4 2009, what is the explanation for claims of near zero inflation in the CPI figures?
* Explain how GDP can be rising so fast with a 'no jobs' recovery.
* Discuss how 'real' Real GDP is when it doesn't consider monetary inflation. Use the Federal Reserve H.6 money stocks table which shows Dec 2009-Dec 2009 M1 monetary inflation of 6.2% in your discussion.
* Bonus question: With all the empty homes around, and Depression-era real unemployment, explain how it is that GDP hasn't crashed? Specifically reveal how outsourcing hits domestic company sales without creating jobs."The Vaughan Co. Realtors,
the third largest residential real estate brokerage company in New
Mexico, has filed for Chap. 11 bankruptcy protection. Douglas F.
Vaughan, the company’s founder, chairman and CEO, also has filed for
personal bankruptcy protection under Chap. 11.
While the U.S. may
never achieve energy independence, billionaire Texas oilman T. Boone
Pickens predicts Congress will pass key energy legislation by Memorial
Day that can “start us back in the right direction.”
“I think Congress
is ready to address the problem. The problem is we are dependent on oil
from the wrong places,” he said in a meeting Thursday with the Houston
Chronicle editorial board.
The legislation,
known as the Natural Gas Act, would dramatically expand the use of
natural gas as a transportation fuel among heavy- duty fleets. House
and Senate versions of the bill provide tax breaks for natural
gas-powered vehicles and fueling stations.
Pickens, 81, has
been one of the most vociferous advocates of using abundant domestic
natural gas supplies in the transportation sector, which accounts for
most of the 21 million barrels a day of crude oil that America
consumes.
A private equity firm said Friday that it will buy the owner of the
Carl's Jr. and Hardee's restaurants for about $619 million in cash.
Thomas H. Lee Partners will also assume about $309 million in debt from CKE Restaurants Inc.
CKE shareholders will receive $11.05 in cash for each share they own, a
24 percent premium to its Thursday closing price of $8.91.
The EU is pushing Greece to urgently adopt new measures amounting to
more than $5.42 billion, on top of the austerity package already
announced, if it is to achieve its goal of slashing its staggering
budget deficit.
OPEC output reaches 14-month high in February on Saudi gain, survey shows.
ZeroHedge: "When the S&P500 came upon the 3:15pm close, the market had settled
negative, but hardly. The rally was good for 17.50 points from the low
equating to a 1.6% reversal. And in case you didn’t know, a 1% market
move equates to well over $100 billion in market capitalization.
Therefore, this amazing move tacked on ~ $180,000,000,000.00 to the US
(non-rigged) market cap. How nice. Oh, did I mention this was based on
a RUMOR…an UNFOUNDED RUMOR? Not to worry though folks – you can bet
your bottom dollar that the fellas on Fraud Street weren’t about to let
a massive rally fade away to nothing. After the initial period when
AAPL denied the rumor and the market churned around 1097.00, then the
market went even higher. Said another way, Fraud Street kept the gains
based on a known FALSE rumor…and then…wait for it….wait for it…I G N O
R E D the real news of the morning. It was a well timed replay of the
Greek bailout rumor of Feb. 9th. How healthy is this market if its best
moves are 100% fabricated bull$#it? I have another question or two: Who
benefited from this other than Goldman Sachs? I wonder how many magical
S&P500 at-the-money calls were purchased moments before the
explosion? I wonder if the SEC will investigate? Would the Lame Stream
Media ignore this if a false rumor triggered a 1.6% rout? OK, I know
the answer to the last two – and it’s no."
Jim Bunning, a Republican from Kentucky, is single-handedly blocking
Senate action needed to prevent an estimated 1.2 million American
workers from suddenly losing their unemployment benefits next month.
As Democratic senators asked again and again for unanimous consent
for a vote on a 30-day extension Thursday night, Bunning refused to go
along.
And when Sen. Jeff Merkely (D-Ore.) begged him to drop his objection, Politico reports, Bunning replied: "Tough shit."
Bunning says he doesn't oppose extending benefits -- he just doesn't
want the money that's required added to the deficit. He proposes paying
for the 30-day extension with stimulus funds. The Senate's GOP
leadership did not support him in his objections.
The National Association of Realtors said that sales fell 7.2 percent
to an annual rate of 5.05 million units, sharply below market
expectations for a 5.50 million unit pace.
While not fearful of another spike in layoffs,
consumers have turned more gloomy about their job and income prospects,
according to the Thomson Reuters/University of Michigan's Surveys of
Consumers.
"Consumers
have been getting more impatient with the slow progress of the stimulus
program, and confidence in the Obama administration's economic policies
has begun to wane," Richard Curtin, director of the surveys, said in a
statement.
The survey's overall index of consumer sentiment was at 73.6 in February, down from 74.4 in January and below the 74.0 forecast by analysts polled by Reuters. The preliminary February reading was 73.7.
(Bloomberg) -- ArcelorMittal South Africa Ltd., a
unit of the world’s biggest steelmaker, threatened “urgent proceedings”
to prevent the producer of most of its iron-ore needs halting supply as
prices of the raw material surge.
Sishen Iron Ore Co., owned by Kumba Iron Ore Ltd.,
“will no longer supply iron ore to ArcelorMittal, on a cost plus 3
percent basis” as set out in their current agreement, the South African
steelmaker said in a statement today.
“It will be negative for Arcelor because they will
have to pay a lot more for iron ore,” Ambrian Partners Ltd. analyst
Peter Davey said by phone from London. “They would have to pay at
market-related prices from Sishen or from export markets.”
Rio Tinto Group, the second-largest iron-ore
producer, and BHP Billiton Ltd., the biggest mining company, are
selling more of the raw material at rising market prices instead of at
rates agreed in annual contract negotiations with steelmakers. Prices
may jump 55 percent in the fiscal year from April 1 on “very tight”
supply, Investec Securities said yesterday.
Steelmakers are in turn seeking to mitigate the
effect of rising costs on profit margins by buying mines. ArcelorMittal
South Africa has set aside funds on its balance sheet to buy mining
resources, Chief Executive Officer Nonkululeko Nyembezi- Heita told
Business Day’s Investors Monthly magazine.
Seeking Assets
The company will “identify mining assets that
complement our activities and we are in the market for iron ore and
coal assets primarily,” she told the Johannesburg-based magazine in an
interview published yesterday. Spokesman Sven Lunsche said that while
the company has “no concrete plans” to buy assets, it is seeking
acquisitions and partnerships.
“ArcelorMittal has rejected SIOC’s repudiation of
the agreement and will institute urgent proceedings against SIOC to
enforce the agreement if the appropriate undertakings are not
received,” the Vanderbijlpark, South Africa-based steelmaker said
today. ArcelorMittal South Africa asked JSE Ltd., operator of
Johannesburg’s stock exchange, to halt trading of its shares until a
further announcement is made on March 3, it said.
Sishen provides “by far the majority” of the iron
ore supplied to ArcelorMittal South Africa, Exxaro Financial Director
Wim De Klerk said in an interview by mobile today. Exxaro owns 20
percent of Sishen. ArcelorMittal South Africa spokeswoman Marion
Green-Thompson declined to comment on the amount of ore the company
uses each year.
U.S. demand for
heating oil through March 5 will be 6 percent above normal for
the period, according to David Salmon, a meteorologist at
Weather Derivatives, which forecasts temperature changes and
the impact on demand for commodities.
The Institute for Supply Management-Chicago Inc. today
said that its business barometer climbed to 62.6, from 61.5
last month.
The Dow Jones Industrial Average sank 9 points to 10,312, the S&P 500 was recently down 1 point at 1,101.9, and the Nasdaq Composite fell 0.4 point to 2,234.
Working gas in storage was 1,853 Bcf as of Friday, February 19, 2010, according to EIA estimates. This represents a net decline of 172 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 13 Bcf above the 5-year average of 1,840 Bcf. In the East Region, stocks were 23 Bcf below the 5-year average following net withdrawals of 95 Bcf. Stocks in the Producing Region were 20 Bcf below the 5-year average of 627 Bcf after a net withdrawal of 66 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 1,853 Bcf, total working gas is within the 5-year historical range.
Currently being hammered by very cold temps and wind chills in Western Pa. Looking at the NG supply numbers for 2005-2009 (EIA Web site), we had a drop of slighly less than 100 Bcf per week in the 3 week period from 2/19 thru 3/12. This resulted in a total decrease in overall supply numbers from 1840 to 1542. We should easily be able to surpass this cumulative drop given the weather we have just experienced this past week and the extend North/South Central and Eastern US forecast through 3/12. We could/should easily end up with a remaining storage number below 1500 Bcf for come the 3/12 report!
The U.S. economy grew slightly
faster than previously reported in the fourth quarter, but details of
the revision to gross domestic product show final sales in the United
States were actually weaker than reported a month ago, the Commerce
Department estimated Friday.
U.S. real gross domestic product increased at a 5.9% seasonally
adjusted annualized pace, revised up from 5.7% estimated last month.
The revision was exactly in line with expectations. Nearly two thirds
of the growth was accounted for by changes in inventories, not by final
sales. Compared with the first GDP estimate, inventories were bigger,
business investments were higher, and exports were higher.
The Obama administration may expand
efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the
government’s Home Affordable Modification Program.
The proposal, reviewed by lenders last week on a White
House conference call, “prohibits referral to foreclosure until
borrower is evaluated and found ineligible for HAMP or
reasonable contact efforts have failed,” according to a
Treasury Department document outlining the plan.
“It is one of the many ideas under consideration in the
administration’s ongoing housing stabilization efforts,”
Treasury spokeswoman Meg Reilly said in an e-mail. “This
proposal has not been approved and there are no immediate
planned announcements on the issue.”
George Ure: "
* If the price index was up nearly 2% in Q4 2009, what is the explanation for claims of near zero inflation in the CPI figures?
* Explain how GDP can be rising so fast with a 'no jobs' recovery.
* Discuss how 'real' Real GDP is when it doesn't consider monetary inflation. Use the Federal Reserve H.6 money stocks table which shows Dec 2009-Dec 2009 M1 monetary inflation of 6.2% in your discussion.
* Bonus question: With all the empty homes around, and Depression-era real unemployment, explain how it is that GDP hasn't crashed? Specifically reveal how outsourcing hits domestic company sales without creating jobs."The Vaughan Co. Realtors,
the third largest residential real estate brokerage company in New
Mexico, has filed for Chap. 11 bankruptcy protection. Douglas F.
Vaughan, the company’s founder, chairman and CEO, also has filed for
personal bankruptcy protection under Chap. 11.
While the U.S. may
never achieve energy independence, billionaire Texas oilman T. Boone
Pickens predicts Congress will pass key energy legislation by Memorial
Day that can “start us back in the right direction.”
“I think Congress
is ready to address the problem. The problem is we are dependent on oil
from the wrong places,” he said in a meeting Thursday with the Houston
Chronicle editorial board.
The legislation,
known as the Natural Gas Act, would dramatically expand the use of
natural gas as a transportation fuel among heavy- duty fleets. House
and Senate versions of the bill provide tax breaks for natural
gas-powered vehicles and fueling stations.
Pickens, 81, has
been one of the most vociferous advocates of using abundant domestic
natural gas supplies in the transportation sector, which accounts for
most of the 21 million barrels a day of crude oil that America
consumes.
A private equity firm said Friday that it will buy the owner of the
Carl's Jr. and Hardee's restaurants for about $619 million in cash.
Thomas H. Lee Partners will also assume about $309 million in debt from CKE Restaurants Inc.
CKE shareholders will receive $11.05 in cash for each share they own, a
24 percent premium to its Thursday closing price of $8.91.
The EU is pushing Greece to urgently adopt new measures amounting to
more than $5.42 billion, on top of the austerity package already
announced, if it is to achieve its goal of slashing its staggering
budget deficit.
OPEC output reaches 14-month high in February on Saudi gain, survey shows.
ZeroHedge: "When the S&P500 came upon the 3:15pm close, the market had settled
negative, but hardly. The rally was good for 17.50 points from the low
equating to a 1.6% reversal. And in case you didn’t know, a 1% market
move equates to well over $100 billion in market capitalization.
Therefore, this amazing move tacked on ~ $180,000,000,000.00 to the US
(non-rigged) market cap. How nice. Oh, did I mention this was based on
a RUMOR…an UNFOUNDED RUMOR? Not to worry though folks – you can bet
your bottom dollar that the fellas on Fraud Street weren’t about to let
a massive rally fade away to nothing. After the initial period when
AAPL denied the rumor and the market churned around 1097.00, then the
market went even higher. Said another way, Fraud Street kept the gains
based on a known FALSE rumor…and then…wait for it….wait for it…I G N O
R E D the real news of the morning. It was a well timed replay of the
Greek bailout rumor of Feb. 9th. How healthy is this market if its best
moves are 100% fabricated bull$#it? I have another question or two: Who
benefited from this other than Goldman Sachs? I wonder how many magical
S&P500 at-the-money calls were purchased moments before the
explosion? I wonder if the SEC will investigate? Would the Lame Stream
Media ignore this if a false rumor triggered a 1.6% rout? OK, I know
the answer to the last two – and it’s no."
Jim Bunning, a Republican from Kentucky, is single-handedly blocking
Senate action needed to prevent an estimated 1.2 million American
workers from suddenly losing their unemployment benefits next month.
As Democratic senators asked again and again for unanimous consent
for a vote on a 30-day extension Thursday night, Bunning refused to go
along.
And when Sen. Jeff Merkely (D-Ore.) begged him to drop his objection, Politico reports, Bunning replied: "Tough shit."
Bunning says he doesn't oppose extending benefits -- he just doesn't
want the money that's required added to the deficit. He proposes paying
for the 30-day extension with stimulus funds. The Senate's GOP
leadership did not support him in his objections.
The National Association of Realtors said that sales fell 7.2 percent
to an annual rate of 5.05 million units, sharply below market
expectations for a 5.50 million unit pace.
While not fearful of another spike in layoffs,
consumers have turned more gloomy about their job and income prospects,
according to the Thomson Reuters/University of Michigan's Surveys of
Consumers.
"Consumers
have been getting more impatient with the slow progress of the stimulus
program, and confidence in the Obama administration's economic policies
has begun to wane," Richard Curtin, director of the surveys, said in a
statement.
The survey's overall index of consumer sentiment was at 73.6 in February, down from 74.4 in January and below the 74.0 forecast by analysts polled by Reuters. The preliminary February reading was 73.7.
(Bloomberg) -- ArcelorMittal South Africa Ltd., a
unit of the world’s biggest steelmaker, threatened “urgent proceedings”
to prevent the producer of most of its iron-ore needs halting supply as
prices of the raw material surge.
Sishen Iron Ore Co., owned by Kumba Iron Ore Ltd.,
“will no longer supply iron ore to ArcelorMittal, on a cost plus 3
percent basis” as set out in their current agreement, the South African
steelmaker said in a statement today.
“It will be negative for Arcelor because they will
have to pay a lot more for iron ore,” Ambrian Partners Ltd. analyst
Peter Davey said by phone from London. “They would have to pay at
market-related prices from Sishen or from export markets.”
Rio Tinto Group, the second-largest iron-ore
producer, and BHP Billiton Ltd., the biggest mining company, are
selling more of the raw material at rising market prices instead of at
rates agreed in annual contract negotiations with steelmakers. Prices
may jump 55 percent in the fiscal year from April 1 on “very tight”
supply, Investec Securities said yesterday.
Steelmakers are in turn seeking to mitigate the
effect of rising costs on profit margins by buying mines. ArcelorMittal
South Africa has set aside funds on its balance sheet to buy mining
resources, Chief Executive Officer Nonkululeko Nyembezi- Heita told
Business Day’s Investors Monthly magazine.
Seeking Assets
The company will “identify mining assets that
complement our activities and we are in the market for iron ore and
coal assets primarily,” she told the Johannesburg-based magazine in an
interview published yesterday. Spokesman Sven Lunsche said that while
the company has “no concrete plans” to buy assets, it is seeking
acquisitions and partnerships.
“ArcelorMittal has rejected SIOC’s repudiation of
the agreement and will institute urgent proceedings against SIOC to
enforce the agreement if the appropriate undertakings are not
received,” the Vanderbijlpark, South Africa-based steelmaker said
today. ArcelorMittal South Africa asked JSE Ltd., operator of
Johannesburg’s stock exchange, to halt trading of its shares until a
further announcement is made on March 3, it said.
Sishen provides “by far the majority” of the iron
ore supplied to ArcelorMittal South Africa, Exxaro Financial Director
Wim De Klerk said in an interview by mobile today. Exxaro owns 20
percent of Sishen. ArcelorMittal South Africa spokeswoman Marion
Green-Thompson declined to comment on the amount of ore the company
uses each year.
U.S. demand for
heating oil through March 5 will be 6 percent above normal for
the period, according to David Salmon, a meteorologist at
Weather Derivatives, which forecasts temperature changes and
the impact on demand for commodities.
The Institute for Supply Management-Chicago Inc. today
said that its business barometer climbed to 62.6, from 61.5
last month.
The Dow Jones Industrial Average sank 9 points to 10,312, the S&P 500 was recently down 1 point at 1,101.9, and the Nasdaq Composite fell 0.4 point to 2,234.
Thursday, February 25, 2010
Natural Gas
2/25/10 Natural Gas
The U.S. Energy Information Administration is expected to report
that 168 billion cubic feet of gas were withdrawn from storage during
that week, according to the average prediction of 15 analysts and
traders in a Dow Jones Newswires survey.
The EIA is scheduled to release its storage data at 10:30 a.m. EST.
The survey's median was 170 billion cubic feet, with a high of a
179 bcf draw and a low of a 147 bcf withdrawal. The storage estimate is greater than last year's pull of 90 bcf from storage and surpasses the five-year average draw, which is 132 bcf.
If the storage estimate is correct, inventories as of Feb. 12 will
total 1.857 trillion cubic feet, about 1% above the five-year average
and 2.7% below last year's level.
Our draws since Dec 1 have totaled 1,775 Bcf to Feb 12. That’s 1.8 Tcf
in 74 days. No other Dec 1-Feb 12 period comes close. Not even the
famed 02-03, which held the top spot, back to 1976, at -1,684 Bcf until
this winter. We beat it by almost 100 Bcf.
Natural gas in storage fell 172 billion cubic feet in the week ended
Feb. 19, the Energy Information Administration said Thursday. Analysts
polled by Dow Jones Newswires were expecting a shallower withdrawal, of
168 billion cubic feet.
The number of people filing initial claims for state unemployment benefits jumped 22,000 to a seasonally adjusted 496,000 in the week ended Feb. 20, the Labor Department reported Thursday. It's the highest rate since mid-November and the sixth increase in the first eight weeks of 2010.
Economists surveyed by MarketWatch expected initial claims to drop to 460,000. The four-week average of initial claims rose 6,000 to 473,750.
In the week ended Feb. 6, the number of people collecting extended
federal benefits fell by 320,000 to 5.68 million, not seasonally
adjusted. Altogether, 11.55 million people were collecting some type of
unemployment benefits in the week of Feb. 6, down from the previous
week's level of 11.8 million.
The number of people filing
initial claims for state unemployment benefits jumped 22,000 to a
seasonally adjusted 496,000 in the week ended Feb. 20, the Labor
Department reported Thursday. It's the highest rate since mid-November
and the sixth increase in the first eight weeks of 2010. Economists
surveyed by MarketWatch expected initial claims to drop to 460,000. The
four-week average of initial claims rose 6,000 to 473,750. In the week
ended Feb. 6, the number of people collecting extended federal benefits
fell by 320,000 to 5.68 million, not seasonally adjusted. Altogether,
11.55 million people were collecting some type of unemployment benefits
in the week of Feb. 6, down from the previous week's level of 11.8
million.
Orders for
U.S-made durable goods soared 3% in January to a seasonally adjusted
$175.7 billion on higher bookings for civilian airplanes, the Commerce
Department estimated Thursday. . December's orders were revised sharply
higher as well to a 1.9% increase from 1%. The 3% gain in orders was
the biggest gain since July. Economists were looking for a 1.5% gain in
total durable goods orders in January. Most of the strength in January,
however, came from the 126% increase in volatile civilian aircraft
orders. Excluding the 15.6% gain in transportation orders, orders fell
0.6% in January.
Coca-Cola Co. (KO) on Thursday said it would buy the North American business of Coca-Cola Enterprises Inc. (CCE)
in a deal that will result in about $4 billion in cash to shareholders
of the Atlanta-based soft drink giant's largest bottler. The Coca-Cola
Company's acquisition of the assets and liabilities of CCE's North
American business includes consideration of Coca-Cola's current 34%
equity ownership in CCE, valued at $3.4 billion. The deal includes the
assumption of $8.9 billion of CCE debt and all of the bottling
company's North American assets and liabilities. Coca-Cola Enterprises
will buy Coke's bottling operations in Norway and Sweden for $822
million as part of the deal. Coca-Cola Enterprises will also get the
right to acquire Coke's 83% equity stake in its German bottling unit.
Charley Blaine: "More than 11.3 million residential properties with mortgages --
about 24% of all such properties with mortgages -- were "underwater" at
the end of 2009.
That means the homes were worth less than the value of their mortgages."
Japan's total public debt is nearing
the value of household wealth, a sign the government bond market is
approaching a "tipping point," according to Mizuho Securities Co.
Gold closed up $11.30 to $1,108.50/oz.
Down nearly 200 points during the session, the Dow Jones Industrial ended at 10,321.03, off 53.13 points, or 0.5%. The S&P 500 Index shed 2.3 points, or 0.2%, to end at 1,102.94, while the Nasdaq Composite Index lost 1.68 points to 2,234.22.
The U.S. Energy Information Administration is expected to report
that 168 billion cubic feet of gas were withdrawn from storage during
that week, according to the average prediction of 15 analysts and
traders in a Dow Jones Newswires survey.
The EIA is scheduled to release its storage data at 10:30 a.m. EST.
The survey's median was 170 billion cubic feet, with a high of a
179 bcf draw and a low of a 147 bcf withdrawal. The storage estimate is greater than last year's pull of 90 bcf from storage and surpasses the five-year average draw, which is 132 bcf.
If the storage estimate is correct, inventories as of Feb. 12 will
total 1.857 trillion cubic feet, about 1% above the five-year average
and 2.7% below last year's level.
Our draws since Dec 1 have totaled 1,775 Bcf to Feb 12. That’s 1.8 Tcf
in 74 days. No other Dec 1-Feb 12 period comes close. Not even the
famed 02-03, which held the top spot, back to 1976, at -1,684 Bcf until
this winter. We beat it by almost 100 Bcf.
Natural gas in storage fell 172 billion cubic feet in the week ended
Feb. 19, the Energy Information Administration said Thursday. Analysts
polled by Dow Jones Newswires were expecting a shallower withdrawal, of
168 billion cubic feet.
The number of people filing initial claims for state unemployment benefits jumped 22,000 to a seasonally adjusted 496,000 in the week ended Feb. 20, the Labor Department reported Thursday. It's the highest rate since mid-November and the sixth increase in the first eight weeks of 2010.
Economists surveyed by MarketWatch expected initial claims to drop to 460,000. The four-week average of initial claims rose 6,000 to 473,750.
In the week ended Feb. 6, the number of people collecting extended
federal benefits fell by 320,000 to 5.68 million, not seasonally
adjusted. Altogether, 11.55 million people were collecting some type of
unemployment benefits in the week of Feb. 6, down from the previous
week's level of 11.8 million.
The number of people filing
initial claims for state unemployment benefits jumped 22,000 to a
seasonally adjusted 496,000 in the week ended Feb. 20, the Labor
Department reported Thursday. It's the highest rate since mid-November
and the sixth increase in the first eight weeks of 2010. Economists
surveyed by MarketWatch expected initial claims to drop to 460,000. The
four-week average of initial claims rose 6,000 to 473,750. In the week
ended Feb. 6, the number of people collecting extended federal benefits
fell by 320,000 to 5.68 million, not seasonally adjusted. Altogether,
11.55 million people were collecting some type of unemployment benefits
in the week of Feb. 6, down from the previous week's level of 11.8
million.
Orders for
U.S-made durable goods soared 3% in January to a seasonally adjusted
$175.7 billion on higher bookings for civilian airplanes, the Commerce
Department estimated Thursday. . December's orders were revised sharply
higher as well to a 1.9% increase from 1%. The 3% gain in orders was
the biggest gain since July. Economists were looking for a 1.5% gain in
total durable goods orders in January. Most of the strength in January,
however, came from the 126% increase in volatile civilian aircraft
orders. Excluding the 15.6% gain in transportation orders, orders fell
0.6% in January.
Coca-Cola Co. (KO) on Thursday said it would buy the North American business of Coca-Cola Enterprises Inc. (CCE)
in a deal that will result in about $4 billion in cash to shareholders
of the Atlanta-based soft drink giant's largest bottler. The Coca-Cola
Company's acquisition of the assets and liabilities of CCE's North
American business includes consideration of Coca-Cola's current 34%
equity ownership in CCE, valued at $3.4 billion. The deal includes the
assumption of $8.9 billion of CCE debt and all of the bottling
company's North American assets and liabilities. Coca-Cola Enterprises
will buy Coke's bottling operations in Norway and Sweden for $822
million as part of the deal. Coca-Cola Enterprises will also get the
right to acquire Coke's 83% equity stake in its German bottling unit.
Charley Blaine: "More than 11.3 million residential properties with mortgages --
about 24% of all such properties with mortgages -- were "underwater" at
the end of 2009.
That means the homes were worth less than the value of their mortgages."
Japan's total public debt is nearing
the value of household wealth, a sign the government bond market is
approaching a "tipping point," according to Mizuho Securities Co.
Gold closed up $11.30 to $1,108.50/oz.
Down nearly 200 points during the session, the Dow Jones Industrial ended at 10,321.03, off 53.13 points, or 0.5%. The S&P 500 Index shed 2.3 points, or 0.2%, to end at 1,102.94, while the Nasdaq Composite Index lost 1.68 points to 2,234.22.
Wednesday, February 24, 2010
New Home Sales Plunge
2/24/10 New Home Sales Plunge
Sales of new U.S. homes plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday. Economists surveyed by MarketWatch forecast sales to rise slightly to 355,000, with buyers taking advantage of a new federal tax credit. Sales in December were revised higher to 348,000 from 342,000 previously reported. Sales are down 6.1% compared with January 2009's 329,000, which was the previous record-low rate. The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory.
Total returns prepared in its fiscal year-to-date fell 8.2%, Block said. "In light of the foregoing preliminary tax season results, the company's previously announced guidance for fiscal 2010 will not be reached," the company said in a press release Wednesday. Block shares fell 11% in pre-open trade.
Bowne & Co., the New York printer, definitively agreed to be acquired for $11.50 a share, or $481 million, by R.R. Donnelley & Sons Co., the companies said in a Tuesday statement. On Tuesday, Bowne shares closed at $6.97, indicating that R.R. Donnelley, the Chicago printer, is paying a 65% premium. The boards of both companies have approved the terms.
A winter storm threatened to dump more than a foot (30 centimeters) of snow across parts of upstate New York and New England, while forecasters warned of an even more powerful system hitting the northeast tomorrow.
“You may hear it called a ‘snow hurricane’ because blizzard may not even do it justice,” said Alex Sosnowski, an expert senior meteorologist with AccuWeather Inc. in State College, Pennsylvania. “It is like we’re getting a decade’s worth of storms all in one season.”
Warnings for the current storm stretch from Maine through New Hampshire, Vermont and New York state, as well as Connecticut and Massachusetts, according to the National Weather Service. Rain was falling today in New York, while inland it was snowing in Albany, where as much as 13 inches of snow were forecast through the night and today, the agency said.
U.S. mortgage applications fell for a third straight week, with demand for home purchase loans sinking to the lowest level in 13 years as inclement weather weighed, data from an industry group showed on Wednesday.
George Ure: " On Page 4 of the FDIC's Quarterly banking report for Q4 '08 and Q4 2009.
When you to click over to the report here and down about 3/4's of the way look for the line item "Notional Amount of Derivatives" where you will see Q4 of 2008 was listed as $212-trillion m (just 14.93 times 2008 GDP.
But Q4 2009 shows the notional value of derivatives at what? $213,568,137,000,000."
Fitch Ratings-Barcelona/London-23 February 2010: Fitch Ratings has today downgraded the Long-term and Short-term Issuer Default Ratings (IDR) of Greece's four largest banks, National Bank of Greece (NBG), Alpha Bank (Alpha), Efg Eurobank Ergasias (Eurobank) and Piraeus Bank (Piraeus) to 'BBB' from 'BBB+' and 'F3' from 'F2' respectively. The Outlook on the Long-term IDRs is Negative.
In January, employers took 1,761 mass layoff actions involving 182,261 workers. Both measures increased in January after four consecutive over-the-month decreases. Manufacturing events and initial claims both increased in January to 486 and 62,556, respectively.
Barbara Kiviat: "Is the option adjustable-rate mortgage the next subprime disaster? For anyone who remembers that souring subprime loans kicked off the real estate meltdown, that's a scary thought. Recent analysis from Standard & Poor's (S&P) anticipates that a full 37.5% of such loans (dubbed option ARMs) that were written in 2007, at the height of lax lending, will eventually go bad. The kicker is that most option ARMs undergo payment spikes after five years, which means the brunt of the impact has yet to be felt. That will change in late 2010, delivering another blow to the fragile housing market just as it begins to regain strength."
ZeroHedge: "Jose Pinera provides an Entitlement State 101 lecture, in which Chile's former Labor and Social Security Minister demystifies the U.S.'s $100 trillion unfunded benefits problem. Since Pinera is the man who many years ago privatized Chile's entitlement system, America, and the entire Western system, which for the past century has been relying on unfunded liabilities to provide benefits to the population in the hopes that funding day will never come, may do well to listen to what he has to say. His message: the American way of life, more so than anything else, in which reckless spending, living on credit and not saving for the future, is precisely why the US will be bankrupt very soon. Chile swallowed the bitter pill 30 years ago and after a lot of pain, managed to get out of the hole. Will enabler state #1, America, fail where this allegedly "backward" South American country succeeded?"
"There's a risk of a double dip recession round the corner," Shah said. "Given the sovereign debt crisis that is going around the Mediterranean countries, this is going to put a lot of pressure on Europe."
The economic outlook for Europe is deteriorating very rapidly and that is adding to the factors dragging on the economic recovery, Shah told CNBC.
* Irving, Texas.
* Commercial Mortgage Default Rate in U.S. More Than Doubles. The default rate for commercial property mortgages held by U.S. banks more than doubled in the fourth quarter and may reach a peak of 5.4 percent at the end of next year, according to Real Capital Analytics Inc. The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 percent from 1.6 percent a year earlier, the New York-based real estate research firm said yesterday in a report. The default rate for loans on apartment buildings climbed to 4.4 percent from 1.8 percent. “The level of distress continues to rise irrespective of improving economic trends,” Sam Chandan, Real Capital’s global chief economist, said in a telephone interview.
In 2010, Blockbuster intends to close 500 to 545 underperforming stores in the U.S.
The Dow Jones Industrial Average added 91.75 points to 10,374.16. The S&P 500 Index rose 10.64 points to 1,105.24. The Nasdaq Composite Index gained 22.46 points to 2,235.9.
General Growth Properties Inc. said Wednesday that it will secure $2.625 billion from Brookfield Asset Management Inc. as part of its recapitalization plan. Brookfield will invest $2.5 billion at $10 a share for new General Growth shares and up to $125 million at $5 a share for existing stock. It will also pay accrued interest to unsecured creditors as part of the package. General Growth is counting on the deal to exit bankruptcy on a standalone basis, the mall operator said.
Sales of new U.S. homes plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday. Economists surveyed by MarketWatch forecast sales to rise slightly to 355,000, with buyers taking advantage of a new federal tax credit. Sales in December were revised higher to 348,000 from 342,000 previously reported. Sales are down 6.1% compared with January 2009's 329,000, which was the previous record-low rate. The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory.
Total returns prepared in its fiscal year-to-date fell 8.2%, Block said. "In light of the foregoing preliminary tax season results, the company's previously announced guidance for fiscal 2010 will not be reached," the company said in a press release Wednesday. Block shares fell 11% in pre-open trade.
Bowne & Co., the New York printer, definitively agreed to be acquired for $11.50 a share, or $481 million, by R.R. Donnelley & Sons Co., the companies said in a Tuesday statement. On Tuesday, Bowne shares closed at $6.97, indicating that R.R. Donnelley, the Chicago printer, is paying a 65% premium. The boards of both companies have approved the terms.
A winter storm threatened to dump more than a foot (30 centimeters) of snow across parts of upstate New York and New England, while forecasters warned of an even more powerful system hitting the northeast tomorrow.
“You may hear it called a ‘snow hurricane’ because blizzard may not even do it justice,” said Alex Sosnowski, an expert senior meteorologist with AccuWeather Inc. in State College, Pennsylvania. “It is like we’re getting a decade’s worth of storms all in one season.”
Warnings for the current storm stretch from Maine through New Hampshire, Vermont and New York state, as well as Connecticut and Massachusetts, according to the National Weather Service. Rain was falling today in New York, while inland it was snowing in Albany, where as much as 13 inches of snow were forecast through the night and today, the agency said.
U.S. mortgage applications fell for a third straight week, with demand for home purchase loans sinking to the lowest level in 13 years as inclement weather weighed, data from an industry group showed on Wednesday.
George Ure: " On Page 4 of the FDIC's Quarterly banking report for Q4 '08 and Q4 2009.
When you to click over to the report here and down about 3/4's of the way look for the line item "Notional Amount of Derivatives" where you will see Q4 of 2008 was listed as $212-trillion m (just 14.93 times 2008 GDP.
But Q4 2009 shows the notional value of derivatives at what? $213,568,137,000,000."
Fitch Ratings-Barcelona/London-23 February 2010: Fitch Ratings has today downgraded the Long-term and Short-term Issuer Default Ratings (IDR) of Greece's four largest banks, National Bank of Greece (NBG), Alpha Bank (Alpha), Efg Eurobank Ergasias (Eurobank) and Piraeus Bank (Piraeus) to 'BBB' from 'BBB+' and 'F3' from 'F2' respectively. The Outlook on the Long-term IDRs is Negative.
In January, employers took 1,761 mass layoff actions involving 182,261 workers. Both measures increased in January after four consecutive over-the-month decreases. Manufacturing events and initial claims both increased in January to 486 and 62,556, respectively.
Barbara Kiviat: "Is the option adjustable-rate mortgage the next subprime disaster? For anyone who remembers that souring subprime loans kicked off the real estate meltdown, that's a scary thought. Recent analysis from Standard & Poor's (S&P) anticipates that a full 37.5% of such loans (dubbed option ARMs) that were written in 2007, at the height of lax lending, will eventually go bad. The kicker is that most option ARMs undergo payment spikes after five years, which means the brunt of the impact has yet to be felt. That will change in late 2010, delivering another blow to the fragile housing market just as it begins to regain strength."
ZeroHedge: "Jose Pinera provides an Entitlement State 101 lecture, in which Chile's former Labor and Social Security Minister demystifies the U.S.'s $100 trillion unfunded benefits problem. Since Pinera is the man who many years ago privatized Chile's entitlement system, America, and the entire Western system, which for the past century has been relying on unfunded liabilities to provide benefits to the population in the hopes that funding day will never come, may do well to listen to what he has to say. His message: the American way of life, more so than anything else, in which reckless spending, living on credit and not saving for the future, is precisely why the US will be bankrupt very soon. Chile swallowed the bitter pill 30 years ago and after a lot of pain, managed to get out of the hole. Will enabler state #1, America, fail where this allegedly "backward" South American country succeeded?"
"There's a risk of a double dip recession round the corner," Shah said. "Given the sovereign debt crisis that is going around the Mediterranean countries, this is going to put a lot of pressure on Europe."
The economic outlook for Europe is deteriorating very rapidly and that is adding to the factors dragging on the economic recovery, Shah told CNBC.
* Irving, Texas.
* Commercial Mortgage Default Rate in U.S. More Than Doubles. The default rate for commercial property mortgages held by U.S. banks more than doubled in the fourth quarter and may reach a peak of 5.4 percent at the end of next year, according to Real Capital Analytics Inc. The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 percent from 1.6 percent a year earlier, the New York-based real estate research firm said yesterday in a report. The default rate for loans on apartment buildings climbed to 4.4 percent from 1.8 percent. “The level of distress continues to rise irrespective of improving economic trends,” Sam Chandan, Real Capital’s global chief economist, said in a telephone interview.
In 2010, Blockbuster intends to close 500 to 545 underperforming stores in the U.S.
The Dow Jones Industrial Average added 91.75 points to 10,374.16. The S&P 500 Index rose 10.64 points to 1,105.24. The Nasdaq Composite Index gained 22.46 points to 2,235.9.
General Growth Properties Inc. said Wednesday that it will secure $2.625 billion from Brookfield Asset Management Inc. as part of its recapitalization plan. Brookfield will invest $2.5 billion at $10 a share for new General Growth shares and up to $125 million at $5 a share for existing stock. It will also pay accrued interest to unsecured creditors as part of the package. General Growth is counting on the deal to exit bankruptcy on a standalone basis, the mall operator said.
Tuesday, February 23, 2010
Elliott Wave
2/23/10 Elliott Wave
"Fourth quarter retail segment performance was well above our expectations due to stronger-than-expected holiday sales, combined with well-controlled inventories and disciplined expense controls," said Target Chief Executive Gregg Steinhafel. "In 2010, we expect our guest traffic trends and sales of discretionary categories to benefit from broader implementation of our new merchandise initiatives as well as a continued modest recovery in the economy, and believe Target will continue to gain profitable market share."
Macy's forecast profit this year of $1.55 to $1.60 a share with same-store sales increasing in the range of 1% to 2%
In 2010, it expects earnings per share from continuing operations to grow by around 15.5% to $1.79. "Despite the tough economic environment, we were able to make solid progress against our key initiatives in 2009," said Home Depot CEO Frank Blake.
The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.
A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.
The S&P/Case-Shiller U.S. national home price index, which covers all nine census divisions, fell 2.5 percent in the fourth quarter from the same time a year earlier. This measure, like the 20-city and 10-city indexes, have seen smaller annual declines all through 2009.
Nearly 20 percent of the U.S. workforce lacked adequate employment in January and struggled to make ends meet with reduced resources and bleak job prospects, according to a Gallup poll released Tuesday. In findings that appear to paint a darker employment picture than official U.S. data, Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.
Underemployed people spent 36 percent less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month, the poll said.
Sears Holdings Corp., the nation's No. 1 department store chain by revenue, will shut 21 underperforming stores May 9.
Elliott Wave Int'l: "It's been nearly 11 months since the outset of the Primary wave 2 rally; by these critical economic measures the rebound is barely registering.The wide disparity between the hope of investor expectations and the reality of economic strength shows that the great bear market -- already ten years old -- remains in its early stages. As the next legdown matures, hope will turn to despair, and it will become impossible to ignore the persistence of the economic contraction."
Rob Kirby: "Something of significance occurred last week that went unreported in the mainstream financial press. This important development was the admission of the Commodities Futures Trading Commission [CFTC] that it was suppressing information that would expose precious metals market manipulation."
State tax revenues declined by 4.1 percent nationwide during the final quarter of calendar 2009, the fifth consecutive quarter of reduced collections, according to a report issued today by the Rockefeller Institute of Government.
The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the Institute said. Collections from each of the two major revenue sources, income and sales taxes, also fell for a fifth straight quarter
U.S. consumer confidence fell in February to the lowest in 10 months, as consumers' short-term outlook for the jobs market worsened, according to a private report released Tuesday.
After touching a 16-month high, the Conference Board reported its index fell 11 points to 46 from an upwardly revised 56.5 in January. Last month's fall was sharper than expected.
The number of distressed banks in the U.S. rose to 702 in the fourth quarter, the highest level in sixteen years, according to a report released by the Federal Deposit Insurance Corp. Tuesday. That number is up from 552 at the end of September and 416 at the end of June. This is the largest number of banks on its "problem list" since June 1993.
Crude oil futures edged higher in electronic trade late Tuesday after the American Petroleum Institute reported inventories dropped last week, indicating greater-than-anticipated demand. The industry group said stockpiles for the week ended Feb. 19 fell 3.13 million barrels. Analysts polled by Platts were expecting stockpiles to rise by 2 million barrels. Gasoline stocks, however, rose 1.738 million barrels versus an expected gain of 500,000 barrels. Distillate stocks fell 834,000, and the refinery utilization rate rose to 80.8% from 79.9% in the prior week. Oil for April delivery rose to $79.05 a barrel from a close of $78.86. Oil ended Tuesday's floor session with a 1.8% loss.
The Dow Jones Industrial Average fell 100.97 points, or 1%, to 10,282.41. The S&P 500 Index declined 13.41 points, or 1.2%, to end at 1,094.6, while the Nasdaq Composite Index finished at 2,213.44, or 28.59 points, or 1.3%.
"Fourth quarter retail segment performance was well above our expectations due to stronger-than-expected holiday sales, combined with well-controlled inventories and disciplined expense controls," said Target Chief Executive Gregg Steinhafel. "In 2010, we expect our guest traffic trends and sales of discretionary categories to benefit from broader implementation of our new merchandise initiatives as well as a continued modest recovery in the economy, and believe Target will continue to gain profitable market share."
Macy's forecast profit this year of $1.55 to $1.60 a share with same-store sales increasing in the range of 1% to 2%
In 2010, it expects earnings per share from continuing operations to grow by around 15.5% to $1.79. "Despite the tough economic environment, we were able to make solid progress against our key initiatives in 2009," said Home Depot CEO Frank Blake.
The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.
A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.
The S&P/Case-Shiller U.S. national home price index, which covers all nine census divisions, fell 2.5 percent in the fourth quarter from the same time a year earlier. This measure, like the 20-city and 10-city indexes, have seen smaller annual declines all through 2009.
Nearly 20 percent of the U.S. workforce lacked adequate employment in January and struggled to make ends meet with reduced resources and bleak job prospects, according to a Gallup poll released Tuesday. In findings that appear to paint a darker employment picture than official U.S. data, Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.
Underemployed people spent 36 percent less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month, the poll said.
Sears Holdings Corp., the nation's No. 1 department store chain by revenue, will shut 21 underperforming stores May 9.
Elliott Wave Int'l: "It's been nearly 11 months since the outset of the Primary wave 2 rally; by these critical economic measures the rebound is barely registering.The wide disparity between the hope of investor expectations and the reality of economic strength shows that the great bear market -- already ten years old -- remains in its early stages. As the next legdown matures, hope will turn to despair, and it will become impossible to ignore the persistence of the economic contraction."
Rob Kirby: "Something of significance occurred last week that went unreported in the mainstream financial press. This important development was the admission of the Commodities Futures Trading Commission [CFTC] that it was suppressing information that would expose precious metals market manipulation."
State tax revenues declined by 4.1 percent nationwide during the final quarter of calendar 2009, the fifth consecutive quarter of reduced collections, according to a report issued today by the Rockefeller Institute of Government.
The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the Institute said. Collections from each of the two major revenue sources, income and sales taxes, also fell for a fifth straight quarter
U.S. consumer confidence fell in February to the lowest in 10 months, as consumers' short-term outlook for the jobs market worsened, according to a private report released Tuesday.
After touching a 16-month high, the Conference Board reported its index fell 11 points to 46 from an upwardly revised 56.5 in January. Last month's fall was sharper than expected.
The number of distressed banks in the U.S. rose to 702 in the fourth quarter, the highest level in sixteen years, according to a report released by the Federal Deposit Insurance Corp. Tuesday. That number is up from 552 at the end of September and 416 at the end of June. This is the largest number of banks on its "problem list" since June 1993.
Crude oil futures edged higher in electronic trade late Tuesday after the American Petroleum Institute reported inventories dropped last week, indicating greater-than-anticipated demand. The industry group said stockpiles for the week ended Feb. 19 fell 3.13 million barrels. Analysts polled by Platts were expecting stockpiles to rise by 2 million barrels. Gasoline stocks, however, rose 1.738 million barrels versus an expected gain of 500,000 barrels. Distillate stocks fell 834,000, and the refinery utilization rate rose to 80.8% from 79.9% in the prior week. Oil for April delivery rose to $79.05 a barrel from a close of $78.86. Oil ended Tuesday's floor session with a 1.8% loss.
The Dow Jones Industrial Average fell 100.97 points, or 1%, to 10,282.41. The S&P 500 Index declined 13.41 points, or 1.2%, to end at 1,094.6, while the Nasdaq Composite Index finished at 2,213.44, or 28.59 points, or 1.3%.
Monday, February 22, 2010
Bloom Energy
2/22/10 Bloom Energy
Mike Burk: "The market is overbought.
The Russell 2000 (R2K) has been up for 8 consecutive days rising 7.7% over that period. The last time the R2K was up for 8 consecutive days was April 5, 2004 and after that peak it fell 11.7% over the next 5 weeks and did not hit a new high until the following November."
ZeroHedge: "As Stone McCarty points out "It is also probably not an accident that the announcement of tomorrow's discount rate hike (and next month's shortening of loan maturities) comes just after the release of the January 26-27 FOMC minutes. The discussion in those minutes further serves to underscore the technical, as opposed to policy, nature of today's move." Yet we think that there is more to this, as the Fed will sooner or later be forced to come face to face with a broken monetary system, in which it stands to lose all control should it not tighten in advance of a potential monetary supply explosion which would lead not only to hyperinflation (should the Fed gets its way, and consumers finally start borrowing), but also to full loss of the Fed's control over the American monetary system. Keep a close eye on this chart: we are confident that the Fed Funds will be hiked before there is another unsymmetrical increase in the discount rate. Alas, the economy is far too weak to sustain a tightening posture at this point. As to what kind of aberrations in the market this action could lead to, we will investigate in the coming days and weeks."
CalculatedRisk predicts 2010 to account for more number of bank failures than 2009 but lesser than the peak of 534 in 1989.
ZeroHedge: "Our findings demonstrate that of the nearly $130 billion in additional cash on the books of S&P 500 companies from June 2008, through September 2009, two key sources, net working capital and a reduced capex spend, have generated over $150 billion, meaning organic operations have accounted for a whopping -$20 billion (yes, negative) of incremental cash."
John Hussman: "Presently, the 4-week moving average of initial claims for unemployment is running at 468,500. This level is normally consistent with monthly payroll job losses on the order of 80,000. Against that, however, we are likely to get significant short-term job growth from census hiring, which can be expected to exert a positive impact on non-farm payrolls through mid-year. I continue to view the 4-week average of initial claims as one of the more informative series to monitor regarding the employment situation."
Schlumberger Ltd agreed to buy Smith International in a $11.34 billion all-stock deal that will boost the oilfield services leader's revenue to double that of its nearest rival.
The deal, still subject to shareholder and regulatory approval, values Smith Stock at $45.84, a 37.5 percent premium over Thursday's closing price, according to a joint statement by the companies on Sunday.
Airgas has announced that its board of directors has voted unanimously against recommending the unsolicited buyout offer from Air Products & Chemicals, Inc. The deal rejected is the most recent $60.00 per share in cash, via an unsolicited tender offer. The board is recommending that Airgas shareholders do not tender their shares to Air Products. The company said that Air Products’ offer significantly undervalues Airgas.
Rob Hanna: " There appears to be a good chance the market will at least test its January highs before it breaks its February lows."
for those who haven't noticed the trend this year we have consumed 42 percent more natural gas than the 5 year average. 5 year avg consumption is 879 bcf and we've consumed 1251 bcf this year....for a 372 bcf increase or 42 percent. and yet natural gas prices are down? wtf? law of supply and demand not playing a factor here as 5 year supply is 2020 bcf, and we're at 2025 bcf as of last report. that's only 5 bcf above the 5 year average storage levels. with demand as high as it's been we should be way up this year in natural gas...not down in prices. eventually the market will correct itself. within a week or two we'll likely be well below the 5 year average. smells like a setup on the bears.
Reliance Industries Ltd., owner of the world's largest oil-refining complex, raised its offer for bankrupt LyondellBasell Industries AF to about $14.5 billion, according to two people with knowledge of the offer.
Drivers pick up enough passengers to qualify for carpool lanes, saving 15 minutes to an hour or more in gridlock plus the usual $4 bridge toll. Riders get a free trip to San Francisco's Financial District.
And everybody gets to scare their friends on the East Coast by boasting about riding with strangers.
But on July 1, an economic shift may test this unregulated system and the reciprocity behind it. As part of a package of toll increases, Bay Area toll bridge officials have decided to do the unthinkable: They're ending the free ride. For the first time, carpools will pay $2.50 to cross state-owned bridges.
That's created a conundrum for the casual carpooling community. Does the driver, who will need to pay the toll through a FasTrak transponder, cough it up in full? Do the passengers - usually two - each pony up $1.25? Or is an even split - 83.33 cents per person - warranted?
Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.
Thirty-seven percent of the company's real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation.
Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.
"More buyers are pooling investments, considering bringing mom and dad into it," said Diann Patton, a Coldwell Banker real estate consumer specialist based in Grass Valley, California, in an interview with Reuters.
The Chicago Fed National Activity Index was +0.02 in January, up from –0.58 in December.
Winter's worst proved to be far worse than imagined, with as much as five feet of snow burying much of the nation - from Texas through the upper Ohio Valley, to the Mid-Atlantic Coast, and lower New England - in back-to-back-to-back storms.
Life ground to a halt, transportation systems found themselves parked, commerce ceased and - instead of the widely anticipated new round of sales and healthy winter profits - businesses experienced lost revenue and higher costs for everything from employee absences and parking-lot plowing to rooftop shoveling and pipe replacement. So what took place? Natural gas prices fell below $5. In sum, use rose 42% but prices fell. So much for the impact of demand on price.
Lowe's (LOW) says 13 of 23 regions posted positive comp. sales; sees H2 better than H1
Yuan strengthened the most in 11 months on speculation govt will allow more flexibility.
Bloom Energy was launched in Silicon Valley on Wednesday. It’s a refrigerator-sized box which can give the power supply to the whole house. It’s the production of Silicon Valley.
From eight years working was carrying on this project, & raised the funds of $400 million which covers VCs, Kleiner Perkins (financiers in Netscape, Amazon, GoogleGoogleGoogle & many more).
It has “BloomBox” houses fuel cells which operate on oxygen & natural gas, bio gas, landfill gas, & solar energy.
Google was the 1st customer of the company which is running datacenter on 4 bloom boxes for more then one & half year. They operate on natural gas. One of its customer is eBay also, which works on five Bloom boxes in San Jose & had saved $100,000 in energy costs in nine months.
On CBS’ 60 Minutes, Bloom Box will be advertised firstly on television.
Charlie Munger: "Basicland is now under new management, using a new governmental system. It also has a new name: Sorrowland."
The Dow Jones Industrial Average fell 18.97 points to 10,383.38. The S&P 500 Index shed 1.16 points to 1,108.01. The Nasdaq Composite Index declined 1.84 points to 2,242.03.
Yields on 10-year notes rose 2 basis points, to 3.79%. Yields on 30-year bonds increased 3 basis points to 4.74%.
Thermo Fisher Scientific Inc., the world’s largest maker of lab instruments, made an unsolicited takeover offer of about $6 billion for Millipore Corp., according to a person close to the situation.
Millipore hired Goldman Sachs as financial adviser after receiving the bid and a deal could be reached as early as next week, said the person who declined to be identified because the talks aren’t public. Millipore rose $16.01, or 22 percent, to $87.35 at 4 p.m. New York time in New York Stock Exchange composite trading. Thermo Fisher fell $1.12, or 2.3 percent, to $48.10.
Mike Burk: "The market is overbought.
The Russell 2000 (R2K) has been up for 8 consecutive days rising 7.7% over that period. The last time the R2K was up for 8 consecutive days was April 5, 2004 and after that peak it fell 11.7% over the next 5 weeks and did not hit a new high until the following November."
ZeroHedge: "As Stone McCarty points out "It is also probably not an accident that the announcement of tomorrow's discount rate hike (and next month's shortening of loan maturities) comes just after the release of the January 26-27 FOMC minutes. The discussion in those minutes further serves to underscore the technical, as opposed to policy, nature of today's move." Yet we think that there is more to this, as the Fed will sooner or later be forced to come face to face with a broken monetary system, in which it stands to lose all control should it not tighten in advance of a potential monetary supply explosion which would lead not only to hyperinflation (should the Fed gets its way, and consumers finally start borrowing), but also to full loss of the Fed's control over the American monetary system. Keep a close eye on this chart: we are confident that the Fed Funds will be hiked before there is another unsymmetrical increase in the discount rate. Alas, the economy is far too weak to sustain a tightening posture at this point. As to what kind of aberrations in the market this action could lead to, we will investigate in the coming days and weeks."
CalculatedRisk predicts 2010 to account for more number of bank failures than 2009 but lesser than the peak of 534 in 1989.
ZeroHedge: "Our findings demonstrate that of the nearly $130 billion in additional cash on the books of S&P 500 companies from June 2008, through September 2009, two key sources, net working capital and a reduced capex spend, have generated over $150 billion, meaning organic operations have accounted for a whopping -$20 billion (yes, negative) of incremental cash."
John Hussman: "Presently, the 4-week moving average of initial claims for unemployment is running at 468,500. This level is normally consistent with monthly payroll job losses on the order of 80,000. Against that, however, we are likely to get significant short-term job growth from census hiring, which can be expected to exert a positive impact on non-farm payrolls through mid-year. I continue to view the 4-week average of initial claims as one of the more informative series to monitor regarding the employment situation."
Schlumberger Ltd agreed to buy Smith International in a $11.34 billion all-stock deal that will boost the oilfield services leader's revenue to double that of its nearest rival.
The deal, still subject to shareholder and regulatory approval, values Smith Stock at $45.84, a 37.5 percent premium over Thursday's closing price, according to a joint statement by the companies on Sunday.
Airgas has announced that its board of directors has voted unanimously against recommending the unsolicited buyout offer from Air Products & Chemicals, Inc. The deal rejected is the most recent $60.00 per share in cash, via an unsolicited tender offer. The board is recommending that Airgas shareholders do not tender their shares to Air Products. The company said that Air Products’ offer significantly undervalues Airgas.
Rob Hanna: " There appears to be a good chance the market will at least test its January highs before it breaks its February lows."
for those who haven't noticed the trend this year we have consumed 42 percent more natural gas than the 5 year average. 5 year avg consumption is 879 bcf and we've consumed 1251 bcf this year....for a 372 bcf increase or 42 percent. and yet natural gas prices are down? wtf? law of supply and demand not playing a factor here as 5 year supply is 2020 bcf, and we're at 2025 bcf as of last report. that's only 5 bcf above the 5 year average storage levels. with demand as high as it's been we should be way up this year in natural gas...not down in prices. eventually the market will correct itself. within a week or two we'll likely be well below the 5 year average. smells like a setup on the bears.
Reliance Industries Ltd., owner of the world's largest oil-refining complex, raised its offer for bankrupt LyondellBasell Industries AF to about $14.5 billion, according to two people with knowledge of the offer.
Drivers pick up enough passengers to qualify for carpool lanes, saving 15 minutes to an hour or more in gridlock plus the usual $4 bridge toll. Riders get a free trip to San Francisco's Financial District.
And everybody gets to scare their friends on the East Coast by boasting about riding with strangers.
But on July 1, an economic shift may test this unregulated system and the reciprocity behind it. As part of a package of toll increases, Bay Area toll bridge officials have decided to do the unthinkable: They're ending the free ride. For the first time, carpools will pay $2.50 to cross state-owned bridges.
That's created a conundrum for the casual carpooling community. Does the driver, who will need to pay the toll through a FasTrak transponder, cough it up in full? Do the passengers - usually two - each pony up $1.25? Or is an even split - 83.33 cents per person - warranted?
Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.
Thirty-seven percent of the company's real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation.
Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.
"More buyers are pooling investments, considering bringing mom and dad into it," said Diann Patton, a Coldwell Banker real estate consumer specialist based in Grass Valley, California, in an interview with Reuters.
The Chicago Fed National Activity Index was +0.02 in January, up from –0.58 in December.
Winter's worst proved to be far worse than imagined, with as much as five feet of snow burying much of the nation - from Texas through the upper Ohio Valley, to the Mid-Atlantic Coast, and lower New England - in back-to-back-to-back storms.
Life ground to a halt, transportation systems found themselves parked, commerce ceased and - instead of the widely anticipated new round of sales and healthy winter profits - businesses experienced lost revenue and higher costs for everything from employee absences and parking-lot plowing to rooftop shoveling and pipe replacement. So what took place? Natural gas prices fell below $5. In sum, use rose 42% but prices fell. So much for the impact of demand on price.
Lowe's (LOW) says 13 of 23 regions posted positive comp. sales; sees H2 better than H1
Yuan strengthened the most in 11 months on speculation govt will allow more flexibility.
Bloom Energy was launched in Silicon Valley on Wednesday. It’s a refrigerator-sized box which can give the power supply to the whole house. It’s the production of Silicon Valley.
From eight years working was carrying on this project, & raised the funds of $400 million which covers VCs, Kleiner Perkins (financiers in Netscape, Amazon, GoogleGoogleGoogle & many more).
It has “BloomBox” houses fuel cells which operate on oxygen & natural gas, bio gas, landfill gas, & solar energy.
Google was the 1st customer of the company which is running datacenter on 4 bloom boxes for more then one & half year. They operate on natural gas. One of its customer is eBay also, which works on five Bloom boxes in San Jose & had saved $100,000 in energy costs in nine months.
On CBS’ 60 Minutes, Bloom Box will be advertised firstly on television.
Charlie Munger: "Basicland is now under new management, using a new governmental system. It also has a new name: Sorrowland."
The Dow Jones Industrial Average fell 18.97 points to 10,383.38. The S&P 500 Index shed 1.16 points to 1,108.01. The Nasdaq Composite Index declined 1.84 points to 2,242.03.
Yields on 10-year notes rose 2 basis points, to 3.79%. Yields on 30-year bonds increased 3 basis points to 4.74%.
Thermo Fisher Scientific Inc., the world’s largest maker of lab instruments, made an unsolicited takeover offer of about $6 billion for Millipore Corp., according to a person close to the situation.
Millipore hired Goldman Sachs as financial adviser after receiving the bid and a deal could be reached as early as next week, said the person who declined to be identified because the talks aren’t public. Millipore rose $16.01, or 22 percent, to $87.35 at 4 p.m. New York time in New York Stock Exchange composite trading. Thermo Fisher fell $1.12, or 2.3 percent, to $48.10.
Saturday, February 20, 2010
Bank Closures
2/20/10 Bank Closings
La Jolla Bank in the San Diego area was among four banks shuttered by authorities Friday, bringing the total to 20 financial institutions closed since the beginning of the year.
La Jolla's deposits will be taken over by OneWest Bank of Pasadena, Calif., the Federal Deposit Insurance Corp. said.
La Jolla had $3.6 billion in total assets and $2.8 billion in deposits. OneWest has entered into a loss-share transaction on $3.3 billion of La Jolla's assets, the FDIC said. The FDIC was appointed as receiver by the Office of Thrift Supervision, which closed La Jolla Bank.
Other banks closed Friday included George Washington Savings Bank of Orland Park, Ill., which was shuttered by the Illinois Department of Financial Professional Regulation's banking division. Again, the FDIC was appointed as receiver for the bank, whose deposits will be taken over by FirstMerit Bank of Akron, Ohio. George Washington Savings had $412.8 million in total assets.
La Coste National Bank of La Coste, Texas, will be taken over by Community National Bank of Hondo, Texas. The sole branch of La Coste National had $53.9 million in assets.
in 2010, the Federal Deposit Insurance Corp. said in a press release issued late Friday. The FDIC entered into a purchase and assumption agreement with privately held Mutual of Omaha Bank. Mutual of Omaha will assume all the deposits of Marco. Marco Community had $119.6 million in assets and $117.1 million in deposits as of Dec. 31. Mutual of Omaha entered into a loss-share agreement on $104.8 million of Marco's assets, the FDIC said. Marco depositors can access their money via checks or debit cards Friday night and over the weekend, the agency added.
Germany's finance ministry has sketched out a plan in which countries using the euro currency will provide aid worth between 20 billion and 25 billion euros ($27-$33.7 billion) for Greece, a magazine reported on Saturday.
Citing "initial considerations" by the ministry, German weekly Der Spiegel said the share of financial aid for Greece would be calculated according to the proportion of capital each country holds in the European Central Bank.
Bloomberg (Kathleen M. Howley): “A record number of Americans were in danger of losing their homes in the fourth quarter… Loans in foreclosure rose to 4.58% of all mortgages, while those more than 90 days overdue… climbed to 5.09%...”
Doug Noland: "So the Bernanke Fed has apparently devised a new rate target – the rate it will pay banks on excess reserve holdings. We’ll have to wait for additional details, as well as to see how this new monetary regime works in practice. From what I’ve read so far, it has the appearance of a handy expedient; a tool similar in form to the fed funds target rate - but without the baggage of an implied policy of managing the rate through the addition or, more importantly, removal of Fed liquidity. The Fed hopes to have the luxury of raising the rate it pays on reserves held at the Federal Reserve, without forcing the system-wide overnight funds rate higher. The Fed would today certainly prefer to separate the tasks of raising rates and removing system liquidity and, once apart, implement respective “tightenings” at varying paces (rates up very slowly… liquidity removal even slower).
Certainly not without justification, the markets came to the recognition that yesterday’s increase in the discount rate did not signal any imminent tightening of financial conditions. It will be interesting to see if the markets eventually end up calling a bluff on Fed “exit” policies more generally."
Steven Pearlstein, Wash. Post: "But the more I look into it, the more I'm beginning to think there is a fairly simple way to meet President Obama's short-term pledge of reducing carbon emissions in the United States by 17 percent over the next decade.
The silver bullet: Decommission about two-thirds of the electric-generating capacity fueled by cheap and plentiful coal, and replace it with power generated from cheap and plentiful natural gas, which emits half as much carbon for each megawatt of electricity."
IBD: "The Department of Energy expects shale gas to account for 50% of natural gas production by 2020 if not sooner."
CitiBank: "Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change," Citigroup said on statements received by customers all over the country.
What's going on? It seems that this is something of an error. The seven day notice policy only applies to customers in Texas, Ira Stoll reports at The Future of Capitalism. It was accidentally included on customer statements nationwide.
"Whatever the explanation, it doesn't exactly inspire confidence in Citi," Stoll writes. "But it's hard to believe a bank would be sending out a notice like that on its statements."
If Greece fails to comply with all of the demands from the rest of the EU, and then experiences a genuine liquidity crisis in April and May, the most obvious next step for the region is to push Greece into the arms of the IMF. The IMF would then provide a program of financial support, with appropriate amounts of conditionality, to give Greece a couple of years to implement the appropriate fiscal adjustment. - JP Morgan
The number of rigs drilling for natural gas in the United States rose by two this week to an 11½-month high of 893, according to a report Friday by oil services firm Baker Hughes in Houston.
It was the eighth straight weekly gain and puts the gas rig count at its highest level since March 6, 2009, when there were 916 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded 34 per cent after bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.
But the rig count is still well off its recent peak above 1,600 in September 2008, and still stands at 125 rigs, or 12 per cent, below the same week last year.
La Jolla Bank in the San Diego area was among four banks shuttered by authorities Friday, bringing the total to 20 financial institutions closed since the beginning of the year.
La Jolla's deposits will be taken over by OneWest Bank of Pasadena, Calif., the Federal Deposit Insurance Corp. said.
La Jolla had $3.6 billion in total assets and $2.8 billion in deposits. OneWest has entered into a loss-share transaction on $3.3 billion of La Jolla's assets, the FDIC said. The FDIC was appointed as receiver by the Office of Thrift Supervision, which closed La Jolla Bank.
Other banks closed Friday included George Washington Savings Bank of Orland Park, Ill., which was shuttered by the Illinois Department of Financial Professional Regulation's banking division. Again, the FDIC was appointed as receiver for the bank, whose deposits will be taken over by FirstMerit Bank of Akron, Ohio. George Washington Savings had $412.8 million in total assets.
La Coste National Bank of La Coste, Texas, will be taken over by Community National Bank of Hondo, Texas. The sole branch of La Coste National had $53.9 million in assets.
in 2010, the Federal Deposit Insurance Corp. said in a press release issued late Friday. The FDIC entered into a purchase and assumption agreement with privately held Mutual of Omaha Bank. Mutual of Omaha will assume all the deposits of Marco. Marco Community had $119.6 million in assets and $117.1 million in deposits as of Dec. 31. Mutual of Omaha entered into a loss-share agreement on $104.8 million of Marco's assets, the FDIC said. Marco depositors can access their money via checks or debit cards Friday night and over the weekend, the agency added.
Germany's finance ministry has sketched out a plan in which countries using the euro currency will provide aid worth between 20 billion and 25 billion euros ($27-$33.7 billion) for Greece, a magazine reported on Saturday.
Citing "initial considerations" by the ministry, German weekly Der Spiegel said the share of financial aid for Greece would be calculated according to the proportion of capital each country holds in the European Central Bank.
Bloomberg (Kathleen M. Howley): “A record number of Americans were in danger of losing their homes in the fourth quarter… Loans in foreclosure rose to 4.58% of all mortgages, while those more than 90 days overdue… climbed to 5.09%...”
Doug Noland: "So the Bernanke Fed has apparently devised a new rate target – the rate it will pay banks on excess reserve holdings. We’ll have to wait for additional details, as well as to see how this new monetary regime works in practice. From what I’ve read so far, it has the appearance of a handy expedient; a tool similar in form to the fed funds target rate - but without the baggage of an implied policy of managing the rate through the addition or, more importantly, removal of Fed liquidity. The Fed hopes to have the luxury of raising the rate it pays on reserves held at the Federal Reserve, without forcing the system-wide overnight funds rate higher. The Fed would today certainly prefer to separate the tasks of raising rates and removing system liquidity and, once apart, implement respective “tightenings” at varying paces (rates up very slowly… liquidity removal even slower).
Certainly not without justification, the markets came to the recognition that yesterday’s increase in the discount rate did not signal any imminent tightening of financial conditions. It will be interesting to see if the markets eventually end up calling a bluff on Fed “exit” policies more generally."
Steven Pearlstein, Wash. Post: "But the more I look into it, the more I'm beginning to think there is a fairly simple way to meet President Obama's short-term pledge of reducing carbon emissions in the United States by 17 percent over the next decade.
The silver bullet: Decommission about two-thirds of the electric-generating capacity fueled by cheap and plentiful coal, and replace it with power generated from cheap and plentiful natural gas, which emits half as much carbon for each megawatt of electricity."
IBD: "The Department of Energy expects shale gas to account for 50% of natural gas production by 2020 if not sooner."
CitiBank: "Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change," Citigroup said on statements received by customers all over the country.
What's going on? It seems that this is something of an error. The seven day notice policy only applies to customers in Texas, Ira Stoll reports at The Future of Capitalism. It was accidentally included on customer statements nationwide.
"Whatever the explanation, it doesn't exactly inspire confidence in Citi," Stoll writes. "But it's hard to believe a bank would be sending out a notice like that on its statements."
If Greece fails to comply with all of the demands from the rest of the EU, and then experiences a genuine liquidity crisis in April and May, the most obvious next step for the region is to push Greece into the arms of the IMF. The IMF would then provide a program of financial support, with appropriate amounts of conditionality, to give Greece a couple of years to implement the appropriate fiscal adjustment. - JP Morgan
The number of rigs drilling for natural gas in the United States rose by two this week to an 11½-month high of 893, according to a report Friday by oil services firm Baker Hughes in Houston.
It was the eighth straight weekly gain and puts the gas rig count at its highest level since March 6, 2009, when there were 916 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded 34 per cent after bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.
But the rig count is still well off its recent peak above 1,600 in September 2008, and still stands at 125 rigs, or 12 per cent, below the same week last year.
The Fed
2/19/10 The Fed
The Federal Reserve announced late Thursday that it was raising its discount rate in order to push banks to borrow from the private market for short-term credit. In a statement, the Fed said it would raise its discount, or primary credit rate, to 0.75% from 0.50% effective on Friday. Fed chairman Ben Bernanke signaled last week that the Fed was mulling the move. Fed watchers had expected the move to come at the next Fed meeting in March. Today's action shows a sense of urgency on the part of the Fed officials. The Fed said the move is intended to "normalize" their operations as the financial crisis winds down. The change is not a tightening and does not signal any change in monetary policy, the Fed said.
With shelter costs dropping sharply, U.S. core consumer prices fell a seasonally adjusted 0.1% in January, the first decline since 1982, the Labor Department estimated Friday. Core prices, which exclude food and energy costs, are considered a good indicator of underlying inflationary pressures. Prices fell for hotel fares, home ownership costs, new cars, airfares and clothing. Overall, the consumer price index rose a seasonally adjusted 0.2% in January for the fifth straight month. Higher energy and medical costs more than offset the largest decline in services prices since 1982. Inflation was weaker than expected by economists, who were forecasting a 0.3% increase in the overall CPI and a 0.1% gain in the core CPI.
Oil services firm Schlumberger Ltd. is in advanced talks to acquire Smith International Inc., The Wall Street Journal reported Friday, citing people familiar with the negotiations. A deal combine two of the world's biggest oil services companies, with Schlumberger's revenue nearly doubling that of its nearest competitor following a deal, the report said. Smith currently has a capitalization fo $7.5 billion, and a typical 20% deal premium would take the transaction to the $9 billion range, the report added.
Although Schlumberger and Smith are both part of the diverse oil-field services sector, they compete directly in relatively few businesses. Smith is best known as a manufacturer of drill bits and related equipment, while Schlumberger makes most of its money finding and evaluating oil reservoirs, drilling wells, and pumping out the oil.
Those differences could help ease pressure from antitrust regulators.
Take a hard look at America's balance sheet and "you have to be concerned," says Charles Ortel, managing director of Newport Value Partners.
Total gross U.S. debt is now $50 trillion or 12 times the nation's total gross income, according to Ortel, whose debt calculation excludes unfunded mandates such as Social Security and Medicaid but does include corporate debt which he says are "potentially eligible for bailouts."
Furthermore, Ortel says the Federal Reserve overestimates U.S. household net worth, because most of the "asset" side of the ledger is based on real estate valuations he says are overinflated.
"A strict, hard look at the national net worth statement will tell you that our assets are lower than you think and our debt is higher than you think," he says.
The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.
Population-weighted, from the Plains east, this winter will likely beat the 2000-2001 winter season to become the coldest winter since 1983-1984, according to Joe Bastardi, a senior meteorologist at AccuWeather.com, with the weather in the last 10-15 days of this month probably cold enough to officially make this winter the coldest in a quarter century, he said.
Robert Pollin: "Unemployment in the United States stands officially at 9.7 percent. This represents 14.8 million people out of work. By a broader official measure that includes people employed fewer hours than they would like and those discouraged from looking for work, the unemployment rate is 16.5 percent, or about 25 million people in a total labor force of about 153 million. We have not seen comparable unemployment rates since 1983, twenty-seven years ago, and before that, not since the 1930s Depression."
ZeroHedge: "The Federal Reserve's balance just hit another record high, at $2.29 trillion, jumping by a whopping $54 billion sequentially (the biggest weekly increase since mid-November). Securities held outright: $1,967 billion (an increase of $60.9 billion MoM, resulting from $56 billion increase in MBS and $5 nillion in Agency Debt), or a huge $53.6 billion increase sequentially. The fed is now 95% complete with its purchases of MBS, and 96% complete with purchases of Agencies. The Fed has completed $167.2 billion of its $175 billion agency debt purchase program through February 17. The Fed's MBS total is now $1.188 trillion, and by the end of the first quarter of 2010, the Fed will have purchased $1.25 trillion."
WSJ: “Our budget deficit is a problem, but it’s not the core issue.
“Our shadow government, the financial industrial complex, is our potential Greece. High unemployment lingers, higher interest rates are on the horizon and U.S. aid to the mortgage markets is coming to an end. Government guarantees in the markets will be withdrawn leaving them exposed to the whims of confidence.
“Amid that uncertain state, Wall Street is chugging along as if the last few years were merely a blip. At Citigroup Inc., the financial innovators are readying a new, complex derivative that would act as kind of financial crisis insurance. Citigroup believes the derivative, dubbed CLX, won’t put Citi or taxpayers at risk, but they concede the contracts aren’t foolproof, a story we’ve heard before.”
Bernanke last month invited the Government Accountability Office to conduct a “full review” of the central bank’s actions tied to the bailout that swelled to $182.3 billion. “In light of your professed commitments and your apparent desire to cooperate with this committee’s investigation, I am writing to request that you voluntarily produce to this committee all records and communications in the possession of the Federal Reserve” regarding the rescue, Issa wrote. Issa is seeking to widen the probe into what he’s called a “backdoor bailout” of banks that got funds from AIG after its rescue and efforts by the Federal Reserve Bank of New York to withhold details from the public about the payments. Treasury Secretary Timothy Geithner, who ran the New York Fed when AIG was bailed out in 2008, testified last month that the payments were necessary and that subordinates made disclosure decisions.
The Telegraph: "Britain is at risk of a Govenment deficit crisis worse than that of Greece, sparking serious fears over the economic stability of the country."
The Federal Reserve announced late Thursday that it was raising its discount rate in order to push banks to borrow from the private market for short-term credit. In a statement, the Fed said it would raise its discount, or primary credit rate, to 0.75% from 0.50% effective on Friday. Fed chairman Ben Bernanke signaled last week that the Fed was mulling the move. Fed watchers had expected the move to come at the next Fed meeting in March. Today's action shows a sense of urgency on the part of the Fed officials. The Fed said the move is intended to "normalize" their operations as the financial crisis winds down. The change is not a tightening and does not signal any change in monetary policy, the Fed said.
With shelter costs dropping sharply, U.S. core consumer prices fell a seasonally adjusted 0.1% in January, the first decline since 1982, the Labor Department estimated Friday. Core prices, which exclude food and energy costs, are considered a good indicator of underlying inflationary pressures. Prices fell for hotel fares, home ownership costs, new cars, airfares and clothing. Overall, the consumer price index rose a seasonally adjusted 0.2% in January for the fifth straight month. Higher energy and medical costs more than offset the largest decline in services prices since 1982. Inflation was weaker than expected by economists, who were forecasting a 0.3% increase in the overall CPI and a 0.1% gain in the core CPI.
Oil services firm Schlumberger Ltd. is in advanced talks to acquire Smith International Inc., The Wall Street Journal reported Friday, citing people familiar with the negotiations. A deal combine two of the world's biggest oil services companies, with Schlumberger's revenue nearly doubling that of its nearest competitor following a deal, the report said. Smith currently has a capitalization fo $7.5 billion, and a typical 20% deal premium would take the transaction to the $9 billion range, the report added.
Although Schlumberger and Smith are both part of the diverse oil-field services sector, they compete directly in relatively few businesses. Smith is best known as a manufacturer of drill bits and related equipment, while Schlumberger makes most of its money finding and evaluating oil reservoirs, drilling wells, and pumping out the oil.
Those differences could help ease pressure from antitrust regulators.
Take a hard look at America's balance sheet and "you have to be concerned," says Charles Ortel, managing director of Newport Value Partners.
Total gross U.S. debt is now $50 trillion or 12 times the nation's total gross income, according to Ortel, whose debt calculation excludes unfunded mandates such as Social Security and Medicaid but does include corporate debt which he says are "potentially eligible for bailouts."
Furthermore, Ortel says the Federal Reserve overestimates U.S. household net worth, because most of the "asset" side of the ledger is based on real estate valuations he says are overinflated.
"A strict, hard look at the national net worth statement will tell you that our assets are lower than you think and our debt is higher than you think," he says.
The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.
Population-weighted, from the Plains east, this winter will likely beat the 2000-2001 winter season to become the coldest winter since 1983-1984, according to Joe Bastardi, a senior meteorologist at AccuWeather.com, with the weather in the last 10-15 days of this month probably cold enough to officially make this winter the coldest in a quarter century, he said.
Robert Pollin: "Unemployment in the United States stands officially at 9.7 percent. This represents 14.8 million people out of work. By a broader official measure that includes people employed fewer hours than they would like and those discouraged from looking for work, the unemployment rate is 16.5 percent, or about 25 million people in a total labor force of about 153 million. We have not seen comparable unemployment rates since 1983, twenty-seven years ago, and before that, not since the 1930s Depression."
ZeroHedge: "The Federal Reserve's balance just hit another record high, at $2.29 trillion, jumping by a whopping $54 billion sequentially (the biggest weekly increase since mid-November). Securities held outright: $1,967 billion (an increase of $60.9 billion MoM, resulting from $56 billion increase in MBS and $5 nillion in Agency Debt), or a huge $53.6 billion increase sequentially. The fed is now 95% complete with its purchases of MBS, and 96% complete with purchases of Agencies. The Fed has completed $167.2 billion of its $175 billion agency debt purchase program through February 17. The Fed's MBS total is now $1.188 trillion, and by the end of the first quarter of 2010, the Fed will have purchased $1.25 trillion."
WSJ: “Our budget deficit is a problem, but it’s not the core issue.
“Our shadow government, the financial industrial complex, is our potential Greece. High unemployment lingers, higher interest rates are on the horizon and U.S. aid to the mortgage markets is coming to an end. Government guarantees in the markets will be withdrawn leaving them exposed to the whims of confidence.
“Amid that uncertain state, Wall Street is chugging along as if the last few years were merely a blip. At Citigroup Inc., the financial innovators are readying a new, complex derivative that would act as kind of financial crisis insurance. Citigroup believes the derivative, dubbed CLX, won’t put Citi or taxpayers at risk, but they concede the contracts aren’t foolproof, a story we’ve heard before.”
Bernanke last month invited the Government Accountability Office to conduct a “full review” of the central bank’s actions tied to the bailout that swelled to $182.3 billion. “In light of your professed commitments and your apparent desire to cooperate with this committee’s investigation, I am writing to request that you voluntarily produce to this committee all records and communications in the possession of the Federal Reserve” regarding the rescue, Issa wrote. Issa is seeking to widen the probe into what he’s called a “backdoor bailout” of banks that got funds from AIG after its rescue and efforts by the Federal Reserve Bank of New York to withhold details from the public about the payments. Treasury Secretary Timothy Geithner, who ran the New York Fed when AIG was bailed out in 2008, testified last month that the payments were necessary and that subordinates made disclosure decisions.
The Telegraph: "Britain is at risk of a Govenment deficit crisis worse than that of Greece, sparking serious fears over the economic stability of the country."
Thursday, February 18, 2010
Yield Curve
2/18/10 Yield Curve
The number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week, the Labor Department reported Thursday, a sign that labor markets remain very weak. The four-week average of initial claims fell by 1,500 to 467,500, about 20,000 more than at the first of the year. The number of people continuing to claim state unemployment benefits was unchanged in the week ending Feb. 6 at 4.56 million. All told, in raw numbers not seasonally adjusted, 11.8 million people were collecting some type of unemployment benefits in the week of Jan. 30, up 281,000 from the previous week's 11.5 million.
U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil, the Labor Department estimated Thursday. Core prices of finished goods - which exclude food and energy goods - rose 0.3% in January, led by higher prices for light trucks and other capital goods. The 1.4% increase in the producer price index was higher than the 0.9% gain expected by economists surveyed by MarketWatch. The core rate of 0.3% was also higher than the 0.1% gain expected. The producer price index is up 4.6% in the past year, the largest year-over-year gain since the financial crisis began in late 2008. The core PPI is up 1% in the past year.
Walmart Stores Inc. said Thursday its fiscal fourth-quarter profit was $4.6 billion, or $1.22 a share, compared to $3.8 billion, or 97 cents a share, in the year-ago period. On an adjusted basis, the Bentonville, Ark., retailer said it earned $1.17 a share. Analysts polled by FactSet Research were looking for earnings of $1.12 a share, on average. Net sales in the quarter rose 4.6% to $112.8 billion. For 2011, Walmart forecast earnings from continuing operations to be in the range of $3.90 to $4 a share. For the first quarter, earnings from continuing operations are expected to be 81 cents to 85 cents a share. Wall Street is looking for first-quarter earnings of 85 cents a share and 2011 earnings of $3.98 a share. Shares of Walmart slipped nearly 2% premarket to $53.15.
The world's largest retailer acknowledged that its U.S. operations will still grapple with weak sales, predicting same-store sales excluding fuel will be flat, within a range of up 1 percent to down 1 percent in the current first quarter.
"U.S. sales will be more challenging in the first quarter, as Walmart U.S. cycles through strong year-over-year comparisons and deflation," Wal-Mart Chief Executive Mike Duke said. "We remain focused on growing top-line sales, and expect improvement in the United States as the year progresses."
George Ure: "Over three months we've seen finished goods up 3.64% which annualizes to what? Oh, 15.36% annual inflation at the finished goods level based on the latest running three-month numbers. The Producer Price Index for Crude Materials for Further Processing climbed 9.6 percent in January. For the 3-month period ending in January, crude material prices rose 16.1 percent, accelerating from an 8.5-percent increase for the 3 months ended October 2009."
The CIA admits that it hired Iranians in the 1950’s to pose as Communists and stage bombings in Iran in order to turn the country against its democratically-elected president
Thousands of UFOs have been spotted in the last 20 years around the UK, according to newly released documents.
Gold futures fell sharply on Thursday after the International Monetary Fund announced plans to sell 191.3 tons of gold on the open market. The sale, announced late Wednesday, is part of a total of 403.3 metric tons designated for sale last September. Gold futures for April delivery dropped $18.50, or 1.6%, to $1,101.60 an ounce in electronic trading on Globex. "The IMF announcement came in the after-market session and saw gold fall more than $5 an ounce in a matter of minutes, and follow-through offers have been generated overnight, with gold testing below $1,100 an ounce, as a result of the weaker euro/dollar cross," said James Moore, an analyst at TheBullionDesk.com, in a note to clients. The euro was down 0.3% to $1.3563.
Matt Taibbi: “The nation’s six largest banks set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007.” The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?
The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.”
Hewlett-Packard (HPQ) will launch a new keyless tablet computer called Slate to compete with Apple’s iPad (WSJ)
By Robert Powell, MarketWatch
BOSTON (MarketWatch) -- A train wreck waiting to happen. That's the only way to describe the mess that state pension systems are in right now, according to a report published today by the Pew Center on the States. According to Pew, there's a $1 trillion gap between the $3.35 trillion in pension, health care and other retirement benefits states promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay them.
Health insurance premium increases of up to 39% aren't an exception but a worrisome sign of the times, the Obama administration said in a report Thursday.
Proposed premium increases by Anthem Blue Cross for Californians purchasing their own coverage set off a wave of criticism and forced the company last week to announce a postponement. Now, the Health and Human Services Department says similar pressure on premiums is being felt in at least six other states.
"This shocking increase isn't unique," said the report, being presented by Secretary Kathleen Sebelius at a news conference Thursday. "Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue."
With his drive for health care overhaul bogged down, President Barack Obama has seized on the Anthem premium increases as Exhibit A to make his case for sweeping change before a bipartisan White House summit next week. California officials say 700,000 households face increases averaging 25% overall and as high as 39% for some.
The HHS report found that those numbers are in line with increases sought by insurers in other states—at a time of robust profit growth for the companies and a lack of competition in most states.
Manufacturing activity expanded in February for the sixth straight month in the Philadelphia area, according to a monthly survey of manufacturing companies released Thursday by the Federal Reserve Bank of Philadelphia. The Philly Fed index rose to 17.6 in February from 15.2 in January, in line with expectations. Details of the report were strong. The new orders index jumped to 22.7 in February from 3.2 in January. The shipments index rose to 19.7 in February from 11 in January. The employment index rose to 7.4 in February from 6.1 in January.
Leading U.S. economic indicators rose 0.3% in January, the 10th straight monthly gain and further evidence of a continuing spring thaw in the U.S. economy, according to the Conference Board. The index was expected to increase 0.2% based on a survey of economists by MarketWatch. The coincident index edged up 0.2% in January, the fourth gain in the past seven months.
The Energy Department is expected to report a decline of 188 billion to 192 billion cubic feet of natural gas storage inventories for the week ended Feb. 12, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
U.S. natural gas storage levels are expected to fall by 190 billion cubic feet when weekly data from the U.S. Energy Information Administration is released early Thursday, according to a Reuters poll.
In the weekly survey of 23 industry traders and analysts, withdrawal estimates for the week ended Feb. 12 ranged from 150 bcf to 208 bcf.
Stocks fell an adjusted 44 bcf for the same week last year. The five-year average drop for that week is 129 bcf.
Oil and Gas Journal: "The US Department of Energy’s Energy Information Administration may be underestimating natural gas demand with much of the US South and Northeast enveloped in yet another round of cold weather that boosted gas and electricity demand in January through early February, said Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC.
The March natural gas contract climbed 10.4¢ to $5.40/MMbtu Feb. 11 on the New York Mercantile Exchange, “the largest 1-day gain since the beginning of the month,” on “a drop in jobless claims, indicating industrial demand, which accounts for 29% of US [gas] consumption, is likely improving, and cold temperatures across the US likely resulting in higher residential demand,” said analysts at Pritchard Capital Partners LLC in New Orleans.
On the US spot market that same day, gas at Henry Hub, La., gained 3¢ to $5.51/MMbtu. Gas prices continued rising to $5.47/MMbtu in the Feb. 12 session on NYMEX and to $5.55/MMbtu at Henry Hub as continued snowfall buried parts of the Northeastern US and the Mid-Atlantic states.
Meanwhile, EIA reported January heating degree-days in the South Census Region—where 60% of households use electricity as the primary space heating fuel—were 13% higher in January than a year ago. Consequently, residential electricity sales in the South region also increased by about 12% to an average of 2,250 Gw-hr/day, “and a good part of this electricity was generated with natural gas,” Sieminski said.
He noted that EIA estimated gas consumption by the entire US electric power sector jumped by more than 8% in January from the administrations preliminary estimate during that month. EIA’s short-term energy outlook published in the week ended Feb. 12 estimated a new record for gas consumption by the electric power sector for January. “However, the EIA is reluctant to give up on its view that an increase in coal-fired generation capacity and higher natural gas prices through the remainder of the year should reduce the share of natural gas-fired generation in the baseload power mix in 2010.” Sieminski said.
Data indicate a mini-spike in electric utility gas use during January before dropping off in February and March. Similarly, residential use in the EIA forecast is shown lower in this year’s first quarter than the similar period in 2009.
“Could the EIA be underestimating gas demand?” Sieminski asked. “News reports this week show a severe and very unusual winter snowstorm across the South from Dallas, Tex., to Atlanta, Ga. This appears to be the same type of weather pattern that caused the unusual rise in electric utility gas use in January. Other parts of the US are also getting hit hard with cold, windy weather that boosts gas use in home heating. March might also be exceptionally cold across a large section of the central US.”
Natural gas inventories down 190 bcf -- EIA. Still, the report also showed underground storage in the lower 48 states remained 1.3% higher than year-ago levels and 2.7% above the five-year average. EIA expects total natural gas consumption to increase 0.4 percent to 62.5 billion cubic feet per day (Bcf/d) in 2010 and another 0.4 percent in 2011. Current 2010 futures market prices between $5.50 and $6.70 per MMBtu
But "on the energy side, a big rise in crude inventories was offset by a big drop in distillate supplies," Fuentes said.
The Energy Information Administration said U.S. crude stockpiles rose by 3.1 million barrels in the week ended Feb. 12. Analysts polled by Platts had expected a buildup of 1.65 million barrels.
The EIA also said gasoline supplies rose by 1.62 million barrels, more than the 1.5 million barrels forecast in the Platts survey.
However, distillates fell by 2.94 million barrels on the week, far greater than the 1.6 million barrels that analysts had projected.
The difference in yield between Treasury 2- and 10-year notes, known as the yield curve, steepened to a record as reports showed that Philadelphia region manufacturing and U.S. leading indicators rose.
The Treasury Department said it will sell $126 billion in notes and bonds next week: $8 billion in 30-year Treasury Inflation Protected Securities, or TIPS, $44 billion in 2-year debt, $42 billion in 5-year notes and $32 billion in 7-year securities. The sales will be on successive days starting Feb. 22. The producer price index increased more than forecast last month, the Labor Department said.
“The curve will continue to steepen as long as we are in the mindset of short-term rates kept low by the Fed and varying degrees of economic growth and inflation, which is dragging the long end down,” said Kevin Giddis, head of fixed-income sales, trading and research at brokerage firm Morgan Keegan Inc. in Memphis, Tennessee.
The yield curve increased to 2.93 percentage points, beating the record high of 2.90 percentage points set Jan. 11.
The Dow Jones Industrial Average rose 83.66 points, or 0.8%, to 10,392.9. The S&P 500 Index gained 7.24 points, or 0.7%, to 1,106.75. The Nasdaq Composite Index advanced 15.42 points, or 0.7%, to 2,241.71.
The number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week, the Labor Department reported Thursday, a sign that labor markets remain very weak. The four-week average of initial claims fell by 1,500 to 467,500, about 20,000 more than at the first of the year. The number of people continuing to claim state unemployment benefits was unchanged in the week ending Feb. 6 at 4.56 million. All told, in raw numbers not seasonally adjusted, 11.8 million people were collecting some type of unemployment benefits in the week of Jan. 30, up 281,000 from the previous week's 11.5 million.
U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil, the Labor Department estimated Thursday. Core prices of finished goods - which exclude food and energy goods - rose 0.3% in January, led by higher prices for light trucks and other capital goods. The 1.4% increase in the producer price index was higher than the 0.9% gain expected by economists surveyed by MarketWatch. The core rate of 0.3% was also higher than the 0.1% gain expected. The producer price index is up 4.6% in the past year, the largest year-over-year gain since the financial crisis began in late 2008. The core PPI is up 1% in the past year.
Walmart Stores Inc. said Thursday its fiscal fourth-quarter profit was $4.6 billion, or $1.22 a share, compared to $3.8 billion, or 97 cents a share, in the year-ago period. On an adjusted basis, the Bentonville, Ark., retailer said it earned $1.17 a share. Analysts polled by FactSet Research were looking for earnings of $1.12 a share, on average. Net sales in the quarter rose 4.6% to $112.8 billion. For 2011, Walmart forecast earnings from continuing operations to be in the range of $3.90 to $4 a share. For the first quarter, earnings from continuing operations are expected to be 81 cents to 85 cents a share. Wall Street is looking for first-quarter earnings of 85 cents a share and 2011 earnings of $3.98 a share. Shares of Walmart slipped nearly 2% premarket to $53.15.
The world's largest retailer acknowledged that its U.S. operations will still grapple with weak sales, predicting same-store sales excluding fuel will be flat, within a range of up 1 percent to down 1 percent in the current first quarter.
"U.S. sales will be more challenging in the first quarter, as Walmart U.S. cycles through strong year-over-year comparisons and deflation," Wal-Mart Chief Executive Mike Duke said. "We remain focused on growing top-line sales, and expect improvement in the United States as the year progresses."
George Ure: "Over three months we've seen finished goods up 3.64% which annualizes to what? Oh, 15.36% annual inflation at the finished goods level based on the latest running three-month numbers. The Producer Price Index for Crude Materials for Further Processing climbed 9.6 percent in January. For the 3-month period ending in January, crude material prices rose 16.1 percent, accelerating from an 8.5-percent increase for the 3 months ended October 2009."
The CIA admits that it hired Iranians in the 1950’s to pose as Communists and stage bombings in Iran in order to turn the country against its democratically-elected president
Thousands of UFOs have been spotted in the last 20 years around the UK, according to newly released documents.
Gold futures fell sharply on Thursday after the International Monetary Fund announced plans to sell 191.3 tons of gold on the open market. The sale, announced late Wednesday, is part of a total of 403.3 metric tons designated for sale last September. Gold futures for April delivery dropped $18.50, or 1.6%, to $1,101.60 an ounce in electronic trading on Globex. "The IMF announcement came in the after-market session and saw gold fall more than $5 an ounce in a matter of minutes, and follow-through offers have been generated overnight, with gold testing below $1,100 an ounce, as a result of the weaker euro/dollar cross," said James Moore, an analyst at TheBullionDesk.com, in a note to clients. The euro was down 0.3% to $1.3563.
Matt Taibbi: “The nation’s six largest banks set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007.” The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?
The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.”
Hewlett-Packard (HPQ) will launch a new keyless tablet computer called Slate to compete with Apple’s iPad (WSJ)
By Robert Powell, MarketWatch
BOSTON (MarketWatch) -- A train wreck waiting to happen. That's the only way to describe the mess that state pension systems are in right now, according to a report published today by the Pew Center on the States. According to Pew, there's a $1 trillion gap between the $3.35 trillion in pension, health care and other retirement benefits states promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay them.
Health insurance premium increases of up to 39% aren't an exception but a worrisome sign of the times, the Obama administration said in a report Thursday.
Proposed premium increases by Anthem Blue Cross for Californians purchasing their own coverage set off a wave of criticism and forced the company last week to announce a postponement. Now, the Health and Human Services Department says similar pressure on premiums is being felt in at least six other states.
"This shocking increase isn't unique," said the report, being presented by Secretary Kathleen Sebelius at a news conference Thursday. "Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue."
With his drive for health care overhaul bogged down, President Barack Obama has seized on the Anthem premium increases as Exhibit A to make his case for sweeping change before a bipartisan White House summit next week. California officials say 700,000 households face increases averaging 25% overall and as high as 39% for some.
The HHS report found that those numbers are in line with increases sought by insurers in other states—at a time of robust profit growth for the companies and a lack of competition in most states.
Manufacturing activity expanded in February for the sixth straight month in the Philadelphia area, according to a monthly survey of manufacturing companies released Thursday by the Federal Reserve Bank of Philadelphia. The Philly Fed index rose to 17.6 in February from 15.2 in January, in line with expectations. Details of the report were strong. The new orders index jumped to 22.7 in February from 3.2 in January. The shipments index rose to 19.7 in February from 11 in January. The employment index rose to 7.4 in February from 6.1 in January.
Leading U.S. economic indicators rose 0.3% in January, the 10th straight monthly gain and further evidence of a continuing spring thaw in the U.S. economy, according to the Conference Board. The index was expected to increase 0.2% based on a survey of economists by MarketWatch. The coincident index edged up 0.2% in January, the fourth gain in the past seven months.
The Energy Department is expected to report a decline of 188 billion to 192 billion cubic feet of natural gas storage inventories for the week ended Feb. 12, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
U.S. natural gas storage levels are expected to fall by 190 billion cubic feet when weekly data from the U.S. Energy Information Administration is released early Thursday, according to a Reuters poll.
In the weekly survey of 23 industry traders and analysts, withdrawal estimates for the week ended Feb. 12 ranged from 150 bcf to 208 bcf.
Stocks fell an adjusted 44 bcf for the same week last year. The five-year average drop for that week is 129 bcf.
Oil and Gas Journal: "The US Department of Energy’s Energy Information Administration may be underestimating natural gas demand with much of the US South and Northeast enveloped in yet another round of cold weather that boosted gas and electricity demand in January through early February, said Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC.
The March natural gas contract climbed 10.4¢ to $5.40/MMbtu Feb. 11 on the New York Mercantile Exchange, “the largest 1-day gain since the beginning of the month,” on “a drop in jobless claims, indicating industrial demand, which accounts for 29% of US [gas] consumption, is likely improving, and cold temperatures across the US likely resulting in higher residential demand,” said analysts at Pritchard Capital Partners LLC in New Orleans.
On the US spot market that same day, gas at Henry Hub, La., gained 3¢ to $5.51/MMbtu. Gas prices continued rising to $5.47/MMbtu in the Feb. 12 session on NYMEX and to $5.55/MMbtu at Henry Hub as continued snowfall buried parts of the Northeastern US and the Mid-Atlantic states.
Meanwhile, EIA reported January heating degree-days in the South Census Region—where 60% of households use electricity as the primary space heating fuel—were 13% higher in January than a year ago. Consequently, residential electricity sales in the South region also increased by about 12% to an average of 2,250 Gw-hr/day, “and a good part of this electricity was generated with natural gas,” Sieminski said.
He noted that EIA estimated gas consumption by the entire US electric power sector jumped by more than 8% in January from the administrations preliminary estimate during that month. EIA’s short-term energy outlook published in the week ended Feb. 12 estimated a new record for gas consumption by the electric power sector for January. “However, the EIA is reluctant to give up on its view that an increase in coal-fired generation capacity and higher natural gas prices through the remainder of the year should reduce the share of natural gas-fired generation in the baseload power mix in 2010.” Sieminski said.
Data indicate a mini-spike in electric utility gas use during January before dropping off in February and March. Similarly, residential use in the EIA forecast is shown lower in this year’s first quarter than the similar period in 2009.
“Could the EIA be underestimating gas demand?” Sieminski asked. “News reports this week show a severe and very unusual winter snowstorm across the South from Dallas, Tex., to Atlanta, Ga. This appears to be the same type of weather pattern that caused the unusual rise in electric utility gas use in January. Other parts of the US are also getting hit hard with cold, windy weather that boosts gas use in home heating. March might also be exceptionally cold across a large section of the central US.”
Natural gas inventories down 190 bcf -- EIA. Still, the report also showed underground storage in the lower 48 states remained 1.3% higher than year-ago levels and 2.7% above the five-year average. EIA expects total natural gas consumption to increase 0.4 percent to 62.5 billion cubic feet per day (Bcf/d) in 2010 and another 0.4 percent in 2011. Current 2010 futures market prices between $5.50 and $6.70 per MMBtu
But "on the energy side, a big rise in crude inventories was offset by a big drop in distillate supplies," Fuentes said.
The Energy Information Administration said U.S. crude stockpiles rose by 3.1 million barrels in the week ended Feb. 12. Analysts polled by Platts had expected a buildup of 1.65 million barrels.
The EIA also said gasoline supplies rose by 1.62 million barrels, more than the 1.5 million barrels forecast in the Platts survey.
However, distillates fell by 2.94 million barrels on the week, far greater than the 1.6 million barrels that analysts had projected.
The difference in yield between Treasury 2- and 10-year notes, known as the yield curve, steepened to a record as reports showed that Philadelphia region manufacturing and U.S. leading indicators rose.
The Treasury Department said it will sell $126 billion in notes and bonds next week: $8 billion in 30-year Treasury Inflation Protected Securities, or TIPS, $44 billion in 2-year debt, $42 billion in 5-year notes and $32 billion in 7-year securities. The sales will be on successive days starting Feb. 22. The producer price index increased more than forecast last month, the Labor Department said.
“The curve will continue to steepen as long as we are in the mindset of short-term rates kept low by the Fed and varying degrees of economic growth and inflation, which is dragging the long end down,” said Kevin Giddis, head of fixed-income sales, trading and research at brokerage firm Morgan Keegan Inc. in Memphis, Tennessee.
The yield curve increased to 2.93 percentage points, beating the record high of 2.90 percentage points set Jan. 11.
The Dow Jones Industrial Average rose 83.66 points, or 0.8%, to 10,392.9. The S&P 500 Index gained 7.24 points, or 0.7%, to 1,106.75. The Nasdaq Composite Index advanced 15.42 points, or 0.7%, to 2,241.71.
Volume
2/17/10 Volume
New construction of U.S. houses rebounded in January, the Commerce Department estimated Wednesday. Starts rose 2.8% in January to a seasonally adjusted 591,000 annualized units. This was in line with forecasts of economists surveyed by MarketWatch. This is the highest level of starts since July. Starts in December were also revised up to 575,000 from the previous estimate of 557,000. Starts of new single-family homes rose by 1.5% to 484,000 in January, while starts of large apartment units rose 9.2% to 107,000. Building permits, a leading indicator of housing construction, fell 4.9% to a seasonally adjusted annual rate of 621,000.
Led by higher prices for oil and gas, the prices of goods imported into the United States jumped 1.4% in January, the sixth straight increase, the Labor Department estimated Wednesday. Fuel prices rose 5.3% in January, including an 18.8% increase in natural gas prices. Petroleum prices rose 4.8%. Prices of nonfuel imports rose 0.4% for the fifth time in the past six months, led by prices of industrial materials. Prices of imported capital goods and autos fell 0.1%. In the past 12 months, import prices have risen 11.5%. Prices of goods exported from the United States rose 0.8% in January, and are up 3.4% in the past year.
Humana Inc said Wednesday that it intends to reduce its workforce by approximately 1,400 jobs, or 5%, in 2010 by cutting 2,500 positions while adding 1,100 additional jobs in areas of growth such as medical-cost containment capabilities, pharmacy management, and specialty products. The reduction will come primarily from attrition, process efficiencies, outsourcing, and position eliminations.
Walgreen Co., the Deerfield, Ill., drugstore operator, definitively agreed to acquire Duane Reade Holdings Inc., operator of a chain of 257 New-York-area drugstores, from affiliates of Oak Hill Capital Partners. The deal price is nearly $1.08 billion, including assumption of debt. In a Wednesday statement, Walgreen called the deal "a compelling strategic acquisition."
Deere lifted its profit forecast for fiscal 2010 to around $1.3 billion and said it expects equipment sales to rise between 6% and 8%.
Rob Hanna: "Tuesday was a 90% Up Volume day on the NYSE. At the same time volume declined from Friday’s levels and was below normal. It’s rare to see volume decline on a day when breadth is so overwhelmingly positive – especially when the market is in a long-term uptrend. Going back to 1970 I was only able to identify 6 other instances."
Footnoted.org: " Buried deep in the 10-K that the company filed late Friday was an interesting disclosure: Google’s headcount actually shrunk in 2009 for the first time since the company has been public (and most likely for the first time ever, given Google’s growth spurt)."
Nearly 600,000 Canadians were working in jobs supported by the natural gas industry in 2008, providing a substantial impact to the nation's economy, according to a new study released today by IHS Global Insight. The study, titled "The Contributions of the Natural Gas Industry to the Canadian National and Provincial Economies," is unique in that it specifically calculated the number of jobs supported by the natural gas industry, numbers usually found only in combination with oil industry employment figures.
China's move to unload US debt is likely to continue in the long term while the "euro scare" may last a while, legendary investor Jim Rogers told CNBC.com Wednesday.
The latest government forecasts predict cooler weather will dominate the eastern two-thirds of the U.S., with the exception of Maine, until at least March. The lowest temperatures are likely to be in the mid-Atlantic states, according to the U.S. Climate Prediction Center in Camp Springs, Maryland.
The Northeast consumes four-fifths of the nation’s home heating oil, and the fuel rose today partly on speculation the cold will boost demand. Heating oil for March delivery was up 0.12 cent, or 0.06 percent, at $1.9975 a gallon in electronic trading on the New York Mercantile Exchange at 3:04 p.m. Singapore time.
“It is beginning to look quite likely that the extensive snow that currently covers the northern two-thirds of the country will enhance the probability of winter cold lingering well into March,” said Jim Rouiller, a senior energy meteorologist at Planalytics Inc.
. MDA EarthSat, a Rockville, Md. private forecaster, was predicting significantly below-normal temperatures across much of the Midwest, Southeast and South Central region from Feb. 22 to March 3. Temperatures were expected to be as low as eight to 14 degrees below normal in some areas.
The National Weather Service was expecting colder-than-normal temperatures across the eastern two-thirds of the U.S. during that time period. The unusually cold weather was expected to spark substantial demand for natural gas for heating.
"With an arctic source region and deep snowcover to go along with a stormy pattern, the threat of this being colder and more widespread next week and the week after is where this forecast is heading," wrote Joe Bastardi, a forecaster with AccuWeather.com, in a note to clients Wednesday.
Ron Paul: "The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.
But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs. Details of agreements are not Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit."
All ships US and European will be blocked into Iran Sea Port. This will halt all shipments of oil & gas. Minimum 1-3 Months before any oil or gas are allowed into the area. This area counts for 85% of all shipments that go to US and Euro.
The U.S. government ran a budget deficit of $43 billion in January, the Treasury Department reported Wednesday. It was the 16th straight month in which the government posted a deficit, but the number was down from the year-ago number of $63 billion. January's outlays of $248 billion were the second-largest January total on record. Receipts were $205 billion in January.
Several Federal Reserve policymakers want to begin selling securities relatively soon as a way to cut back their massive supply of cash to the financial system, the central bank said Wednesday.
The Federal Reserve should sell its U.S. mortgage-backed securities holdings sooner rather than later as the economic recovery gathers steam in order to extricate itself from fiscal policy, a senior central bank official said.
The Federal Reserve predicts unemployment will stay high over the next two years because recession-scarred Americans are likely to stay cautious making for only a moderate-paced economic recovery.
New construction of U.S. houses rebounded in January, the Commerce Department estimated Wednesday. Starts rose 2.8% in January to a seasonally adjusted 591,000 annualized units. This was in line with forecasts of economists surveyed by MarketWatch. This is the highest level of starts since July. Starts in December were also revised up to 575,000 from the previous estimate of 557,000. Starts of new single-family homes rose by 1.5% to 484,000 in January, while starts of large apartment units rose 9.2% to 107,000. Building permits, a leading indicator of housing construction, fell 4.9% to a seasonally adjusted annual rate of 621,000.
Led by higher prices for oil and gas, the prices of goods imported into the United States jumped 1.4% in January, the sixth straight increase, the Labor Department estimated Wednesday. Fuel prices rose 5.3% in January, including an 18.8% increase in natural gas prices. Petroleum prices rose 4.8%. Prices of nonfuel imports rose 0.4% for the fifth time in the past six months, led by prices of industrial materials. Prices of imported capital goods and autos fell 0.1%. In the past 12 months, import prices have risen 11.5%. Prices of goods exported from the United States rose 0.8% in January, and are up 3.4% in the past year.
Humana Inc said Wednesday that it intends to reduce its workforce by approximately 1,400 jobs, or 5%, in 2010 by cutting 2,500 positions while adding 1,100 additional jobs in areas of growth such as medical-cost containment capabilities, pharmacy management, and specialty products. The reduction will come primarily from attrition, process efficiencies, outsourcing, and position eliminations.
Walgreen Co., the Deerfield, Ill., drugstore operator, definitively agreed to acquire Duane Reade Holdings Inc., operator of a chain of 257 New-York-area drugstores, from affiliates of Oak Hill Capital Partners. The deal price is nearly $1.08 billion, including assumption of debt. In a Wednesday statement, Walgreen called the deal "a compelling strategic acquisition."
Deere lifted its profit forecast for fiscal 2010 to around $1.3 billion and said it expects equipment sales to rise between 6% and 8%.
Rob Hanna: "Tuesday was a 90% Up Volume day on the NYSE. At the same time volume declined from Friday’s levels and was below normal. It’s rare to see volume decline on a day when breadth is so overwhelmingly positive – especially when the market is in a long-term uptrend. Going back to 1970 I was only able to identify 6 other instances."
Footnoted.org: " Buried deep in the 10-K that the company filed late Friday was an interesting disclosure: Google’s headcount actually shrunk in 2009 for the first time since the company has been public (and most likely for the first time ever, given Google’s growth spurt)."
Nearly 600,000 Canadians were working in jobs supported by the natural gas industry in 2008, providing a substantial impact to the nation's economy, according to a new study released today by IHS Global Insight. The study, titled "The Contributions of the Natural Gas Industry to the Canadian National and Provincial Economies," is unique in that it specifically calculated the number of jobs supported by the natural gas industry, numbers usually found only in combination with oil industry employment figures.
China's move to unload US debt is likely to continue in the long term while the "euro scare" may last a while, legendary investor Jim Rogers told CNBC.com Wednesday.
The latest government forecasts predict cooler weather will dominate the eastern two-thirds of the U.S., with the exception of Maine, until at least March. The lowest temperatures are likely to be in the mid-Atlantic states, according to the U.S. Climate Prediction Center in Camp Springs, Maryland.
The Northeast consumes four-fifths of the nation’s home heating oil, and the fuel rose today partly on speculation the cold will boost demand. Heating oil for March delivery was up 0.12 cent, or 0.06 percent, at $1.9975 a gallon in electronic trading on the New York Mercantile Exchange at 3:04 p.m. Singapore time.
“It is beginning to look quite likely that the extensive snow that currently covers the northern two-thirds of the country will enhance the probability of winter cold lingering well into March,” said Jim Rouiller, a senior energy meteorologist at Planalytics Inc.
. MDA EarthSat, a Rockville, Md. private forecaster, was predicting significantly below-normal temperatures across much of the Midwest, Southeast and South Central region from Feb. 22 to March 3. Temperatures were expected to be as low as eight to 14 degrees below normal in some areas.
The National Weather Service was expecting colder-than-normal temperatures across the eastern two-thirds of the U.S. during that time period. The unusually cold weather was expected to spark substantial demand for natural gas for heating.
"With an arctic source region and deep snowcover to go along with a stormy pattern, the threat of this being colder and more widespread next week and the week after is where this forecast is heading," wrote Joe Bastardi, a forecaster with AccuWeather.com, in a note to clients Wednesday.
Ron Paul: "The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.
But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs. Details of agreements are not Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit."
All ships US and European will be blocked into Iran Sea Port. This will halt all shipments of oil & gas. Minimum 1-3 Months before any oil or gas are allowed into the area. This area counts for 85% of all shipments that go to US and Euro.
The U.S. government ran a budget deficit of $43 billion in January, the Treasury Department reported Wednesday. It was the 16th straight month in which the government posted a deficit, but the number was down from the year-ago number of $63 billion. January's outlays of $248 billion were the second-largest January total on record. Receipts were $205 billion in January.
Several Federal Reserve policymakers want to begin selling securities relatively soon as a way to cut back their massive supply of cash to the financial system, the central bank said Wednesday.
The Federal Reserve should sell its U.S. mortgage-backed securities holdings sooner rather than later as the economic recovery gathers steam in order to extricate itself from fiscal policy, a senior central bank official said.
The Federal Reserve predicts unemployment will stay high over the next two years because recession-scarred Americans are likely to stay cautious making for only a moderate-paced economic recovery.
Tuesday, February 16, 2010
General Growth Properties
2/16/10 General Growth Properties
Manufacturing activity in the New York expanded at a faster pace in February, the New York Federal Reserve Bank said Tuesday. The bank's Empire State Manufacturing index rose to 24.9 in February from 15.9 in January. The index had plunged in December but has now rebounded to the highest level since October. The details of the report were mixed. New orders slowed to 8.8 in February from 20.5 in the prior month. Shipments inched lower. However, inventories were flat in February after 17 straight negative monthly readings. Employment was positive for the second straight month.
Simon Property Group Inc Tuesday said it has made an offer to acquire General Growth Properties Inc, the real estate investment trust that filed for bankruptcy last year, in a deal valued at over $10 billion, including about $9 billion in cash. The offer includes a consideration to creditors totaling roughly $7 billion, Simon said. Shareholders of mall operator General Growth would receive more than $9 a share, including $6 a share in cash, Simon said.
Japan plans to introduce around-the-clock commodities trading due to a drop-off in volume, according to a report Tuesday. Total trading volumes at Japan's four domestic commodity exchanges sank by two-thirds in the 2003-2008 period, while overall global commodity trading volumes rose more than threefold, helped by new index-linked commodities instruments, the Nikkei business daily reported. In response, the nation's Ministry of Economy, Trade and Industry has drafted a "revitalization plan" that would, among other things, allow the Tokyo Commodity Exchange to stay open 24 hours during the trading week, the report said.
“If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it. It’s called euthanasia, not a rescue.”
Paul Volcker said on CNN.
Goldman Sachs Group Inc. Chief Economist Jim O’Neill said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy.
“I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”
International demand for long-term U.S. financial assets grew in December at a slower pace than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed.
Net buying of long-term equities, notes and bonds totaled $63.3 billion for the month, compared with net purchases of $126.4 billion in November, the Treasury said in Washington. Including short-term securities such as bills and stock swaps, foreigners purchased a net $60.9 billion in December, compared with net buying of $30.7 billion the previous month.
China cut its holdings of U.S. government debt in December to the lowest level since February 2009 and Japan was a net buyer for the six month in the past seven. As the financial crisis eased, some central banks that poured money into Treasuries have been investing reserves elsewhere, economists said.
In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion.
Peter Terzakian: "Due to its northern latitude, over 40% of natural gas demand in North America is related to fluctuations in the weather, especially over winter. Colder weather means more furnaces get fired up more often. The relationship is very tight and every incremental heating degree-day (HDD) in the United States requires an extra 1.6 billion cubic feet (Bcf) of natural gas consumption.
So it’s heartwarming for natural gas producers to see HDDs rack up an average 225 per week for the first six-weeks of the year, when the five-year average is around 200. As well, with spring around the corner, the average number of degree days in a week declines by a rate of about 25 per week, so the added cold makes a big difference to heating oil and natural gas consumption in the heavily populated regions of the Northeastern US.
Think of HDDs this way: raising the temperature of US households by one degree Fahrenheit, for one day, requires the same amount of natural gas that can be ultimately recovered from one Barnett Shale well (~1.6 Bcf). In other words, Snowmageddon has resulted in extra gas demand that notionally requires the drilling and completely draining the equivalent of 25 Barnett wells a day! That’s an interesting sense of scale; in reality, a Barnett Well is produced out over 20 years, not one day."
U.S. home builders were a bit more confident that the housing market is recovering, according to a monthly survey released Tuesday by the National Association of Home Builders. The NAHB/Wells Fargo housing market index rose two points to 17 in February after falling in December and January. The increase to the highest level since November was in line with expectations of economists surveyed by MarketWatch. Two of the three components of the home builders' index improved in February. The index for current sales rose from 15 to 17, the index for expected sales rose from 26 to 27, and the index for traffic of prospective buyers was steady at 12.
Capital One Financial's U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing.
The Dow Jones Industrial Average gained 169.67 points, or 1.7%, to 10,268.81. The S&P 500 Index rose 19.36 points, or 1.8%, to 1,094.87. The Nasdaq Composite Index climbed 30.66 points, or 1.4%, to 2,214.19.
Crude oil for March delivery finished up $2.88, or 3.9%, at $77.01 a barrel at the New York Mercantile Exchange. Gold for April delivery finished up $29.80, or 2.7%, at $1,119.80 an ounce at the New York Mercantile Exchange.
Ford Motor Co. will lay off about 900 workers as it cuts a production shift at a plant that makes the Mustang, The Associated Press reported Tuesday.
General Growth Properties Inc. said a $10 billion takeover offer from rival Simon Property Group Inc. is too low and it will invite others to make bids as it considers options for emerging from bankruptcy.
Manufacturing activity in the New York expanded at a faster pace in February, the New York Federal Reserve Bank said Tuesday. The bank's Empire State Manufacturing index rose to 24.9 in February from 15.9 in January. The index had plunged in December but has now rebounded to the highest level since October. The details of the report were mixed. New orders slowed to 8.8 in February from 20.5 in the prior month. Shipments inched lower. However, inventories were flat in February after 17 straight negative monthly readings. Employment was positive for the second straight month.
Simon Property Group Inc Tuesday said it has made an offer to acquire General Growth Properties Inc, the real estate investment trust that filed for bankruptcy last year, in a deal valued at over $10 billion, including about $9 billion in cash. The offer includes a consideration to creditors totaling roughly $7 billion, Simon said. Shareholders of mall operator General Growth would receive more than $9 a share, including $6 a share in cash, Simon said.
Japan plans to introduce around-the-clock commodities trading due to a drop-off in volume, according to a report Tuesday. Total trading volumes at Japan's four domestic commodity exchanges sank by two-thirds in the 2003-2008 period, while overall global commodity trading volumes rose more than threefold, helped by new index-linked commodities instruments, the Nikkei business daily reported. In response, the nation's Ministry of Economy, Trade and Industry has drafted a "revitalization plan" that would, among other things, allow the Tokyo Commodity Exchange to stay open 24 hours during the trading week, the report said.
“If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it. It’s called euthanasia, not a rescue.”
Paul Volcker said on CNN.
Goldman Sachs Group Inc. Chief Economist Jim O’Neill said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy.
“I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”
International demand for long-term U.S. financial assets grew in December at a slower pace than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed.
Net buying of long-term equities, notes and bonds totaled $63.3 billion for the month, compared with net purchases of $126.4 billion in November, the Treasury said in Washington. Including short-term securities such as bills and stock swaps, foreigners purchased a net $60.9 billion in December, compared with net buying of $30.7 billion the previous month.
China cut its holdings of U.S. government debt in December to the lowest level since February 2009 and Japan was a net buyer for the six month in the past seven. As the financial crisis eased, some central banks that poured money into Treasuries have been investing reserves elsewhere, economists said.
In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion.
Peter Terzakian: "Due to its northern latitude, over 40% of natural gas demand in North America is related to fluctuations in the weather, especially over winter. Colder weather means more furnaces get fired up more often. The relationship is very tight and every incremental heating degree-day (HDD) in the United States requires an extra 1.6 billion cubic feet (Bcf) of natural gas consumption.
So it’s heartwarming for natural gas producers to see HDDs rack up an average 225 per week for the first six-weeks of the year, when the five-year average is around 200. As well, with spring around the corner, the average number of degree days in a week declines by a rate of about 25 per week, so the added cold makes a big difference to heating oil and natural gas consumption in the heavily populated regions of the Northeastern US.
Think of HDDs this way: raising the temperature of US households by one degree Fahrenheit, for one day, requires the same amount of natural gas that can be ultimately recovered from one Barnett Shale well (~1.6 Bcf). In other words, Snowmageddon has resulted in extra gas demand that notionally requires the drilling and completely draining the equivalent of 25 Barnett wells a day! That’s an interesting sense of scale; in reality, a Barnett Well is produced out over 20 years, not one day."
U.S. home builders were a bit more confident that the housing market is recovering, according to a monthly survey released Tuesday by the National Association of Home Builders. The NAHB/Wells Fargo housing market index rose two points to 17 in February after falling in December and January. The increase to the highest level since November was in line with expectations of economists surveyed by MarketWatch. Two of the three components of the home builders' index improved in February. The index for current sales rose from 15 to 17, the index for expected sales rose from 26 to 27, and the index for traffic of prospective buyers was steady at 12.
Capital One Financial's U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing.
The Dow Jones Industrial Average gained 169.67 points, or 1.7%, to 10,268.81. The S&P 500 Index rose 19.36 points, or 1.8%, to 1,094.87. The Nasdaq Composite Index climbed 30.66 points, or 1.4%, to 2,214.19.
Crude oil for March delivery finished up $2.88, or 3.9%, at $77.01 a barrel at the New York Mercantile Exchange. Gold for April delivery finished up $29.80, or 2.7%, at $1,119.80 an ounce at the New York Mercantile Exchange.
Ford Motor Co. will lay off about 900 workers as it cuts a production shift at a plant that makes the Mustang, The Associated Press reported Tuesday.
General Growth Properties Inc. said a $10 billion takeover offer from rival Simon Property Group Inc. is too low and it will invite others to make bids as it considers options for emerging from bankruptcy.
Monday, February 15, 2010
Greece
2/15/10 Greece
Mike Burk: "Since Monday the secondaries have led the way upward, new highs have picked up a little and new lows have remained low. These are reasons to think last Monday's lows will be the lows for this correction.
I expect the major averages to be higher on Friday February 19 than they were on Friday February 12."
John Mauldin: " Greece basically lied about its finances in order to gain admission to the union. It never complied with the fiscal discipline that was required for entrance.
With the high exchange rate, however, came the consequence of higher labor costs relative to, above all, Germany. While reviewing some economic facts about Greece, I came across the factoid that Greek workers had the second highest level of actual hours worked. But even with that, Greece was running a trade deficit that is currently 12.7% of its GDP.
And with the onset of the current recession, their fiscal deficit went from bad to worse. Their total debt is now €254 billion, and they need to finance another €64 billion this year, €30 billion of it in the next few months.
Bottom line, without some help or a bailout, they simply will not be able to borrow that money. And since a lot of that money is for "rollover" debt, that means a potential for default if they cannot borrow it.
European leaders said today that Greece will not be allowed to fail, hinting of a bailout. But there are a lot of "buts" and conditions.....The dire predicament is the one where Greece cuts its budgets and more or less willingly enters into a rather long and deep recession/depression. The disastrous predicament is where they do not make the cuts and are allowed to default. That means the government is plunged into a situation where it has to cut the entire deficit to what it can get in the form of taxes and fees, immediately. As in right now. And defaulting on the interest on the current bonds wouldn't be enough, although it would help.
Why not just let Greece go under? Part of the argument has to do with moral hazard. If Germany bails out Greece, Ireland, which is actually making such cuts to its budget, can legitimately ask, "Why not us?" And will Portugal be next? And Spain is too big for even Germany to bail out. At almost 20% unemployment, Spain has severe problems. Its banks are in bad shape, with large amounts of overvalued real estate on their books (sound familiar?) and a government fiscal deficit of almost 10%. While Spanish authorities say they can work this out, deficits will remain high.
The fear is one of contagion. Some argue that Greece is only 2.7% of European GDP. But Bear Stearns held less than 2% of US banking assets, and look what happened."
Spanish National Intelligence Agency (CNI) is investigating whether the Spanish economy and the euro have fallen victim to a concerted attack by speculators and foreign media (El Pais)
Greek FinMin unveils tax reform, wage policy, outlawing of cash: "From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards" (Reuters)
Yara International ASA, the largest fertilizer maker, agreed to buy Terra Industries Inc. for $4.1 billion to benefit from lower U.S. fuel costs.
The company will pay $41.10 for each Terra share, raising the cash with a $2.5 billion rights offer, Oslo-based Yara said in a statement today. The price is 24 percent more than Terra’s Feb. 12 close of $33.25 in New York. Yara fell as much as 7.1 percent today in Oslo, the most in almost eight months.
Buying Sioux City, Iowa-based Terra will give Yara six North American plants making nitrogen-based fertilizer. The price of natural-gas, used to produce the crop nutrient, has declined 64 percent in the past two years
April gold climbs $10 to $1,100/oz on Globex..
Mike Burk: "Since Monday the secondaries have led the way upward, new highs have picked up a little and new lows have remained low. These are reasons to think last Monday's lows will be the lows for this correction.
I expect the major averages to be higher on Friday February 19 than they were on Friday February 12."
John Mauldin: " Greece basically lied about its finances in order to gain admission to the union. It never complied with the fiscal discipline that was required for entrance.
With the high exchange rate, however, came the consequence of higher labor costs relative to, above all, Germany. While reviewing some economic facts about Greece, I came across the factoid that Greek workers had the second highest level of actual hours worked. But even with that, Greece was running a trade deficit that is currently 12.7% of its GDP.
And with the onset of the current recession, their fiscal deficit went from bad to worse. Their total debt is now €254 billion, and they need to finance another €64 billion this year, €30 billion of it in the next few months.
Bottom line, without some help or a bailout, they simply will not be able to borrow that money. And since a lot of that money is for "rollover" debt, that means a potential for default if they cannot borrow it.
European leaders said today that Greece will not be allowed to fail, hinting of a bailout. But there are a lot of "buts" and conditions.....The dire predicament is the one where Greece cuts its budgets and more or less willingly enters into a rather long and deep recession/depression. The disastrous predicament is where they do not make the cuts and are allowed to default. That means the government is plunged into a situation where it has to cut the entire deficit to what it can get in the form of taxes and fees, immediately. As in right now. And defaulting on the interest on the current bonds wouldn't be enough, although it would help.
Why not just let Greece go under? Part of the argument has to do with moral hazard. If Germany bails out Greece, Ireland, which is actually making such cuts to its budget, can legitimately ask, "Why not us?" And will Portugal be next? And Spain is too big for even Germany to bail out. At almost 20% unemployment, Spain has severe problems. Its banks are in bad shape, with large amounts of overvalued real estate on their books (sound familiar?) and a government fiscal deficit of almost 10%. While Spanish authorities say they can work this out, deficits will remain high.
The fear is one of contagion. Some argue that Greece is only 2.7% of European GDP. But Bear Stearns held less than 2% of US banking assets, and look what happened."
Spanish National Intelligence Agency (CNI) is investigating whether the Spanish economy and the euro have fallen victim to a concerted attack by speculators and foreign media (El Pais)
Greek FinMin unveils tax reform, wage policy, outlawing of cash: "From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards" (Reuters)
Yara International ASA, the largest fertilizer maker, agreed to buy Terra Industries Inc. for $4.1 billion to benefit from lower U.S. fuel costs.
The company will pay $41.10 for each Terra share, raising the cash with a $2.5 billion rights offer, Oslo-based Yara said in a statement today. The price is 24 percent more than Terra’s Feb. 12 close of $33.25 in New York. Yara fell as much as 7.1 percent today in Oslo, the most in almost eight months.
Buying Sioux City, Iowa-based Terra will give Yara six North American plants making nitrogen-based fertilizer. The price of natural-gas, used to produce the crop nutrient, has declined 64 percent in the past two years
April gold climbs $10 to $1,100/oz on Globex..
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