Insider Selling

4/12/10 Insider Selling

Finance ministers of the 16 euro nations on Sunday discussed details
of a financial lifeline for Greece, whose debt crisis has hiked
borrowing costs for the Athens government and slammed Europe's common
currency.
The
ministers held an emergency video conference hoping "to finalize
technical details" of a deal letting Greece borrow at below-market
interest rates, said an official who asked not to be identified given
the sensitive nature of the negotiations.
"It is hoped that the
finance ministers can make a very strong statement (of support for
Greece) before financial markets open Monday," said the official.
European governments put together a
30 billion-euro ($41 billion) loan package for debt-burdened
Greece, trying to stamp out its fiscal crisis and restore
confidence in the euro. The interest rate is reported at 5%.

Mike Burk: "The market is overbought. There has not had a down week in the past 9 weeks.
The NASDAQ composite (OTC) hit a recovery high Friday logging 181 new highs which was nearly 100 short of the 280 new highs recorded on March 17.
I expect the major averages to be lower on Friday April 16 than they were on Thursday April 9. Last weeks negative forecast was a miss."

Palm (PALM) is seeking buyers and has retained two investment banks (Bloomberg).

California Kitchen Pizza (CPKI) is on the block. (WSJ).

Fully 44 percent of the nation's 15 million unemployed have been out of work for more than six months.

Japanese bank lending in March fell at its sharpest pace since August
2005 after a steep increase in loans a year earlier and weak corporate
demand for funds.

Power generators Mirant and RRI Energy plan to merge in an all-stock
deal in a bid to cut costs and strengthen their financial standing amid
challenging wholesale power markets.

DynCorp International (DCP)
will go private in a $1.5B transaction with private investment firm
Cerberus Capital Management. Under the agreement, Cerberus will pay
$17.55 per share in cash, a 49% premium over Friday's closing price.

Insider buying cratered in the week ending April 9th as corporate
executives refused to buy into the rally after the recent surge in
stocks. Buying has been consistently light since the rally started last
March, but was particularly light this week. Total purchases of just
$2.1MM was the lowest level during the entire 75% equity rally though
the weekly average has ticked slightly higher over the last 8 weeks.
Meanwhile, the heavy stream of insider selling continued as insiders
unloaded $824mm onto the market.

Michael Panzner: " Professor Robert Shiller, and neither of the following two articles
citing his work and perspectives paints an especially positive picture
for asset prices in the period ahead:
"So, How Are Stock Prices Now That We're Back At DOW 11,000? They're 30% Overvalued"(Business Insider's The Money Game)
So, how do look now that the DOW is back to 11,000?
Not outrageous. But certainly not cheap.
Measured
using our favorite valuation technique, Professor Shiller's cyclically
adjusted PE analysis, the S&P 500 has a PE of 22X. The long-term
average (1880-2010) is about 16X. The current level is actually close
to the big peaks of the past--with the exception of the gigantic one
that peaked in 2000."

Robert McHugh: "While the rally from March 2009 through April 2010 has been impressive, there are big picture, huge Head & Shoulders top patterns that are warning this is simply a Bear Market rally, the eye of the storm, a temporary respite. The rally from March 2009 has not been as long time-wise, or as strong as the decline that preceded it. So far, it has retraced approximately a Fibonacci 60 percent of the 2007 to 2009 decline. It is a Bear Market rally. Because we are in a huge Grand Supercycle degree Bear Market, rallies or bounces can seem large and long. But big picture patterns suggest all the borrowing and spending, and monetary printing by the Central Planners will only produce a temporary Bear Market Bounce at great cost to the Federal Budget Deficit. Another leg lower is likely over the next several years, and the Central Planners cannot prevent it. When it starts is the question."

The U.S. Commerce Department approved duties of about 30 percent and 99
percent on imports of Chinese steel pipes used in oil and gas wells,
acting on a complaint by American producers including U.S. Steel
Corp(X). The final ruling affects $1.1 billion of annual imports, the
U.S. said in a statement yesterday. Thirty-eight companies including
Tianjin Pipe International Economic and Trading Corp. must pay a 29.94
percent rate, while Jiangsu Changbao Steel Tube Co. and remaining
producers are charged 99.14 percent.

"Drastic Measures" Needed to Curb Public Debt, Says BIS. Economists
at the Bank for International Settlements have warned the fiscal
problems facing industrial economies are more serious than official
figures suggest, and that proposed measures for tackling public debt
could prove insufficient.

Goldman Sachs on Monday lowered its 2010 forecast for gold prices to $1,165 an ounce and its 2011 forecast to $1,350 an ounce.

China Petroleum & Chemical Corp.,
Asia’s biggest refiner, plans to buy ConocoPhillips’s stake in
oil-sands producer Syncrude Canada Ltd. in a deal that may be
worth about $4 billion, a person familiar with the matter said.

The Dow Jones industrials ($INDU) closed above 11,000 for the first time in 18 months today.
The blue chip index closed up 9 points to 11,006, its first close above 11,000 since
Sept. 26, 2008. The index had briefly dropped under 11,000 with about 15 minutes to go in trading.

The Standard & Poor's 500 Index hit a new post-crash high, up 2 points to 1,196, but it failed to top 1,200, which it hasn't passed in more than 18 months. The Nasdaq Composite Index, meanwhile, was up 4 points to 2,458.

Analysts polled by Platts expect an 11th consecutive increase in U.S. crude-oil inventories. The analysts surveyed forecast stockpiles will be up by 1.60 million barrels, while gasoline stocks will be down by 1.26 million barrels. Distillates stocks, which include heating oil and diesel, will be up by 1 million barrels.

The U.S. government ran a $65 billion budget deficit in March, the Treasury Department reported Monday, far lower than the year-ago number due partly to a revision of the projected cost of the government's program to bail out banks. Income was $153 billion in March, the Treasury said, 19% over the total recorded last March. Spending was $219 billion. A year ago in March, the deficit was $192 billion.

Money

4/10/10 Money

A plane carrying Polish
president Lech Kacynzski and his wife has crashed in Western Russia,
and the governor of the region said there are no survivors, according
to media reports. The plane crashed near Smolensk airport, about 275
miles west of Moscow.

Halliburton said on Friday it agreed to buy Boots & Coots , a
company that provides pressure control services for oil and gas wells,
in a stock and cash deal worth about $240 million.
Halliburton
said Boots & Coots shareholders will receive about $3 for each
share of Boots & Coots they hold. That $3 consists of $1.73 in cash
and $1.27 in Halliburton stock, according to the statement from
Halliburton.

China posted its first trade
deficit in six years in March even as the yuan stayed pegged to
the dollar, aiding government efforts to play down the
currency’s role in global economic imbalances.
The $7.24 billion shortfall, reported by the customs bureau
on its Web site today, compared with a median forecast for a
$390 million deficit in a Bloomberg News survey of 26 economists.
Imports surged 66 percent from a year earlier as exports gained
24 percent.


Doug Noland: "How about a few days of hearings examining issues specific to
total mortgage Credit having almost doubled in just six years, to end
2007 at $14.5 TN. More specifically, how was it possible that the vast
majority of this Credit was perceived - in the marketplace; by the
rating agencies; by the regulators - as “money good”? A more
conceptual analytic focus would get us much closer to appreciating key
Credit system dynamics than a piecemeal grilling of policymakers and
executives from Citi, AIG, Lehman, Bear Stearns, the GSEs and the like....The misperception of mortgage Credit “moneyness” was the root
cause of the crisis. The market perceived that Trillions of
mortgage-related securities were a safe and liquid store of nominal
value. This created the insatiable market demand for these debt
securities that Wall Street so capably exploited. Supply and demand
dynamics no longer applied, as Trillions of mortgage Credit was
supplied at lower yields and easier terms. And greater mortgage Credit
excess inflated home prices and economic output, further buttressing
the perception that mortgage debt was Good Money. The markets’ fateful
misconception – and a momentous breakdown in the market pricing
mechanism - can be traced directly to Washington....Throughout the risk markets, prices are buoyed by confidence that
the Fed will restart monetization operations in the event of any market
liquidity disruption. Hedge funds and other speculators are thriving
once again as they successfully exploit Washington’s inflationary
policymaking. Washington further disrupts the market pricing mechanism
with its ongoing massive fiscal stimulus, ultra-low interest rates, and
liquidity backstop operations....Importantly, you don’t want to allow distortions in money
perceptions to establish a foothold. Such distortions are always and
everywhere the lifeblood of Bubbles. Above all, you certainly don’t
want to finance a massive inflation of non-productive debt with
“money.” This only ensures a problematic widening gulf between
perceptions of safety and liquidity and the actual deteriorating
underlying soundness of these financial claims. And when the inflation
of this money is also distorting market perceptions for Credit and
asset prices throughout the entire system, inflationism is really
playing with fire. Money Not Good."


Improvements in the spread between the New Zealand debt and comparable
U.S. Debt, is driving investors into the Kiwi. Speculation that the
Reserve Bank of New Zealand will raise its benchmark rate sometime
after June is also providing some support. Traders seem to have
shrugged off the recent International Monetary Fund Report calling the
NZD USD overpriced. Support is also coming from a government report
which said the New Zealand budget cash deficit was narrower than its
forecast.

Auto sales in China continued their ascent in March, rising 56% from
a year earlier to a new monthly record of 1.74 million vehicles, data
from a semiofficial industry group showed Friday.
The previous
record was in January, when sales more than doubled to 1.66 million
vehicles—showing government incentives aimed at boosting demand remain
effective more than a year after they were initially introduced.

From Robert Selna at the San Francisco Chronicle: Office vacancy rate rises in San Francisco The 13 million square feet of available space in the first quarter of 2010 translates to a 17.7 percent office vacancy rate, up from 14.7 percent a year ago and nearly one percentage point from the previous quarter ending in December, according to data released Friday by the real estate firm Jones Lang LaSalle.
...Boston's commercial district has a vacancy rate of 18.4 percent and Chicago's is 16.3 percent, according to Jones Lang LaSalle.

This week the Unofficial Problem Bank List stands at 682 institutions with assets of $364 billion compared with 683 institutions with assets of $361 billion last week.

Virtually all U.S. silver production is going toward the manufacturing of Silver Eagles. - Casey's Gold & Resource Report

Patrick Chovanec: "China’s exports are up just over 20% from last year, but that’s just barely back to the level they were at before the global financial crisis struck. With Chinese exporters already struggling, China’s leaders have been reluctant to hit them with a “double whammy” in the form of a less competitive currency. If exports continue their recovery, though, that will give the Chinese a lot more comfort in moving towards a more flexible exchange rate."

From Leucadia's 2009 Letter: "Out of prudence we take a pessimistic view as to when this recession will end. To think otherwise would be a gamble that we are unwilling to make."

Stiglitz said an International Monetary Fund rescue of Greece would be a "sad" chapter in the history of the European Union.

James Rickards: "Real debt cannot be repaid through any feasible combination of growth and taxes. We will soon arrive at the point where it cannot be rolled over. Debt includes contingent liabilities as well as bonds. In the U.S., this means social security, healthcare and housing obligations estimated at over $60 trillion. That does not include unfunded pension obligations of the states whose plans use fanciful 8% growth assumptions to limit contributions. Pension debt grows exponentially; a toxic brew of increased benefits, contribution shortfalls and anemic performance.
Even what we call money is debt. Paper money is a contract between citizen and government. As with any contract, it pays to read the fine print. Embossed on each U.S. bill is the phrase “Federal Reserve Note.” Give the Fed credit for full disclosure; these notes are liabilities. If the Fed’s mortgage assets were marked-to-market the Fed itself would be insolvent. In short, it’s all debt....The global financial system is a rope of sand....You cannot tax your way to solvency in a world of low growth and compound interest. "

Risk

4/9/10 Risk

The Pragmatic Capitalist: "UBS called the bottom of the recent downturn tothe exact day on February 9th (see here).
They’ve been bullish since then, but are now warning of extreme risks
in the market. According to their Risk Appetite Indicator, risks are
surging as the market advances and investors turn increasingly complacent:
“Our Risk Appetite Indicator edged
higher last week, moving up to 1.21 from 1.15. After briefly dipping
into negative territory in early February, the indicator has risen 5
out of the last 6 weeks (with one week unchanged) and is nearing the
+1.30 level, which we define as extreme risk seeking territory. Last
week, each component ticked marginally higher as the MSCI AC World
index was up 1.9%.”

Major banks masked their risk levels in the past five quarters by
temporarily lowering their debt just before reporting it to the public,
according to data from the New York Fed.

Canada's job market improved in
March less than expected, with the economy adding 18,000 jobs, the
government said Friday. That's fewer than what some economists
anticipated, according to RBS Capital Markets. The gains were the
smallest this year, "suggesting some moderation in economic growth from
the robust pace projected in January," said Action Economics.

Apple launched a war with Google over mobile advertising revenues on Thursday as it announced its own iAd network for the iPhone.

Jeff Rubin, a former CIBC chief economist and author of a book on oil
and globalisation, says: “Triple-digit oil prices are going to threaten
a world recovery.”

Roubini: "Cities, townships and local authorities are subject to
court-adjudicated debt workouts under Chapter 9 of the U.S. Bankruptcy
Code. States are sovereign under the 10th Amendment to the
Constitution, putting them above bankruptcy. Even so, the
constitutional balanced budget amendments in 49 of the 50 states are
honored."

Bill Bonner: "Nearly 7,000 people go bankrupt every day – a record number. And in
March, M3, the broadest measure of the money supply, recorded its
biggest drop ever.
And get this. Peak to trough, December ’07 to February ’10, 8.3
million jobs were lost. As we reported yesterday, take away the
statistical tricks and the number of people with real jobs actually
fell last month – despite reports of an additional 163,000 new jobs in
March."

Wal-Mart Stores Inc. is cutting prices on thousands of products in an aggressive
campaign to reinforce its reputation as a discount leader, as the
company seeks to reverse months of slowing U.S. sales.

EconomicDisconnect: "Many consumers are spending their mortgage payments! It’s beginning to
make sense in the most disturbing way. As homeowners face staggering
payments on houses that have negative equity, a large number are simply
deciding not to pay their mortgage bill, resigned to the fact that
eventually they will lose their house."

The west coast manager of real estate owned, Senior Vice
President Ken Gaitan, stated that Bank of America, which currently
forecloses on 7,500 homes a month nationally, will increase that number
to 45,000 homes per month by December of 2010.
After his surprising statement, two questioners from the audience asked questions to verify the numbers.
Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.

There were 158,141 U.S. bankruptcy petitions filed last month — a
35% increase over February's figure, according to data compiled by
Automated Access to Court Records (AACER). This was a 19% increase over
the number in October 2009, the last record-high month. In the first quarter of 2010, the rate of personal bankruptcy
filings in a dozen states increased by double-digit percentages over
2009's monthly averages. "What is surprising is that there are still
hefty increases in states like Arizona, California and Florida," says
AACER president Mike Bickford, referring to the fact that it might seem
that the worst would be over in states hard-hit by the housing bubble.
"Intuitively, you would think there might be some leveling off in these
states, but that is not the case.


In really bad times, people who are evicted from their
houses will not rent.

Instead, they will move in with friends or family
for some time.

As the Wall Street Journal explained last October:
Driving the change [i.e. large numbers of rental
>vacancies and lower rents] is the troubled employment market, which is
>closely tied to rentals. With unemployment at 9.8% — a 26-year high —
>more would-be renters are doubling up or moving in with family and
>friends during periods of job loss. Landlords have been particularly
>battered because unemployment has been higher among workers under 35
>years old, who are more likely to rent. Nationally, effective rents
>have fallen by 2.7% over the past year, to around $972.
As Zack’s Investment Research writes:
A smaller percentage of Americans owned their own homes
in the 4th quarter of 2009 than at any time since 2000. In the 4th
quarter 67.2% of Americans owned their own home, down from 67.6% in the
third quarter and two full percentage points below the peak set in the
fourth quarter of 2004.

The Chinese Ministry of Finance was unable to sell all of its planned
issuance of 91- and 273- day bills. The bond failures were attributed
to increasing concerns of monetary tightening which, of course, would
impact short-term rates and make investors skittish about locking up
capital. If China has difficulty selling bills, what's the outlook for the U.S.?

Casey's General Stores (CASY +22.1%) soars as Canadian convenience store operator Couche-Tard launches a hostile offer to buy the company for $36 a share, a 14% premium over Thursday's closing price.

Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.

Sovereign Debt Crisis at 'Boiling Point', Warns Bank for International Settlements.

Total wholesale inventories increased 0.6 percent, the Commerce
Department said, from an upwardly revised 0.1 percent gain in January.
Wholesale inventories in January were previously reported to have
slipped 0.1 percent.

Euro zone officials agreed on Friday on the terms of a possible
financial rescue for Greece as a credit ratings agency downgraded
Athens' debt by two notches citing a worsening economy and rising
borrowing costs.
Deputy finance ministers and central bankers of
the 16 countries sharing the European single currency decided that any
emergency loans would be made on terms almost identical to standard IMF
bailouts if Greece needed them, an EU source said.

Gold futures settled at a fresh four-month high Friday as prices
overcame a wobbly start to rally on rekindled concerns about the global
economic recovery. Gold for June delivery, the most active contract,
added $9, or 0.8%, to end at $1,161.90 an ounce on Comex, the highest
for a most-active contract since early December. A Fitch Ratings
downgrade of Greece's credit ratings gave markets a decisive upward
push.

Iran's president unveiled a new generation of centrifuges used to
enrich uranium Friday, defying international warnings against
continuing its sensitive nuclear work.

Fitch Ratings cut oil refining company Sunoco Inc's senior
unsecured debt rating to the lowest rung of investment grade on Friday,
partly reflecting declining demand for gasoline, the agency said.


Regulators on Friday closed Beach First National Bank of Myrtle Beach, S.C.,
bringing the total number of failed banks so far this year to 42. Beach
First National had about $585.1 million in assets and $516 million in
deposits as of Dec. 31. Bank of North Carolina in Thomasville, N.C.
will assume all of its deposits and assets.

The Dow industrials added 70.28
points, or 0.6%, to end at 10,997.35, up 0.6% for the week. The
blue-chip index had traveled above the 11,000 milestone just minutes
ahead of the market's close. The S&P 500 Index
rose 7.93 points, or 0.7%, to 1,194.37, a weekly rise of 1.4%, while
the Nadaq Composite Index gained 17.24 points, or 0.7%, to 2,454.05, up
2.1% from the prior week's close.

Unemployment

4/8/10 Unemployment

The number of people applying
for unemployment benefits rose 18,000 to a seasonally adjusted 460,000
in the week ended April 3, the Labor Department reported Thursday.
Economists surveyed by MarketWatch had expected a result of 442,000.
The four-week average of initial claims -- a better gauge of employment
trends than the volatile weekly number - rose 2,250 to 450,250. For the
week ended March 27, continuing claims fell 131,000 to 4.55 million.
The four-week average of these ongoing claims declined 36,000 to 4.65
million, the lowest level since January 2009. In the week ended March
20, about 5.8 million jobless workers, not seasonally adjusted, were
receiving extended federal benefits, down 223,000 from the prior week.
Altogether, 11.1 million people were collecting some type of
unemployment benefits in the week ended March 20, down about 373,000
from the prior week. A Labor Department official said interpretation of
the data around this time period is clouded by events such as Easter
that make it difficult to properly adjust for seasonal factors.

George Ure: " Tax Freedom Day will arrive on April 9 this year, the 99th day of 2010, according to the Tax Foundation's annual calculation using the latest government data on income and taxes. Americans will work well over three months of the year—from January 1 to April 9—before they have earned enough money to pay this year's tax obligations at the federal, state and local levels. This year's Tax Freedom Day is one day later than in 2009, but more than two weeks earlier than in 2007. The shift toward a lower tax burden since 2007 has been driven by three factors: (1) The recession has reduced tax collections even faster than it has reduced income; (2) President Obama and the Congress have enacted large but temporary income tax cuts for 2009 and 2010, just as President Bush did in 2008; and (3) Two significant taxes were repealed for 2010 as part of previous legislation, the estate tax and the so-called PEP and Pease provisions of
the income tax. Despite all these tax reductions, Americans will pay more taxes in 2010 than they will spend on food, clothing and shelter combined." 27% of your work year goes to government.

U.S. natural gas storage is expected to increase by 29 to 33 billion
cubic feet in the week ended April 2, analysts polled by Platts said.
The Energy Information Administration releases its report on natural
gas storage Thursday at 10:30 a.m. Eastern. Natural gas's most active
contract has gained 3.9% so far this month, following a 31% decline in
the first quarter of the year. Natural gas for May delivery, the most
traded contract, was down 8 cents, or 1.9%, to settle at $4.02 per
million British thermal units Wednesday.

Natural gas storage increases by 33 bln cubic feet. Increase in nat gas storage within expectations. Natural gas holds on to losses, at $3.90/mln Btus.

Baker Hughes reported that the international rig count for March
2010 was 1,074, up 6 from the 1,068 counted in February 2010, and up 62
from the 1,012 counted in March 2009. The international offshore rig
count for March 2010 was 295, down 6 from the 301 counted in February
2010 and up 14 from the 281 counted in March 2009.
The U.S. rig count for March 2010 was 1,419, up 69 from the 1,350
counted in February 2010 and up 314 from the 1,105 counted in March
2009. The Canadian rig count for March 2010 was 386, down 178 from the
564 counted in February 2010 and up 190 from the 196 counted in March
2009.
The worldwide rig count for March 2010 was 2,879, down 103 from the
2,982 counted in February 2010 and up 566 from the 2,313 counted in
March 2009.

Contrarian: "Higher prices of milk, fruits and pulses pushed food inflation to
17.70 per cent for the week ended March 27, fueling expectations that
Reserve Bank of India may further tighten rates in its annual monetary
policy on April 20.
Food inflation in the previous week stood at 16.35 per cent. With
prices of essential items rising and fears of food inflation spreading
to manufactured goods, the overall inflation for March, data for which
is expected next week, is likely to cross the double digit mark."

Wealth, Income, and Power by Professor G. William Domhoff at the University of California at Santa Cruz: "In
the United States, wealth is highly concentrated in a relatively few
hands. As of 2007, the top 1% of households (the upper class) owned
34.6% of all privately held wealth, and the next 19% (the managerial,
professional, and small business stratum) had 50.5%, which means that
just 20% of the people owned a remarkable 85%, leaving only 15% of the
wealth for the bottom 80% (wage and salary workers). In terms of
financial wealth (total net worth minus the value of one's home), the
top 1% of households had an even greater share: 42.7%."

Mish: "If the top 20% have 84% of the wealth (and recall that 10%
have 85% to 90% of the stocks, bonds, trust funds, and business
equity), that means that the United States is a power pyramid. It's
tough for the bottom 80% -- maybe even the bottom 90% -- to get
organized and exercise much power."

Russell Napier: “For 120 years, the US borrowed money to kill people [in wars]. Now, it’s borrowing money to keep them alive."

ZeroHedge: "Panic in Greece as total freefall envelops both the bond and the stock
market. The 10 Year is now at an absolute record 447 bps spread to
bunds, or in the mid 7's in absolute terms. The stock market has
tumbled by about 5% and Greek CDS have surged to a record."

Early Easter boosts March retail sales (Reuters) as consumer buy trinkets with money saved from not paying mortgage or credit cards.

The 30-year fixed-rate mortgage
average rose to 5.21% with an average 0.6 point for the week ending
April 8, the highest since August 2009.

A team led by Yuri Oganessian of the Joint Institute for Nuclear
Research in Dubna, Russia, reports smashing together calcium-48 — an
isotope with 20 protons and 28 neutrons — and berkelium-249, which has
97 protons and 152 neutrons. The collisions spit out either three or
four neutrons, creating two different isotopes of an element with 117
protons.

Costco Wholesale Corp. said Thursday that
sales at stores open at least a year rose 10 percent in March, buoyed
by strong growth overseas.
The
warehouse club operator said its international sales at store open at
least a year grew 28 percent, with U.S. results up 5 percent.
Removing
higher gasoline prices and a weaker dollar, sales at stores open at
least a year increased 3 percent in March with overseas up 7 percent
and U.S. results up 2 percent.

The Dow Jones Industrial Average gained 29.55 points to 10,927.07. The S&P 500 Index added 3.99 points to 1,186.44. The Nasdaq Composite Index rose 5.65 points to 2,436.81.

Consumers

4/7/10 Consumers

Consumer borrowing fell again in February, reflecting weakness in credit cards and auto loans. Analysts said the sharp reduction showed that the weak economy is still making consumers hesitant to take on more debt.

The Federal Reserve said Wednesday that borrowing declined by $11.5 billion in February, surprisingly weaker than the small $500 million gain that economists had expected. The February decline was the 12th decrease in the past 13 months as consumers slash borrowing in the face of a deep economic recession and high unemployment.

Analysts said consumer borrowing is being held back by lingering fears about job security with unemployment still near 10 percent and a move by banks to tighten credit standards following the severe financial crisis of the past two years.

Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York, said the job worries were a bigger factor holding back borrowing than the tighter lending standards.

Japan Airlines Corp. plans to slash its personnel by 16,500, or roughly one-third of its existing workforce, during the current fiscal year, according to a report Wednesday.

Toyota Motor Corp.plans to keep its sales-incentive program in the U.S. going through
this month and next in the wake of major safety recalls, according to a
report Wednesday.

A 7.8-magnitude earthquake
struck Northern Sumatra, Indonesia, early Wednesday morning, according
to the U.S. Geological Survey. The earthquake struck 325 miles west of
Kuala Lumpur, Malaysia, according to the USGS, and 880 miles northwest
of the Indonesian capital Jakarta. In addition, the National Oceanic
and Atmospheric Administration reported that a local tsunami watch is
in effect for the region.

The Federal Reserve is considering allowing maturing Treasury bonds
to roll off its portfolio as an alternative way to drain reserves from
the banking system, according to minutes from its March meeting.
The
move would mark a shift from the current policy of reinvesting the
proceeds from government debt into new Treasury bonds as the old ones
come due.

CKE Restaurants Inc
rose 8% to $11.99 in pre market trades on Wednesday after the company
said it received an alternative takeover proposal to acquire all the
outstanding shares of the company. The company did not name the new
buyer or the price. The offer came after CKE shareholder Porter Orlin,
a New York-based investment manager, said it was dissatisfied with a
going-private offer of $11.05 a share from private equity firm Thomas
Lee Partners LP. Under CKE's merger agreement with Thomas H. Lee, it
has until 12:01 p.m. on April 27 to conclude discussions with the new
buyer. CKE Restaurants manages a total of 3,141 franchised, licensed or
company-operated restaurants in 42 states and in 16 countries,
including 1,224 Carl's Jr. restaurants and 1,905 Hardee's restaurants.

Vacancy rates at US shopping centers and malls rose to the highest
levels in at least 10 years in the first quarter, accompanied by a drop
in rents that wiped out years of growth. Is there an end in sight?

Time is running out for home buyers seeking tax credits of up to
$8,000, with purchase contracts needing to be signed by the end of this
month and loans closed by the end of June.

Tens of thousands of loans have been hitting the "notice of trustee sale" bin, and that means they are coming to foreclosure.
The
actual foreclosure numbers have been down recently because of all the
modification efforts, but as we see more loans not qualifying for
modifications and more loans defaulting on modifications, the
foreclosure numbers rise.


M1 for February 2010 is estimated at 1.7103 trillion versus the February 2009 M1 of 1.5621 trillion which means that the M1 inflation rate is 9.487%. The unadjusted 12-month inflation rate for goods and services gobbled up by consumers is a weak 2.1%.

Dams have dried up in southwest China, Thai fishermen have almost
completely stopped their fishery activities on the Mekong River, and
nearly half of northern Vietnam's farmland is under threat because of a
regional drought.
The region is facing water shortages and low
water levels along the Mekong River -- particularly the tributaries
that feed into it -- after a shorter-than-usual monsoon season last
year and light rainfall in the dry season, affecting millions of
people, livestock and hectares of land, and generating losses in the
millions of dollars, officials from various countries and the United
Nations say.
"This is a regional drought. It's not just
restricted to one area. We expect it to go on now for maybe another two
to three weeks before the rainy season starts, and then the water
levels on the river will hopefully start to rise," said Jeremy Bird,
chief executive officer of the Mekong River Commission, which was
formed in 1995 by Thailand, Vietnam, Laos and Cambodia to oversee
sustainable development along the waterway.

Moody’s Investors Service lowered Los Angeles’ bond rating effective Wednesday -- and warned that the city risks further downgrades.Moody’s cut L.A.’s general-obligation bond debt rating to Aa3 from Aa2.


Apple's iPad tablet computer costs as little as $259.60 to build, according to analysis by the research firm iSuppli.

Los Angeles Mayor Antonio Villaraigosa called for shutting down
“nonessential” city services two days a week, after Controller Wendy
Greuel said the municipality’s cash may run out next month.

China is considering allowing the yuan
to trade against the Russian ruble, South Korean won and Malaysian
ringgit to promote its use in cross-border trade, an official at
the China Foreign Exchange Trade System said. The People’s Bank of
China is investigating the possibility of offering new foreign-exchange
pairs, said an official at the Shanghai-based interbank exchange, a
subsidiary of the central bank.

The price of copper passed $8,000 a ton for the first time in 20 months yesterday.

ZeroHedge: "As Social Security taxes increased over time, so did the benefits.
Essentially, previous generations paid into the system when taxes were
low and retired when the benefits were high. A retiree’s maximum tax
loss from Social Security in 1940 was $923 in today’s dollars. Compare
this to the current maximum of $13,243."

The euro hit a fresh one-week low against the dollar on Wednesday as
concerns over Greece's fiscal problems escalated, while the Australian
dollar stayed buoyed on expectations of higher interest rates.

Thailand's prime minister
declared a state of emergency in the capital city of Bangkok and some
surrounding areas after protesters broke into a parliamentary compound,
escalating a weeks-long protest over claims that the country's current
leadership is illegitimate, according to report by Agency
France-Presse. Prime Minister Abhisit Vejjajiva announced the emergency
measures during a nationally-televised press conference after
supporters of the ousted premier Thaksin Shinawatra stormed the
parliament building.

The Midwest Manufacturing Index fell 0.8% to
82.6, paring back a 2% gain in January. Compared to a year ago, the
index was -0.5% in the midwest, and +2% nationwide.

Nearly two-thirds of Americans think the time is right to buy a house, and that prices will be the same or higher over the
coming year, according to a Fannie Mae survey. The 64% of respondents
that said it's a good time to buy is just shy of the 66% that said the
same thing in 2003, as the housing market took flight.

Eurozone growth came to an unexpected halt in Q4 on weak consumer and investment spending. Eurostat had previously pegged Q4 growth at 0.1%, but in its final estimate said output was unchanged from Q3, while output in seven of 16 member nations actually fell.

The Energy Information
Administration reported Wednesday an increase in crude-oil stockpiles
by 2 million barrels in the week ending April 2, while analysts polled
by Platts expected an increase of 1.5 million barrels.


Yields on the current 10-year notes declined 6 basis points to 3.89%. The
euro fell to $1.3368 from $1.3398 in late New York trading on Tuesday.
The dollar index rose to 81.465, from 81.379 Tuesday.

The Treasury Department sold
$21 billion in 10-year notes on Wednesday at a yield of 3.900%, the
highest level since last June. Bidders offered to buy 3.72 times the
amount of debt sold, the highest ever, according to RBS, and above the
average of 3.02 times at the last four comparable sales. Indirect
bidders, a group of investors that includes foreign central banks,
bought 43.1%, versus 36.6% of the last four on average. Direct bidders,
which include domestic money managers, purchased another 16.3%,
compared to an average of 12.2% recently.

Young adults in the United States are being squeezed out of the
labor force as older workers either delay retirement or seek jobs to
rebuild nest eggs destroyed by the recession, a study showed on
Wednesday.
The size of the labor force fell 6.3 percent for young
workers, but increased 8.5 percent for workers 55 years and older
between December 2007 and January 2010, according to the study by the
Washington-based Economic Policy Institute (EPI).

Fed's Hoenig: 1% fed funds rate could happen soon.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified
for enough credits, deductions and exemptions to eliminate their
liability. That's according to projections by the Tax Policy Center, a Washington research organization.

The Dow Jones industrials finished down 72 points to 10,898 after dropping as many as 124 points by 3:15 p.m. ET. The decline was the Dow's biggest since Feb. 23, when the index fell 101 points.
The Standard & Poor's 500 Index was off 7 points to 1,182, and the Nasdaq Composite Index was off 6 points to 2,431.

The Yuan

4/6/10 The Yuan

The United States on Monday reiterated its call for China's currency to
be market-based, as lawmakers warned they would act if there was no
movement from China on revaluing the yuan.

Australia's central bank raised its key cash rate by 25 basis points to
a 14-month high of 4.25 percent on Tuesday and flagged further moves
ahead as the resource-rich nation rides a tide of Asian demand.

George Ure: "A 5:30 AM check of the USGS Earthquake Site (here) showed that as of this morning there had been 140 quakes listed...just so far today and yesterday had an amazing547 quakes listed, the vast majority guess where?"

About 39.4 million Americans, the most ever, received food stamps in January, the government said.

U.S. Feb. job openings decline to 2.72 million.

Treasury Secretary Timothy Geithner said he was confident that China
would see that it is in its own interest to make its currency more
flexible, and said global economic recovery "looks quite strong now."
Geithner, in an interview on Tuesday with India's NDTV, said it was "China's choice" whether or not it revalues the yuan.
"As
I said before and I'll say it again, but I want to make sure I am
repeating myself, I am confident that China will decide it's in their
interest to resume the move to a more flexible exchange rate, that they
began some years ago and suspended in the midst of the crisis," he said
in India's capital.

CA Inc. plans to cut roughly 1,000 positions as part of a cost-cutting
program, the software company said in a regulatory filing with the
Securities and Exchange Commission.


A Stanford University study commissioned by Gov. Arnold
Schwarzenegger says California's public pension funds are underfunded
by as much as $500 billion.

The
estimated shortfall applies to the retirement systems for California
state and local government workers, teachers and University of
California employees.

The most profitable supertanker
market in more than a year is heading for a 35 percent slump as
oil refineries from Japan to the U.K. shut for maintenance and
leave a surplus of vessels.
Shipping costs will fall to an average of $28,758 a day
this quarter from $44,576 on April 1, according to the median
estimate in a Bloomberg survey of 13 analysts, traders and
shipbrokers. Rates to hire the ships, each bigger than the
Chrysler Building, averaged $49,908 a day in the first quarter,
the most since the last three months of 2008.


China says firmer yuan not key to U.S. trade imbalance.

The Dow Jones Industrial Average fell 3.56 points to 10,969.99. The S&P 500 index rose 2.0 points, or 0.2%, to 1,189.44. The financials sector led the gains on the broad index, rising 1%. The technology-heavy Nasdaq Composite rose 7.28 points, or 0.3%, to 2,436.81.

10-year Treasury Bond

4/5/10 10-year Treasury Bond

John Mauldin: " So, either we have a slow-growth economy for 5-6 years, or we hit the wall all at once. Think depression if it's the latter. Either way, it's a tough investment environment."

Mike Burk: "Most of the breadth indicators deteriorated last week and the secondaries underperformed the blue chips.
I expect the major averages to be lower on Friday April 9 than they were on Thursday April 1.
Last weeks negative forecast was a miss."

The U.S. office vacancy rate rose to 17.2 percent, a level unseen since
1994, as the market lost about 11.6 million net square feet of occupied
space during the first quarter, according to the report released on
Monday. The U.S. vacancy rate inched up 0.2 percentage points from a
quarter earlier and was 2 percent higher than a year ago.

Rob Hanna: "Unscheduled Fed meetings have been typically been surprises where the
announcement came out of the blue - and the time of day was not
consistent. Monday is the first unscheduled Fed meeting that I can
recall that has been announced beforehand. While behavior may fall in
line with other scheduled Fed meetings, I believe it would be dangerous
to make any assumptions in this unique case.
Traders should be aware that news will likely hit in the afternoon that may affect the market."

There will be a review and determination by the Board of Governors of the advance and discount rates to be charged by Federal Reserve Banks.

John Hussman: "The first crucial observation is that high risk
market conditions like we observe at present come with an "unpleasant
skew." If you look at overvalued, overbought, overbullish, hostile
yield conditions of the past, you'll find that the most likely market
outcome, in terms of raw probability, is a continued tendency for the
market to achieve successive but slight marginal new highs. While this
movement tends to be fairly muted in terms of overall progress, it can
be somewhat excruciating for investors in a defensive position, because
the market tends to pull back by a only a few percent, followed by
bursts that recover that lost ground and achieve minor but widely
celebrated new highs. That is the "unpleasant" part.
The
"skew" part is that although the raw probability tends to favor slight
successive new highs, the remaining probability tends to feature nearly
vertical drops, typically well over 10% over a period of weeks.
Frankly, I thought we had begun that process in the decline from the
January highs, but much like we observed in early 2007, that initial
decline was quickly recovered and followed by a restoration of
overvalued, overbought, overbullish, hostile yield conditions.
Eventually, of course, the outcome for investors was very bad, but that
in no way rescued us from discomfort as the market approached its final
peak in 2007. I suspect something similar is at work at present, but we
will take our evidence as it comes.
Here
and now, it does not matter which "data set" we live in - whether we
are presently in a temporary lull prior to a second wave of credit
difficulties, or whether we are in a typical post-war recovery, the
present set of conditions would hold us to a defensive investment
stance."

The Energy Department is preparing to make sweeping revisions to
its U.S. natural-gas production data after finding it has been
overstating output, raising new questions about the government's
collection of energy information.
The monthly gas-production
data, known as the 914 report, is used by the industry and analysts as
guide for everything from making capital investments to predicting
future natural-gas prices and stock recommendations.
But the
Energy Information Administration, the statistical unit of the Energy
Department, has uncovered a fundamental problem in the way it collects
the data from producers across the country—it surveys only large
producers and extrapolates its findings across the industry. That means it
doesn’t reflect swings in production from hundreds of smaller
producers.
The EIA plans to change its methodology this month,
resulting in “significant” downward revisions in some areas, according
to Gary Long, the acting director of the 914 form, who led the review.

CEOs have increased spending about 9% on the personal use of
corporate jets over the last year, says a study by the Corporate
Library.

A close look at how much Iranian money has been frozen to date in the
U.S. under existing sanctions shows that the total amount is
surprisingly small.


Economists Carmen Reinhart of the University of Maryland and Kenneth
Rogoff of Harvard University have recently shown that a 90 percent
debt-to-GDP ratio usually touches off a crisis.
This year, the debt will reach 63 percent of GDP, a ratio that has
ignited crises in smaller wealthy nations. Fiscal crises gripped
Canada, Denmark, Sweden, Finland and Ireland when their debts were
below where the United States is shortly headed.
Japan's debt is much higher, but most of it is held domestically,
and Japan's economy has been weak for 20 years. "I really don't think
we want to be like Japan," said UC Berkeley economist Alan Auerbach.

Apple Inc., trying to revive demand
for tablet-style computers with its iPad, said it sold more than
300,000 of the devices on the first day of their debut weekend.
The number includes preorders, sales at Apple stores and
deliveries to channel partners, the company said in a statement
today. Users downloaded more than 1 million iPad applications
from Apple’s site and bought more than 250,000 electronic books
from its online store during the first day.

USGS reports at 3:40 PM Pacific on Sunday, April
4, 2010, 30 miles southeast of Mexicali, Mexico, a 7.2 quake hit about
6 miles down. Mexicali's population is nearly a million. Reuters is
reporting that “some people were trapped in elevators, retaining walls
collapsed in some places and electricity was out in several parts of
Baja California state. ... Some buildings in Tijuana, about 135 miles
from the epicenter, were badly damaged. The quake was felt about 200
miles northwest in Los Angeles.”211 quakes worldwide on the USGS site since the Sunday 7.2 Baja event and 202 aftershocks.

Enticed by an expanded tax
credit, home buyers came back into the market in February, the National
Association of Realtors said Monday, reporting an 8.2% increase in its
pending home sales index. The index had fallen 7.8% in January and was
down 20% from the peak in October. Following February's surprise
increase, the pending home sales index is up 17.3% compared with a year
earlier. Economists were looking for a decline or a smaller increase in
the index in February, in part because of extreme weather in the
eastern half of the nation. However, the index showed sales contracts
increased about 9% in the Northeast and South, and about 22% in the
Midwest. Sales contracts declined about 5% in the West.

U.S. March ISM services index 55.4% vs 53.0 Feb.

Reggie Middleton: "Let's not mince words here. Greece is going to
effectively default on its debt, one way or another, and it is probably
going to do it relatively soon."

ZeroHedge: "At this point one has to be an immaculate idiot (read Chairman of the
Fed) not to see, that what the Fed is doing with the pursuit of the
same catastrophic monetary policy which failed the first time around,
and will fail now, is pushing us straight into the abyss, from where
America just barely managed to crawl out in 2009 via $3 trillion in
additional public debt issuance to date (a number which will likely hit
$10 trillion within the next 5 years, to result in a debt-GDP ratio of
approximately 200% when including the GSEs). It has gotten so bad that
even Fed governors are begging Bernanke to stop the madness before it
is too late: a first sign of internal mutiny. Alas, just like when
everyone ignored Michael Burry, who laughed into the face of
conventional groupthink in the mid-2000's (which by definition is
always wrong, and will be this time around as well), so will Wall
Street and its proxy, Washington D.C., ignore that which is all too
obvious until it is once again too late. Hopefully by then intelligent
and very rich life on Mars will be discovered, cause there will be no
one left to bail out not just the US, but the world."

Pickens says a typical trash truck consumes as much fuel each year as 325 automobiles.
According to the national trade group Natural Gas Vehicles for America,
natural gas-fueled automobiles emit 20 to 30 percent less greenhouse
gas than diesel and gasoline-powered vehicles, as well as fewer
particulates and other pollutants.
But CNG vehicles are more expensive - a natural-gas-fueled truck comes at a $50,000 premium over a conventional truck.
And so Pickens and Natural Gas Vehicles for America are lobbying for
legislation now in Congress that would provide federal tax credits up
to $32,000 per vehicle, an incentive to buy in.

10-year Treasury bonds yielding 4% and 30-year at 4.84%. Just the tip of the iceberg.
Thanks to Bernanke this has been a no-brainer.

Today produced a spike in the 10 year UST-Bund spreads to over 90 bps, a level unmatched since mid-2006.

The Dow Jones Industrial Average rose 46.48 points, or 0.4%, to 10,973.55. The S&P 500 Index climbed 9.34 points, or 0.8%, to 1,187.44. The Nasdaq Composite Index gained 26.95 points, or 1.1%, to 2,429.53.

LA's controller Wendy Greuel just announced that she expects LA's general fund to be "out of money" by May 10, and that LA will likely deplete all reserve funds by the end of Q2.

ZeroHedge: "The just completed 3 Month and 6 Month Bill auctions were the weakest ones conducted so far in 2010. Out of 14 auctions conducted so far across both maturities this year, the 3 Month closed at the highest rate seen since December, at 0.175%, coupled with the lowest Bid To Cover over the same period, coming in at 3 month low of 3.6.The same is true for the 6 Month: the closing high rate of 0.265% was the highest in 2010, combined with the weakest Bid To Cover YTD, at 3.63. Direct bidders once again came in to save the day."

Happy Easter

4/4/10 Happy Easter


More Americans filed for bankruptcy protection in March than during any month since the federal personal bankruptcy law was tightened in October 2005, a new report says, a result of high unemployment and the housing crash.
Federal courts reported over 158,000 bankruptcy filings in March, or
6,900 a day, a rise of 35 percent from February, according to a report
to be released on Friday by Automated Access to Court Electronic
Records, a data collection company known as Aacer. Filings were up 19
percent over March 2009. The previous record over the last five years
was 133,000 in October.
Bloomberg: “China’s central bank said new asset bubbles are emerging
in some parts of the world and some sectors and these bubbles may burst
unless ‘supported by economic fundamentals.’ The rapid increase in
asset prices has been pushed up mainly by excessively loose monetary
policies pursued by governments around the world, the People’s Bank of
China said…”

Bloomberg (Michael B. Marois and Paul Dobson): “The People’s Bank of
China said the U.S. dollar will have only a limited rebound in 2010
because of the nation’s high fiscal deficit and low interest rates.
The greenback may see a ‘technical rebound’ from last year’s declines,
though the appreciation may not be ‘too big,’ the central bank said in
its 2009 international financial markets report…”

“If you can manipulate news, a judge can manipulate the law. A smart lawyer can keep a killer out of jail, a smart
accountant can keep a thief from paying taxes, a smart reporter could
ruin your reputation- unfairly.” Mario Cuomo

China is expected to post its first monthly trade deficit in six years.

“Successful
politicians are insecure and intimidated men. They advance politically
only as they placate, appease, bribe, seduce, bamboozle or otherwise
manage to manipulate the demanding and threatening elements in their constituencies.” Walter Lippmann

China’s Premier Wen Jiabao said
one country can’t be blamed for imbalances in trade
relationships, a comment that comes amid pressure on the
Asian nation to allow its currency to appreciate.
Trade problems “can’t be blamed on one side,” visiting
Japanese Finance Minister Naoto Kan quoted Wen as saying
today.
“I didn’t tell him what to do” about China’s currency,
Kan told reporters today in Beijing after the meeting. “I
told him I expect China to make a wise judgment.”


"When it comes to controlling human beings, there is
no better instrument than lies. Because you see, humans live by
beliefs. And beliefs can be manipulated. The power to manipulate
beliefs is the only thing that counts."
Michael Ende

Gallup: Underemployment In The U.S. Rises to 20.3% in March


Robert Reich
Apr 2, 2010 12:24PM
The Fed has finally came clean. It now admits it
bailed out Bear Stearns – taking on tens of billions of dollars of the
bank’s bad loans – in order to smooth Bear Stearns’ takeover by JPMorgan Chase. The secret Fed bailout came months before Congress authorized
the government to spend up to $700 billion of taxpayer dollars bailing
out the banks, even months before Lehman Brothers collapsed. The Fed
also took on billions of dollars worth of AIG securities, also before
the official government-sanctioned bailout. The losses from those deals still total tens of billions, and
taxpayers are ultimately on the hook. But the public never knew. There
was no congressional oversight. It was all done behind closed doors. And the New York Fed – then run by Tim Geithner – was very much in the
center of the action.

Jobs

4/2/10 Jobs

The U.S. economy created 162,000
jobs in March, the largest seasonally adjusted increase in nonfarm
payrolls in three years, the Labor Department reported Friday. Nonfarm
payrolls rose for just the second time in the past 27 months, boosted
by the hiring of 48,000 temporary workers to conduct the Census.
Excluding the Census workers, payrolls rose by 114,000. The
unemployment rate was steady at 9.7%, with the labor force rising by
398,000. The report was largely in line with expectations. Economists
surveyed by MarketWatch were forecasting a 200,000 increase in nonfarm
payrolls, with about half of those coming from temporary hires at the
Census Bureau. Average Hourly Earnings of all employees NFP fell by 2 cents, or 0.1%. Average workweek was up by 0.1 hour to 34.0 hours in March. Long-term unemployed (jobless for 27 weeks+) increased by 414,000 to 6.5 million. 44.1 percent of unemployed persons were jobless for 27 weeks +. Involuntary part-time workers increased to 9.1 million in March.
January 2010 data was revised upwards 40k (from-26k to +14k); February was revised up 22k (from -36k to -14k).
The government’s broader measure of unemployment ticked up for the second month in a row, rising 0.1 percentage point to 16.9%.
The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department,
accounts for people who have stopped looking for work or who can’t find
full-time jobs. Though the rate is still 0.5 percentage point below its
high of 17.4% in October, its continuing divergence from the official
number (the “U-3″ unemployment measure) indicates the job market has a
long way to go before growth in the economy translates into relief for
workers.The agency said it will take on 1.15 million temporary
workers in the first half of the year to conduct the population
count that occurs every 10 years.
For that reason, economists will be excluding workers on
public payrolls for much of the rest of the year in gauging the
state of the labor market.
US companies cut 23,000 jobs in March.

ZeroHedge: "Key data points for March: change in NFP: 162K; of these - Census +48K;
Weather ~+100K; Birth/Death +81: Net -67,000. Underemployment increased
to 16.9%. In the meantime the dollar is surging, and the 10 Year is
approaching 4.00%"

The Federal Reserve may again
increase the discount rate at its meeting on Monday, further widening
the gap to the more closely-watched fed funds rate, analysts said
Friday. The Board of Governors will meet on Monday to consider the
discount rate, now at 0.75%, to be charged by Fed banks to institutions
seeking emergency funds, the Fed said in a release. The discount window
is rarely used now, so has little impact on the economy and a sign of
normalizing financial markets, since the discount rate used to be 1%
above the fed funds rate. It is now 0.5 percentage points. When the
central bank last raised the discount rate, it said it is not an
indication of monetary policy. "With markets closed in Europe on Monday
and holiday induced light trading session in the US, the Fed is well
positioned to increase the discount rate without causing too much
collateral damage in global financial markets," said Joseph Brusuelas
of Brusuelas Analytics.

China's central bank said on Friday that it expected the dollar to
strengthen this year, but it raised the specter of worldwide asset
bubbles and inflation.
In a lengthy report on the global
financial markets, the People's Bank of China also warned that huge,
hidden bank bad loans in the West could pose a threat to the global
economy.

A report released Monday by the National Alliance to End
Homelessness projects a 33 percent increase over the next decade in
elderly people who are homeless.
That would mean that today's estimate of 44,172 homeless over age 62 would climb to 58,772.
Officials
last year counted only nine homeless people over age 65 in Sedgwick
County. But 39 people ages 55 to 64 reported being homeless, hinting at
the potential for an increase.

Fashion brand Rock & Republic files for Chapter 11 bankruptcy protection.

Closely-watched iSuppli projects iPad (AAPL) sales of 7.1M in 2010, 14.4M in 2011, and 20.1M in 2012.

Obama will host a discussion with employees at Celgard LLC, an
advanced battery technology manufacturer that was able to hire more
workers and expand its operations through an economic stimulus grant,
the White House said.
The White House said Obama will use the plant as an example of the economic progress made since he took office.

In March, the US government issued a massive amount of debt: $332.8
billion - the biggest amount ever since the all time record of $545
billion raised (most of it purchased by the Fed) during the apex of the
financial crisis in October 2008. The US Treasury had $12.717 trillion
in debt subject to limit at the end of March, compared to just $12.384
trillion in the beginning of the month.

Obama: US would go bankrupt without health changes.

Yields on 10-year notes 3.93, +0.07, +1.73%) increased 7 basis points to 3.94%, putting in a third weekly increase. Bond yields move inversely to prices and a basis point is 0.01%.

Yields on 2-year notes 1.10, +0.05, +4.98%) rose 5 basis points to 1.10%, the highest level on a closing basis since late December. Two-year yields have increased for five straight weeks.

Yields on 30-year bonds 4.80, +0.07, +1.44%) rose 7 basis points to 4.80%, the highest level since October 2007.

Natural Gas

4/1/10 Natural Gas

The
U.S. Energy Information Administration is expected to report that 14
billion cubic feet of gas were added to storage during the week ended
March 26, according to the average prediction of 24 analysts and
traders in a Dow Jones Newswires survey. The survey's median was a
build of 15 bcf, with a high of a 23 bcf build and a low of a 5 bcf
withdrawal. Last year, gas storage levels were unchanged during the
same week. On average, 27 bcf were withdrawn from storage during the
same week over the past five years.
If the storage estimate is correct, inventories as of March 26 will total 1.640 trillion cubic
feet, about 11% above the five-year average and 0.84% below last year's
level for that week.

EIA: Natural gas storage up by 12 billion cubic feet.

The number of people applying for unemployment benefits fell 6,000 in the week ended March 27 to a seasonally adjusted 439,000, the Labor Department reported Thursday.
Economists surveyed by MarketWatch had expected a result of 443,000.
The four-week average of initial claims -- a better gauge of employment
trends than the volatile weekly number - declined by 6,750 to 447,250,
the lowest level since September 2008. For the week ended March 20,
continuing claims fell 6,000 to 4.66 million. The four-week average of
these ongoing claims declined 12,500 to 4.68 million, the lowest level
since January 2009. In the week ended March 13, about 6 million jobless
workers, not seasonally adjusted, were receiving extended federal
benefits, up 264,000 from the prior week. Altogether, 11.4 million
people were collecting some type of unemployment benefits in the week
ended March 13, up about 215,000 from the prior week.


The Dow Jones Industrial Average gained 4.1% or 428.58
points during the first quarter, to 10856.63. That marked the Dow’s
fourth consecutive quarterly gain and the best first-quarter
performance since 1999. The broad Standard & Poor’s 500-stock index
rose 4.9% to 1169.43, but still 25% below its all-time high posted in
October 2007.

Pimco sees Europe's action on Greece as ineffective in fixing the
country's problems, while Britain's sovereign debt rating could be
downgraded within a year, a top executive of the world's largest bond
fund said.

China’s manufacturing expanded for a
13th month, business sentiment in Japan rose to the highest
since 2008 and factories in Britain and the euro region stepped
up output as the global economic recovery strengthened.

Social Security is facing a $28 billion shortfall this year.

Is the Japanese long bond market, with a yield of 1.4%, a disaster waiting to happen?


ZeroHedge: "RealPoint has just released its March CMBS delinquency data, according
to which delinquencies hit an all time high 6%. Not to be ignored,
according to TREPP this number is even worse, at nearly 8%, after the
single biggest monthly spike in 30 day + delinquencies."

"Our forecast of +275k for Friday's report on nonfarm payrolls is based
on this premise (an underlying increase of 50k, including non-Census
government, plus another 100k for a weather rebound and 125k for
temporary Census hires). We have not changed this estimate but will
keep it under review, as we always do, pending more information on
hiring (Conference Board and Monster), claims, and the ISM's mfg
employment index." -Jan Hatzius, Goldman Sachs

Groceries accounted for 51% of Wal-Mart's $258.2 billion in U.S. sales last year, up from 49% the year before.

Oil hit an 18-month high on Thursday, breaking up above previous
trading ranges and drawing in fresh inflows from investors at the start
of the new quarter.


Reporting from Washington and Moscow — U.S. and European officials
considering new sanctions against Iran have decided to set aside some
of the harshest of the measures as they seek broader international
agreement in United Nations Security Council negotiations, said
diplomats involved in the talks.
In particular, U.S. officials
and their allies have decided to drop any attempt to impose a ban on
the export or import of refined petroleum products, concluding that
such a measure would be rejected by Russia, China and possibly other
members of the Security Council, the diplomats said, speaking on
condition of anonymity.

The ISM manufacturing diffusion
index rose to 59.6% in March from 56.5% in February, the ISM said. It
was the highest reading since July 2004. Seventeen of 18 industries
were growing in March. The orders and production indexes rose above
61%. The employment index slipped to 55.1%. Economists surveyed by
MarketWatch were looking for the index to strengthen to 57.5%.

Bloomberg: "Prime Minister Vladimir Putin will
pay his first visit to Venezuelan President Hugo Chavez tomorrow
as Russia seeks to regain lost influence in Latin America
through energy and arms deals.
The highlight of the one-day trip to Caracas may be the
formation of a joint venture to pump oil from Venezuela’s
Orinoco Belt. Putin also plans to meet Bolivia’s Evo Morales,
who like Chavez opposes U.S. policy in the region.
Chavez, who visited Russia eight times during his decade in
power, has wooed Putin by signing more than $4 billion in arms
deals and inviting state energy companies OAO Gazprom and OAO
Rosneft to explore for oil. Venezuela was a lone supporter of
Russia during the five-day Georgian war in 2008 and hosted joint
naval war games later that year."

Xstrata Plc, the world’s largest
exporter of coal used for power, raised benchmark prices for the
fuel to an unidentified Japanese utility as much as 40 percent
as a recovery in economic growth in Asia spurs demand.
Zug, Switzerland-based Xstrata agreed to contract prices
for the next 12 months at $98 a metric ton, it said in a
statement. The figure compares with the $70-$72 a ton for the
previous year, cited in the company’s annual report.

Natural gas futures turned
higher Thursday after the U.S. Energy Information Administration
reported a lower-than-expected rise of natural gas in storage. The EIA
reported a net increase of 12 billion cubic feet for the week ended
March 26, while analysts surveyed by Platts expected a net injection of
14 to 18 billion cubic feet to natural gas storage. Prices shot up on
the news, and natural gas for May delivery rose 19 cents, or 4.5%, to
$4.07 per million British thermal units.

U.S. construction outlays fell
1.3% in February on broad-based declines across most types of projects
amid unseasonably strong winter storms in the South, East and Midwest,
the Commerce Department estimated Thursday. Total outlays were down
12.8% from a year earlier at a seasonally adjusted annual rate of
$846.2 billion. Economists surveyed by MarketWatch were expecting the
1.3% decline. Private residential outlays fell 2.1%, private
non-residential spending fell 0.4%, and public construction outlays
dropped 1.7%.

Goldman Sachs lowered its forecast for the March U.S. payrolls report to a gain of 200,000 jobs from its previous expectation of a 275,000 rise, Edward McKelvey, an economist with the firm, said Thursday.



>

ADP

3/31/10 ADP

Companies in the U.S. private
sector shed 23,000 jobs in March, according to the ADP employment
report released Wednesday. The report comes two days before the Labor
Department reports on nonfarm payroll growth for March. The decline in
ADP employment was a surprise. Economists had forecast a gain of 40,000
in March ADP. Economists are also expecting a sizable jump in nonfarm
payroll in March. The consensus forecast of Wall Street economists is
for an increase of 189,000 in nonfarm payrolls. The ADP report does not
include federal workers. Many economists expect a surge in federal
workers related to the 2010 Census. Joel Prakken, chairman of
Macroeconomic Advisers LLC that prepares the ADP report said nonfarm
payroll could still jump in March if there is a reversal of the
depressed hiring from the winter weather in February and from hiring of
census workers.

The Obama administration will propose allowing offshore oil and
natural-gas exploration and development in a large swath of the eastern
Gulf of Mexico.

Steve Forbes: "President Obama and Speaker Nancy Pelosi rammed
ObamaCare through the House by unprecedented parliamentary trickery,
bribery and deceit."

Japanese business sentiment approaches pre-crisis levels, Tankan may show.

China may curb purchases of U.S.
Treasuries this year as its first trade deficit in 17 years
leaves it with fewer dollars to invest, causing yields to climb,
according to Societe Generale SA.
The trade gap will reach $100 billion in 2010, driven by a
45 percent climb in imports as China’s demand growth outpaces
that of other major economies, said Glenn Maguire, chief Asia-
Pacific economist at Societe Generale in Hong Kong. He said
yields on benchmark 10-year U.S. notes will hit 4.5 percent by
the end of 2010, capping the biggest two-year increase since
1980-81.


Seventy-eight percent,
including 82 percent of independents, think government spending is out
of control. Eighty-one percent are fed up with the growing deficit and
73 percent with government spending. Sure, deride the poll because it
came from Fox News; ignore the clarity of American anger.


The Chicago purchasing managers
index fell to 58.8% from 62.6% in February. Economists had been
anticipating a retreat but this was a bigger decline than expected.
Forecasters surveyed by MarketWatch had expected the index to fall to
59.9%. Economists expect the March ISM manufacturing
composite to increase to 57.0 from a February reading of 56.5.



U.S. stocks are holding near recovery highs, but the potential for a pullback is extremely high, Standard & Poor's market strategists said late Wednesday. "Any gains from here will likely be given back in a hurry," S&P said. "It is way too late to chase the market."

Oil has gained 5.1% in March and 5.5% for the quarter, its fifth-straight quarterly increase. Natural gas ended Wednesday's session down 10 cents, or 2.6%, at $3.869 per million British thermal units. The most-active contract has fallen 20% this month and 31% for the quarter.

The Dow closed down 51 points to 10,857. The Nasdaq Composite Index was off 13 points at 2,398, and the S&P 500 was down 4 points to 1,169.

Ireland

3/30/10 Ireland

China displayed new divisions on Tuesday over how to respond to mounting U.S. pressure to let its exchange rate rise.
Two
new advisers to the central bank called for the yuan to resume its
gradual appreciation, but they were slapped down by Commerce Minister
Chen Deming, who said a stronger currency would not wipe out China's
trade surplus with the United States.
"It has been proved both in
theory and practice that the appreciation of a nation's currency
provides little help for improving the balance of payments," Chen said
in a detailed defense of China's trade policy.

Greek seven-year notes fell in the
first day of trading and an auction of 12-year bonds garnered
demand for less than half the debt offered on concern Europe’s
most indebted nation will keep struggling to fund itself.
The drop drove yields on the 5 billion euros ($6.7 billion)
of seven-year notes to 6.3 percent at 1:15 p.m. in London, up
from 6 percent when issued. The yield premium to comparable
German debt widened about 33 basis points to 367 basis points,
ABN Amro Bank NV prices show. Ten-year bonds also fell, while
the cost to insure Greek debt using credit-default swaps rose.


John Crudele: "The experts are expecting that March's growth could have been as
much as 180,000 jobs. But they also think the unemployment rate will
rise modestly to 9.8 percent. But before you get too excited, this is
mostly the result of more than 1 million people being hired to conduct
the 2010 US Census, as well as statistical tricks.
The
statistical razzmatazz is most interesting, because it created a huge
error in 2009 figures that is likely to be repeated this year.
In March 2009, for instance, this assumption -- for what the Labor
Department calls the Birth/Death Model -- added 114,000 jobs to the
overall count. And these assumptions get more optimistic as the spring
continues.
The jobs that the government assumed existed last
year really didn't. And the Labor Department will probably be wrong
about its guesses this year as well.
But there's a bigger
problem than just errors produced by Washington and the politicians who
will try to use them to their advantage.
While the job growth
that'll likely be reported on Friday may not be trustworthy, any
resulting rise in interest rates will be all too real."


"New Book by MIT Sloan Professor Warns of Next Financial Meltdown In 13 Bankers, Simon Johnson calls for breakup of nation’s biggest banks..." In 13 Bankers, Johnson, a former chief economist for the International Monetary Fund, and co-author James Kwak cite historical precedents and offer financial analysis to conclude that a second financial shock is inevitable unless the financial and political stranglehold held on Washington by the nation’s biggest banks is broken. “The best defense against a massive financial crisis is a popular consensus that too big to fail is too big to exist,” the authors write. “This is at its heart a question of politics, not of economics or of regulatory technicalities.”

Home prices in 20 major U.S.
cities fell a not-seasonally adjusted 0.4% in January compared with
December, according to the Case-Shiller home price index released
Tuesday by Standard & Poor's. Prices were down 0.7% in the past
year. David Blitzer, chairman of the index committee for Standard &
Poor's, which compiles the Case-Shiller index, said the rebound in
housing prices seen last fall is fading. On a seasonally adjusted
basis, prices rose 0.3% in January.

By the end of 2010, about half of all commercial real estate
mortgages will be underwater, said Elizabeth Warren, chairperson of the
TARP Congressional Oversight Panel, in a wide-ranging interview on
Monday. “They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have
these dangerous concentrations in commercial real estate lending."

China's finance ministry may require banks to set aside more of their risk-weighted assets as reserves. The
Ministry of Finance is soliciting banks' feedback on raising the
general reserve requirement to 1.5% of their new risk-weighted assets,
up from the current 1%, the report said.The
Industrial & Commercial Bank Ltd. and China Construction Bank Co.
reduced their discounts on mortgage rates, forcing borrowers to pay
more in down payments for their home loans.

U.S. Treasury to sell $73 bln in bills.

McDonald's inaugurated its first Hamburger University in China on
Tuesday to train new generations of managers as foreign companies step
up efforts to develop and keep Chinese talent.

Financial Times: "Think back, for a moment, to the summer of
2007, or just before the start of the subprime meltdown. Back then, it
was not the equity and credit markets that signalled disaster. Instead,
the main sign of spreading investor alarm was that prices started to
swing in the more obscure world of credit derivatives indices (such as
ABX) and asset-backed commercial paper (ABCP).
This
time round, is the swaps market another version of, say, ABX? Perhaps
not yet. Personally, I will be astonished if countries such as the UK
and US entirely avoid a government bond market shock; but I also
suspect that this will occur some time down the road.
Nevertheless,
if nothing else, the swaps spread swing does suggest that some
investors are getting jittery. It also serves to underline that we do
not live in "normal" markets right now. While the surface may look
calm, the inner cogs of the financial system have been distorted by
government intervention in ways that are still barely understood."

Marshall & Ilsley Extends Foreclosure Moratorium Through June
Monday, March 29th, 2010, 4:49 pm
Wisconsin’s
largest bank with $57.2bn in assets, Marshall & Ilsley, extended
its foreclosure moratorium another 90 days through June 30, 2010

Vale SA, the world’s largest iron
ore producer, and BHP Billiton Ltd. ended a 40-year system of
setting annual prices by signing short-term contracts with Asian
mills, with the Brazilian company winning a 90 percent increase.
Sumitomo Metal Industries Co., Japan’s third-biggest
steelmaker, agreed to pay Vale $100 to $110 a metric ton for the
quarter starting April 1, spokesman Toshifumi Matsui said. BHP,
the largest mining company, today said it will sell the majority
of its production to Asian steel mills on shorter-term contracts
without giving pricing.

The Conference Board, an industry group, said its index of consumer
attitudes rose to 52.5 in March from an upwardly revised 46.4 in
February.

Ireland's National Asset
Management Agency said it will accept 16 billion euros of risky loans
from Irish lenders at an average discount of 47%, including taking on
3.29 billion euros from Allied Irish Banks at a 43% haircut and 1.93 billion euros from the Bank of Ireland
at a 35% discount. NAMA, which eventually will buy 81 billion euros of
loans, said 4.9 billion euros of the loans it's taking are from Ireland
and 3.2 billion euros from Britain. AIB separately will need 7.4
billion euros of fresh capital and the Bank of Ireland will need 2.7
billion euros. State-owned Anglo Irish Bank will require another 8.3
billion euros as an interim measure.

The Dow Jones Industrial Average gained 11.56 points, or 0.1%, to finish at 10,907.42. The broad S&P 500 index barely advanced, rising 0.05 points to 1,173.27, while the technology-heavy Nasdaq Composite ended up 6.33 points, or 0.3%, at 2,410.69.

Greece

3/29/10 Greece

Real consumer spending
increased a seasonally adjusted 0.3% in February after having risen
0.2% in January, the Commerce Department estimated Monday. After
adjusting for inflation, the Commerce Department reported that
after-tax incomes were unchanged in February. After-tax incomes fell
0.4% in January, after adjusting for inflation. With spending rising
faster than incomes, the personal savings rate fell to 3.1% of
disposable income, down from 3.3% in January and 4.2% in December 2009.

Hungary's central bank decided on Monday to lower its base rate by 25 basis points to 5.50%, effective from March 30.

Greece on Monday launched a
seven-year, euro-denominated bond issue, news reports said. Guidance
for the sale was at 310 basis points over mid-swaps, equal to a yield
of around 6%, Dow Jones Newswires reported. The Greek government is
looking for a benchmark size of around 5 billion euros ($6.7 billion),
reports said. The sale marks the first test of the market by Greece
after euro-zone leaders last week backed a joint standby
European-International Monetary Fund aid plan for Greece.

The Oil Drum: "Compared to previous years, this heating season in the U.K. has
called for record withdrawals of natural gas from U.K. storage to
balance demand. This drawdown will result in increased demand for
natural gas for refilling of the U.K. storage facilities this
spring/summer.
Apart from a colder than normal winter, a considerable contributor
to the growing use of storage withdrawals to balance demand this winter
has been an accelerated decline rate in indigenous U.K. marketable
natural gas supplies--recently as high as 17% on an annual basis.The decline rate and colder weather have also contributed to a
noticeable growth in U.K. LNG (Liquefied Natural Gas) imports and a
decline in natural gas supplies sent from the U.K. to Continental
Europe. This pattern of increasing LNG imports and declining exports to
Continental Europe is expected to continue."

John Hussman: "As of last week, the S&P 500 was priced
to achieve an average annual total return of just 5.83% over the coming
decade, based on our standard methodology. Prior to 1995, the lowest
implied 10-year total returns priced into the S&P 500 in post-war
data were:
November 1961: Implied 10-year total return 6.26%.
Actual 10-year subsequent return 6.16%
October 1965: Implied 10-year total return 5.89%.
Actual 10-year subsequent return 3.11%
November 1968: Implied 10-year total return 6.19%.
Actual 10-year subsequent return 2.51%
August 1987: Implied 10-year total return 6.29%.
Actual 10-year subsequent return 13.85%.
Note
that in the 1987 case, the unusually strong 10-year return reflects a
move to the extreme bubble valuations in the late 1990's, which have in
turn been followed by 13 years of market returns below Treasury bill
yields. Once the market becomes overvalued, further gains are
ultimately paid for by a period of sorry returns later. To expect
normal or above-average long-term returns from current prices is to rely on the market bailing out the rich overvaluation of today with extreme bubble valuations down the road.
While
investors can hope that today is similar to August 1987, a moment's
reflection about the market crash that occurred shortly after August
1987 might dampen that hope a bit, particularly because that instance
also featured overbought, overbullish and rising-yield conditions.
As
I emphasized last week, even if we had no concern at all about a second
wave of credit strains, we would still be fully hedged here based on
the present combination of rich valuations, overbought conditions,
overbullish sentiment, and hostile yield pressures. Presently, we are
also at the peak of concern about the potential for fresh credit
difficulties to emerge, as we move into the first portion of the Alt-A
/ Option ARM reset schedule."

March 29 (Bloomberg) -- Exxon Mobil Corp. is making a $28.5
billion bet on natural gas, this year’s worst-performing energy
commodity, just as hedge funds amass their biggest wager on
prices falling.
If history is a guide, the acquisition of XTO Energy Inc.
may make Irving, Texas-based Exxon the winner. Its purchase of
Mobil Corp., announced in December 1998, came three weeks before
crude bottomed at $10.35 a barrel and then surged to $25 a year
later. While speculators have helped drive gas down 31 percent
this year, everyone from Goldman Sachs Group Inc. to
ConocoPhillips says prices are headed higher.
The combination of faster economic growth, demand for
cleaner-burning fuels and higher coal prices may spur demand
from factories, power plants and chemical makers, which account
for 60 percent of gas consumption. Goldman Sachs, which cut its
forecast this month, projects a price of $6 per million British
thermal units in 12 months, up more than 50 percent from $3.872
on the New York Mercantile Exchange March 26.
Demand will rebound with the economy, ConocoPhillips Chief
Executive Officer Jim Mulva told investors and analysts March 24
at a conference in New York. “We see natural gas prices in the
short term somewhere in the neighborhood of around $5, but
ultimately longer term, we see it more in $6 to $8,” he said.
This year, the only Reuters/Jefferies CRB Index commodity
that has fallen more is sugar, down 37 percent. Speculators had
sold a net 186,983 futures contracts worth about $7 billion in
the week ended March 16, based on Commodity Futures Trading
Commission data and April futures prices. Inventories rose 11
billion cubic feet to 1.626 trillion in the week ended March 19,
8 percent more than the five-year average, according to the
Energy Department.

ZeroHedge: "Most troubling, this implies that the Personal Savings Rate declined by
0.3% from 3.4% to 3.1%, the lowest this metric has been in over a year.
Keep in mind, the primary reason why Goldman sees that 10 Year at 3.25%
(as opposed to Morgan Stanley's 5.5% call) is because of the
"increased" savings by US consumers. Now that these same consumers have
decided to put their money in iMaxiPad pre-orders, maybe Goldman will
consider reevaluating their Treasury forecast."

Mike Burk:"Since 1928 the SPX has been up 59% of the time in April with an average gain of 1.2%, helped considerably by a 41.5% gain in 1933 (the largest monthly gain ever recorded for that index). During the 2nd year of the Presidential Cycle the SPX has been up 60% of the time with an average gain of 0.3%....
All of the major indices hit new highs last Tuesday, but breadth indicators were weaker than during previous highs. This is just exhaustion following a remarkable 6 week run. There is likely to be some short term weakness, but new highs should be expected longer term.
I expect the major averages to be lower on Friday April 2 than they were on Friday March 26."

BWAY Holding (BWY), which makes metal containers such as the kind that hold coffee, SPAM, or even bullets, said this morning it is getting taken private by private equity firm Madison Dearborn Partners for $915 million, including the assumption of debt.
The deal values each BWY share at $20; hence, BWY stock is up $2.87, or 17%, at $20.22.
BWY is free to solicit competing offers for 30 days, the company said.
BWY is ” a world class packaging business with leading market
positions, outstanding customer relationships, and a proven and
exceptional management team,” said Thomas Souleles, managing director
of Madison Dearborn.

Industry group The World Gold
Council Monday estimated gold demand in China could double from current
levels over the next decade, on rising jewelry and investment demand.
Demand for gold in China reached 423 metric tons (466 short tons) last
year; domestic mine supply contributed only 314 metric tons (346 short
tons) during the same year. The shortfall creates a 'snowball' effect
as China's gold industry has to be rely on imports, the council said in
a report. "Today, gold is regarded as a sign of prosperity, an
ornament, a currency and an integral part of Chinese religion," the
council added. Chinese demand and the country's reliance on imports
"should support the gold price in the long term," analysts at
Commerzbank said. Gold futures for April delivery gained $3.20, or
0.3%, to $1,107.40 an ounce.

About 10.5% of the U.S. economy is exports. Compare that with Germany’s, which is about 47% exports.

Jim Rogers: "I like to buy what's cheapest. Silver is cheaper than gold, on a historical basis; natural gas is cheaper than oil."
"We see more and more speculation in oil and gold. And in these times, it's usually best to step back and let others speculate."
Rogers reiterated his take on the "two biggest bubbles in the world" right now — US Treasurys and Chinese real estate:
"There's no question that the United States government's long bond is a bubble."
"In particular, Hong Kong real estate is nuts," he added."

The Dow Jones Industrial Average added 45.5 points, or 0.4%, to 10,895.86. The S&P 500 Index rose 6.63 points, or 0.6%, to 1,173.22. The Nasdaq Composite Index climbed 9.23 points, or 0.4%, to 2,404.36.

Swap Spreads

3/28/10 Swap Spreads

ZeroHedge: "All of Bernanke's posturing about prudent monetary control is total
garbage as his entire policy is merely predicated by making sure that
banks have found enough "grater fools" to cushion the blow from curve
flattening."

Bonds had been under pressure earlier as massive amounts of
corporate issuance flipped 10-year swap spreads -- a metric of how
issuers adjust their interest-rate exposure -- from positive to
negative for the first time ever. The about-face was a result of rising
issuance of corporate and sovereign debt as investors clamor for better
yields.
"We view the inversion in 10-year swap spreads as a harbinger [of] the
massive supply of U.S. Treasury debt that will ultimately drive yields
higher," said James Caron, head of U.S. interest-rate strategy at
Morgan Stanley.


Rick the Bond Trader: "If
you are JPM, there is a way in which they can achieve lower borrowing
costs than the US government. According to JPM's latest balance sheet,
they issue about $97 billion of short term debt (including Libor loans
and commercial paper) which float at the Libor rate. If JPM entered into a swap agreement to pay the 10 year rate (at 9 bps lower than 10 year treasury rates)
and receive libor, then effectively JPM is borrowing cheaper than the
US. The big IF revolves around JPM's ability to continue to borrow at
the Libor rate which is prevalent in the market place. Assuming that
JPM continues to be a bank in good standing, and their short term
borrowing costs continue to mimic the LIBOR rate, then JPM will be able
to achieve a lower rate than the US government. And if you are an
investor who lends at the LIBOR rate, then you will achieve a return
lower than on US treasuries if you swap your floating rate for fixed.
The fact that the swap rate is a series of 3 month short term borrowing
rates also means that the basis for the swap rate could turn on a dime.
The markets allow investors in JPM Libor agreements to decide they no
longer like JPM as a borrower, and to move their money elsewhere in the
heat of a financial crisis."

On Tuesday, the 10-year US swap spread turned negative for the first time ever on record, according to Bloomberg data.
The wire put it down to rising demand for higher-yielding assets such as corporate and emerging market securities. As they explained it:
A negative swap spread means the Treasury yield is
>higher than the swap rate, which typically is greater given the
>floating payments are based on interest rates that contain credit risk,
>such as the London interbank offered rate, or Libor. The 30-year swap
>spread turned negative for the first time in August 2008, after the
>collapse of Lehman Brothers Holdings Inc. triggered a surge of hedging
>in swaps. The difference narrowed to negative 20.5 basis points today.
According to Barclays Capital, however, it’s a trend that’s unlikely to reverse any time soon.
The fiscal situation in the US, they argue, supports a 10-year swap
trading range of between -10 and -15 basis points at least for the
medium term.

Among its many effects, the new healthcare law eliminated a tax deduction that companies used to cut the cost of drug-benefit programs for retired workers. President Obama signed the healthcare overhaul into law this week, a big victory for Democrats.
Yet companies that still offer retiree drug benefits, mostly older industrial concerns or those with unionized employees, say the end of the deduction could force them to change their benefit plans. In other words, they might curtail or even cancel them.
"As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree healthcare benefits offered by the company," AT&T said Friday in a government filing.

The number of U.S. troops killed in Afghanistan has roughly doubled in the first three months of 2010 compared to the same period last year as Washington has added tens of thousands of additional soldiers to reverse the Taliban's momentum.
Those deaths have been accompanied by a dramatic spike in the number of wounded, with injuries more than tripling in the first two months of the year and trending in the same direction based on the latest available data for March.

John Mauldin: "Why is Greece important? Because so much of their debt is on the books of European banks. Hundreds of billions of dollars worth. And just a few years ago this seemed like a good thing. The rating agencies made Greek debt AAA, and banks could use massive leverage (almost 40 times in some European banks) and buy these bonds and make good money in the process. (Don't ask Dad why people still trust rating agencies. Some things just can't be explained.)

Except, now that Greek debt is risky. Today, it appears there will be some kind of bailout for Greece. But that is just a band-aid on a very serious wound. The crisis will not go away. It will come back, unless the Greeks willingly go into their own Great Depression by slashing their spending and raising taxes to a level that no one in the US could even contemplate. What is being demanded of them is really bad for them, but they did it to themselves.

But those European banks? When that debt goes bad, and it will, they will react to each other just like they did in 2008. Trust will evaporate. Will taxpayers shoulder the burden? Maybe, maybe not. It will be a huge crisis. There are other countries in Europe, like Spain and Portugal, that are almost as bad as Greece. Great Britain is not too far behind."


Zhejiang Geely Holding Co. reached a definitive agreement to buy Volvo Cars from Ford Motor Co. in the biggest overseas acquisition by a Chinese automaker.

Volvo spokesman Per-Aake Froeberg today said a deal was signed and that further details will be given later at a press conference. The companies previously said they planned to close the sale by June 30. Volvo will be sold for $1.8 billion, three people briefed on the negotiations said March 23.


Washington Mutual filed a Chapter 11 plan on Friday, sketching out how it plans to distribute more than $7 billion accumulated in the wake of the largest banking failure in U.S. history, that of its former subsidiary Washington Mutual Bank, or WaMu.

Greece's debt deal could help the struggling euro zone country avoid a "refinancing crisis," but Greece still needs to cut its budget deficit to resolve its long-term problems, economist Nouriel Roubini said Friday.

The latest Fox News poll finds that 79 percent of voters think it’s possible the economy could collapse, including large majorities of Democrats (72 percent), Republicans (84 percent) and independents (80 percent).