4/23/10 More Banks Shut
Greece said on Friday it was tapping an EU/IMF aid mechanism aimed at rescuing the euro zone member from a debt crisis.
Orders for durable goods fell 1.3% in March to a seasonally adjusted $176.7 billion after a 1.1% gain in February. Excluding transportation goods, however, new orders rose 2.8% to $136.5 billion in March, the fastest growth since the recession began in December 2007. Orders for core capital equipment goods - the kinds of equipment businesses invest in to maintain or expand their productive capacity - rose 4%, the largest increase since June.
China's foreign exchange regulator may reduce the amount of short-term foreign debt the nation's commercial banks can hold in the current year, as part of efforts to curb currency market speculation, according to a Reuter's report Friday which cited three sources familiar with the situation. The report said many economists believe short term debt is an indicator of fund flows betting on appreciation the yuan, and that by reducing the foreign debt quota, authorities are seeking to close a loop hole that enables hot money flows.
"The financial market rally may not be over. There is a chance of a melt-up before any meltdown. Riding an irrational price bubble is sometimes an optimal investment strategy for even rational investors As an unnamed banker told Charles MacKay, author of the 1841 book, “Extraordinary Delusions and the Madness of Crowd” (1841): “When the rest of the world is mad, we must imitate them in some measure.”
Governments may introduce provide further support if economic and financial setbacks occur. Further fiscal stimulus packages are likely to be unveiled. Credit Suisse’s Neil Soss summed up the monetary policy position succinctly: “Central banks … have maxed out the amount of ‘love’ they're willing/able to give. … They probably won't take away much, if any, of the "love" they're giving us now in terms of low short-term interest rates and large central bank balance sheets for quite some time, but the change in momentum from ‘more love’ to ‘no incremental love’ is palpable and bound to influence markets.”
The risk of policy errors is ever present. Inopportune withdrawal of support or policy mistakes has the potential to be destabilising. High levels of volatility are likely to persist.
Governments and central banks continue to inject liberal amounts of botox to cover up problems, at least, while supplies exist. In absence of any definite solutions, policymakers are deferring dealing with the problems, rolling them forward. This means that the unavoidable adjustment when it occurs will be more severe and more painful. The ability of policymakers to cushion the adjustment will be restricted by constrained balance sheets.
In the words of David Bowers of Absolute Strategy Research: “It’s the last game of pass the parcel. When the tech bubble burst, balance sheet problems were passed to the household sector [through mortgages]. This time they are being passed to the public sector [through governments’ assumption of banks’ debts]. There’s nobody left to pass it to in the future.”
The exact trigger to end the current period of optimism is unpredictable. While several areas of stress are apparent, as Keynes observed: “The inevitable never happens. It is the unexpected always.”
The summary of 2009 and the outlook for 2010 may be the logo on a black T-shirt worn by Lisbeth Salander, the heroine of Steig Larsson’s “Girl with the Dragon Tatoo”: “Armageddon was yesterday – Today we have a serious problem.”
Satyajit Das
Eric Fry: “Total US corporate profits rose 30.6% year-over-year in the fourth quarter, a huge swing from the -25.1% trend a year ago,” observes The Daily Reckoning’s favorite economist, David Rosenberg. “But almost the entire story is in the financial sector, where profits have soared 240%, which is unprecedented… Financial sector profits have accounted for 85% of the overall increase in corporate earnings. Total non-financial earnings are up a grand total of 5.2% year-over-year."
Economic Disconnect: "
I offer this:
IF
-If 10% of this working country can have no job, but be paid by the government to be calm
-If a record number of people need food assistance to stay calm
-If a never before seen number of people are losing their homes but remain calm due to various help programs or just free living to stay calm
-If the stock market, which is the EASIEST thing to goose, looks good many may remain calm
-If tax breaks which bite you in the butt can entice fools to buy cars and homes not only remain calm but get excited
THEN
-How many more can "remain calm" under the same process?
Right now this all works because, and let's stop playing nice, the world has to get down on their knees and "service" the United States due to this dollar reserve currency thing (too long to get into). Can the US be the engine for world growth if our central bank prints cash to pay all the "remain calm" types, buys our own debt and pretends its "temporary", runs deficits that makes no sense by any honest reckoning, and gets the biggest free ride of all time?
It will until it does not.
I have been so wrong on so many things. I admit that. It happens. I guess I figured people could think, but they just believe. Huge difference. Huge.
Now go buy Amazon (AMZN) on the dip and buy a GM car and then a house to park over the car. Might as well go all out, what could stop you? Above all, remain calm."
A 5.9 magnitude earthquake shook Chile Friday near the city heavily damaged in a devastating February quake, but there were no immediate reports of damage.
Residents in Bio-Bio region were woken up by the tremor that lasted 25 seconds, Radio Cooperativa reported.
A Senate panel investigating the causes of the nation's financial crisis on Thursday unveiled evidence that credit-ratings agencies knowingly gave inflated ratings to complex deals backed by shaky U.S. mortgages because of the fees they earned for giving such investment-grade ratings.
Greece expects to receive before May 19 the first tranche of funds under a 45 billion euro ($60.49 billion) EU/IMF aid package it has formally requested, Finance Minister George Papaconstantinou said on Friday.
Sales of newly built U.S. single-family homes rebounded strongly in March to touch their highest level in eight months as buyers rushed into the market to take advantage of a homebuyer tax credit, a government report showed on Friday.
The Commerce Department said sales surged 26.9 percent, the largest advance since April 1963, to a 411,000 unit annual rate, breaking a four-month slide. February new home sales were revised up to a 324,000-unit pace from 308,000 units previously.
Foreign governments advised citizens to avoid nonessential travel to Bangkok on Friday, expanding earlier travel warnings a day after explosions killed one person and injured dozens in the city’s main financial district.
Shops, offices and banks were closed amid growing anxiety that a political standoff between protesters and the government of Prime Minister Abhisit Vejjajiva had reached a more volatile and violent phase.
Many of the 87 people injured, including at least 4 foreigners, were bystanders who appeared to have no role in the rival political crowds that have taunted each other across a makeshift barricade in recent days.
The American Embassy advised its citizens to forgo “nonessential travel to Bangkok,” adding that the possibility of more attacks could not be ruled out. Similar warnings were issued by the Australian and British Embassies.
Nokia has slashed prices of its cellphones across its portfolio this week, with the deepest cuts of around 10 percent seen for some smartphone models, data seen by Reuters showed on Thursday.
Seven U.S. banks were closed by regulators Friday, bringing the total number of bank failures for the year to 57. The seven banks are all based in Illinois, and include Wheatland Bank, Peotone Bank and Trust Company, Lincoln Park Savings Bank, New Century Bank, Citizens Bank & Trust Company of Chicago, Amcore Bank and Broadway Bank. Broadway Bank is run by the family of U.S. Senate candidate Alexi Giannoulias. The seven bank failures combined will cost the federal deposit insurance fund $973.9 million, according to the Federal Deposit Insurance Corp.
The Dow Jones Industrial Average rose 69.99 points, or 0.6%, to 11,204.28. For the week, the Dow gained 1.7%, marking the 8th straight week of gains for the blue-chip average, its longest winning streak since the 8 weeks ended Jan. 16, 2004. The S&P 500 index gained 8.61 points, or 0.7%, to 1,217.28, while the Nasdaq Composite rose 11.08 points, or 0.4%, to 2,530.15. For the week, the Nasdaq rose 2%, also the 8th straight week of gains for the tech-heavy benchmark. The S&P 500 gained 2.1% for the week, after falling 0.2% last week.
Saturday, April 24, 2010
Thursday, April 22, 2010
Greece
4/22/10 Greece
The number of people filing an initial claim for unemployment benefits declined by 24,000 last week to a seasonally adjusted 456,000, the first drop in three weeks, the Labor Department reported Thursday. The number of people collecting regular state benefits dropped by 40,000 to a seasonally adjusted 4.65 million in the week of April 10. All told, in the week of April 3, 10.54 million people were collecting some type of unemployment benefits, down 538,000 from the previous week's 11.08 million.
Higher prices for vegetables helped drive U.S. wholesale prices higher by a seasonally adjusted 0.7% in March, reversing a drop in February, the Labor Department estimated Thursday. The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices, the government agency said. Excluding often-volatile food and energy prices, the core PPI increased 0.1% in March and is up 0.9% compared with a year earlier. The big story in the March PPI was wholesale food prices, which rose 2.4%, matching the biggest gain in 26 years. Prices of fresh and dried vegetables soared 49.3%, the most in 16 years.
Rural phone company CenturyTel Inc said it will buy Qwest Communications International Inc for about $10.6 billion in stock.
The deal combines two of the largest landline telephone companies in the United States. Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own.
The European Union said Greece’s budget deficit last year was worse than previously forecast and may top 14 percent of gross domestic product, fueling investor concern about a default and sending its bond yields soaring.
The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two-week-old forecast of 12.9 percent and the EU’s November prediction of 12.7 percent. “Uncertainties” about the quality of the Greek data may lead to a further revision of as much of 0.5 percentage point, Luxembourg-based Eurostat said.
Barry Ritholtz: "It doesn’t matter until it does. Now it does in terms of the market reaction to what’s going on in Greece. Greek yields are blowing out again with the 10 yr yield up 46 bps to 8.53% and their curve has gone firmly inverted as the 2 yr yield is up 140 bps to 9.2%. 5 yr CDS is skyrocketing by 71 bps to 559 and 1 yr CDS is higher by 105 bps to 745 bps. Italy, Portugal, Spain and Ireland are all feeling the heat as bond yields are all higher and CDS is wider. These countries have a combined $4.8T of GDP, 35% of Euro zone GDP and European banks have sizeable exposure and large sovereign bond holdings as part of their capital. The EU said Greece’s deficit to GDP in ‘09 was 13.6% vs their previous forecast of 12.7%. Greece seems to be headed to a debt restructuring where haircuts are going to have to be taken as it seems the only way out for them as it’s impossible for their economy to grow out of their debt obligations. The Euro zone cannot guarantee Greek debt as who would buy a German bund yielding 3.05."
In today's (April 21) NYT, David Leonhardt writes that rent ratios - the market price of a house divided by the annual rent of a comparable house - are suggesting that in many regions of the country, the purchase of a house makes more economic sense than renting a comparable house (In Sour Home Market, Buying Often Beats Renting). According to Leonhardt, when the rent ratio is above 20, renting makes more economic sense. When the rent ratio is below 20, a home purchase makes more economic sense. "In many large metropolitan areas, including New York, Los Angeles, Chicago, Houston, Dallas, Atlanta and South Florida, the average ratio is now 16 or lower. It was more than 25 in several of these places at the peak of the bubble, about five years ago."
The National Association of Realtors calculates a Housing Affordability Index (HAI). This index is a function of the level of mortgage rates and the ratio of house prices to household income. The lower the level of mortgage rates and the lower the house price-income ratio, the more affordable is a home purchase (i.e., the higher is the value of the HAI). The HAI index =100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter market. Chart 1 shows the history of the HAI from January 1971 through February 2010. The highest reading for the HAI was 184 in January 2009. The February 2010 reading was 176. The HAI is sending a signal similar to the Leonhardt's rent ratio - owner-occupied housing is a buy.
The Energy Department on Thursday is expected to report an increase of 76 billion to 80 billion cubic feet of natural gas storage inventories for the week ended April 16, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
George Ure: "
The so-called “shrinking” money supply that arises when adjusting for the loss of purchasing power from inflation is a characteristic portending imminent hyperinflation. Let’s call it a ‘Havenstein moment’, named after the ill-fated president of the Reichsbank who presided over the destructive hyperinflation that devastated Weimar Germany.
I first explained this phenomenon in September 2007 and questioned then whether the dollar would eventually hyperinflate because Ben Bernanke would follow the footsteps of Herr Havenstein. I quoted an insightful section from Murray Rothbard’s excellent book, The Mystery of Banking, that explicitly explains the consequences of the inflation-adjusted money supply. Here is the relevant part of that quote:
“When prices are going up faster than the money supply, the people begin to experience a severe shortage of money, for they now face a shortage of cash balances relative to the much higher price levels. Total cash balances are no longer sufficient to carry transactions at the higher price.”
As the Globe & Mail observes, these circumstances prevail today. Prices of goods and services are rising, but as it warns, the quantity of dollars in circulation is “shrinking, after taking into account inflation.” This “shortage of money” is being widely misinterpreted as deflation, which is exactly what happened in Weimar Germany shortly before the Reichsmark was swooped up in its hyperinflationary whirlwind.
Rothbard provides his usual brilliant insight to explain what happens once the “Havenstein moment’ is reached. There are two alternatives.
“If the government tightens its own belt and stops printing (or otherwise creating) new money, then inflationary expectations will eventually be reversed, and prices will fall once more – thus relieving the money shortage by lowering prices. But if government follows its own inherent inclination to counterfeit and appeases the clamor by printing more money so as to allow the public’s cash balances to ‘catch up’ to prices, then the country is off to the races. Money and prices will follow each other upward in an ever-accelerating spiral, until finally prices ‘run away’…[i.e., hyperinflate]”
Weimar Germany took the second alternative.
The dollar has now reached its ‘Havenstein moment’. Will policymakers follow the prudent advice of Murray Rothbard and ‘tighten its belt’? Or like Herr Havenstein, will Mr. Bernanke continue to ‘print’?
No need to ponder these two alternatives. The Federal Reserve must ‘print’, for one reason. Despite the noble goals assigned to it in textbooks and offered in Congressional hearings, the Federal Reserve exists for only one reason – to make sure the federal government gets all the dollars it wants to spend, which consequently has put the dollar on a hyperinflationary course."
Current economic policies are not sustainable and the world faces doom because "the governments are taking over", said Marc Faber, editor & publisher of The Gloom, Boom & Doom Report. "They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down."
The WSJ reports that the American Institute of Architects’ Architecture Billings Index increased to 46.1 in March from 44.8 in February. Any reading below 50 indicates contraction.
Reggie Middleton: "Greece is ever closer to default (a default that is damn near guaranteed) while Ireland is probably in worse shape!!! Financial contagion begets economic contagion which breeds more financial contagion."
Working gas in storage was 1,829 Bcf as of Friday, April 16, 2010, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 95 Bcf higher than last year at this time and 286 Bcf above the 5-year average of 1,543 Bcf. In the East Region, stocks were 146 Bcf above the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 72 Bcf above the 5-year average of 624 Bcf after a net injection of 31 Bcf. Stocks in the West. Region were 68 Bcf above the 5-year average after a net addition of 8 Bcf. At 1,829 Bcf, total working gas is
Existing Home Sales in March Rose 6.8% to 5.35M Rate, Inventories at 8.0 Months Supply.
An oil pipeline, which carries a quarter of Iraq’s total crude exports to Turkey, was damaged in a bomb attack in Iraq’s northern province of Nineveh, Reuters reported April 22. According to Iraqi North Oil Company officials, the oil flow will resume in three days and currently 650,000 barrels are stored in Ceyhan port in Turkey’s Mediterranean coast, where it could be pumped to tankers and sent to Europe.
The Nasdaq Composite Index which had been down 36 points, was up 14 points to 2,519. And the Standard & Poor's 500 Index was up 3 points to 1,209. The index had been down as many as 16 points. The Dow Jones industrials, down as many as 108 points right after the open, closed up 9 points at 11,134. The major averages all fell to their 20-day moving averages today and immediately bounced higher.
11.6% of Greece's GDP goes to pension coverage. Moody's downgrades their debt.
Microsoft shares were down 2.9% to $30.50 from a regular close of $31.39. The company said it earned 45 cents a share in earnings, up from 39 cents a year ago. Revenue of $14.5 billion was up 6.2% from a year ago and slightly ahead of the Street estimate of $14.47 billion. Microsoft said the results included a $305 million revenue deferral related to a promotional program for its Office suite of applications.
Amazon.com shares were down 4.3% to $144 from a regular close of $150.49. The online retailer reported 66 cents a share in earnings per share, up from 41 cents a share a year ago and ahead of the consensus estimate of 60 cents. Revenue was up 46% to $7.13 billion and ahead of the consensus view of $6.85 billion.
American Express shares rose 1.8% after hours to $47.60 from a regular close of $46.77. The company earned $895 million, or 73 cents a share, up 103% from a year ago. Revenue of $6.6 billion was up 11% from a year ago. Earnings beat the Street estimate of 64 cents. Revenue was ahead of the Street estimate of $6.35 billion.
UAL Corp.’s United Airlines and Continental Airlines Inc. are considering a stock-for-stock merger with no market premium, said two people with knowledge of the talks, creating a company valued at more than $6 billion.
4/22/10 Greece
The number of people filing an initial claim for unemployment benefits declined by 24,000 last week to a seasonally adjusted 456,000, the first drop in three weeks, the Labor Department reported Thursday. The number of people collecting regular state benefits dropped by 40,000 to a seasonally adjusted 4.65 million in the week of April 10. All told, in the week of April 3, 10.54 million people were collecting some type of unemployment benefits, down 538,000 from the previous week's 11.08 million.
Higher prices for vegetables helped drive U.S. wholesale prices higher by a seasonally adjusted 0.7% in March, reversing a drop in February, the Labor Department estimated Thursday. The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices, the government agency said. Excluding often-volatile food and energy prices, the core PPI increased 0.1% in March and is up 0.9% compared with a year earlier. The big story in the March PPI was wholesale food prices, which rose 2.4%, matching the biggest gain in 26 years. Prices of fresh and dried vegetables soared 49.3%, the most in 16 years.
Rural phone company CenturyTel Inc said it will buy Qwest Communications International Inc for about $10.6 billion in stock.
The deal combines two of the largest landline telephone companies in the United States. Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own.
The European Union said Greece’s budget deficit last year was worse than previously forecast and may top 14 percent of gross domestic product, fueling investor concern about a default and sending its bond yields soaring.
The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two-week-old forecast of 12.9 percent and the EU’s November prediction of 12.7 percent. “Uncertainties” about the quality of the Greek data may lead to a further revision of as much of 0.5 percentage point, Luxembourg-based Eurostat said.
Barry Ritholtz: "It doesn’t matter until it does. Now it does in terms of the market reaction to what’s going on in Greece. Greek yields are blowing out again with the 10 yr yield up 46 bps to 8.53% and their curve has gone firmly inverted as the 2 yr yield is up 140 bps to 9.2%. 5 yr CDS is skyrocketing by 71 bps to 559 and 1 yr CDS is higher by 105 bps to 745 bps. Italy, Portugal, Spain and Ireland are all feeling the heat as bond yields are all higher and CDS is wider. These countries have a combined $4.8T of GDP, 35% of Euro zone GDP and European banks have sizeable exposure and large sovereign bond holdings as part of their capital. The EU said Greece’s deficit to GDP in ‘09 was 13.6% vs their previous forecast of 12.7%. Greece seems to be headed to a debt restructuring where haircuts are going to have to be taken as it seems the only way out for them as it’s impossible for their economy to grow out of their debt obligations. The Euro zone cannot guarantee Greek debt as who would buy a German bund yielding 3.05."
In today's (April 21) NYT, David Leonhardt writes that rent ratios - the market price of a house divided by the annual rent of a comparable house - are suggesting that in many regions of the country, the purchase of a house makes more economic sense than renting a comparable house (In Sour Home Market, Buying Often Beats Renting). According to Leonhardt, when the rent ratio is above 20, renting makes more economic sense. When the rent ratio is below 20, a home purchase makes more economic sense. "In many large metropolitan areas, including New York, Los Angeles, Chicago, Houston, Dallas, Atlanta and South Florida, the average ratio is now 16 or lower. It was more than 25 in several of these places at the peak of the bubble, about five years ago."
The National Association of Realtors calculates a Housing Affordability Index (HAI). This index is a function of the level of mortgage rates and the ratio of house prices to household income. The lower the level of mortgage rates and the lower the house price-income ratio, the more affordable is a home purchase (i.e., the higher is the value of the HAI). The HAI index =100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter market. Chart 1 shows the history of the HAI from January 1971 through February 2010. The highest reading for the HAI was 184 in January 2009. The February 2010 reading was 176. The HAI is sending a signal similar to the Leonhardt's rent ratio - owner-occupied housing is a buy.
The Energy Department on Thursday is expected to report an increase of 76 billion to 80 billion cubic feet of natural gas storage inventories for the week ended April 16, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
George Ure: "
The so-called “shrinking” money supply that arises when adjusting for the loss of purchasing power from inflation is a characteristic portending imminent hyperinflation. Let’s call it a ‘Havenstein moment’, named after the ill-fated president of the Reichsbank who presided over the destructive hyperinflation that devastated Weimar Germany.
I first explained this phenomenon in September 2007 and questioned then whether the dollar would eventually hyperinflate because Ben Bernanke would follow the footsteps of Herr Havenstein. I quoted an insightful section from Murray Rothbard’s excellent book, The Mystery of Banking, that explicitly explains the consequences of the inflation-adjusted money supply. Here is the relevant part of that quote:
“When prices are going up faster than the money supply, the people begin to experience a severe shortage of money, for they now face a shortage of cash balances relative to the much higher price levels. Total cash balances are no longer sufficient to carry transactions at the higher price.”
As the Globe & Mail observes, these circumstances prevail today. Prices of goods and services are rising, but as it warns, the quantity of dollars in circulation is “shrinking, after taking into account inflation.” This “shortage of money” is being widely misinterpreted as deflation, which is exactly what happened in Weimar Germany shortly before the Reichsmark was swooped up in its hyperinflationary whirlwind.
Rothbard provides his usual brilliant insight to explain what happens once the “Havenstein moment’ is reached. There are two alternatives.
“If the government tightens its own belt and stops printing (or otherwise creating) new money, then inflationary expectations will eventually be reversed, and prices will fall once more – thus relieving the money shortage by lowering prices. But if government follows its own inherent inclination to counterfeit and appeases the clamor by printing more money so as to allow the public’s cash balances to ‘catch up’ to prices, then the country is off to the races. Money and prices will follow each other upward in an ever-accelerating spiral, until finally prices ‘run away’…[i.e., hyperinflate]”
Weimar Germany took the second alternative.
The dollar has now reached its ‘Havenstein moment’. Will policymakers follow the prudent advice of Murray Rothbard and ‘tighten its belt’? Or like Herr Havenstein, will Mr. Bernanke continue to ‘print’?
No need to ponder these two alternatives. The Federal Reserve must ‘print’, for one reason. Despite the noble goals assigned to it in textbooks and offered in Congressional hearings, the Federal Reserve exists for only one reason – to make sure the federal government gets all the dollars it wants to spend, which consequently has put the dollar on a hyperinflationary course."
Current economic policies are not sustainable and the world faces doom because "the governments are taking over", said Marc Faber, editor & publisher of The Gloom, Boom & Doom Report. "They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down."
The WSJ reports that the American Institute of Architects’ Architecture Billings Index increased to 46.1 in March from 44.8 in February. Any reading below 50 indicates contraction.
Reggie Middleton: "Greece is ever closer to default (a default that is damn near guaranteed) while Ireland is probably in worse shape!!! Financial contagion begets economic contagion which breeds more financial contagion."
Working gas in storage was 1,829 Bcf as of Friday, April 16, 2010, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 95 Bcf higher than last year at this time and 286 Bcf above the 5-year average of 1,543 Bcf. In the East Region, stocks were 146 Bcf above the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 72 Bcf above the 5-year average of 624 Bcf after a net injection of 31 Bcf. Stocks in the West. Region were 68 Bcf above the 5-year average after a net addition of 8 Bcf. At 1,829 Bcf, total working gas is
Existing Home Sales in March Rose 6.8% to 5.35M Rate, Inventories at 8.0 Months Supply.
An oil pipeline, which carries a quarter of Iraq’s total crude exports to Turkey, was damaged in a bomb attack in Iraq’s northern province of Nineveh, Reuters reported April 22. According to Iraqi North Oil Company officials, the oil flow will resume in three days and currently 650,000 barrels are stored in Ceyhan port in Turkey’s Mediterranean coast, where it could be pumped to tankers and sent to Europe.
The Nasdaq Composite Index which had been down 36 points, was up 14 points to 2,519. And the Standard & Poor's 500 Index was up 3 points to 1,209. The index had been down as many as 16 points. The Dow Jones industrials, down as many as 108 points right after the open, closed up 9 points at 11,134. The major averages all fell to their 20-day moving averages today and immediately bounced higher.
11.6% of Greece's GDP goes to pension coverage. Moody's downgrades their debt.
Microsoft shares were down 2.9% to $30.50 from a regular close of $31.39. The company said it earned 45 cents a share in earnings, up from 39 cents a year ago. Revenue of $14.5 billion was up 6.2% from a year ago and slightly ahead of the Street estimate of $14.47 billion. Microsoft said the results included a $305 million revenue deferral related to a promotional program for its Office suite of applications.
Amazon.com shares were down 4.3% to $144 from a regular close of $150.49. The online retailer reported 66 cents a share in earnings per share, up from 41 cents a share a year ago and ahead of the consensus estimate of 60 cents. Revenue was up 46% to $7.13 billion and ahead of the consensus view of $6.85 billion.
American Express shares rose 1.8% after hours to $47.60 from a regular close of $46.77. The company earned $895 million, or 73 cents a share, up 103% from a year ago. Revenue of $6.6 billion was up 11% from a year ago. Earnings beat the Street estimate of 64 cents. Revenue was ahead of the Street estimate of $6.35 billion.
UAL Corp.’s United Airlines and Continental Airlines Inc. are considering a stock-for-stock merger with no market premium, said two people with knowledge of the talks, creating a company valued at more than $6 billion.
The number of people filing an initial claim for unemployment benefits declined by 24,000 last week to a seasonally adjusted 456,000, the first drop in three weeks, the Labor Department reported Thursday. The number of people collecting regular state benefits dropped by 40,000 to a seasonally adjusted 4.65 million in the week of April 10. All told, in the week of April 3, 10.54 million people were collecting some type of unemployment benefits, down 538,000 from the previous week's 11.08 million.
Higher prices for vegetables helped drive U.S. wholesale prices higher by a seasonally adjusted 0.7% in March, reversing a drop in February, the Labor Department estimated Thursday. The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices, the government agency said. Excluding often-volatile food and energy prices, the core PPI increased 0.1% in March and is up 0.9% compared with a year earlier. The big story in the March PPI was wholesale food prices, which rose 2.4%, matching the biggest gain in 26 years. Prices of fresh and dried vegetables soared 49.3%, the most in 16 years.
Rural phone company CenturyTel Inc said it will buy Qwest Communications International Inc for about $10.6 billion in stock.
The deal combines two of the largest landline telephone companies in the United States. Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own.
The European Union said Greece’s budget deficit last year was worse than previously forecast and may top 14 percent of gross domestic product, fueling investor concern about a default and sending its bond yields soaring.
The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two-week-old forecast of 12.9 percent and the EU’s November prediction of 12.7 percent. “Uncertainties” about the quality of the Greek data may lead to a further revision of as much of 0.5 percentage point, Luxembourg-based Eurostat said.
Barry Ritholtz: "It doesn’t matter until it does. Now it does in terms of the market reaction to what’s going on in Greece. Greek yields are blowing out again with the 10 yr yield up 46 bps to 8.53% and their curve has gone firmly inverted as the 2 yr yield is up 140 bps to 9.2%. 5 yr CDS is skyrocketing by 71 bps to 559 and 1 yr CDS is higher by 105 bps to 745 bps. Italy, Portugal, Spain and Ireland are all feeling the heat as bond yields are all higher and CDS is wider. These countries have a combined $4.8T of GDP, 35% of Euro zone GDP and European banks have sizeable exposure and large sovereign bond holdings as part of their capital. The EU said Greece’s deficit to GDP in ‘09 was 13.6% vs their previous forecast of 12.7%. Greece seems to be headed to a debt restructuring where haircuts are going to have to be taken as it seems the only way out for them as it’s impossible for their economy to grow out of their debt obligations. The Euro zone cannot guarantee Greek debt as who would buy a German bund yielding 3.05."
In today's (April 21) NYT, David Leonhardt writes that rent ratios - the market price of a house divided by the annual rent of a comparable house - are suggesting that in many regions of the country, the purchase of a house makes more economic sense than renting a comparable house (In Sour Home Market, Buying Often Beats Renting). According to Leonhardt, when the rent ratio is above 20, renting makes more economic sense. When the rent ratio is below 20, a home purchase makes more economic sense. "In many large metropolitan areas, including New York, Los Angeles, Chicago, Houston, Dallas, Atlanta and South Florida, the average ratio is now 16 or lower. It was more than 25 in several of these places at the peak of the bubble, about five years ago."
The National Association of Realtors calculates a Housing Affordability Index (HAI). This index is a function of the level of mortgage rates and the ratio of house prices to household income. The lower the level of mortgage rates and the lower the house price-income ratio, the more affordable is a home purchase (i.e., the higher is the value of the HAI). The HAI index =100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter market. Chart 1 shows the history of the HAI from January 1971 through February 2010. The highest reading for the HAI was 184 in January 2009. The February 2010 reading was 176. The HAI is sending a signal similar to the Leonhardt's rent ratio - owner-occupied housing is a buy.
The Energy Department on Thursday is expected to report an increase of 76 billion to 80 billion cubic feet of natural gas storage inventories for the week ended April 16, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
George Ure: "
The so-called “shrinking” money supply that arises when adjusting for the loss of purchasing power from inflation is a characteristic portending imminent hyperinflation. Let’s call it a ‘Havenstein moment’, named after the ill-fated president of the Reichsbank who presided over the destructive hyperinflation that devastated Weimar Germany.
I first explained this phenomenon in September 2007 and questioned then whether the dollar would eventually hyperinflate because Ben Bernanke would follow the footsteps of Herr Havenstein. I quoted an insightful section from Murray Rothbard’s excellent book, The Mystery of Banking, that explicitly explains the consequences of the inflation-adjusted money supply. Here is the relevant part of that quote:
“When prices are going up faster than the money supply, the people begin to experience a severe shortage of money, for they now face a shortage of cash balances relative to the much higher price levels. Total cash balances are no longer sufficient to carry transactions at the higher price.”
As the Globe & Mail observes, these circumstances prevail today. Prices of goods and services are rising, but as it warns, the quantity of dollars in circulation is “shrinking, after taking into account inflation.” This “shortage of money” is being widely misinterpreted as deflation, which is exactly what happened in Weimar Germany shortly before the Reichsmark was swooped up in its hyperinflationary whirlwind.
Rothbard provides his usual brilliant insight to explain what happens once the “Havenstein moment’ is reached. There are two alternatives.
“If the government tightens its own belt and stops printing (or otherwise creating) new money, then inflationary expectations will eventually be reversed, and prices will fall once more – thus relieving the money shortage by lowering prices. But if government follows its own inherent inclination to counterfeit and appeases the clamor by printing more money so as to allow the public’s cash balances to ‘catch up’ to prices, then the country is off to the races. Money and prices will follow each other upward in an ever-accelerating spiral, until finally prices ‘run away’…[i.e., hyperinflate]”
Weimar Germany took the second alternative.
The dollar has now reached its ‘Havenstein moment’. Will policymakers follow the prudent advice of Murray Rothbard and ‘tighten its belt’? Or like Herr Havenstein, will Mr. Bernanke continue to ‘print’?
No need to ponder these two alternatives. The Federal Reserve must ‘print’, for one reason. Despite the noble goals assigned to it in textbooks and offered in Congressional hearings, the Federal Reserve exists for only one reason – to make sure the federal government gets all the dollars it wants to spend, which consequently has put the dollar on a hyperinflationary course."
Current economic policies are not sustainable and the world faces doom because "the governments are taking over", said Marc Faber, editor & publisher of The Gloom, Boom & Doom Report. "They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down."
The WSJ reports that the American Institute of Architects’ Architecture Billings Index increased to 46.1 in March from 44.8 in February. Any reading below 50 indicates contraction.
Reggie Middleton: "Greece is ever closer to default (a default that is damn near guaranteed) while Ireland is probably in worse shape!!! Financial contagion begets economic contagion which breeds more financial contagion."
Working gas in storage was 1,829 Bcf as of Friday, April 16, 2010, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 95 Bcf higher than last year at this time and 286 Bcf above the 5-year average of 1,543 Bcf. In the East Region, stocks were 146 Bcf above the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 72 Bcf above the 5-year average of 624 Bcf after a net injection of 31 Bcf. Stocks in the West. Region were 68 Bcf above the 5-year average after a net addition of 8 Bcf. At 1,829 Bcf, total working gas is
Existing Home Sales in March Rose 6.8% to 5.35M Rate, Inventories at 8.0 Months Supply.
An oil pipeline, which carries a quarter of Iraq’s total crude exports to Turkey, was damaged in a bomb attack in Iraq’s northern province of Nineveh, Reuters reported April 22. According to Iraqi North Oil Company officials, the oil flow will resume in three days and currently 650,000 barrels are stored in Ceyhan port in Turkey’s Mediterranean coast, where it could be pumped to tankers and sent to Europe.
The Nasdaq Composite Index which had been down 36 points, was up 14 points to 2,519. And the Standard & Poor's 500 Index was up 3 points to 1,209. The index had been down as many as 16 points. The Dow Jones industrials, down as many as 108 points right after the open, closed up 9 points at 11,134. The major averages all fell to their 20-day moving averages today and immediately bounced higher.
11.6% of Greece's GDP goes to pension coverage. Moody's downgrades their debt.
Microsoft shares were down 2.9% to $30.50 from a regular close of $31.39. The company said it earned 45 cents a share in earnings, up from 39 cents a year ago. Revenue of $14.5 billion was up 6.2% from a year ago and slightly ahead of the Street estimate of $14.47 billion. Microsoft said the results included a $305 million revenue deferral related to a promotional program for its Office suite of applications.
Amazon.com shares were down 4.3% to $144 from a regular close of $150.49. The online retailer reported 66 cents a share in earnings per share, up from 41 cents a share a year ago and ahead of the consensus estimate of 60 cents. Revenue was up 46% to $7.13 billion and ahead of the consensus view of $6.85 billion.
American Express shares rose 1.8% after hours to $47.60 from a regular close of $46.77. The company earned $895 million, or 73 cents a share, up 103% from a year ago. Revenue of $6.6 billion was up 11% from a year ago. Earnings beat the Street estimate of 64 cents. Revenue was ahead of the Street estimate of $6.35 billion.
UAL Corp.’s United Airlines and Continental Airlines Inc. are considering a stock-for-stock merger with no market premium, said two people with knowledge of the talks, creating a company valued at more than $6 billion.
4/22/10 Greece
The number of people filing an initial claim for unemployment benefits declined by 24,000 last week to a seasonally adjusted 456,000, the first drop in three weeks, the Labor Department reported Thursday. The number of people collecting regular state benefits dropped by 40,000 to a seasonally adjusted 4.65 million in the week of April 10. All told, in the week of April 3, 10.54 million people were collecting some type of unemployment benefits, down 538,000 from the previous week's 11.08 million.
Higher prices for vegetables helped drive U.S. wholesale prices higher by a seasonally adjusted 0.7% in March, reversing a drop in February, the Labor Department estimated Thursday. The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices, the government agency said. Excluding often-volatile food and energy prices, the core PPI increased 0.1% in March and is up 0.9% compared with a year earlier. The big story in the March PPI was wholesale food prices, which rose 2.4%, matching the biggest gain in 26 years. Prices of fresh and dried vegetables soared 49.3%, the most in 16 years.
Rural phone company CenturyTel Inc said it will buy Qwest Communications International Inc for about $10.6 billion in stock.
The deal combines two of the largest landline telephone companies in the United States. Qwest shareholders will receive 0.1664 CenturyTel shares for each share of Qwest common stock they own.
The European Union said Greece’s budget deficit last year was worse than previously forecast and may top 14 percent of gross domestic product, fueling investor concern about a default and sending its bond yields soaring.
The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two-week-old forecast of 12.9 percent and the EU’s November prediction of 12.7 percent. “Uncertainties” about the quality of the Greek data may lead to a further revision of as much of 0.5 percentage point, Luxembourg-based Eurostat said.
Barry Ritholtz: "It doesn’t matter until it does. Now it does in terms of the market reaction to what’s going on in Greece. Greek yields are blowing out again with the 10 yr yield up 46 bps to 8.53% and their curve has gone firmly inverted as the 2 yr yield is up 140 bps to 9.2%. 5 yr CDS is skyrocketing by 71 bps to 559 and 1 yr CDS is higher by 105 bps to 745 bps. Italy, Portugal, Spain and Ireland are all feeling the heat as bond yields are all higher and CDS is wider. These countries have a combined $4.8T of GDP, 35% of Euro zone GDP and European banks have sizeable exposure and large sovereign bond holdings as part of their capital. The EU said Greece’s deficit to GDP in ‘09 was 13.6% vs their previous forecast of 12.7%. Greece seems to be headed to a debt restructuring where haircuts are going to have to be taken as it seems the only way out for them as it’s impossible for their economy to grow out of their debt obligations. The Euro zone cannot guarantee Greek debt as who would buy a German bund yielding 3.05."
In today's (April 21) NYT, David Leonhardt writes that rent ratios - the market price of a house divided by the annual rent of a comparable house - are suggesting that in many regions of the country, the purchase of a house makes more economic sense than renting a comparable house (In Sour Home Market, Buying Often Beats Renting). According to Leonhardt, when the rent ratio is above 20, renting makes more economic sense. When the rent ratio is below 20, a home purchase makes more economic sense. "In many large metropolitan areas, including New York, Los Angeles, Chicago, Houston, Dallas, Atlanta and South Florida, the average ratio is now 16 or lower. It was more than 25 in several of these places at the peak of the bubble, about five years ago."
The National Association of Realtors calculates a Housing Affordability Index (HAI). This index is a function of the level of mortgage rates and the ratio of house prices to household income. The lower the level of mortgage rates and the lower the house price-income ratio, the more affordable is a home purchase (i.e., the higher is the value of the HAI). The HAI index =100 when median family income qualifies for an 80% mortgage on a median priced existing single-family home. A rising index indicates more buyers can afford to enter market. Chart 1 shows the history of the HAI from January 1971 through February 2010. The highest reading for the HAI was 184 in January 2009. The February 2010 reading was 176. The HAI is sending a signal similar to the Leonhardt's rent ratio - owner-occupied housing is a buy.
The Energy Department on Thursday is expected to report an increase of 76 billion to 80 billion cubic feet of natural gas storage inventories for the week ended April 16, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
George Ure: "
The so-called “shrinking” money supply that arises when adjusting for the loss of purchasing power from inflation is a characteristic portending imminent hyperinflation. Let’s call it a ‘Havenstein moment’, named after the ill-fated president of the Reichsbank who presided over the destructive hyperinflation that devastated Weimar Germany.
I first explained this phenomenon in September 2007 and questioned then whether the dollar would eventually hyperinflate because Ben Bernanke would follow the footsteps of Herr Havenstein. I quoted an insightful section from Murray Rothbard’s excellent book, The Mystery of Banking, that explicitly explains the consequences of the inflation-adjusted money supply. Here is the relevant part of that quote:
“When prices are going up faster than the money supply, the people begin to experience a severe shortage of money, for they now face a shortage of cash balances relative to the much higher price levels. Total cash balances are no longer sufficient to carry transactions at the higher price.”
As the Globe & Mail observes, these circumstances prevail today. Prices of goods and services are rising, but as it warns, the quantity of dollars in circulation is “shrinking, after taking into account inflation.” This “shortage of money” is being widely misinterpreted as deflation, which is exactly what happened in Weimar Germany shortly before the Reichsmark was swooped up in its hyperinflationary whirlwind.
Rothbard provides his usual brilliant insight to explain what happens once the “Havenstein moment’ is reached. There are two alternatives.
“If the government tightens its own belt and stops printing (or otherwise creating) new money, then inflationary expectations will eventually be reversed, and prices will fall once more – thus relieving the money shortage by lowering prices. But if government follows its own inherent inclination to counterfeit and appeases the clamor by printing more money so as to allow the public’s cash balances to ‘catch up’ to prices, then the country is off to the races. Money and prices will follow each other upward in an ever-accelerating spiral, until finally prices ‘run away’…[i.e., hyperinflate]”
Weimar Germany took the second alternative.
The dollar has now reached its ‘Havenstein moment’. Will policymakers follow the prudent advice of Murray Rothbard and ‘tighten its belt’? Or like Herr Havenstein, will Mr. Bernanke continue to ‘print’?
No need to ponder these two alternatives. The Federal Reserve must ‘print’, for one reason. Despite the noble goals assigned to it in textbooks and offered in Congressional hearings, the Federal Reserve exists for only one reason – to make sure the federal government gets all the dollars it wants to spend, which consequently has put the dollar on a hyperinflationary course."
Current economic policies are not sustainable and the world faces doom because "the governments are taking over", said Marc Faber, editor & publisher of The Gloom, Boom & Doom Report. "They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down."
The WSJ reports that the American Institute of Architects’ Architecture Billings Index increased to 46.1 in March from 44.8 in February. Any reading below 50 indicates contraction.
Reggie Middleton: "Greece is ever closer to default (a default that is damn near guaranteed) while Ireland is probably in worse shape!!! Financial contagion begets economic contagion which breeds more financial contagion."
Working gas in storage was 1,829 Bcf as of Friday, April 16, 2010, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 95 Bcf higher than last year at this time and 286 Bcf above the 5-year average of 1,543 Bcf. In the East Region, stocks were 146 Bcf above the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 72 Bcf above the 5-year average of 624 Bcf after a net injection of 31 Bcf. Stocks in the West. Region were 68 Bcf above the 5-year average after a net addition of 8 Bcf. At 1,829 Bcf, total working gas is
Existing Home Sales in March Rose 6.8% to 5.35M Rate, Inventories at 8.0 Months Supply.
An oil pipeline, which carries a quarter of Iraq’s total crude exports to Turkey, was damaged in a bomb attack in Iraq’s northern province of Nineveh, Reuters reported April 22. According to Iraqi North Oil Company officials, the oil flow will resume in three days and currently 650,000 barrels are stored in Ceyhan port in Turkey’s Mediterranean coast, where it could be pumped to tankers and sent to Europe.
The Nasdaq Composite Index which had been down 36 points, was up 14 points to 2,519. And the Standard & Poor's 500 Index was up 3 points to 1,209. The index had been down as many as 16 points. The Dow Jones industrials, down as many as 108 points right after the open, closed up 9 points at 11,134. The major averages all fell to their 20-day moving averages today and immediately bounced higher.
11.6% of Greece's GDP goes to pension coverage. Moody's downgrades their debt.
Microsoft shares were down 2.9% to $30.50 from a regular close of $31.39. The company said it earned 45 cents a share in earnings, up from 39 cents a year ago. Revenue of $14.5 billion was up 6.2% from a year ago and slightly ahead of the Street estimate of $14.47 billion. Microsoft said the results included a $305 million revenue deferral related to a promotional program for its Office suite of applications.
Amazon.com shares were down 4.3% to $144 from a regular close of $150.49. The online retailer reported 66 cents a share in earnings per share, up from 41 cents a share a year ago and ahead of the consensus estimate of 60 cents. Revenue was up 46% to $7.13 billion and ahead of the consensus view of $6.85 billion.
American Express shares rose 1.8% after hours to $47.60 from a regular close of $46.77. The company earned $895 million, or 73 cents a share, up 103% from a year ago. Revenue of $6.6 billion was up 11% from a year ago. Earnings beat the Street estimate of 64 cents. Revenue was ahead of the Street estimate of $6.35 billion.
UAL Corp.’s United Airlines and Continental Airlines Inc. are considering a stock-for-stock merger with no market premium, said two people with knowledge of the talks, creating a company valued at more than $6 billion.
Wednesday, April 21, 2010
Earnings
4/21/10 Earnings
Edmunds.com is reporting that March 2010 saw a record number of
automobiles purchased with zero financing. The total of 22% of
transactions exceeded the previous high of 21% in July 2006. The stark
difference though of course is the total number of vehicle sales
between the two periods. In March 2010 the SAAR was 11.77mm (highest
since Sept ’08 ex clunkers) and in July 2006 it was 17.07mm.
McDonald's Corp.
said Wednesday that its first-quarter profit rose to $1.09 billion, or
$1 a share, from $979.5 million, or 87 cents a share, a year earlier.
Total revenue, including those from franchised restaurants, rose 10% to
$5.61 billion. Analysts, on average, estimated McDonald's to earn 96
cents a share on sales of $5.53 billion, according to FactSet. Global
comparable sales increased 4.2%, including a 1.5% increase in the U.S.,
a 5.2% jump in Europe and a 5.7% gain in Asia, Middle East and Africa.
Boeing lowered its earnings
expectations to a range of $3.50 to $3.80 a share, from a prior range
of $3.70 to $4 a share, due to the loss of the tax deduction.
China's apparent oil demand in March climbed 12.8% from a year ago to 35.25 million tonnes or about 8.12 million barrels per day (b/d), but fell below the all-time high of 8.5 million b/d estimated for February, according to a Platts analysis of official data just released.
Amid growing refining capacity in the country and high refinery utilization rates, March was also the seventh month in row the world's second-largest oil consumer after the US posted double-digit on-year growth in oil consumption.
The latest growth spurt goes back to September 2009, a month that saw Chinese oil consumption leap 12.6% on year to 28.41 million tonnes. However, the November 2009 high of an 18.7% on-year leap in demand remains unsurpassed.
For the first quarter of this year, Chinese petroleum demand averaged around 8.1 million b/d according to Platts estimates, up 16% versus the corresponding period of 2009.
UK unemployment at 16-year high.
Developed economies face the risk of deflation as central banks end programs to revive their financial systems, according to Pacific Investment Management Co., the biggest holder of inflation-linked Treasuries.
A slowdown in economic growth is adding to deflation pressures, said Mihir Worah, who oversees the $18 billion Pimco Real Return Fund. Pimco, which runs the world’s biggest bond fund, is “underweight” inflation-linked bonds in portfolios that focus on the debt, he wrote in a report.
“There is a near-term risk of flipping to deflation given our view that developed economies have not fully healed and consumers are not yet ready to stand on their own two feet,” Worah wrote on the Newport Beach, California-based company’s Web site.
ZeroHedge: "The April 19 Consumer Comfort Index number dropped back to -50, a 2010 low, just 4 points from its all-time low in 24 years of weekly polls, -54 in January 2009 and December 2008. 92% of those polled said the national economy’s in bad shape. The silver lining: "just 30 percent say it’s getting even worse, down from recent highs of 36 percent in January and 43 percent last September, much less a towering 82 percent as the economy fell into the abyss in October 2008." 25% said the economy’s getting better, while a little more than 4 in 10 say it’s staying the same: truly abysmal numbers when once look away from the wine and ambrosia flowing at the altar of Steve Jobs."
A 6.2-magnitude earthquake struck the Samoa Island region in the South Pacific Ocean Thursday morning local time, according to the U.S. Geological Survey. The epicenter was 123 miles from Apia, Samoa and 157 miles from Pago Pago, American Samoa.
The Dow Jones Industrial Average finished up 8 points, or 0.1%, to 11,124.92 for the third-straight session of gains. The S&P 500 slid 1 point, or 0.1%, to 1,205.94, weighed down by health-care and financial stocks. The Nasdaq Composite rose 4 points, or 0.2%, to 2,504.61.
Edmunds.com is reporting that March 2010 saw a record number of
automobiles purchased with zero financing. The total of 22% of
transactions exceeded the previous high of 21% in July 2006. The stark
difference though of course is the total number of vehicle sales
between the two periods. In March 2010 the SAAR was 11.77mm (highest
since Sept ’08 ex clunkers) and in July 2006 it was 17.07mm.
McDonald's Corp.
said Wednesday that its first-quarter profit rose to $1.09 billion, or
$1 a share, from $979.5 million, or 87 cents a share, a year earlier.
Total revenue, including those from franchised restaurants, rose 10% to
$5.61 billion. Analysts, on average, estimated McDonald's to earn 96
cents a share on sales of $5.53 billion, according to FactSet. Global
comparable sales increased 4.2%, including a 1.5% increase in the U.S.,
a 5.2% jump in Europe and a 5.7% gain in Asia, Middle East and Africa.
Boeing lowered its earnings
expectations to a range of $3.50 to $3.80 a share, from a prior range
of $3.70 to $4 a share, due to the loss of the tax deduction.
China's apparent oil demand in March climbed 12.8% from a year ago to 35.25 million tonnes or about 8.12 million barrels per day (b/d), but fell below the all-time high of 8.5 million b/d estimated for February, according to a Platts analysis of official data just released.
Amid growing refining capacity in the country and high refinery utilization rates, March was also the seventh month in row the world's second-largest oil consumer after the US posted double-digit on-year growth in oil consumption.
The latest growth spurt goes back to September 2009, a month that saw Chinese oil consumption leap 12.6% on year to 28.41 million tonnes. However, the November 2009 high of an 18.7% on-year leap in demand remains unsurpassed.
For the first quarter of this year, Chinese petroleum demand averaged around 8.1 million b/d according to Platts estimates, up 16% versus the corresponding period of 2009.
UK unemployment at 16-year high.
Developed economies face the risk of deflation as central banks end programs to revive their financial systems, according to Pacific Investment Management Co., the biggest holder of inflation-linked Treasuries.
A slowdown in economic growth is adding to deflation pressures, said Mihir Worah, who oversees the $18 billion Pimco Real Return Fund. Pimco, which runs the world’s biggest bond fund, is “underweight” inflation-linked bonds in portfolios that focus on the debt, he wrote in a report.
“There is a near-term risk of flipping to deflation given our view that developed economies have not fully healed and consumers are not yet ready to stand on their own two feet,” Worah wrote on the Newport Beach, California-based company’s Web site.
ZeroHedge: "The April 19 Consumer Comfort Index number dropped back to -50, a 2010 low, just 4 points from its all-time low in 24 years of weekly polls, -54 in January 2009 and December 2008. 92% of those polled said the national economy’s in bad shape. The silver lining: "just 30 percent say it’s getting even worse, down from recent highs of 36 percent in January and 43 percent last September, much less a towering 82 percent as the economy fell into the abyss in October 2008." 25% said the economy’s getting better, while a little more than 4 in 10 say it’s staying the same: truly abysmal numbers when once look away from the wine and ambrosia flowing at the altar of Steve Jobs."
A 6.2-magnitude earthquake struck the Samoa Island region in the South Pacific Ocean Thursday morning local time, according to the U.S. Geological Survey. The epicenter was 123 miles from Apia, Samoa and 157 miles from Pago Pago, American Samoa.
The Dow Jones Industrial Average finished up 8 points, or 0.1%, to 11,124.92 for the third-straight session of gains. The S&P 500 slid 1 point, or 0.1%, to 1,205.94, weighed down by health-care and financial stocks. The Nasdaq Composite rose 4 points, or 0.2%, to 2,504.61.
Tuesday, April 20, 2010
Goldman Sachs
4/20/10 Goldman Sachs
J&J updated its 2010 adjusted earnings forecast to $4.80 to $4.90 a share, down from $4.85 to $4.95 a share.
Goldman Sachs, facing a fraud lawsuit from U.S. regulators,
said first-quarter earnings surged 91 percent after fixed-income
trading revenue rose to a record. The Mannheim-based ZEW Center
for European Economic Research said its index of investor and
analyst expectations increased to 53 from 44.5 in March, while
Federal Reserve Bank of Chicago President Charles Evans said
late yesterday that the U.S. recession is “definitely over.”
By: Ty Andros :
"The global financial maelstrom continues to unfold as public serpents, central banks and crony capitalists continue to pour gas on the fires. It is set to continue. The collapse of FIAT paper wealth storage is unfolding with breathtaking speed. Asset bubbles continue to emerge in the emerging world and collapse in the developed world as capital FLEES. Today's missive covers the deep insolvencies in the developed world and the definitions of solvency of Austrian Economics. The inflationary depression still lies in our futures."
The Bank of Canada kept its key
lending rate at a record low 0.25 percent, and said it will
start raising interest rates because of faster-than-expected
economic growth and inflation.
“With recent improvements in the economic outlook, the
need for such extraordinary policy is now passing, and it is
appropriate to begin to lessen the degree of monetary
stimulus,” the central bank, led by Governor Mark Carney, said
in a statement today from Ottawa. “The extent and timing will
depend on the outlook for economic activity and inflation.”
The Treasury’s Home Affordable Modification Program,
or HAMP, “has made very little progress in stemming this onslaught,”
with 230,000 mortgage loans permanently modified in a year, according
to the report by Neil Barofsky, special inspector general for the
Troubled Asset Relief Program.
The report is the second in two weeks to criticize
the department’s $75 billion foreclosure-prevention program, which pays
lenders to modify troubled mortgages and lower homeowners’ monthly
payments. U.S. home foreclosures this year are on a course to exceed
the 2.8 million initiated in 2009, with more than 932,000 filings
during the first three months, the report said.
Borrowers helped by the programs continue to default
on their mortgages, threatening the effort’s success, Barofsky’s review
found. The Treasury estimates that 40 percent of HAMP- modified
mortgages will default.
Fed governor Elizabeth Duke:
"Despite the best efforts of bankers and regulators, small businesses are still finding it difficult to obtain credit. A recent study conducted by the National Federation of Independent Business (NFIB) found that only about half of the small employers who attempted to borrow in 2009 received all the credit they wanted. Nearly one-quarter received no credit at all. A similar study in 2005 found nearly 90 percent of small employers had most or all their credit needs met, and only 8 percent obtained no credit. Even though conditions in financial markets have continued to improve this year, access to credit remains restricted for many smaller businesses.
Several factors are contributing to the reduced supply of bank loans. For instance, in response to an increase in the number of delinquent and nonperforming loans, many banks have reduced existing lines of credit sharply and have tightened their standards and terms for new credit. In other cases, banks whose capital has been eroded by losses or who have limited access to capital markets may be reducing risk assets to improve their capital positions, especially amid continued uncertainty about the economic outlook and possible future loan losses. But the reduction in the availability of credit is not the whole story. There is also less demand for credit by sound firms. "
Saudis tightening Chinese energy ties to move away from dependence on US with about a fifth of China’s crude imports now coming from Saudi
Arabia, or about 1 million barrels a day compared with 455,000 barrels
a day in 2005, the kingdom is investing to expand Chinese capacity for
refining of Saudi heavy crude. China’s need for oil is prompting it to seek greater influence in the Middle East,
said Shi Yinhong, a professor of international relations at Renmin
University in Beijing. Increasing economic ties to Saudi Arabia “will
play some role in gradually eroding American preponderance over that
country.
ZeroHedge: "In the week ended April 16, the US Treasury collected $29.3 billion,
10% less than the comparable week in the prior year when $32.5 billion
was withheld. Cumulatively, the difference is now at an almost 2010
high, hitting a $16.7 billion difference between the YTD period and the
comparable period in 2009 (only highest cum total was in Week 2)."
April 19, 2010 - Iceland Volcano Erupts
Again with New 15,000-Foot-High Ash Cloud.
At least 8 million travelers around the world interrupted.
“The volcano eruption in Iceland has strengthened and a new
ash cloud is spreading south and east towards the U.K.”
- British National Air Traffic Controller
Greece announced today that its unemployment rate rose to 11.3%.
Goldman Sachs has hired a lawyer familiar to many in Washington: Former White House Counsel Greg Craig.
European Central Bank Governing Council member Axel Weber has told
German politicians that Greece may require assistance of up to 80
billion euros ($111.8 billion) in the coming years.
U.S. highway travel was down 2.9 percent in February from a year
earlier, falling 6.3 billion miles to 212.9 billion miles, the U.S.
Transportation Department said Tuesday.
When it comes to predicting the price of oil, Henry Groppe has made a long career out of zigging when others were
zagging. So why should he be any different when talking about natural gas.
Mr. Groppe – the octogenarian patriarch of Texas petroleum industry
analysts Groppe Long & Littell – doesn't buy the prevailing wisdom
that New York Mercantile Exchange natural gas prices are dead in the
water, stuck around $4 to $5 (U.S.) per million British thermal units
even as demand recovers, awash in supplies and with much more on the
way.
No, his analysis (and more than 50 years of experience) tells him that
gas inventories are about to get a lot tighter, that new supplies are
overstated, and that prices are headed north of $8 by the end of
summer.
Why is he so sure he's got it right and most everyone else has it wrong?
Because, he contends, shale gas – the previously unattainable source of
vast gas supplies that has been unlocked by new high-tech horizontal
drilling advancements – is not the holy grail it's been cracked up to
be. Not even close.
“Everyone thinks [shale gas] is going to solve all of our problems.
There are very optimistic estimates about the economically recoverable
volumes of gas from this new resource,” he said in an interview last
week in the Toronto offices of boutique fund manager Middlefield
Capital Corp., where he's a long-time consultant and is special adviser
to the nine-month-old Middlefield Groppe Tactical Energy mutual fund.
“That's dominating everyone's views about the gas supply picture – that we're going to be flooded with gas.”
The reality, he argues, is that shale gas deposits are a tiny part of
the North American production pool – and they are already depleting
fast.
Mr. Groppe says that while the average depletion rate in conventional
gas wells is about 25 per cent (in other words, if you didn't drill at
all for new wells, production would decline by a quarter each year),
shale gas shows even more rapid depletion – output tumbles, on average,
45 per cent in the first year for shale wells.“ We think that we're now having a continuous, rapid decline of gas in storage. By summer, it could get to be alarming.”
Drilling of shale plays has recovered rapidly from the slowdown during
the recession – indeed, the count of active horizontal drill rigs in
the United States has ramped up to record levels – which, because of
the high initial production volumes that are characteristic of shale
wells, has flooded the market with supplies and fuelled expectations of
continued rapid growth. But given Mr. Groppe's depletion numbers, the
high drilling pace may also be serving to drain the resource in the
major shale pools even faster than they would otherwise.
As for the shorter-term supply picture, Mr. Groppe notes that for all
that horizontal drilling frenzy, shale gas accounts for just 6 per cent
of U.S. natural gas production.
In the other 94 per cent – conventional gas – the rig count is 70 per cent below the pre-financial-crisis levels of September, 2008, as low prices and
high inventory levels have convinced producers to keep drills idled.
“With that extraordinary drop in drilling, the [production] decline
rate from all these [non-shale] sources is accelerating – and will be
much more than offset whatever increases you get in shale.”
Add to that the fact that consumption continues to grow as the
economy recovers, and he believes the glut in gas will prove strikingly
short-lived.
“We think that we're now having a continuous, rapid decline of gas in
storage,” he says. “By summer, it could get to be alarming.”
“We would expect gas prices to get above $8 in the August-September range.”
Why should we believe Henry Groppe? Well, he has a habit of disagreeing with the consensus view – and being right.
In 1980, when oil approached $40 a barrel and forecasters predicted
$100 oil was inevitable, Mr. Groppe said crude would fall below $15 by
the mid-1980s. It did.
In 1998, when crude dipped to barely above $10 and some prognosticators
were hailing a new era of cheap energy, Mr. Groppe said oil was set to
soar. By early 2000, it had topped $30 a barrel.
And two years ago, when it threatened to reach $150 a barrel and
forecasters said $200 and more were just over the horizon, Mr. Groppe
predicted we'd be back at $60-$70 in the second half of the year. By
October, he was right again.
Now, he says, a slow-but-gradual decline in North American natural gas
reserves – regardless of shale – means an average price in the $8 range
is inevitable to trigger the “demand destruction” necessary to keep the
supply-demand picture in balance. Eventually, he says, that price will
creep up toward $10 by the end of the decade, as gas production slowly
depletes.
Mr. Groppe credits his successes on a meticulous study of
supply-and-demand details – something, he says, many of the people who
disagree with him fail to do. He believes this is again the case in his
critics' misplaced faith that shale plays will permanently alter the
trajectory of North American natural gas supplies.
“When you take apart all the pieces from the bottom, there's absolutely
no way for that to take place,” he says.
The U.S. Travel Association said Tuesday that flight disruptions due to the erupting volcano in Iceland decreased travel-related spending in the U.S. by $650 million, and hurt federal tax receipts by $90 million. According to the lobbying group, every U.S.-bound flight accounts for about $450,000 in direct spending by international travelers in the country.
Apple sold almost 11 million iPods last quarter and doubled its iPhone sales from this time last year, selling 8.8 million smartphones during the quarter ended March 27.
Those sales helped Apple on Tuesday report a profit of $3.1 billion on revenue of $13.5 billion, blowing past Wall Street's expectations.
Yahoo! Inc. forecast sales that missed analysts' estimates after the company lost market share.
Washington-based trade group The American Petroleum Institute reported late Tuesday that crude-oil inventories declined by 741,000 barrels in the week ended April 16. Analysts polled by Platts expected the data to show an increase of 300,000 barrels. The API reported that gasoline stockpiles declined by 1.7 million barrels, and distillates inventories declined by 3.1 million barrels. The refinery utilization rate rose to 85.1%, whereas the Platts analysts expected a rise to 85.94%.
The Dow Jones Industrial Average climbed 25 points to end the day at 11,117, while the Nasdaq Composite Index rose 20 points to finish at 2,500. The S&P 500 Index tacked on almost 10 points to end the day's trading at 1,207.
Politicians in the United Kingdom and Germany are calling on their governments to cut ties with Goldman Sachs Group Inc. in the wake of its fraud charges, The Wall Street Journal reported Tuesday in its online edition. The newspaper reported that U.K. Liberal Democrat leader Nick Clegg said Goldman Sachs should be suspended as an adviser to the government until these allegations are looked into. A German lawmaker also said Berlin should put its business relationship with Goldman Sachs on hold for the time being, the newspaper said.
J&J updated its 2010 adjusted earnings forecast to $4.80 to $4.90 a share, down from $4.85 to $4.95 a share.
Goldman Sachs, facing a fraud lawsuit from U.S. regulators,
said first-quarter earnings surged 91 percent after fixed-income
trading revenue rose to a record. The Mannheim-based ZEW Center
for European Economic Research said its index of investor and
analyst expectations increased to 53 from 44.5 in March, while
Federal Reserve Bank of Chicago President Charles Evans said
late yesterday that the U.S. recession is “definitely over.”
By: Ty Andros :
"The global financial maelstrom continues to unfold as public serpents, central banks and crony capitalists continue to pour gas on the fires. It is set to continue. The collapse of FIAT paper wealth storage is unfolding with breathtaking speed. Asset bubbles continue to emerge in the emerging world and collapse in the developed world as capital FLEES. Today's missive covers the deep insolvencies in the developed world and the definitions of solvency of Austrian Economics. The inflationary depression still lies in our futures."
The Bank of Canada kept its key
lending rate at a record low 0.25 percent, and said it will
start raising interest rates because of faster-than-expected
economic growth and inflation.
“With recent improvements in the economic outlook, the
need for such extraordinary policy is now passing, and it is
appropriate to begin to lessen the degree of monetary
stimulus,” the central bank, led by Governor Mark Carney, said
in a statement today from Ottawa. “The extent and timing will
depend on the outlook for economic activity and inflation.”
The Treasury’s Home Affordable Modification Program,
or HAMP, “has made very little progress in stemming this onslaught,”
with 230,000 mortgage loans permanently modified in a year, according
to the report by Neil Barofsky, special inspector general for the
Troubled Asset Relief Program.
The report is the second in two weeks to criticize
the department’s $75 billion foreclosure-prevention program, which pays
lenders to modify troubled mortgages and lower homeowners’ monthly
payments. U.S. home foreclosures this year are on a course to exceed
the 2.8 million initiated in 2009, with more than 932,000 filings
during the first three months, the report said.
Borrowers helped by the programs continue to default
on their mortgages, threatening the effort’s success, Barofsky’s review
found. The Treasury estimates that 40 percent of HAMP- modified
mortgages will default.
Fed governor Elizabeth Duke:
"Despite the best efforts of bankers and regulators, small businesses are still finding it difficult to obtain credit. A recent study conducted by the National Federation of Independent Business (NFIB) found that only about half of the small employers who attempted to borrow in 2009 received all the credit they wanted. Nearly one-quarter received no credit at all. A similar study in 2005 found nearly 90 percent of small employers had most or all their credit needs met, and only 8 percent obtained no credit. Even though conditions in financial markets have continued to improve this year, access to credit remains restricted for many smaller businesses.
Several factors are contributing to the reduced supply of bank loans. For instance, in response to an increase in the number of delinquent and nonperforming loans, many banks have reduced existing lines of credit sharply and have tightened their standards and terms for new credit. In other cases, banks whose capital has been eroded by losses or who have limited access to capital markets may be reducing risk assets to improve their capital positions, especially amid continued uncertainty about the economic outlook and possible future loan losses. But the reduction in the availability of credit is not the whole story. There is also less demand for credit by sound firms. "
Saudis tightening Chinese energy ties to move away from dependence on US with about a fifth of China’s crude imports now coming from Saudi
Arabia, or about 1 million barrels a day compared with 455,000 barrels
a day in 2005, the kingdom is investing to expand Chinese capacity for
refining of Saudi heavy crude. China’s need for oil is prompting it to seek greater influence in the Middle East,
said Shi Yinhong, a professor of international relations at Renmin
University in Beijing. Increasing economic ties to Saudi Arabia “will
play some role in gradually eroding American preponderance over that
country.
ZeroHedge: "In the week ended April 16, the US Treasury collected $29.3 billion,
10% less than the comparable week in the prior year when $32.5 billion
was withheld. Cumulatively, the difference is now at an almost 2010
high, hitting a $16.7 billion difference between the YTD period and the
comparable period in 2009 (only highest cum total was in Week 2)."
April 19, 2010 - Iceland Volcano Erupts
Again with New 15,000-Foot-High Ash Cloud.
At least 8 million travelers around the world interrupted.
“The volcano eruption in Iceland has strengthened and a new
ash cloud is spreading south and east towards the U.K.”
- British National Air Traffic Controller
Greece announced today that its unemployment rate rose to 11.3%.
Goldman Sachs has hired a lawyer familiar to many in Washington: Former White House Counsel Greg Craig.
European Central Bank Governing Council member Axel Weber has told
German politicians that Greece may require assistance of up to 80
billion euros ($111.8 billion) in the coming years.
U.S. highway travel was down 2.9 percent in February from a year
earlier, falling 6.3 billion miles to 212.9 billion miles, the U.S.
Transportation Department said Tuesday.
When it comes to predicting the price of oil, Henry Groppe has made a long career out of zigging when others were
zagging. So why should he be any different when talking about natural gas.
Mr. Groppe – the octogenarian patriarch of Texas petroleum industry
analysts Groppe Long & Littell – doesn't buy the prevailing wisdom
that New York Mercantile Exchange natural gas prices are dead in the
water, stuck around $4 to $5 (U.S.) per million British thermal units
even as demand recovers, awash in supplies and with much more on the
way.
No, his analysis (and more than 50 years of experience) tells him that
gas inventories are about to get a lot tighter, that new supplies are
overstated, and that prices are headed north of $8 by the end of
summer.
Why is he so sure he's got it right and most everyone else has it wrong?
Because, he contends, shale gas – the previously unattainable source of
vast gas supplies that has been unlocked by new high-tech horizontal
drilling advancements – is not the holy grail it's been cracked up to
be. Not even close.
“Everyone thinks [shale gas] is going to solve all of our problems.
There are very optimistic estimates about the economically recoverable
volumes of gas from this new resource,” he said in an interview last
week in the Toronto offices of boutique fund manager Middlefield
Capital Corp., where he's a long-time consultant and is special adviser
to the nine-month-old Middlefield Groppe Tactical Energy mutual fund.
“That's dominating everyone's views about the gas supply picture – that we're going to be flooded with gas.”
The reality, he argues, is that shale gas deposits are a tiny part of
the North American production pool – and they are already depleting
fast.
Mr. Groppe says that while the average depletion rate in conventional
gas wells is about 25 per cent (in other words, if you didn't drill at
all for new wells, production would decline by a quarter each year),
shale gas shows even more rapid depletion – output tumbles, on average,
45 per cent in the first year for shale wells.“ We think that we're now having a continuous, rapid decline of gas in storage. By summer, it could get to be alarming.”
Drilling of shale plays has recovered rapidly from the slowdown during
the recession – indeed, the count of active horizontal drill rigs in
the United States has ramped up to record levels – which, because of
the high initial production volumes that are characteristic of shale
wells, has flooded the market with supplies and fuelled expectations of
continued rapid growth. But given Mr. Groppe's depletion numbers, the
high drilling pace may also be serving to drain the resource in the
major shale pools even faster than they would otherwise.
As for the shorter-term supply picture, Mr. Groppe notes that for all
that horizontal drilling frenzy, shale gas accounts for just 6 per cent
of U.S. natural gas production.
In the other 94 per cent – conventional gas – the rig count is 70 per cent below the pre-financial-crisis levels of September, 2008, as low prices and
high inventory levels have convinced producers to keep drills idled.
“With that extraordinary drop in drilling, the [production] decline
rate from all these [non-shale] sources is accelerating – and will be
much more than offset whatever increases you get in shale.”
Add to that the fact that consumption continues to grow as the
economy recovers, and he believes the glut in gas will prove strikingly
short-lived.
“We think that we're now having a continuous, rapid decline of gas in
storage,” he says. “By summer, it could get to be alarming.”
“We would expect gas prices to get above $8 in the August-September range.”
Why should we believe Henry Groppe? Well, he has a habit of disagreeing with the consensus view – and being right.
In 1980, when oil approached $40 a barrel and forecasters predicted
$100 oil was inevitable, Mr. Groppe said crude would fall below $15 by
the mid-1980s. It did.
In 1998, when crude dipped to barely above $10 and some prognosticators
were hailing a new era of cheap energy, Mr. Groppe said oil was set to
soar. By early 2000, it had topped $30 a barrel.
And two years ago, when it threatened to reach $150 a barrel and
forecasters said $200 and more were just over the horizon, Mr. Groppe
predicted we'd be back at $60-$70 in the second half of the year. By
October, he was right again.
Now, he says, a slow-but-gradual decline in North American natural gas
reserves – regardless of shale – means an average price in the $8 range
is inevitable to trigger the “demand destruction” necessary to keep the
supply-demand picture in balance. Eventually, he says, that price will
creep up toward $10 by the end of the decade, as gas production slowly
depletes.
Mr. Groppe credits his successes on a meticulous study of
supply-and-demand details – something, he says, many of the people who
disagree with him fail to do. He believes this is again the case in his
critics' misplaced faith that shale plays will permanently alter the
trajectory of North American natural gas supplies.
“When you take apart all the pieces from the bottom, there's absolutely
no way for that to take place,” he says.
The U.S. Travel Association said Tuesday that flight disruptions due to the erupting volcano in Iceland decreased travel-related spending in the U.S. by $650 million, and hurt federal tax receipts by $90 million. According to the lobbying group, every U.S.-bound flight accounts for about $450,000 in direct spending by international travelers in the country.
Apple sold almost 11 million iPods last quarter and doubled its iPhone sales from this time last year, selling 8.8 million smartphones during the quarter ended March 27.
Those sales helped Apple on Tuesday report a profit of $3.1 billion on revenue of $13.5 billion, blowing past Wall Street's expectations.
Yahoo! Inc. forecast sales that missed analysts' estimates after the company lost market share.
Washington-based trade group The American Petroleum Institute reported late Tuesday that crude-oil inventories declined by 741,000 barrels in the week ended April 16. Analysts polled by Platts expected the data to show an increase of 300,000 barrels. The API reported that gasoline stockpiles declined by 1.7 million barrels, and distillates inventories declined by 3.1 million barrels. The refinery utilization rate rose to 85.1%, whereas the Platts analysts expected a rise to 85.94%.
The Dow Jones Industrial Average climbed 25 points to end the day at 11,117, while the Nasdaq Composite Index rose 20 points to finish at 2,500. The S&P 500 Index tacked on almost 10 points to end the day's trading at 1,207.
Politicians in the United Kingdom and Germany are calling on their governments to cut ties with Goldman Sachs Group Inc. in the wake of its fraud charges, The Wall Street Journal reported Tuesday in its online edition. The newspaper reported that U.K. Liberal Democrat leader Nick Clegg said Goldman Sachs should be suspended as an adviser to the government until these allegations are looked into. A German lawmaker also said Berlin should put its business relationship with Goldman Sachs on hold for the time being, the newspaper said.
Monday, April 19, 2010
Gallows?
4/19/10 Gallows?
George Ure: "So here's the ponder point: How bad does a crime/fraud/scam have to be - how many people does it have to destroy - before it scales beyond going to jail and means instead going to the gallows? What's that threshold?"
Jim Rogers: "If I were buying energy, I would probably buy natural gas rather than oil just because it’s so depressed. I don’t like to buy when things are up. I like to buy things when down, when people are unhappy that’s when I like to buy things."
Between July 2005 and July 2008, the renminbi appreciated 21 percent against the dollar, yet America's imports from China grew 39 percent and the trade deficit with China increased $66 billion.
Chinese banks have 1.88 billion debit cards and 190 million credit cards outstanding, on which cardholders made 19.7 billion purchases last year. But they can't buy domestic card payment network services from American Express, Discover, JCB, MasterCard or Visa. China UnionPay (CUP) enjoys a protected card-payment-network monopoly. And merchant processors such as First Data and Global Payments, which have joint ventures in China with British banks Standard Chartered and HSBC respectively, can't compete with CUP and Chinese banks providing domestic card acceptance to merchants.
The continued witch hunt and scapegoating at just the symptoms of the
credit bubble and not the disease comes in the context of a market that
was very overbought and was due for any excuse to take a rest. To
quantify, the RSI in the S&P 500 went 6 weeks straight above 65 for
the first time since 1986. With that said, the open ended nature of
future lawsuits and the greater possibility of tighter scrutiny of our
banking system will have an impact on the financials and their future
earnings power. As important for the global economy and its markets is
the correction going on in China in response to further steps to crack
down on their property bubble. The Shanghai index fell 4.8% after banks
were told to halt loans for 3rd home buyers (investors) in cities with
large price gains and to tighten the criteria for sales to non
residents. Commodities are also down in response. Greek bond yields are
breaking out to the highest since 1998.
Rob Hanna: "Big drops on Fridays have often been overreactions and have therefore resulted in a consistent propensity to bounce on Monday."
The Organization of Petroleum Exporting Countries may be
creating a glut after output jumped 5.6 percent to 29.2 million
barrels a day in March from a year earlier, according to
Bloomberg estimates. Shipments will rise 0.9 percent in the four
weeks ending May 1, according to tanker-tracker Oil Movements.
“Oil at $87 a barrel seems pretty unreasonable given the
fundamentals of the market,” said Addison Armstrong, director
of market research at Tradition Energy, a Stamford, Connecticut-
based procurement adviser. “Forget China and India for a minute.
The U.S. remains the biggest consumer, and U.S. demand hasn’t
recovered.”
Greece’s bonds fell, pushing yields
to the highest relative to German bunds since 1998, as debt-
crisis talks with the European Central Bank, European Commission
and International Monetary Fund were delayed.
Greek two-year notes led the declines as officials
postponed the Athens meeting after air space across northern
Europe was closed because of volcanic ash from Iceland, putting
back the start of negotiations to lay down conditions for a 45
billion-euro ($60 billion) bailout package until April 21. The
bonds of Portugal and Ireland also dropped.
Until there is an aid agreement, “the market is not going
to believe it,” said Marc Ostwald, a strategist at Monument
Securities Ltd. in London.
Guy Lerner: "The "Dumb Money" indicator looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2)Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The "Dumb Money" indicator is bullish to an extreme degree, and this implies that a price move is either nearing its end or the ascent of prices is surely to show. This is our expectation 85% of the time. As discussed last week, not only is the current value extreme it is also less than prior extremes suggesting decreasing bullishness despite higher equity prices. This remains a noteworthy, yet unconfirmed, negative divergence."
John Hussman: "It seems unwise to celebrate "favorable" bank
earnings reports that are exclusively driven by reduced loan loss
provisions, particularly when the volume of impaired loans has not
declined proportionately....As of last week, the stock market remained characterized by strenuous
overvaluation, strenuous overbought conditions, overbullish sentiment,
and hostile yield pressures. The fraud charges brought against Goldman
Sachs by the SEC may or may not provide a catalyst for market weakness,
but significant risk is already baked into observable market
conditions. The present syndrome tends to be followed by large and
abrupt losses (though with somewhat unpredictable timing). To the
extent that investors tend to attribute market fluctuations to the
immediate news surrounding them, the Goldman Sachs issue may become
more of a subject of investor attention in the weeks ahead than it
deserves. But really, is anybody actually surprised?"
Courtesy of John Hussman:
April 12, 2010: The latest Mortgage Monitor report
released by Lender Processing Services, a leading provider of mortgage
performance data and analytics, shows that the total number of
delinquent loans was 21.3 percent higher than the same period last
year. The nation's foreclosure inventories reached record highs.
February's foreclosure rate of 3.31 percent represented a 51.1 percent
year-over-year increase. The percentage of new problem loans also
remains at a five-year high. The total number of non-current first-lien
mortgages and REO properties is now more than 7.9 million loans.
Furthermore, the percentage of new problem loans is also at its highest
level in five years. More than 1.1 million loans that were current at
the beginning of January 2010 were already at least 30 days delinquent
or in foreclosure by February 2010 month-end.
April
8, 2010: First American CoreLogic reports that distressed home sales –
such as short sales and real estate owned (REO) sales – accounted for
29 percent of all sales in the U.S. in January: the highest level since
April 2009. After the peak in early 2009, the distressed sale share
fell to 23 percent in July, before rising again in late 2009 and
continuing into 2010. Distressed sales are non-arms-length transactions
such as REO or short sales. Market sales are arms-length transactions
between a willing buyer and willing seller and they exclude distressed
sales. Distressed sales have a very strong influence on home price
trends and are an indicator of a housing market's health."
China told banks to stop loans for third-home purchases in cities.
General Electric filed more than 7,000 income tax returns in hundreds
of global jurisdictions last year, but when push came to shove, the
company owed the U.S. government a whopping bill of $0. How'd it pull
off that trick? By losing lots of money. GE
had plenty of earnings last year -- just not in the United States. For
tax purposes, the company's U.S. operations lost $408 million, while
its international businesses netted a $10.8 billion profit.
For every $1 of disposable income, Canadians owe a record $1.47.
The index
of leading economic indicators rose 1.4% in March, marking 12
consecutive gains, following an upwardly revised increase of 0.4% in
February. Analysts polled by MarketWatch had expected a gain of 1.3% in
March. Going forward, the strength of demand "remains the big
question," said Ken Goldstein, economist at the Conference Board.
"Improvement in employment and income will be the key factors in
whether consumers push the recovery on a stronger path," Goldstein
said.
Analysts surveyed by Platts expected an increase in petroleum products inventories in the week ended April 16. The analysts expected crude-oil inventories to rise by 300,000 barrels, while they see gasoline stocks going up by 100,000 barrels. Inventories of distillates, which include diesel and heating oil, are expected to increase by 840,000 barrels.
After wavering between gains and losses for much of the day, the Dow average added 73.39 points, or 0.7%, higher at 11,092.05. The S&P 500 gained 5.39 points, or 0.45%, to 1,197.52, with all sectors posting gains. Financials, which had been down earlier in the session, rallied on Citigroup, Inc results and after Goldman Sachs Group Inc.shares turned higher in the wake of a Securities and Exchange Commission vote. The Nasdaq Composite fell 1.15 points, or 0.1%, to 2,480.11.
IBM raised its full-year outlook and reported stronger-than-expected quarterly results as companies increased spending on software and IT consulting, but the news failed to excite investors who had already begun to price in a strong recovery.
Shares of IBM fell 2 percent despite the positive numbers, mirroring the performance of other tech companies like Oracle Corp and Google Inc , whose investors had also locked in profits following a rally ahead of results.
George Ure: "So here's the ponder point: How bad does a crime/fraud/scam have to be - how many people does it have to destroy - before it scales beyond going to jail and means instead going to the gallows? What's that threshold?"
Jim Rogers: "If I were buying energy, I would probably buy natural gas rather than oil just because it’s so depressed. I don’t like to buy when things are up. I like to buy things when down, when people are unhappy that’s when I like to buy things."
Between July 2005 and July 2008, the renminbi appreciated 21 percent against the dollar, yet America's imports from China grew 39 percent and the trade deficit with China increased $66 billion.
Chinese banks have 1.88 billion debit cards and 190 million credit cards outstanding, on which cardholders made 19.7 billion purchases last year. But they can't buy domestic card payment network services from American Express, Discover, JCB, MasterCard or Visa. China UnionPay (CUP) enjoys a protected card-payment-network monopoly. And merchant processors such as First Data and Global Payments, which have joint ventures in China with British banks Standard Chartered and HSBC respectively, can't compete with CUP and Chinese banks providing domestic card acceptance to merchants.
The continued witch hunt and scapegoating at just the symptoms of the
credit bubble and not the disease comes in the context of a market that
was very overbought and was due for any excuse to take a rest. To
quantify, the RSI in the S&P 500 went 6 weeks straight above 65 for
the first time since 1986. With that said, the open ended nature of
future lawsuits and the greater possibility of tighter scrutiny of our
banking system will have an impact on the financials and their future
earnings power. As important for the global economy and its markets is
the correction going on in China in response to further steps to crack
down on their property bubble. The Shanghai index fell 4.8% after banks
were told to halt loans for 3rd home buyers (investors) in cities with
large price gains and to tighten the criteria for sales to non
residents. Commodities are also down in response. Greek bond yields are
breaking out to the highest since 1998.
Rob Hanna: "Big drops on Fridays have often been overreactions and have therefore resulted in a consistent propensity to bounce on Monday."
The Organization of Petroleum Exporting Countries may be
creating a glut after output jumped 5.6 percent to 29.2 million
barrels a day in March from a year earlier, according to
Bloomberg estimates. Shipments will rise 0.9 percent in the four
weeks ending May 1, according to tanker-tracker Oil Movements.
“Oil at $87 a barrel seems pretty unreasonable given the
fundamentals of the market,” said Addison Armstrong, director
of market research at Tradition Energy, a Stamford, Connecticut-
based procurement adviser. “Forget China and India for a minute.
The U.S. remains the biggest consumer, and U.S. demand hasn’t
recovered.”
Greece’s bonds fell, pushing yields
to the highest relative to German bunds since 1998, as debt-
crisis talks with the European Central Bank, European Commission
and International Monetary Fund were delayed.
Greek two-year notes led the declines as officials
postponed the Athens meeting after air space across northern
Europe was closed because of volcanic ash from Iceland, putting
back the start of negotiations to lay down conditions for a 45
billion-euro ($60 billion) bailout package until April 21. The
bonds of Portugal and Ireland also dropped.
Until there is an aid agreement, “the market is not going
to believe it,” said Marc Ostwald, a strategist at Monument
Securities Ltd. in London.
Guy Lerner: "The "Dumb Money" indicator looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2)Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The "Dumb Money" indicator is bullish to an extreme degree, and this implies that a price move is either nearing its end or the ascent of prices is surely to show. This is our expectation 85% of the time. As discussed last week, not only is the current value extreme it is also less than prior extremes suggesting decreasing bullishness despite higher equity prices. This remains a noteworthy, yet unconfirmed, negative divergence."
John Hussman: "It seems unwise to celebrate "favorable" bank
earnings reports that are exclusively driven by reduced loan loss
provisions, particularly when the volume of impaired loans has not
declined proportionately....As of last week, the stock market remained characterized by strenuous
overvaluation, strenuous overbought conditions, overbullish sentiment,
and hostile yield pressures. The fraud charges brought against Goldman
Sachs by the SEC may or may not provide a catalyst for market weakness,
but significant risk is already baked into observable market
conditions. The present syndrome tends to be followed by large and
abrupt losses (though with somewhat unpredictable timing). To the
extent that investors tend to attribute market fluctuations to the
immediate news surrounding them, the Goldman Sachs issue may become
more of a subject of investor attention in the weeks ahead than it
deserves. But really, is anybody actually surprised?"
Courtesy of John Hussman:
April 12, 2010: The latest Mortgage Monitor report
released by Lender Processing Services, a leading provider of mortgage
performance data and analytics, shows that the total number of
delinquent loans was 21.3 percent higher than the same period last
year. The nation's foreclosure inventories reached record highs.
February's foreclosure rate of 3.31 percent represented a 51.1 percent
year-over-year increase. The percentage of new problem loans also
remains at a five-year high. The total number of non-current first-lien
mortgages and REO properties is now more than 7.9 million loans.
Furthermore, the percentage of new problem loans is also at its highest
level in five years. More than 1.1 million loans that were current at
the beginning of January 2010 were already at least 30 days delinquent
or in foreclosure by February 2010 month-end.
April
8, 2010: First American CoreLogic reports that distressed home sales –
such as short sales and real estate owned (REO) sales – accounted for
29 percent of all sales in the U.S. in January: the highest level since
April 2009. After the peak in early 2009, the distressed sale share
fell to 23 percent in July, before rising again in late 2009 and
continuing into 2010. Distressed sales are non-arms-length transactions
such as REO or short sales. Market sales are arms-length transactions
between a willing buyer and willing seller and they exclude distressed
sales. Distressed sales have a very strong influence on home price
trends and are an indicator of a housing market's health."
China told banks to stop loans for third-home purchases in cities.
General Electric filed more than 7,000 income tax returns in hundreds
of global jurisdictions last year, but when push came to shove, the
company owed the U.S. government a whopping bill of $0. How'd it pull
off that trick? By losing lots of money. GE
had plenty of earnings last year -- just not in the United States. For
tax purposes, the company's U.S. operations lost $408 million, while
its international businesses netted a $10.8 billion profit.
For every $1 of disposable income, Canadians owe a record $1.47.
The index
of leading economic indicators rose 1.4% in March, marking 12
consecutive gains, following an upwardly revised increase of 0.4% in
February. Analysts polled by MarketWatch had expected a gain of 1.3% in
March. Going forward, the strength of demand "remains the big
question," said Ken Goldstein, economist at the Conference Board.
"Improvement in employment and income will be the key factors in
whether consumers push the recovery on a stronger path," Goldstein
said.
Analysts surveyed by Platts expected an increase in petroleum products inventories in the week ended April 16. The analysts expected crude-oil inventories to rise by 300,000 barrels, while they see gasoline stocks going up by 100,000 barrels. Inventories of distillates, which include diesel and heating oil, are expected to increase by 840,000 barrels.
After wavering between gains and losses for much of the day, the Dow average added 73.39 points, or 0.7%, higher at 11,092.05. The S&P 500 gained 5.39 points, or 0.45%, to 1,197.52, with all sectors posting gains. Financials, which had been down earlier in the session, rallied on Citigroup, Inc results and after Goldman Sachs Group Inc.shares turned higher in the wake of a Securities and Exchange Commission vote. The Nasdaq Composite fell 1.15 points, or 0.1%, to 2,480.11.
IBM raised its full-year outlook and reported stronger-than-expected quarterly results as companies increased spending on software and IT consulting, but the news failed to excite investors who had already begun to price in a strong recovery.
Shares of IBM fell 2 percent despite the positive numbers, mirroring the performance of other tech companies like Oracle Corp and Google Inc , whose investors had also locked in profits following a rally ahead of results.
Sunday, April 18, 2010
Fraud?
4/18/10 Fraud?
Venezuela secured a $20 billion loan from China and agreed to form a joint
venture to pump crude oil from a block in the Orinoco Belt, President Hugo Chavez said as he promised to meet the Asian country’s
energy needs.
Chavez said the $20 billion financing from China is separate from a $12
billion bilateral investment fund, without providing details. Venezuela
currently sends China 460,000 barrels a day of crude oil to repay an $8 billion
loan that finances infrastructure projects in the South American country.
“We agreed on a huge long-term financing plan,” Chavez said on state
television. “This is a larger scope, a super heavy fund. China needs energy
security and we’re here to provide them with all the oil they need.”
Prime Minister Gordon Brown said on Sunday he wanted Britain's financial
regulator to conduct a special investigation into U.S. bank Goldman Sachs.
Courtesy of ZeroHedge:
"The cycles and very simple fundamentals are enough to
predict that 2011 will be worse than 2008. The medium-term cycles tell us that
there is a very high probability of a serious bout of risk aversion beginning in
the next five trading days and continuing into the week of May 3. This is likely
to be most apparent in Europe, but it should also impact the equity and
commodity markets around the world. The stream of strong economic and corporate
news, plus continued benign inflation outside of Asia should assure us of a
further risk rally, starting in May and running through July and possibly into
early August. This decline after the August peak should be far more serious and
we believe it will be the start of a major market rout continuing into the
middle of 2011, at a minimum. The deflationary recession that will accompany
this market collapse, at least in the developed world, will put extreme pressure
on the Eurozone and the EMU structure. The second half of this decade will
witness a very different world." John Taylor of FX Concepts, biggest currency
hedge fund in the world.
Kenneth Lench, Chief of the SEC's Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."
Mike Shedlock: "Merrill Lynch & Co. engaged in the same investor fraud that the U.S. Securities and Exchange Commission accused Goldman Sachs Group Inc. of committing, according to a bank that sued the firm in New York last year.Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, known as Rabobank, claims Merrill, now a unit of Bank of America Corp., failed to tell it a key fact in advising on a synthetic collateralized debt obligation. Omitted was Merrill’s relationship with another client betting against the investment, which resulted in a loss of $45 million, Rabobank claims.“This is the tip of the iceberg in regard to Goldman Sachs and certain other banks who were stacking the deck against CDO investors,” said Jon Pickhardt, an attorney with Quinn Emanuel Urquhart Oliver & Hedges, who is representing Netherlands-based Rabobank."
Venezuela secured a $20 billion loan from China and agreed to form a joint
venture to pump crude oil from a block in the Orinoco Belt, President Hugo Chavez said as he promised to meet the Asian country’s
energy needs.
Chavez said the $20 billion financing from China is separate from a $12
billion bilateral investment fund, without providing details. Venezuela
currently sends China 460,000 barrels a day of crude oil to repay an $8 billion
loan that finances infrastructure projects in the South American country.
“We agreed on a huge long-term financing plan,” Chavez said on state
television. “This is a larger scope, a super heavy fund. China needs energy
security and we’re here to provide them with all the oil they need.”
Prime Minister Gordon Brown said on Sunday he wanted Britain's financial
regulator to conduct a special investigation into U.S. bank Goldman Sachs.
Courtesy of ZeroHedge:
"The cycles and very simple fundamentals are enough to
predict that 2011 will be worse than 2008. The medium-term cycles tell us that
there is a very high probability of a serious bout of risk aversion beginning in
the next five trading days and continuing into the week of May 3. This is likely
to be most apparent in Europe, but it should also impact the equity and
commodity markets around the world. The stream of strong economic and corporate
news, plus continued benign inflation outside of Asia should assure us of a
further risk rally, starting in May and running through July and possibly into
early August. This decline after the August peak should be far more serious and
we believe it will be the start of a major market rout continuing into the
middle of 2011, at a minimum. The deflationary recession that will accompany
this market collapse, at least in the developed world, will put extreme pressure
on the Eurozone and the EMU structure. The second half of this decade will
witness a very different world." John Taylor of FX Concepts, biggest currency
hedge fund in the world.
Kenneth Lench, Chief of the SEC's Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."
Mike Shedlock: "Merrill Lynch & Co. engaged in the same investor fraud that the U.S. Securities and Exchange Commission accused Goldman Sachs Group Inc. of committing, according to a bank that sued the firm in New York last year.Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, known as Rabobank, claims Merrill, now a unit of Bank of America Corp., failed to tell it a key fact in advising on a synthetic collateralized debt obligation. Omitted was Merrill’s relationship with another client betting against the investment, which resulted in a loss of $45 million, Rabobank claims.“This is the tip of the iceberg in regard to Goldman Sachs and certain other banks who were stacking the deck against CDO investors,” said Jon Pickhardt, an attorney with Quinn Emanuel Urquhart Oliver & Hedges, who is representing Netherlands-based Rabobank."
Saturday, April 17, 2010
Monetary Disorder
4/17/10 Monetary Disorder
Regulators on Friday shut down eight banks -- three in Florida, two in
California, and one each in Massachusetts, Michigan and Washington -- putting
the number of U.S. bank failures this year at 50.
Doug Noland: "Almost $50 billion exited money market funds the past week alone, boosting the 15-week outflow to $380 billion. Money Fund assets are down an incredible $900
billion in just 12 months, a historic wall of finance unleashed upon global risk
markets....The Morgan Stanley Retail index closed yesterday above its previous all-time
high set all the way back in April, 2007. From its low of 68.41 in November of
2008, the Morgan Stanley Retail index has tripled in price. While down almost
3% today, the S&P500 Regional Bank index sports a 2010 gain of 34.8%.
During the height of the Credit crisis, I wrote that I believed the U.S. economy
was heading into a depression. I was wrong.... Massive government Credit inflation has, at least for now, sustained the
existing economic structure – buy retailers, regional banks, homebuilders,
restaurants, etc. It’s back to Bubble Economy business as usual.... It is quite amazing how quickly Trust has been restored. A new bull market is
celebrated, while another bout of Monetary Disorder has unfathomable amounts of
“money” sloshing around for the taking.
At the center of it all,
policymaking at home and abroad has distorted market perceptions and market
pricing mechanisms. The unsuspecting again have little notion of the underlying
risks they are accepting. Fleeing zero rates and chasing inflating securities
prices, investors have been left again dangerously exposed to another financial
Bubble and a postponed economic restructuring. It may never be called “fraud”
or “misrepresentation. The outcome will be about the same. At the end of the
day, markets are made or broken on Trust."
"
Bloomberg: “China’s State Council ordered minimum 30% down payments for
purchases of first homes larger than 90 square meters…”
The Monetary Authority of Singapore said it will seek a ‘modest and gradual
appreciation’ in the local dollar and shift to a stronger range for currency
fluctuations… The trade ministry said the $182 billion economy will expand as
much as 9% in 2010, compared with a previous outlook of 6.5%.
Chinese investment in Australian farms increased 10-fold in the past six months,
real estate agents said.
Mike Burk: "The market is overbought.
By my way of counting where all of the major indices must be down to count the week as down, there has not had a down week in the past 10 weeks.
Most of the indicators confirmed Thursday's highs, NYSE volume is the exception. I do not know of any volume indicators that generate buy and sell signals. There is usually a nebulous pattern of volume increasing when the market is rising and volume decreasing when the market is falling. I think of it as a matter of interest. That is, a rising market generates more interest which is reflected in rising volume. Over the past 13 months we have witnesses one of the greatest bull markets in history and it has not generated any interest.
The chart below covers the past 8 years showing the S&P 500 (SPX) in orange and a 5% trend (39 day EMA) of NYSE total volume in grey. Dashed vertical lines have been drawn on the 1st trading day of each year.
NYSE Volume has fallen to an 8 year low."
Regulators on Friday shut down eight banks -- three in Florida, two in
California, and one each in Massachusetts, Michigan and Washington -- putting
the number of U.S. bank failures this year at 50.
Doug Noland: "Almost $50 billion exited money market funds the past week alone, boosting the 15-week outflow to $380 billion. Money Fund assets are down an incredible $900
billion in just 12 months, a historic wall of finance unleashed upon global risk
markets....The Morgan Stanley Retail index closed yesterday above its previous all-time
high set all the way back in April, 2007. From its low of 68.41 in November of
2008, the Morgan Stanley Retail index has tripled in price. While down almost
3% today, the S&P500 Regional Bank index sports a 2010 gain of 34.8%.
During the height of the Credit crisis, I wrote that I believed the U.S. economy
was heading into a depression. I was wrong.... Massive government Credit inflation has, at least for now, sustained the
existing economic structure – buy retailers, regional banks, homebuilders,
restaurants, etc. It’s back to Bubble Economy business as usual.... It is quite amazing how quickly Trust has been restored. A new bull market is
celebrated, while another bout of Monetary Disorder has unfathomable amounts of
“money” sloshing around for the taking.
At the center of it all,
policymaking at home and abroad has distorted market perceptions and market
pricing mechanisms. The unsuspecting again have little notion of the underlying
risks they are accepting. Fleeing zero rates and chasing inflating securities
prices, investors have been left again dangerously exposed to another financial
Bubble and a postponed economic restructuring. It may never be called “fraud”
or “misrepresentation. The outcome will be about the same. At the end of the
day, markets are made or broken on Trust."
"
Bloomberg: “China’s State Council ordered minimum 30% down payments for
purchases of first homes larger than 90 square meters…”
The Monetary Authority of Singapore said it will seek a ‘modest and gradual
appreciation’ in the local dollar and shift to a stronger range for currency
fluctuations… The trade ministry said the $182 billion economy will expand as
much as 9% in 2010, compared with a previous outlook of 6.5%.
Chinese investment in Australian farms increased 10-fold in the past six months,
real estate agents said.
Mike Burk: "The market is overbought.
By my way of counting where all of the major indices must be down to count the week as down, there has not had a down week in the past 10 weeks.
Most of the indicators confirmed Thursday's highs, NYSE volume is the exception. I do not know of any volume indicators that generate buy and sell signals. There is usually a nebulous pattern of volume increasing when the market is rising and volume decreasing when the market is falling. I think of it as a matter of interest. That is, a rising market generates more interest which is reflected in rising volume. Over the past 13 months we have witnesses one of the greatest bull markets in history and it has not generated any interest.
The chart below covers the past 8 years showing the S&P 500 (SPX) in orange and a 5% trend (39 day EMA) of NYSE total volume in grey. Dashed vertical lines have been drawn on the 1st trading day of each year.
NYSE Volume has fallen to an 8 year low."
Friday, April 16, 2010
Better Late......
4/16/10 Better Late.....
The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of
interest in mortgage investments it sold as the housing market was
faltering.
The Securities and Exchange Commission said in a civil
complaint Friday that Goldman failed to disclose that one of its
clients helped create -- and then bet against -- subprime mortgage
securities that Goldman sold to investors.
Goldman Sachs denied the allegations. In a statement, it called the SEC's charges
"completely unfounded in law and fact" and said it will contest them.
The
charges are a blow to the reputation of the most powerful firm on Wall
Street, which earned a record $4.79 billion last quarter and has long
profited from high-octane trading.
The allegations come as
lawmakers seek to crack down on Wall Street practices that helped cause
the financial crisis. Among proposals Congress is weighing are tougher
rules for complex investments like those involved in the alleged
Goldman fraud.
The Goldman client implicated in the fraud is one
of the world's largest hedge funds, Paulson & Co., which paid
Goldman roughly $15 million for structuring the deals in 2007.
Goldman Sachs shares fell more than 13 percent after the SEC announcement, which also
caused shares of other financial companies to sink. The Dow Jones
industrial average fell more than 140 points in midday trading.
Congress is sending President Barack Obama an $18 billion bill to restore unemployment benefits for people who have been out of a job for months and resume full Medicare payments to doctors threatened by a 21 percent cut.
The
House cleared the bill Thursday night by a 289-112 tally taken just two
hours after it emerged from the Senate on a 59-38 vote that capped an
unusually partisan debate. Republicans largely chose to take a stand
against the legislation for adding to the $12.8 trillion national
despite backing it by wide margins in December and again recently.
European finance ministers discussed Greece's debt crisis on Friday
but said Athens was seeking to clarify how an emergency aid mechanism
would work, rather than requesting it.
Greek Prime Minister
George Papandreou told parliament that any request to activate the
40-45 billion euro ($56-$63 billion) financial aid package announced by
euro zone governments would be made in the country's best interest if
needed."We are taking all the preparatory actions required," said Papandreou.
Brett Steenbarger: "If you're not seeing the market well,
step back and reassess your views. If you're not trading well, step
back and reassess yourself. The capacity to flexibly engage markets and
disengage from them is an important component of career longevity."
GE's orders for big-ticket equipment and services fell 8% in Q1 to $17.1B. That's below the $18B GE reported in Q2 2009, which CEO Jeff Immelt at the time described as the potential low point for new orders amid the broad economic downturn. CEO Jeff Immelt: "We saw encouraging economic signs, including
increases in airline passenger miles and freight loadings, declines in
receivables delinquencies, and growth in local advertising markets."
The share of America's jobless out of work for 27 weeks or more reached a new record of 44.1% in March.
Wholesale prices in China for the month were up 5.9% year-on-year, compared to a 5.4% rise in February.
"There are signs of overheating," said Stephen Green, Standard Chartered's head of Greater China research in Shanghai.
Mar. Housing Starts: +1.6% to 626K vs. 610K expected and 616K last month (revised). Permits +7.5% to 685K vs. 634K expected and 637K last month (revised).
The Association of American Railroads (AAR) today reported that U.S. freight railroads saw a 7.5 percent rise in carloads during March compared with the same month last year, and a decline of 11.5 percent compared with the same month in 2008.
Millions of Americans are not only upside down on their mortgage,
they also appear to be shunning that monthly payment in favor of
meeting their everyday expenses.
In the state of California, for
example, more than 10% of credit card-carrying consumers were choosing
to pay that bill rather than their mortgage as of last fall, according
to a recent study published by the credit reporting agency TransUnion.
Exports rise 15.8% and 10.9%, respectively, helped by the dollar's
weakness. Imports rise 10.8% at Long Beach but fall 2.9% at Los Angeles
compared with March 2009.
Continental Airlines is again discussing a merger with United Airlines,
two years after the Houston-based carrier abandoned similar talks and
declared its desire to stay independent.
ZeroHedge: "PDMA Chief Petros Christodoulou was quoted as saying in an interview
with Japan's Jiji news agency published Friday. Greece is now
effectively a Lehman Brothers, whose busted balance sheet is entirely
dependent on the "discount window" of the IMF's benevolence. Should
there be a hiccup in ultra-short term debt availability, the country
will default overnight."
It's mid-April and gas is $3+ a gallon and the peak driving season has not begun. How much is left on credit cards for gas and then for shopping? The brick wall is approaching our economy.
"Something isn't sitting well with
small business owners," Bill Dunkelberg, chief economist of the
National Federation of Independent Business, said in a written
statement accompanying the latest edition of his organization's monthly
"Small Business Optimism" report. "Poor sales and uncertainty continue
to overwhelm any other good news about the economy." Capital
expenditures remain near record lows, sales are still weak, and credit
lines are hard to find, according to the around 950 business owners
NFIB surveyed in March. While job cuts have slowed, few businesses say
they plan to hire new workers within the next three months. NFIB's
findings dovetail with those from American Express, which recently
polled owners of firms with 100 or fewer employees. One in five
businesses said their companies are "sinking ships," while more than
half said they were merely "staying afloat." Just 21% reported that
their business was healthy or growing.
Washington-based trade group The
American Petroleum Institute said Thursday U.S. gasoline production in
March was the highest ever level on record. At 9.3 million barrels per
day, it was 7.5% above March 2009. Domestic crude production, at 5.5
million barrels a day, remained at a five-year high, the API said in
releasing its monthly statistics. Crude imports fell in March compared
to last year, the API said.
U.S. consumer sentiment dropped in early April, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index fell
to 69.5 in April from 73.6 in March. Economists surveyed by MarketWatch
had been expecting the sentiment index to hit 75 in April. While the
economy has been picking up, consumers remain worried about jobs and
their personal finances. The index hit a 28-year low of 55.3 in
November 2008.
Schork Report: "Therefore, it goes without saying, once Exxon et al. master the shale
learning curve, producers will not be so keen to sell into a $6 market,
especially when No.6 oil is trading at an equivalent $12."
Three bank failures in Florida and one in Massachusetts brought the year's tally to 47, according to the Federal Deposit Insurance Corp. Friday. In Florida, TD Bank took over the deposits and assets of AmericanFirst Bank, First Federal Bank of North Florida and Riverside National Bank of Florida, for a total of $3.9 billion in assets and $3.17 billion in deposits. Massachusetts' Butler Bank had its $268 million in assets and $233.2 million in deposits taken over by People's United Bank of Bridgeport, Conn. Earlier in the day, the FDIC announced another bank failure in Michigan.
Bernstein Research analyst Brad Hintz said Friday that Goldman Sachs could face a maximum liability of $706.5 million stemming from securities fraud charges filed against the investment bank by the Securities and Exchange Commission.
The Dow Jones industrials fell 126 points, or 1.1%, to 11,019. The Standard & Poor's 500 Index was off 20 points, 1.6%, to 1,192. And the Nasdaq Composite Index was off 34 points, 1.4%, to 2,481. The declines for the three indexes were the biggest since Feb. 4.
The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of
interest in mortgage investments it sold as the housing market was
faltering.
The Securities and Exchange Commission said in a civil
complaint Friday that Goldman failed to disclose that one of its
clients helped create -- and then bet against -- subprime mortgage
securities that Goldman sold to investors.
Goldman Sachs denied the allegations. In a statement, it called the SEC's charges
"completely unfounded in law and fact" and said it will contest them.
The
charges are a blow to the reputation of the most powerful firm on Wall
Street, which earned a record $4.79 billion last quarter and has long
profited from high-octane trading.
The allegations come as
lawmakers seek to crack down on Wall Street practices that helped cause
the financial crisis. Among proposals Congress is weighing are tougher
rules for complex investments like those involved in the alleged
Goldman fraud.
The Goldman client implicated in the fraud is one
of the world's largest hedge funds, Paulson & Co., which paid
Goldman roughly $15 million for structuring the deals in 2007.
Goldman Sachs shares fell more than 13 percent after the SEC announcement, which also
caused shares of other financial companies to sink. The Dow Jones
industrial average fell more than 140 points in midday trading.
Congress is sending President Barack Obama an $18 billion bill to restore unemployment benefits for people who have been out of a job for months and resume full Medicare payments to doctors threatened by a 21 percent cut.
The
House cleared the bill Thursday night by a 289-112 tally taken just two
hours after it emerged from the Senate on a 59-38 vote that capped an
unusually partisan debate. Republicans largely chose to take a stand
against the legislation for adding to the $12.8 trillion national
despite backing it by wide margins in December and again recently.
European finance ministers discussed Greece's debt crisis on Friday
but said Athens was seeking to clarify how an emergency aid mechanism
would work, rather than requesting it.
Greek Prime Minister
George Papandreou told parliament that any request to activate the
40-45 billion euro ($56-$63 billion) financial aid package announced by
euro zone governments would be made in the country's best interest if
needed."We are taking all the preparatory actions required," said Papandreou.
Brett Steenbarger: "If you're not seeing the market well,
step back and reassess your views. If you're not trading well, step
back and reassess yourself. The capacity to flexibly engage markets and
disengage from them is an important component of career longevity."
GE's orders for big-ticket equipment and services fell 8% in Q1 to $17.1B. That's below the $18B GE reported in Q2 2009, which CEO Jeff Immelt at the time described as the potential low point for new orders amid the broad economic downturn. CEO Jeff Immelt: "We saw encouraging economic signs, including
increases in airline passenger miles and freight loadings, declines in
receivables delinquencies, and growth in local advertising markets."
The share of America's jobless out of work for 27 weeks or more reached a new record of 44.1% in March.
Wholesale prices in China for the month were up 5.9% year-on-year, compared to a 5.4% rise in February.
"There are signs of overheating," said Stephen Green, Standard Chartered's head of Greater China research in Shanghai.
Mar. Housing Starts: +1.6% to 626K vs. 610K expected and 616K last month (revised). Permits +7.5% to 685K vs. 634K expected and 637K last month (revised).
The Association of American Railroads (AAR) today reported that U.S. freight railroads saw a 7.5 percent rise in carloads during March compared with the same month last year, and a decline of 11.5 percent compared with the same month in 2008.
Millions of Americans are not only upside down on their mortgage,
they also appear to be shunning that monthly payment in favor of
meeting their everyday expenses.
In the state of California, for
example, more than 10% of credit card-carrying consumers were choosing
to pay that bill rather than their mortgage as of last fall, according
to a recent study published by the credit reporting agency TransUnion.
Exports rise 15.8% and 10.9%, respectively, helped by the dollar's
weakness. Imports rise 10.8% at Long Beach but fall 2.9% at Los Angeles
compared with March 2009.
Continental Airlines is again discussing a merger with United Airlines,
two years after the Houston-based carrier abandoned similar talks and
declared its desire to stay independent.
ZeroHedge: "PDMA Chief Petros Christodoulou was quoted as saying in an interview
with Japan's Jiji news agency published Friday. Greece is now
effectively a Lehman Brothers, whose busted balance sheet is entirely
dependent on the "discount window" of the IMF's benevolence. Should
there be a hiccup in ultra-short term debt availability, the country
will default overnight."
It's mid-April and gas is $3+ a gallon and the peak driving season has not begun. How much is left on credit cards for gas and then for shopping? The brick wall is approaching our economy.
"Something isn't sitting well with
small business owners," Bill Dunkelberg, chief economist of the
National Federation of Independent Business, said in a written
statement accompanying the latest edition of his organization's monthly
"Small Business Optimism" report. "Poor sales and uncertainty continue
to overwhelm any other good news about the economy." Capital
expenditures remain near record lows, sales are still weak, and credit
lines are hard to find, according to the around 950 business owners
NFIB surveyed in March. While job cuts have slowed, few businesses say
they plan to hire new workers within the next three months. NFIB's
findings dovetail with those from American Express, which recently
polled owners of firms with 100 or fewer employees. One in five
businesses said their companies are "sinking ships," while more than
half said they were merely "staying afloat." Just 21% reported that
their business was healthy or growing.
Washington-based trade group The
American Petroleum Institute said Thursday U.S. gasoline production in
March was the highest ever level on record. At 9.3 million barrels per
day, it was 7.5% above March 2009. Domestic crude production, at 5.5
million barrels a day, remained at a five-year high, the API said in
releasing its monthly statistics. Crude imports fell in March compared
to last year, the API said.
U.S. consumer sentiment dropped in early April, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index fell
to 69.5 in April from 73.6 in March. Economists surveyed by MarketWatch
had been expecting the sentiment index to hit 75 in April. While the
economy has been picking up, consumers remain worried about jobs and
their personal finances. The index hit a 28-year low of 55.3 in
November 2008.
Schork Report: "Therefore, it goes without saying, once Exxon et al. master the shale
learning curve, producers will not be so keen to sell into a $6 market,
especially when No.6 oil is trading at an equivalent $12."
Three bank failures in Florida and one in Massachusetts brought the year's tally to 47, according to the Federal Deposit Insurance Corp. Friday. In Florida, TD Bank took over the deposits and assets of AmericanFirst Bank, First Federal Bank of North Florida and Riverside National Bank of Florida, for a total of $3.9 billion in assets and $3.17 billion in deposits. Massachusetts' Butler Bank had its $268 million in assets and $233.2 million in deposits taken over by People's United Bank of Bridgeport, Conn. Earlier in the day, the FDIC announced another bank failure in Michigan.
Bernstein Research analyst Brad Hintz said Friday that Goldman Sachs could face a maximum liability of $706.5 million stemming from securities fraud charges filed against the investment bank by the Securities and Exchange Commission.
The Dow Jones industrials fell 126 points, or 1.1%, to 11,019. The Standard & Poor's 500 Index was off 20 points, 1.6%, to 1,192. And the Nasdaq Composite Index was off 34 points, 1.4%, to 2,481. The declines for the three indexes were the biggest since Feb. 4.
Thursday, April 15, 2010
Taxes
4/15/10 Taxes
April 9 was Tax Freedom Day, the day on which Americans have earned
enough to pay their federal, state and local taxes, as calculated by
the Tax Foundation, a non-partisan tax research group in Washington.
Analysts surveyed by Platts saw an increase in natural gas storage by 76 to 80 billion cubic feet in the week ended April 9.
Natural gas for May delivery
declined 11 cents, or 2.6%, to $4.09 per million British thermal units.
The Energy Information Administration reported an increase of 87
billion cubic feet in the week ended April 9.
Euro Will Drop to $1.19 by Next Year on Greece Crisis, BNP Says.
Apache Corp said Thursday it will buy deepwater exploration firm Mariner Energy Inc.
in a deal valued at nearly $4 billion in cash, stock and debt. Mariner
Energy shareholders will receive 0.17043 of a share of Apache common
stock and $7.80 in cash for each share for a total of $2.7 billion.
Capital One Financial Corp's U.S. credit-card defaults rose in March in a sign that consumers may still be under stress.
In
a regulatory filing, Capital One said the annualized net charge-off
rate -- debts the company believes it will never collect -- for U.S.
credit cards rose to 10.87 percent in March from 10.19 percent in
February.
The Fortune 500 largest U.S. companies slashed
a record 821,000 jobs last year, even as their collective profit soared
more than three-fold to $391 billion, according to the business
magazine, which issued the annual ranking on Thursday.
The
companies suffered an 8.7 percent drop in 2009 sales as the recession,
the sharpest decline since 1983, took its toll and spared few
industries last year, but the cost cutting, including the job cuts,
more than offset that.
Existing tax preferences for fossil fuels give gas, oil and coal an
advantage, while suppressing investment in clean energy technologies,
Assistant Treasury Secretary Michael Mundaca said.
The number of people applying for unemployment benefits jumped 24,000
in the latest week, but the increase appeared to stem largely from the
Easter holiday and other onetime factors that distorted the data.
Initial claims rose to a seasonally adjusted 484,000 in the week ended
April 10, the Labor Department said Thursday. The four-week average of
initial claims -- a better gauge of employment trends than the volatile
weekly number - increased 7,500 to 457,750. Economists surveyed by
MarketWatch had forecast claims to drop to 430,000. Continuing claims
in the week of April 3 climbed 73,000 to 4.64 million.
U.S. April Empire State index 31.9 vs 22.9 March.
"Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Manufacturing output rose 0.9 percent in March, led by widespread gains among durable goods industries. Factory production was likely held down in February by the winter storms but nonetheless rose at an annual rate of 6.6 percent for the first quarter as a whole. The output of mines increased 2.3 percent in March. Utilities output dropped 6.4 percent; after a relatively cold February, demand for heating fell in March as temperatures climbed to above-normal levels. At 101.6 percent of its 2002 average, industrial output in March was 4.0 percent above its year-earlier level. Capacity utilization for total industry advanced 0.2 percentage point to 73.2 percent, a rate 7.4 percentage points below its average from 1972 to 2009, but 3.7 percentage points above the rate from a year earlier.
The Philly Fed index rose to 20.2 in April from 18.9 in March, slightly better than expectations of an increase to 20.0.
UK Treasury holdings have literally exploded from $106 billion in October, to more than double, or $231.7 billion in February.
The NAHB/Wells Fargo housing
market index rose 4 points to 19 in April, reversing a fall in March.
This is the highest level of the index since last September.
The Dow Jones Industrial Average ended up 21.46 points, or 0.2%, at 11,144.57, a fresh closing high for the year. The S&P 500 index rose 1.02 point, or 0.1%, to 1,211.67, and the Nasdaq Composite gained 10.83, or 0.4%, to 2,515.69, with both average also ending at 2010 closing highs.
Google Inc. said Thursday its first-quarter net income rose to $1.96 billion, or $6.06 a share, from $1.42 billion, or $4.49 a share in the same period last year. Net revenue for the period ended in March came in at $5.06 billion. Excluding special items, Google said earnings for the quarter were $6.76 a share. Wall Street analysts polled by Thomson Reuters had expected Google to post first-quarter earnings excluding items of $6.60 a share, and $4.95 billion in net revenue.
April 9 was Tax Freedom Day, the day on which Americans have earned
enough to pay their federal, state and local taxes, as calculated by
the Tax Foundation, a non-partisan tax research group in Washington.
Analysts surveyed by Platts saw an increase in natural gas storage by 76 to 80 billion cubic feet in the week ended April 9.
Natural gas for May delivery
declined 11 cents, or 2.6%, to $4.09 per million British thermal units.
The Energy Information Administration reported an increase of 87
billion cubic feet in the week ended April 9.
Euro Will Drop to $1.19 by Next Year on Greece Crisis, BNP Says.
Apache Corp said Thursday it will buy deepwater exploration firm Mariner Energy Inc.
in a deal valued at nearly $4 billion in cash, stock and debt. Mariner
Energy shareholders will receive 0.17043 of a share of Apache common
stock and $7.80 in cash for each share for a total of $2.7 billion.
Capital One Financial Corp's U.S. credit-card defaults rose in March in a sign that consumers may still be under stress.
In
a regulatory filing, Capital One said the annualized net charge-off
rate -- debts the company believes it will never collect -- for U.S.
credit cards rose to 10.87 percent in March from 10.19 percent in
February.
The Fortune 500 largest U.S. companies slashed
a record 821,000 jobs last year, even as their collective profit soared
more than three-fold to $391 billion, according to the business
magazine, which issued the annual ranking on Thursday.
The
companies suffered an 8.7 percent drop in 2009 sales as the recession,
the sharpest decline since 1983, took its toll and spared few
industries last year, but the cost cutting, including the job cuts,
more than offset that.
Existing tax preferences for fossil fuels give gas, oil and coal an
advantage, while suppressing investment in clean energy technologies,
Assistant Treasury Secretary Michael Mundaca said.
The number of people applying for unemployment benefits jumped 24,000
in the latest week, but the increase appeared to stem largely from the
Easter holiday and other onetime factors that distorted the data.
Initial claims rose to a seasonally adjusted 484,000 in the week ended
April 10, the Labor Department said Thursday. The four-week average of
initial claims -- a better gauge of employment trends than the volatile
weekly number - increased 7,500 to 457,750. Economists surveyed by
MarketWatch had forecast claims to drop to 430,000. Continuing claims
in the week of April 3 climbed 73,000 to 4.64 million.
U.S. April Empire State index 31.9 vs 22.9 March.
"Industrial production edged up 0.1 percent in March and increased at an annual rate of 7.8 percent in the first quarter. Manufacturing output rose 0.9 percent in March, led by widespread gains among durable goods industries. Factory production was likely held down in February by the winter storms but nonetheless rose at an annual rate of 6.6 percent for the first quarter as a whole. The output of mines increased 2.3 percent in March. Utilities output dropped 6.4 percent; after a relatively cold February, demand for heating fell in March as temperatures climbed to above-normal levels. At 101.6 percent of its 2002 average, industrial output in March was 4.0 percent above its year-earlier level. Capacity utilization for total industry advanced 0.2 percentage point to 73.2 percent, a rate 7.4 percentage points below its average from 1972 to 2009, but 3.7 percentage points above the rate from a year earlier.
The Philly Fed index rose to 20.2 in April from 18.9 in March, slightly better than expectations of an increase to 20.0.
UK Treasury holdings have literally exploded from $106 billion in October, to more than double, or $231.7 billion in February.
The NAHB/Wells Fargo housing
market index rose 4 points to 19 in April, reversing a fall in March.
This is the highest level of the index since last September.
The Dow Jones Industrial Average ended up 21.46 points, or 0.2%, at 11,144.57, a fresh closing high for the year. The S&P 500 index rose 1.02 point, or 0.1%, to 1,211.67, and the Nasdaq Composite gained 10.83, or 0.4%, to 2,515.69, with both average also ending at 2010 closing highs.
Google Inc. said Thursday its first-quarter net income rose to $1.96 billion, or $6.06 a share, from $1.42 billion, or $4.49 a share in the same period last year. Net revenue for the period ended in March came in at $5.06 billion. Excluding special items, Google said earnings for the quarter were $6.76 a share. Wall Street analysts polled by Thomson Reuters had expected Google to post first-quarter earnings excluding items of $6.60 a share, and $4.95 billion in net revenue.
Wednesday, April 14, 2010
Inflation Muted
4/14/10 Inflation Muted
U.S. retail gasoline demand dropped 3.6 percent in the week to April 9, according to a MasterCard SpendingPulse report released on Tuesday.
Gasoline demand averaged 9.298 million barrels per day last week, the weekly survey showed. Gasoline demand fell 1.1 percent from the same period last year, SpendingPulse showed.
Israel issued an "urgent" warning Tuesday to its citizens to leave
Egypt's Sinai Peninsula immediately citing "concrete evidence of an
expected terrorist attempt to kidnap Israelis in Sinai."
Magnitude 7.1 earthquake hits southwest China.
China's currency is undervalued
and the Chinese government should move to let the market value it,
President Barack Obama said Tuesday. Obama said it's in China's
interest to let the market determine the value of the yuan, but also
said he won't hold Beijing to a deadline for action. "I have no
timetable," Obama said at a press conference following a nuclear
summit.
Washington-based trade group
The American Petroleum Institute reported Tuesday an increase in U.S.
oil stockpiles of 1.4 million barrels in the week ended April 9.
Analysts polled by Platts expected an increase of 1.6 million barrels.
Distillates increased by 1.7 million barrels, below the Platts analyst
survey's expectations, which stood at 1 million barrels. Gasoline
stocks rose to 1.6 million, whereas the analysts Platts surveyed
projected it to decline by 1.26 million barrels on the week.
Roubini: "And for now, there is more deflation than inflation."
Goldman Sachs, J.P. Morgan, and Morgan Stanley have launched a
last-ditch effort in Congress to fight changes to financial regulation
that would squeeze their derivatives-trading businesses.
The Market Oracle: "Taking an average achievable growth rate of 1.5% per annum for the
next 4 years implies that Britain will grow GDP by a total of £213
billion. However to achieve this growth and based on the governments
own figures, Britain will borrow an additional £478 billion. So Britain
is in effect borrowing more than £2 for every £1 of extra economic
growth. If that does not illustrate a country that is on the road
towards bankruptcy then nothing will. Labour ignited the debt fuelled
boom during mid 2009 which I covered at length in articles such as - 03
Jun 2009 - UK Economy Set for Debt Fuelled Economic Recovery Into 2010 General Election, and analysed at length in the Inflation Mega-Trend Ebook (FREE Download)
Nothing has changed as the Labour government looks set to deliver the forecast scorched earth economy to the next Government, something that Britain will have to suffer the
consequences of for at least the next 5 years as the country looks set
to enter into a prolonged period of stagflation as the government
attempts to inflate some of the debt and interest burden away.
Britain Will Eventually Go Bankrupt
Britain will at some point default on its debts to foreigners (as it
has done at least twice before), this is INEVITABLE because ALL
countries eventually DEFAULT on their debts, it is only a question of
when i.e. in the next few years or delay bankruptcy for many decades
and therefore results in the relative risks of default which the market
prices. INFLATION is a symptom of the trend towards bankruptcy as it is
a measure of the continuous COMPOUNDING loss of purchasing power of the
currency. The best that governments such as Britain have been able to
achieve is the slow stealth trend towards bankruptcy where people don't
realise the loss of purchasing and wage earning power over time.
However with government debt heading towards 100% of GDP, Britain looks
set to leave the stealth trend towards bankruptcy behind and about to
accelerate a few notches higher which risks igniting a wage price
spiral that ultimately ends in a hyper-inflationary bust."
The Monetary Authority of Singapore tightened its policy Wednesday,
saying it will revalue upward its undisclosed targeted trading band for
the Singapore dollar and aim for a "modest and gradual appreciation"
against a basket of currencies
The volatility index fell to its lowest level since June 2007 this
week. The VIX is at 15 today…light-years from the 80-90s suffered
during Lehman’s collapse..
Reports showed retail sales rose 1.6% last month, more than expected, while consumer prices rose 0.1%.
China to increase gasoline and diesel prices by as much as 4.6 percent starting today.
The U.S. Energy Information
Administration on Wednesday said crude-oil stockpiles decreased by 2.2
million barrels in the week ended April 9, contrary to market
expectations of another build. Total motor gasoline inventories
decreased by 1.1 million barrels, the agency said. Distillates stocks
increased by 1.1 million barrels.
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 addition, there were large
increases in bankruptcy filings in the Midwest, especially Michigan and
Illinois."
The Dow Jones industrials added 104 points, or 0.9%, to 11,123. It was the best finish for the
blue chips since September 2008 and their first gain of 100 points or
more since March 23.
The Standard & Poor's 500 Index closed up 13 points, or 1.1%, to 1,211, its first close above 1,200 since Sept. 26, 2008. The Nasdaq Composite Index jumped 39 points, or 1.6%, to 2,505, its best finish since June 5, 2008.
Australia's benchmark index
broke above the psychologically important 5,000 level Thursday for the
first time since September 2008.
U.S. retail gasoline demand dropped 3.6 percent in the week to April 9, according to a MasterCard SpendingPulse report released on Tuesday.
Gasoline demand averaged 9.298 million barrels per day last week, the weekly survey showed. Gasoline demand fell 1.1 percent from the same period last year, SpendingPulse showed.
Israel issued an "urgent" warning Tuesday to its citizens to leave
Egypt's Sinai Peninsula immediately citing "concrete evidence of an
expected terrorist attempt to kidnap Israelis in Sinai."
Magnitude 7.1 earthquake hits southwest China.
China's currency is undervalued
and the Chinese government should move to let the market value it,
President Barack Obama said Tuesday. Obama said it's in China's
interest to let the market determine the value of the yuan, but also
said he won't hold Beijing to a deadline for action. "I have no
timetable," Obama said at a press conference following a nuclear
summit.
Washington-based trade group
The American Petroleum Institute reported Tuesday an increase in U.S.
oil stockpiles of 1.4 million barrels in the week ended April 9.
Analysts polled by Platts expected an increase of 1.6 million barrels.
Distillates increased by 1.7 million barrels, below the Platts analyst
survey's expectations, which stood at 1 million barrels. Gasoline
stocks rose to 1.6 million, whereas the analysts Platts surveyed
projected it to decline by 1.26 million barrels on the week.
Roubini: "And for now, there is more deflation than inflation."
Goldman Sachs, J.P. Morgan, and Morgan Stanley have launched a
last-ditch effort in Congress to fight changes to financial regulation
that would squeeze their derivatives-trading businesses.
The Market Oracle: "Taking an average achievable growth rate of 1.5% per annum for the
next 4 years implies that Britain will grow GDP by a total of £213
billion. However to achieve this growth and based on the governments
own figures, Britain will borrow an additional £478 billion. So Britain
is in effect borrowing more than £2 for every £1 of extra economic
growth. If that does not illustrate a country that is on the road
towards bankruptcy then nothing will. Labour ignited the debt fuelled
boom during mid 2009 which I covered at length in articles such as - 03
Jun 2009 - UK Economy Set for Debt Fuelled Economic Recovery Into 2010 General Election, and analysed at length in the Inflation Mega-Trend Ebook (FREE Download)
Nothing has changed as the Labour government looks set to deliver the forecast scorched earth economy to the next Government, something that Britain will have to suffer the
consequences of for at least the next 5 years as the country looks set
to enter into a prolonged period of stagflation as the government
attempts to inflate some of the debt and interest burden away.
Britain Will Eventually Go Bankrupt
Britain will at some point default on its debts to foreigners (as it
has done at least twice before), this is INEVITABLE because ALL
countries eventually DEFAULT on their debts, it is only a question of
when i.e. in the next few years or delay bankruptcy for many decades
and therefore results in the relative risks of default which the market
prices. INFLATION is a symptom of the trend towards bankruptcy as it is
a measure of the continuous COMPOUNDING loss of purchasing power of the
currency. The best that governments such as Britain have been able to
achieve is the slow stealth trend towards bankruptcy where people don't
realise the loss of purchasing and wage earning power over time.
However with government debt heading towards 100% of GDP, Britain looks
set to leave the stealth trend towards bankruptcy behind and about to
accelerate a few notches higher which risks igniting a wage price
spiral that ultimately ends in a hyper-inflationary bust."
The Monetary Authority of Singapore tightened its policy Wednesday,
saying it will revalue upward its undisclosed targeted trading band for
the Singapore dollar and aim for a "modest and gradual appreciation"
against a basket of currencies
The volatility index fell to its lowest level since June 2007 this
week. The VIX is at 15 today…light-years from the 80-90s suffered
during Lehman’s collapse..
Reports showed retail sales rose 1.6% last month, more than expected, while consumer prices rose 0.1%.
China to increase gasoline and diesel prices by as much as 4.6 percent starting today.
The U.S. Energy Information
Administration on Wednesday said crude-oil stockpiles decreased by 2.2
million barrels in the week ended April 9, contrary to market
expectations of another build. Total motor gasoline inventories
decreased by 1.1 million barrels, the agency said. Distillates stocks
increased by 1.1 million barrels.
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 addition, there were large
increases in bankruptcy filings in the Midwest, especially Michigan and
Illinois."
The Dow Jones industrials added 104 points, or 0.9%, to 11,123. It was the best finish for the
blue chips since September 2008 and their first gain of 100 points or
more since March 23.
The Standard & Poor's 500 Index closed up 13 points, or 1.1%, to 1,211, its first close above 1,200 since Sept. 26, 2008. The Nasdaq Composite Index jumped 39 points, or 1.6%, to 2,505, its best finish since June 5, 2008.
Australia's benchmark index
broke above the psychologically important 5,000 level Thursday for the
first time since September 2008.
Tuesday, April 13, 2010
Overbought
4/13/10 Overbought
US small business owners have little confidence in the economy and are
in no rush to hire or expand, despite signs the recovery is picking up,
a survey released Tuesday showed.
Small U.S. business owners were more pessimistic in March than in February, according to a monthly survey of companies released Tuesday by the National Federation of
Independent Businesses. The NFIB index fell to 86.8 from 88, with only
one of 10 components improving. "Something isn't sitting well with
small business owners," said Bill Dunkelberg, chief economist for the
small-business lobbying group. "Poor sales and uncertainty continue to
overwhelm any other good news about the economy." Most owners think
business conditions will not improve in the next six months, few are
hiring, and fewer than usual are investing in their business. Price
reductions are widespread.
Prices of goods imported into
the United States increased 0.7% in March, after two months of
declines, the Labor Department reported Tuesday. Fuel prices rose 2.9%
in March. Import prices are up 11.4% in the past year, driven by a
63.3% rise in imported fuel prices. Non-fuel prices rose 0.2% in March
and were up 2.7% in the past year. Export prices increased 0.7% in
March, including a 2.1% increase in agricultural export prices. Prices
of imported capital goods fell 0.3%. Prices of imports from China
dropped 0.1%.
The U.S.
trade deficit widened by 7.4% in February to $39.7 billion, the
Commerce Department said Tuesday. The trade deficit was above the
consensus forecast of Wall Street economists of a deficit of $38.5
billion. Imports rose faster than exports in February. The U.S. trade
deficit with China widened to $16.5 billion in compared with $14.2
billion in the same month last year. This is the smallest deficit since
last March.
The International Energy Agency
revised up by 30,000 barrels a day its forecast for global oil demand
in 2010, citing higher-than-expected data from North America and the
Pacific, as well as non-OECD Asia and the Middle East. Oil demand is
now estimated to grow by 1.7 million barrels a day to 86.6 million
barrels a day in 2010, the Paris-based IEA said Tuesday in its monthly
oil report. "It is worth noting that six large non-OECD countries -
China, Saudi Arabia, Russia, Brazil, Iran and India - are expected to
account for almost three-quarters of global oil demand growth in 2010,"
the IEA said.
Dialogue, not sanctions, is the best way to handle negotiations with
Iran over its nuclear program, China's Foreign Ministry said Tuesday.
Real personal income for Americans - excluding government payouts such
as Social Security - has fallen by 3.2 percent since President Obama
took office in January 2009, according to the Commerce Department's
Bureau of Economic Analysis.
For comparison, real personal income during the first 15 months
in office for President George W. Bush, who inherited a milder
recession from his predecessor, dropped 0.4 percent. Income excluding
government payouts increased 12.7 percent during Mr. Bush's eight years
in office.
Recovery in the world's biggest economies could be jeopardized if crude
oil prices stay over $80 per barrel, the International Energy Agency
said today.
Mish: "Large corporations are abandoning the US. I work for IBM. Here is a snapshot of IBM's US headcount:
2005 133,789
2006 127,000
2007 121,000
2008 115,000
2009 105,000
2010 98,000 estimate
These are all good paying jobs that can support a family and pay taxes.
Today,
75% of the total headcount is overseas. The overseas revenue is 65%.
The company reported record profits last year. IBM decided to stop
reporting their US headcount this year."
China's biggest banks face $70B capital shortfall, ICBC's Yang says.
ZeroHedge: "The Tax Policy Center calculates, that for a
return to economic normalcy, or deficits at a "mere" 2% of GDP,
households earnings more than $200/250k would see their tax rates going
up to a stunning 91%. If the economic underperformance target is
reduced to more palatable deficits at 3% of GDP, then the top earners
would be hit with "only" 77% taxes."
St. Petersburg Times:
Washington Will Spend $31,406 Per Household This Year. Taxpayers filing their 1040s are likely wondering just where all their hard-earned tax dollars are going, anyway. Washington
will spend $31,406 per household in 2010 — the highest level in
American history (adjusted for inflation). It will collect $18,276 per
household in taxes. The remaining $13,130 represents this year's
staggering budget deficit per household, which, along with all prior
government debt, will be dumped in the laps of our children. Government
spending has increased by $5,000 per household since 2008, and nearly
$10,000 per household over the past decade. Yet there is no free lunch:
If spending is not reined in, then eventually taxes must also rise by
$10,000 per household.
John Hussman: "When you don't require the reported value of
assets to have a clear and tangible link to the value that the assets
would have in liquidation, bad things happen. Yet this is what
regulatory and accounting rules are allowing for the banking system at
present...Presently, a normalization of valuations, not to extreme undervaluation
but simply a reversion to post-war, non-bubble norms, would imply an
average annual return for the S&P 500 of just 2.97% over the coming
5 year period...I suspect that the secular bear market that began at the valuation peak
of 2000 is incomplete. As of last week, the S&P 500 remained
strenuously overvalued on the basis of normalized fundamentals. From
that perspective, even if the trough we observed in March 2009 was the
ultimate price low of the secular bear market since 2000, it's not likely to represent the ultimate valuation trough...Again, at this point it does not matter whether we anticipate further
credit strains or not. Wholly on the basis of current valuations,
stocks are priced to deliver unsatisfactory returns in the coming years
- a situation that is worsened by strenuous overbought conditions and
upward yield pressures here."
The U.S. economy is the world’s largest and requires a huge amount of
energy. In 2009, during the deepest recession in 80 years, the U.S.
still imported about 12 million barrels of oil a day.
About 70 percent of that is used as the principal transportation fuel
for America’s 250 million cars and light trucks, and 8.5 million heavy
trucks.
China’s economy, the world’s second-largest in terms of purchasing
power, is about half the size of the U.S. gross domestic product.
According to its central bank, China’s economy grew at an annual rate
of 10.7 percent in the fourth quarter of 2009.
To keep its economy growing at that rate, China needs about 8 million barrels of oil a day. It imports about half of that. In sum, China has locked in about 5.2 billion barrels of oil to import.
Five billion barrels is the amount the United States must import (at
current levels) between now and 2023. But China has a big advantage
because its state-owned oil company is financed by its state-owned bank.
China has imposed duties on imports from the U.S. and Russia of a
common type of electrical steel used in the power sector, following a
final decision on its countervailing and antidumping investigation, the
nation's Ministry of Commerce said Tuesday.
The duties took effect Sunday and are valid for five years, the
ministry stated on its Web site. In December, China had made a
preliminary ruling and required importers to pay deposits ahead of a
final decision on the matter.
Tuesday's announcement by China's commerce ministry comes after last
week's decision issued by the U.S. commerce department to impose
antidumping duties of up to 99.14% on imports of steel pipes from
China.
In the probe against U.S. companies, the ministry said it will levy
countervailing duties of as much as 44.6% and antidumping duties of as
much as 64.8% on imports of the electrical steel from the U.S.
The investigation into Russian companies has resulted in antidumping
duties of as much as 25% on the same type of products, the ministry
said in its statement. Companies that responded to the investigation—AK
Steel Corp. and Allegheny Ludlum Corp. of the U.S. as well as Russian
company Novolipetsk Steel, or NLMK, and its affiliate VIZ-Stal
Ltd.—will face lower duties, it said.
The Dow Jones industrial average was up 0.68 point, or 0.01 percent, at 11,006.65. The Standard & Poor's 500 Index was down 1.84 points, or 0.15 percent, at 1,194.64. The Nasdaq Composite Index was up 1.06 points, or 0.04 percent, at 2,458.93.
US small business owners have little confidence in the economy and are
in no rush to hire or expand, despite signs the recovery is picking up,
a survey released Tuesday showed.
Small U.S. business owners were more pessimistic in March than in February, according to a monthly survey of companies released Tuesday by the National Federation of
Independent Businesses. The NFIB index fell to 86.8 from 88, with only
one of 10 components improving. "Something isn't sitting well with
small business owners," said Bill Dunkelberg, chief economist for the
small-business lobbying group. "Poor sales and uncertainty continue to
overwhelm any other good news about the economy." Most owners think
business conditions will not improve in the next six months, few are
hiring, and fewer than usual are investing in their business. Price
reductions are widespread.
Prices of goods imported into
the United States increased 0.7% in March, after two months of
declines, the Labor Department reported Tuesday. Fuel prices rose 2.9%
in March. Import prices are up 11.4% in the past year, driven by a
63.3% rise in imported fuel prices. Non-fuel prices rose 0.2% in March
and were up 2.7% in the past year. Export prices increased 0.7% in
March, including a 2.1% increase in agricultural export prices. Prices
of imported capital goods fell 0.3%. Prices of imports from China
dropped 0.1%.
The U.S.
trade deficit widened by 7.4% in February to $39.7 billion, the
Commerce Department said Tuesday. The trade deficit was above the
consensus forecast of Wall Street economists of a deficit of $38.5
billion. Imports rose faster than exports in February. The U.S. trade
deficit with China widened to $16.5 billion in compared with $14.2
billion in the same month last year. This is the smallest deficit since
last March.
The International Energy Agency
revised up by 30,000 barrels a day its forecast for global oil demand
in 2010, citing higher-than-expected data from North America and the
Pacific, as well as non-OECD Asia and the Middle East. Oil demand is
now estimated to grow by 1.7 million barrels a day to 86.6 million
barrels a day in 2010, the Paris-based IEA said Tuesday in its monthly
oil report. "It is worth noting that six large non-OECD countries -
China, Saudi Arabia, Russia, Brazil, Iran and India - are expected to
account for almost three-quarters of global oil demand growth in 2010,"
the IEA said.
Dialogue, not sanctions, is the best way to handle negotiations with
Iran over its nuclear program, China's Foreign Ministry said Tuesday.
Real personal income for Americans - excluding government payouts such
as Social Security - has fallen by 3.2 percent since President Obama
took office in January 2009, according to the Commerce Department's
Bureau of Economic Analysis.
For comparison, real personal income during the first 15 months
in office for President George W. Bush, who inherited a milder
recession from his predecessor, dropped 0.4 percent. Income excluding
government payouts increased 12.7 percent during Mr. Bush's eight years
in office.
Recovery in the world's biggest economies could be jeopardized if crude
oil prices stay over $80 per barrel, the International Energy Agency
said today.
Mish: "Large corporations are abandoning the US. I work for IBM. Here is a snapshot of IBM's US headcount:
2005 133,789
2006 127,000
2007 121,000
2008 115,000
2009 105,000
2010 98,000 estimate
These are all good paying jobs that can support a family and pay taxes.
Today,
75% of the total headcount is overseas. The overseas revenue is 65%.
The company reported record profits last year. IBM decided to stop
reporting their US headcount this year."
China's biggest banks face $70B capital shortfall, ICBC's Yang says.
ZeroHedge: "The Tax Policy Center calculates, that for a
return to economic normalcy, or deficits at a "mere" 2% of GDP,
households earnings more than $200/250k would see their tax rates going
up to a stunning 91%. If the economic underperformance target is
reduced to more palatable deficits at 3% of GDP, then the top earners
would be hit with "only" 77% taxes."
St. Petersburg Times:
Washington Will Spend $31,406 Per Household This Year. Taxpayers filing their 1040s are likely wondering just where all their hard-earned tax dollars are going, anyway. Washington
will spend $31,406 per household in 2010 — the highest level in
American history (adjusted for inflation). It will collect $18,276 per
household in taxes. The remaining $13,130 represents this year's
staggering budget deficit per household, which, along with all prior
government debt, will be dumped in the laps of our children. Government
spending has increased by $5,000 per household since 2008, and nearly
$10,000 per household over the past decade. Yet there is no free lunch:
If spending is not reined in, then eventually taxes must also rise by
$10,000 per household.
John Hussman: "When you don't require the reported value of
assets to have a clear and tangible link to the value that the assets
would have in liquidation, bad things happen. Yet this is what
regulatory and accounting rules are allowing for the banking system at
present...Presently, a normalization of valuations, not to extreme undervaluation
but simply a reversion to post-war, non-bubble norms, would imply an
average annual return for the S&P 500 of just 2.97% over the coming
5 year period...I suspect that the secular bear market that began at the valuation peak
of 2000 is incomplete. As of last week, the S&P 500 remained
strenuously overvalued on the basis of normalized fundamentals. From
that perspective, even if the trough we observed in March 2009 was the
ultimate price low of the secular bear market since 2000, it's not likely to represent the ultimate valuation trough...Again, at this point it does not matter whether we anticipate further
credit strains or not. Wholly on the basis of current valuations,
stocks are priced to deliver unsatisfactory returns in the coming years
- a situation that is worsened by strenuous overbought conditions and
upward yield pressures here."
The U.S. economy is the world’s largest and requires a huge amount of
energy. In 2009, during the deepest recession in 80 years, the U.S.
still imported about 12 million barrels of oil a day.
About 70 percent of that is used as the principal transportation fuel
for America’s 250 million cars and light trucks, and 8.5 million heavy
trucks.
China’s economy, the world’s second-largest in terms of purchasing
power, is about half the size of the U.S. gross domestic product.
According to its central bank, China’s economy grew at an annual rate
of 10.7 percent in the fourth quarter of 2009.
To keep its economy growing at that rate, China needs about 8 million barrels of oil a day. It imports about half of that. In sum, China has locked in about 5.2 billion barrels of oil to import.
Five billion barrels is the amount the United States must import (at
current levels) between now and 2023. But China has a big advantage
because its state-owned oil company is financed by its state-owned bank.
China has imposed duties on imports from the U.S. and Russia of a
common type of electrical steel used in the power sector, following a
final decision on its countervailing and antidumping investigation, the
nation's Ministry of Commerce said Tuesday.
The duties took effect Sunday and are valid for five years, the
ministry stated on its Web site. In December, China had made a
preliminary ruling and required importers to pay deposits ahead of a
final decision on the matter.
Tuesday's announcement by China's commerce ministry comes after last
week's decision issued by the U.S. commerce department to impose
antidumping duties of up to 99.14% on imports of steel pipes from
China.
In the probe against U.S. companies, the ministry said it will levy
countervailing duties of as much as 44.6% and antidumping duties of as
much as 64.8% on imports of the electrical steel from the U.S.
The investigation into Russian companies has resulted in antidumping
duties of as much as 25% on the same type of products, the ministry
said in its statement. Companies that responded to the investigation—AK
Steel Corp. and Allegheny Ludlum Corp. of the U.S. as well as Russian
company Novolipetsk Steel, or NLMK, and its affiliate VIZ-Stal
Ltd.—will face lower duties, it said.
The Dow Jones industrial average was up 0.68 point, or 0.01 percent, at 11,006.65. The Standard & Poor's 500 Index was down 1.84 points, or 0.15 percent, at 1,194.64. The Nasdaq Composite Index was up 1.06 points, or 0.04 percent, at 2,458.93.
Monday, April 12, 2010
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.
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.
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