9/23/10 Casinoism
WSJ: Big U.S. banks are facing legal pressure to make up for losses tied to pools of soured low-end mortgage loans.
In the latest effort, a group of investors in 2,300 mortgage securities worth roughly $500 billion is seeking to force several banks that originated or are now servicing faulty subprime-mortgage loans to repurchase or modify them.
A new oil pipeline through three western North Dakota counties will help deliver crude to at least three regional markets and will reduce truck traffic on the region's roads, state regulators said Wednesday.
North Dakota's Public Service Commission endorsed a route for the 12-inch pipeline, which will stretch for 77 miles through Billings, Dunn and McKenzie counties. Bridger Pipeline LLC hopes to begin construction soon and finish by next summer on the $29 million project.
House Republicans are offering a collection of conservative ideas, including freezing government spending and replacing the president's sweeping health-care legislation with a scaled-back version allowing for the purchase of health plans across state lines.
The coincidence of a rising harvest moon at about 6:28 p.m. Wednesday with the last sunset of summer comes only once every 20 years.
The Automatic Earth: "When 77% of your population lives paycheck to paycheck, as David DeGraw writes, up from 43% when the recession started in 2007 and 61% when it supposedly ended, it's high time to consider dignity and respect when publishing cold statistics. How good of a thing is it for a president to tout his achievements in front of TV cameras while fast increasing numbers of those who voted him into office see no way out of their misery anymore, when for many the recession's just started instead of ended? Who does a president represent, exactly?...And a 9.6% unemployment rate, or 16.7% in more realistic terms, does not spell an end to a recession. If anything, it spells an end to an experiment started in 1776, of a new world built on freedom, truth, dignity and respect. There's not much left, other than a lot of decent people too busy and too blinded to notice they're being robbed blind as they watch 57 channels with nothing on. Cynicism rules all over the place. And you can't build anything that way."
(Bloomberg) -- Seagate Technology Plc, the world’s largest maker of hard-disk drives, held talks with previous owners TPG Capital and Silver Lake about going private again, according to people with knowledge of the discussions.
Talks ended in recent weeks, and a deal, which would have been valued at about $7 billion, is unlikely to happen, said the people, who declined to be identified because the discussions were private. Representatives of TPG, Silver Lake and Dublin- based Seagate declined to comment.
Negotiations collapsed as Seagate wasn’t meeting some of the financial projections the two private-equity firms had based the deal on, said one of the people familiar with the situation.
An appreciation of 20 percent in China's currency would cause widespread bankruptcies in China's export sector, where firms operate on thin margins, Chinese Premier Wen Jiabao said on Wednesday. "The conditions for a major appreciation of the renminbi do not exist," Wen said in a speech to U.S. businessmen in New York.
Gross domestic product increased 0.2 percent in the second quarter from the previous three months, less than the 0.7 percent median estimate in a Bloomberg News survey of 12 economists and the 0.9 percent forecast by the central bank, Statistics New Zealand figures showed in Wellington today.
George Ure: "The reality is that the crowd which preaches "free market" really only means free for those on top. This is why the PTB will go to the very ends of the earth to find someone in a TWSH (third world shit hole) who will underbid you. The lower the bid for the work and the higher the retail price in America the more wealth, power, and future for themselves and their evil spawn they ensure. (Or so they'd like to think...)"
ZeroHedge: "Since the beginning of the greatest depression, US household net worth has plunged nearly 11 trillion dollars. All the while we continue to experience price inflation and expanded government spending. In a normal economy that isn’t run by a bunch of criminals, we should expect to see price deflation as malinvestment is wiped out. Since our money is based on debt, as debt is reduced though defaults and write-downs, the monetary base should contract, thereby leading to price deflation. Of course, this is not what we are actually experiencing at the present moment since the criminal central bankers and politicians have decided to prevent the liquidation of malinvestment through a nearly endless series of bailouts, guarantees, and deficit spending."
"In the week ending Sept. 18, the advance figure for seasonally adjusted initial claims was 465,000, an increase of 12,000 from the previous week's revised figure of 453,000. The 4-week moving average was 463,250, a decrease of 3,250 from the previous week's revised average of 466,500.
The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Sept. 11, a decrease of 0.1 percentage point from the prior week's revised rate of 3.6 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Sept. 11 was 4,489,000, a decrease of 48,000 from the preceding week's revised level of 4,537,000. The 4-week moving average was 4,519,500, an increase of 2,500 from the preceding week's revised average of 4,517,000.
Macy's plans to hire approximately 65,000 seasonal associates in its stores, call centers, distribution centers and online fulfillment facilities for the holiday season. The workers will add to the retailer's contingent of 161,000 associates on a year-round basis.
The number of existing homes on the market is climbing from the current 4 million units to 5 million, versus a ten year annual trailing average sales of 2.5 million units. One month after suffering the largest percentage decline on record, sales of existing single-family homes and condos rebounded 7.6% in August to a seasonally adjusted annual rate of 4.13 million, the National Association of Realtors reported Thursday. Resales plunged a revised 27% in July to a record low 3.84 million unit pace, compared with the initial estimate of a 27.2% plunge to 3.83 million units. Economists surveyed by MarketWatch expected sales to rebound to a 4.10 million unit pace in August. Resales have sunk 19.0% in the past year. The inventory of unsold homes on the market fell 0.6% to 3.98 million, an 11.6 month supply at the current sales pace. The median sales prices fell 0.8% in the past year to $178,600.
Blockbuster Inc. said Thursday that it has filed voluntary Chapter 11 petitions after agreeing a deal with bondholders to recapitalize the company.
Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services.
Henry Ford
The Energy Department on Thursday is expected to report an increase of 77 billion cubic feet to 81 billion cubic feet of natural gas in storage for the week ended Sept. 17, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Working gas in storage was 3,340 Bcf as of Friday, September 17, 2010, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 175 Bcf less than last year at this time and 195 Bcf above the 5-year average of 3,145 Bcf. In the East Region, stocks were 16 Bcf above the 5-year average following net injections of 53 Bcf. Stocks in the Producing Region were 114 Bcf above the 5-year average of 915 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 65 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,340 Bcf, total working gas is within the 5-year historical range.
"The whole premise of the site is that everything is more valuable when you have context about what your friends are doing," says Facebook co-founder and Chief Executive Officer Mark Zuckerberg, who started accepting ads on Facebook as a Harvard sophomore in 2004 in an attempt to cover server costs. "That's true for ads as well. An advertiser can produce the best creative ad in the world, but knowing your friends really love drinking Coke is the best endorsement for Coke you can possibly get."
Sharply raising the stakes in a dispute over Japan’s detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles.
The Conference Board said on Thursday that its leading economic index -- a composite gauge of ten indicators including weekly jobless claims, stock prices and the money supply -- rose 0.3% in August, after a 0.1% increase in July. The rise was stronger than the 0.2% pick-up that economists polled by MarketWatch expected; nonetheless, the index has slowed to 2% in the six months to August, down from 4.8% in the preceding six months. The biggest positive contribution in August came from the interest rate spread between 10-year Treasury bonds and the federal funds rate, while the biggest drag came from the average weekly rise in initial jobless claims.
Buffett says we're still in recession and will not be out of it for a while.
A speculator is a man who observes the future, and acts before it occurs.
Bernard M. Baruch
30-year U.S. treasury bonds yield 3.72% and Freddie Mac said Thursday the 30-year fixed-rate mortgage average was unchanged at 4.37% with an average 0.7 point for the week ending Sept. 23.
Jack Bogle: "The only way I can define capitalism right now is casinoism!
The rampant trading that goes on is just foolish and creates no value for both the buyer and seller combined. We have this casino mentality. Its a rapid turn over....Under normal circumstances, I think the concerned investors should be aware of that these are no normal circumstances.
We're in an economic crisis. We remain in a global economic crisis. Corporations are having good earnings, but there is a lot of instability in the global financial system. We have seen a lot in the price of gold."
The eurozone manufacturing PMI declined to 53.6 from 55.1 in the previous month. Equally, the services PMI dropped to 53.6 from 55.9, much lower than our forecast and median of 55.4.
The German September manufacturing PMI dropped to 55.3 from 58.2 in August, while the services reading slumped to 54.6 from 57.2.
There are two times in a man's life when he should not speculate: when he can't afford it and when he can.
- Following the Equator, Pudd'nhead Wilson's New Calendar
Oil for November delivery added 47 cents, or 0.6%, to $75.18 a barrel. Natural gas held on to gains, settling 5 cents higher at $4.02 per million British thermal units, its highest price in nearly a week. Natural gas prices benefited from an Energy Information Administration report showing an increase of 73 billion cubic feet for the week ended Sept. 17.
About 45% of investors surveyed were bullish, while 29.6% were neutral and 25.4% were bearish. Last week, 50.9% of investors were bullish while 24.3% were bearish. Over the long term, 39% are bullish, 31% are neutral and 30% are bearish.
Insider selling in Salesforce and Netflix by their respective founders and ceos.
The Obama administration needs to permit corporations, private businesses and individuals the right to bring back from foreign soils at least $5 billion tax free. A similar situation was allowed one-time under Bush Jr.
ZeroHedge: "using foreign cash to pay dividends or share repurchases is considered repatriation from the perspective of US tax regulations."
Social media is expected to grow to 18 percent of companies' budgets within the next five years — that's three times as much as it is right now — according to a recent survey by Duke University and the American Marketing Association.
Dow industrials down 76 points at 10,662 at close. S&P 500 index down 0.8% at 1,124.85. Nasdaq Composite down 0.3% at 2,327.08.
Thursday, September 23, 2010
Wednesday, September 22, 2010
The Voters
9/22/10 The Voters
More than half of U.S. states saw their unemployment rates rise in August, the largest number in six months, as hiring weakened across the country. The jobless rate increased in 27 states last month, the Labor Department said Tuesday. It fell in 13 and was unchanged in 10 states and Washington, D.C. That's worse than the previous month, when the rate increased in only 14 states and fell in 18. It's also the most states to see an increase since February.
While the stock market continues its recovery, suggesting that investors have become more optimistic, the voting public remains in the firm grip of pessimism and their negative outlook shows no signs of receding as we head into the midterms. In the latest POLITICO poll, 54 percent of the voters believe we are headed for a second recession, believing this by a two to one margin with only 25 percent who believe we will avoid a double dip.
China's Sinochem Corp has hired banks to advise it how to foil BHP Billiton's $39 billion bid for Potash Corp , two sources with direct knowledge of the matter told Reuters.
The state-owned chemicals group had hired Deutsche Bank and Citigroup for the purpose, the sources said after BHP extended its offer for Potash, the world's largest fertilizer group, by a month to November 18 to provide Canada's competition regulator with more information.
"Sinochem has been given an extra window of a month within which to decide whether and how they are going to bid," said London-based analyst Dominic O'Kane at Liberum Capital.
Oil services company Wellstream is being circled by four potential bidders as industry rivals look to get a slice of Brazil's potentially huge market for oil exploration.
The suitors who have approached the British company, which makes about half its revenues in Brazil, are understood to be Italy's Saipem, General Electric and US operators National Oilwell Vargo and Cameron International.
A Dutch-German medical research team led by Harald Schmidt from Maastricht University, Netherlands, and Christoph Kleinschnitz, University of Wurzburg, Germany, has discovered that an enzyme is responsible for the death of nerve cells after a stroke. The enzyme NOX4 produces hydrogen peroxide, a caustic molecule also used in bleaching agents. Inhibition of NOX4 by an experimental new drug in mice with stroke dramatically reduces brain damage and preserves brain functions, even when given hours after the stroke.
The identification of NOX4 as an enzyme with a key role in killing nerve cells after a stroke in mice makes NOX4 inhibition currently the most promising new therapeutic approach in this often deadly or disabling disease in humans. Pharmacologist, Prof. Schmidt suspects that the findings "May have implications for other disease states in which hydrogen peroxide or related oxygen radicals are suspected to play a major role but where antioxidant or vitamin therapies have failed. Inhibiting now the source of hydrogen peroxide or oxygen radicals may represent the long-sought solution to treating also heart attacks, heart failure, cancer, and other forms of nerve cell degeneration such as in Parkinson's or Alzheimer's disease."
The Dollar Index, a gauge of the currency versus six major trading partners, slid to the lowest level since March 17.
Las Vegas home sales fall as area unemployment lingers near 15%.
The dollar fell about 1% against the euro for a second day, pushing the shared currency to the highest since April, as investors around the globe interpreted Tuesday's statement from the U.S. Federal Reserve as increasing the likelihood that it will soon embark on some kind of asset-buying program, which would weaken the greenback. The euro rose to $1.3415 recently, from $1.3242 in late North American trading on Tuesday. It hasn't topped $1.34 intraday since April.
Are you sane to lend the U.S. Treasury 10-year money at an interest rate of 2.55%?
More than three-quarters of U.S. investors view Obama as anti-business and are pessimistic about his policies, while a majority outside the U.S. holds a more favorable view, a Bloomberg survey shows.
John Fund: "Comparisons between the Obama White House and the failed presidency of Jimmy Carter are increasingly being made—and by Democrats.
Walter Mondale, Mr. Carter's vice president, told The New Yorker this week that anxious and angry voters in the late 1970s "just turned against us—same as with Obama." As the polls turned against his administration, Mr. Mondale recalled that Mr. Carter "began to lose confidence in his ability to move the public." Democrats on Capitol Hill are now saying this is happening to Mr. Obama.
Mr. Mondale says it's time for the president "to get rid of those teleprompters and connect" with voters. Another of Mr. Obama's clear errors has been to turn over the drafting of key legislation to the Democratic Congress: "That doesn't work even when you own Congress," he said.
Jul. FHFA Housing Price Index: -0.5% month-on-month, vs. -1.2% (revised from -0.3%) in June. Year-on-year, prices are -3.3%.
The FHFA purchase-only home-price index is down 13.8% from the peak in 2007. The biggest losses in July came in the South Atlantic states with a 1.6% drop. Economists at Majestic Research said that home prices are weakening because existing inventory is growing at the fastest rate since 2007.
Payrolls dropped in 36 U.S. states in August, led by Michigan.
Meanwhile, yields on 2-year notes fell to a new all-time low of 0.39% in early trading.
U.S. home loan demand fell for a third straight week though fixed mortgage rates slid near all-time lows, with potential buyers still unnerved by the jobs market, Mortgage Bankers Association data showed on Wednesday.
The Energy Information Administration said oil inventories for the week ended Sept. 17 rose 1 million barrels. Oil traded around $75.30 a barrel before the report, which gave prices an initial boost as it showed an increase below what a trade group had reported earlier in the week. The increase, however, ran contrary to analysts expectations. Analysts polled by Platts expected a decline of 1.5 million barrels for the week. Gasoline stocks rose 1.6 million barrels, whereas analysts had seen it unchanged. Reserves of distillates, which include diesel and heating oil, rose 300,000 barrels, the EIA said. They were forecast to increase 100,000 barrels, according to Platts.
"Double Dip or Global Deflation?," is going to represent the worst economic contraction since WWI. Forget WWII. Think "shrinkage" to use the Gilded Age description for economic deflation. - Chris Whalen
Gold for December delivery on the Comex in New York gained as much as 1.7 percent to an all-time high of $1,295.80 an ounce before trading at $1,290.70.
The U.S. currency extended a decline against a basket of six major counterparts, dropping to the lowest level in six weeks. The dollar last traded at $1.3315 per euro.
Australia & New Zealand Banking Group raised its 2011 gold forecast by 6 percent to $1,347 an ounce, and silver target by 8 percent to $21.50 an ounce. The World Gold Council forecast in March that gold consumption in China may double within 10 years.
Why would there be a demand for a 2-year Treasury bond with a falling dollar and rising gold and silver prices?
Gold for December delivery added $17.80, or 1.4%, to $1,292.10 an ounce on the Comex division of the New York Mercantile Exchange. Silver for December delivery advanced 42 cents, or 2%, to $21.06 an ounce.
Potash Corp filed a lawsuit against BHP Billiton on Wednesday that seeks to block the mining giant's $39 billion hostile bid and intensifies the month-long takeover battle for the Canadian fertilizer company.
The lawsuit, filed in a U.S. District Court in Chicago, alleges that BHP misrepresented and failed to inform investors about material facts. It also accuses BHP of engaging in fraudulent, deceptive and manipulative behavior related to its offer.
BHP said the lawsuit is entirely without merit and that it intends to contest the matter vigorously.
With expectations for millions of foreclosures on the horizon, lenders in an Obama administration mortgage-modification program have approved in August modified permanent loans for 33,000 homeowners, bringing the total number of adjusted home-loans under the plan to over 468,000, the Treasury Department said Wednesday in its September report. Homeowners with permanent modifications have had their median monthly payments cut by 36% or more than $500 a month.
The Dow Jones Industrial Average ended down 21.72 points, or 0.2%, at 10,739.31, with 18 of its 30 components declining. The S&P 500 index slid 5.51 points, or 0.5%, to 1,134.27, held down by the financials sector, dropping 1.6%. The Nasdaq Composite Index fell 14.80 points, or 0.6%, to 2,334.55.
Blockbuster Inc is preparing to file for Chapter 11 bankruptcy within the next few days, a source familiar with the video rental chain's plans said on Wednesday.
Microsoft Corp., the world’s biggest software maker, sold $4.75 billion of bonds in four parts, including a portion of 0.875 percent 3-year debt, the lowest coupon on record, according to a person familiar with the transaction.
More than half of U.S. states saw their unemployment rates rise in August, the largest number in six months, as hiring weakened across the country. The jobless rate increased in 27 states last month, the Labor Department said Tuesday. It fell in 13 and was unchanged in 10 states and Washington, D.C. That's worse than the previous month, when the rate increased in only 14 states and fell in 18. It's also the most states to see an increase since February.
While the stock market continues its recovery, suggesting that investors have become more optimistic, the voting public remains in the firm grip of pessimism and their negative outlook shows no signs of receding as we head into the midterms. In the latest POLITICO poll, 54 percent of the voters believe we are headed for a second recession, believing this by a two to one margin with only 25 percent who believe we will avoid a double dip.
China's Sinochem Corp has hired banks to advise it how to foil BHP Billiton's $39 billion bid for Potash Corp , two sources with direct knowledge of the matter told Reuters.
The state-owned chemicals group had hired Deutsche Bank and Citigroup for the purpose, the sources said after BHP extended its offer for Potash, the world's largest fertilizer group, by a month to November 18 to provide Canada's competition regulator with more information.
"Sinochem has been given an extra window of a month within which to decide whether and how they are going to bid," said London-based analyst Dominic O'Kane at Liberum Capital.
Oil services company Wellstream is being circled by four potential bidders as industry rivals look to get a slice of Brazil's potentially huge market for oil exploration.
The suitors who have approached the British company, which makes about half its revenues in Brazil, are understood to be Italy's Saipem, General Electric and US operators National Oilwell Vargo and Cameron International.
A Dutch-German medical research team led by Harald Schmidt from Maastricht University, Netherlands, and Christoph Kleinschnitz, University of Wurzburg, Germany, has discovered that an enzyme is responsible for the death of nerve cells after a stroke. The enzyme NOX4 produces hydrogen peroxide, a caustic molecule also used in bleaching agents. Inhibition of NOX4 by an experimental new drug in mice with stroke dramatically reduces brain damage and preserves brain functions, even when given hours after the stroke.
The identification of NOX4 as an enzyme with a key role in killing nerve cells after a stroke in mice makes NOX4 inhibition currently the most promising new therapeutic approach in this often deadly or disabling disease in humans. Pharmacologist, Prof. Schmidt suspects that the findings "May have implications for other disease states in which hydrogen peroxide or related oxygen radicals are suspected to play a major role but where antioxidant or vitamin therapies have failed. Inhibiting now the source of hydrogen peroxide or oxygen radicals may represent the long-sought solution to treating also heart attacks, heart failure, cancer, and other forms of nerve cell degeneration such as in Parkinson's or Alzheimer's disease."
The Dollar Index, a gauge of the currency versus six major trading partners, slid to the lowest level since March 17.
Las Vegas home sales fall as area unemployment lingers near 15%.
The dollar fell about 1% against the euro for a second day, pushing the shared currency to the highest since April, as investors around the globe interpreted Tuesday's statement from the U.S. Federal Reserve as increasing the likelihood that it will soon embark on some kind of asset-buying program, which would weaken the greenback. The euro rose to $1.3415 recently, from $1.3242 in late North American trading on Tuesday. It hasn't topped $1.34 intraday since April.
Are you sane to lend the U.S. Treasury 10-year money at an interest rate of 2.55%?
More than three-quarters of U.S. investors view Obama as anti-business and are pessimistic about his policies, while a majority outside the U.S. holds a more favorable view, a Bloomberg survey shows.
John Fund: "Comparisons between the Obama White House and the failed presidency of Jimmy Carter are increasingly being made—and by Democrats.
Walter Mondale, Mr. Carter's vice president, told The New Yorker this week that anxious and angry voters in the late 1970s "just turned against us—same as with Obama." As the polls turned against his administration, Mr. Mondale recalled that Mr. Carter "began to lose confidence in his ability to move the public." Democrats on Capitol Hill are now saying this is happening to Mr. Obama.
Mr. Mondale says it's time for the president "to get rid of those teleprompters and connect" with voters. Another of Mr. Obama's clear errors has been to turn over the drafting of key legislation to the Democratic Congress: "That doesn't work even when you own Congress," he said.
Jul. FHFA Housing Price Index: -0.5% month-on-month, vs. -1.2% (revised from -0.3%) in June. Year-on-year, prices are -3.3%.
The FHFA purchase-only home-price index is down 13.8% from the peak in 2007. The biggest losses in July came in the South Atlantic states with a 1.6% drop. Economists at Majestic Research said that home prices are weakening because existing inventory is growing at the fastest rate since 2007.
Payrolls dropped in 36 U.S. states in August, led by Michigan.
Meanwhile, yields on 2-year notes fell to a new all-time low of 0.39% in early trading.
U.S. home loan demand fell for a third straight week though fixed mortgage rates slid near all-time lows, with potential buyers still unnerved by the jobs market, Mortgage Bankers Association data showed on Wednesday.
The Energy Information Administration said oil inventories for the week ended Sept. 17 rose 1 million barrels. Oil traded around $75.30 a barrel before the report, which gave prices an initial boost as it showed an increase below what a trade group had reported earlier in the week. The increase, however, ran contrary to analysts expectations. Analysts polled by Platts expected a decline of 1.5 million barrels for the week. Gasoline stocks rose 1.6 million barrels, whereas analysts had seen it unchanged. Reserves of distillates, which include diesel and heating oil, rose 300,000 barrels, the EIA said. They were forecast to increase 100,000 barrels, according to Platts.
"Double Dip or Global Deflation?," is going to represent the worst economic contraction since WWI. Forget WWII. Think "shrinkage" to use the Gilded Age description for economic deflation. - Chris Whalen
Gold for December delivery on the Comex in New York gained as much as 1.7 percent to an all-time high of $1,295.80 an ounce before trading at $1,290.70.
The U.S. currency extended a decline against a basket of six major counterparts, dropping to the lowest level in six weeks. The dollar last traded at $1.3315 per euro.
Australia & New Zealand Banking Group raised its 2011 gold forecast by 6 percent to $1,347 an ounce, and silver target by 8 percent to $21.50 an ounce. The World Gold Council forecast in March that gold consumption in China may double within 10 years.
Why would there be a demand for a 2-year Treasury bond with a falling dollar and rising gold and silver prices?
Gold for December delivery added $17.80, or 1.4%, to $1,292.10 an ounce on the Comex division of the New York Mercantile Exchange. Silver for December delivery advanced 42 cents, or 2%, to $21.06 an ounce.
Potash Corp filed a lawsuit against BHP Billiton on Wednesday that seeks to block the mining giant's $39 billion hostile bid and intensifies the month-long takeover battle for the Canadian fertilizer company.
The lawsuit, filed in a U.S. District Court in Chicago, alleges that BHP misrepresented and failed to inform investors about material facts. It also accuses BHP of engaging in fraudulent, deceptive and manipulative behavior related to its offer.
BHP said the lawsuit is entirely without merit and that it intends to contest the matter vigorously.
With expectations for millions of foreclosures on the horizon, lenders in an Obama administration mortgage-modification program have approved in August modified permanent loans for 33,000 homeowners, bringing the total number of adjusted home-loans under the plan to over 468,000, the Treasury Department said Wednesday in its September report. Homeowners with permanent modifications have had their median monthly payments cut by 36% or more than $500 a month.
The Dow Jones Industrial Average ended down 21.72 points, or 0.2%, at 10,739.31, with 18 of its 30 components declining. The S&P 500 index slid 5.51 points, or 0.5%, to 1,134.27, held down by the financials sector, dropping 1.6%. The Nasdaq Composite Index fell 14.80 points, or 0.6%, to 2,334.55.
Blockbuster Inc is preparing to file for Chapter 11 bankruptcy within the next few days, a source familiar with the video rental chain's plans said on Wednesday.
Microsoft Corp., the world’s biggest software maker, sold $4.75 billion of bonds in four parts, including a portion of 0.875 percent 3-year debt, the lowest coupon on record, according to a person familiar with the transaction.
Tuesday, September 21, 2010
Sucker Punch
9/21/10 Sucker Punch
John Crudele: "If you invested on the first two days of each month from January through September, you would have had a 10.40 percent return on your investment in Standard & Poor's 500 stocks. If you invested on just the first day of each month, your return wouldn't have been too shabby either: 7.78 percent.
To put it into perspective, if you had placed money in the S&P at the beginning of the year and held firm, you would be up only about 2.48 percent at this point. And you are only doing that well because stocks rallied nicely over the past two weeks. Without the September rally, you would be down 2.5 percent.
A gain of 10.40 percent versus 1 percent. For doing less work!"
The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.
New construction of U.S. houses surged in August, the Commerce Department estimated Tuesday. Starts rose 10.5% in August to a seasonally adjusted 598,000 annualized units, much stronger than the 535,000 pace expected by economists surveyed by MarketWatch, but still down 6.9% from August 2009.This is the highest level since April. Starts in July were revised down slightly to a 541,000 rate compared with prior estimate of 546,000. Starts of new single-family homes rose 4.3% to a 438,000 rate in August, while starts of large apartment units rose 32.2% to 160,000. Building permits, a leading indicator of housing construction, rose 1.8% to a seasonally adjusted annual rate of 569,000.
Who will buy these house? Certainly not in Nevada with 200,000 citizens out of work. Not in Southern California. Meanwhile the level of optimism for homebuilders is at an 18-month low level.
July's residential construction was revised down to show a 0.4 percent gain, which was previously reported as a 1.7 percent increase. There was a 9.8 percent rise in permits for multi-family units. Residential construction in August was lifted by a 32.2 percent jump in groundbreaking activity in the volatile multi-family segment to an annual rate of 160,000 units.
As we can see, it is all in the reporting. Same-housing numbers down 6.9% August 2009 to August 2010 or up from the month of July 2010. In the retail business it's all about same-store sales. Comparisons on a 12-month basis for housing are highly relevant. For examples, housing completions are 23.7% below August 2009.
The Standard & Poor’s 500 Index has risen on 75 percent of the days since March 2009 when the Federal Reserve announced its interest-rate decisions, according to Rob Leiphart of Birinyi Associates Inc.
Nine NATO soldiers were killed in a helicopter crash Tuesday in Afghanistan. Nearly 2100 NATO troops have died in the nine-year Afghanistan war, with 529 alone this year.
2010 Is Deadliest Year for NATO in Afghanistan.
More than 50 million Americans are now on Medicaid.
Salary and benefits [edit] Salaries As of January 2010, the annual salary of each Representative is $174,000.[. The Speaker of the House and the Majority and Minority Leaders earn more: $223,500 for the Speaker and $193,400 for their party leaders (the same as Senate leaders). A cost-of-living-adjustment (COLA) increase takes effect annually unless Congress votes to not accept it. Congress sets members' salaries; however, the Twenty-seventh Amendment to the United States Constitution prohibits a change in salary (but not COLA[14]) from taking effect until after the next general election. Representatives are eligible for lifetime benefits after serving for five years, including a pension, health benefits, and social security benefits.
Charles Hugh Smith: "Corporate America is not even halfway through downsizing. Anyone who thinks hiring is about to explode higher is not just in an ivory tower, they are wearing blinders and earphones in the dark cellar of the ivory tower. This is the story in much of corporate America: divisions are being consolidated, closed or sold, support staff are being laid off and replaced by temps, travel budgets are being trimmed further, etc. etc. etc.
Small business is hanging on by a thread. OK, so Twitter went from 200 employees to 250--whoopie. As I have often noted here, you have to be insane to add employees in this environment. Remaining employees are working longer and harder.
The solution? Require all unemployed drawing benefits to sign up for unpaid work at a non-profit, church, temple, city agencies desperate for volunteers, etc. The fiction is that the unemployed are devoting 40 hours a week to looking for work. Since there are so few job openings out there, it doesn't take more than a few minutes a day to look for what doesn't exist (paying work)."
Stocks jumped Monday with the Dow rising 1.4% to 10,753 and the S&P gaining 1.5% to 1143, its highest close in four months.
The S&P eclipsing 1130 for the first time since late June would seem to confirm the long-awaited technical breakout for the index, and could pull many reluctant investors off the sidelines. "Many automatic buy and sell orders are set around market milestones such as these, and investors watch those levels closely for clues about which way the market may go next," the AP reports.
But the wise move now is to sell this recent rally, says Robert Prechter, president of Elliott Wave International.
Fifty-seven percent of Americans say the government should cut the $1.47 trillion deficit when the economy is in trouble and 60 percent say reducing the fiscal gap would create jobs.
With the sharp rally in equities in September, investor sentiment has shifted from bearish to bullish. Volume remains weak and there is enormous short covering and, the pundits say, risk investing has evaporated. I firmly disagree. There is an underlying race to de-risk and that is reflected in 2-year U.S. treasury bonds yielding 0.42%, an all-time record low yield! Combine that with massive insider selling and you have set the equity market up for a huge sucker punch, and a very costly one at that.
(Bloomberg) -- Former Richmond Fed President J. Alfred Broaddus and former Fed economist Dean Croushore said the Fed’s statement today saying inflation remains below levels consist with price stability suggests the central bank will act to keep prices from falling.
They spoke after the Fed said today that it is willing to ease monetary policy further to boost the economy and support prices. Villanova University professor Victor Li, OppenheimerFunds Inc. economist Brian Levitt, former Fed economist Paul Ballew and Wells Fargo Securities LLC Chief Economist John Silvia also spoke today.
Broaddus:
“If there are clear signs, perhaps in inflation expectations, that the deflation risk is rising, then at that point the Fed will need to act decisively.”
The director of the National Economic Council, Lawrence Summers, will leave the White House at the end of the year and return to Harvard University as a professor. Summers joins Peter Orszag and Christina Romer as high-profile departures from the Obama economics team. The statement confirms a report from Bloomberg News earlier.
Crude-oil inventories rose 2.2 million barrels for the week ended Sept. 17, the American Petroleum Institute said late Tuesday. Gasoline reserves rose 2.4 million barrels, while stocks of distillates rose 2.5 million barrels. Analysts polled by Platts expected a decline of 1.5 million barrels for crude oil stocks, and flat gasoline stocks.
The Dow finished up 7.41 points, or 0.1%, at 10,761.03. But the S&P 500 index, the gauge of the broad market used by market profesionals, ended down 2.93 points, or 0.3%, at 1,137.77, weighed down a 1% drop in its financials sector. The Nasdaq Composite fell 6.48 points, or 0.3%, to end at 2,349.35.
ABC Poll: "This week 89 percent of Americans rate the economy negatively, 75 percent say it’s a bad time to spend money and 55 percent rate their own finances negatively."
John Crudele: "If you invested on the first two days of each month from January through September, you would have had a 10.40 percent return on your investment in Standard & Poor's 500 stocks. If you invested on just the first day of each month, your return wouldn't have been too shabby either: 7.78 percent.
To put it into perspective, if you had placed money in the S&P at the beginning of the year and held firm, you would be up only about 2.48 percent at this point. And you are only doing that well because stocks rallied nicely over the past two weeks. Without the September rally, you would be down 2.5 percent.
A gain of 10.40 percent versus 1 percent. For doing less work!"
The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.
New construction of U.S. houses surged in August, the Commerce Department estimated Tuesday. Starts rose 10.5% in August to a seasonally adjusted 598,000 annualized units, much stronger than the 535,000 pace expected by economists surveyed by MarketWatch, but still down 6.9% from August 2009.This is the highest level since April. Starts in July were revised down slightly to a 541,000 rate compared with prior estimate of 546,000. Starts of new single-family homes rose 4.3% to a 438,000 rate in August, while starts of large apartment units rose 32.2% to 160,000. Building permits, a leading indicator of housing construction, rose 1.8% to a seasonally adjusted annual rate of 569,000.
Who will buy these house? Certainly not in Nevada with 200,000 citizens out of work. Not in Southern California. Meanwhile the level of optimism for homebuilders is at an 18-month low level.
July's residential construction was revised down to show a 0.4 percent gain, which was previously reported as a 1.7 percent increase. There was a 9.8 percent rise in permits for multi-family units. Residential construction in August was lifted by a 32.2 percent jump in groundbreaking activity in the volatile multi-family segment to an annual rate of 160,000 units.
As we can see, it is all in the reporting. Same-housing numbers down 6.9% August 2009 to August 2010 or up from the month of July 2010. In the retail business it's all about same-store sales. Comparisons on a 12-month basis for housing are highly relevant. For examples, housing completions are 23.7% below August 2009.
The Standard & Poor’s 500 Index has risen on 75 percent of the days since March 2009 when the Federal Reserve announced its interest-rate decisions, according to Rob Leiphart of Birinyi Associates Inc.
Nine NATO soldiers were killed in a helicopter crash Tuesday in Afghanistan. Nearly 2100 NATO troops have died in the nine-year Afghanistan war, with 529 alone this year.
2010 Is Deadliest Year for NATO in Afghanistan.
More than 50 million Americans are now on Medicaid.
Salary and benefits [edit] Salaries As of January 2010, the annual salary of each Representative is $174,000.[. The Speaker of the House and the Majority and Minority Leaders earn more: $223,500 for the Speaker and $193,400 for their party leaders (the same as Senate leaders). A cost-of-living-adjustment (COLA) increase takes effect annually unless Congress votes to not accept it. Congress sets members' salaries; however, the Twenty-seventh Amendment to the United States Constitution prohibits a change in salary (but not COLA[14]) from taking effect until after the next general election. Representatives are eligible for lifetime benefits after serving for five years, including a pension, health benefits, and social security benefits.
Charles Hugh Smith: "Corporate America is not even halfway through downsizing. Anyone who thinks hiring is about to explode higher is not just in an ivory tower, they are wearing blinders and earphones in the dark cellar of the ivory tower. This is the story in much of corporate America: divisions are being consolidated, closed or sold, support staff are being laid off and replaced by temps, travel budgets are being trimmed further, etc. etc. etc.
Small business is hanging on by a thread. OK, so Twitter went from 200 employees to 250--whoopie. As I have often noted here, you have to be insane to add employees in this environment. Remaining employees are working longer and harder.
The solution? Require all unemployed drawing benefits to sign up for unpaid work at a non-profit, church, temple, city agencies desperate for volunteers, etc. The fiction is that the unemployed are devoting 40 hours a week to looking for work. Since there are so few job openings out there, it doesn't take more than a few minutes a day to look for what doesn't exist (paying work)."
Stocks jumped Monday with the Dow rising 1.4% to 10,753 and the S&P gaining 1.5% to 1143, its highest close in four months.
The S&P eclipsing 1130 for the first time since late June would seem to confirm the long-awaited technical breakout for the index, and could pull many reluctant investors off the sidelines. "Many automatic buy and sell orders are set around market milestones such as these, and investors watch those levels closely for clues about which way the market may go next," the AP reports.
But the wise move now is to sell this recent rally, says Robert Prechter, president of Elliott Wave International.
Fifty-seven percent of Americans say the government should cut the $1.47 trillion deficit when the economy is in trouble and 60 percent say reducing the fiscal gap would create jobs.
With the sharp rally in equities in September, investor sentiment has shifted from bearish to bullish. Volume remains weak and there is enormous short covering and, the pundits say, risk investing has evaporated. I firmly disagree. There is an underlying race to de-risk and that is reflected in 2-year U.S. treasury bonds yielding 0.42%, an all-time record low yield! Combine that with massive insider selling and you have set the equity market up for a huge sucker punch, and a very costly one at that.
(Bloomberg) -- Former Richmond Fed President J. Alfred Broaddus and former Fed economist Dean Croushore said the Fed’s statement today saying inflation remains below levels consist with price stability suggests the central bank will act to keep prices from falling.
They spoke after the Fed said today that it is willing to ease monetary policy further to boost the economy and support prices. Villanova University professor Victor Li, OppenheimerFunds Inc. economist Brian Levitt, former Fed economist Paul Ballew and Wells Fargo Securities LLC Chief Economist John Silvia also spoke today.
Broaddus:
“If there are clear signs, perhaps in inflation expectations, that the deflation risk is rising, then at that point the Fed will need to act decisively.”
The director of the National Economic Council, Lawrence Summers, will leave the White House at the end of the year and return to Harvard University as a professor. Summers joins Peter Orszag and Christina Romer as high-profile departures from the Obama economics team. The statement confirms a report from Bloomberg News earlier.
Crude-oil inventories rose 2.2 million barrels for the week ended Sept. 17, the American Petroleum Institute said late Tuesday. Gasoline reserves rose 2.4 million barrels, while stocks of distillates rose 2.5 million barrels. Analysts polled by Platts expected a decline of 1.5 million barrels for crude oil stocks, and flat gasoline stocks.
The Dow finished up 7.41 points, or 0.1%, at 10,761.03. But the S&P 500 index, the gauge of the broad market used by market profesionals, ended down 2.93 points, or 0.3%, at 1,137.77, weighed down a 1% drop in its financials sector. The Nasdaq Composite fell 6.48 points, or 0.3%, to end at 2,349.35.
ABC Poll: "This week 89 percent of Americans rate the economy negatively, 75 percent say it’s a bad time to spend money and 55 percent rate their own finances negatively."
Monday, September 20, 2010
Jaws of Death
9/20/10 Jaws of Death
Gordon Long: "The reality is we are on the cusp of an imminent and significant collapse in the standard of living for most Americans....My point is that there is a strong possibility that the 'Jaws of Death' is an orchestrated plan to reposition America's standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America's standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion."
Robert McHugh: "My point is that there is a strong possibility that the 'Jaws of Death' is an orchestrated plan to reposition America's standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America's standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion."
IBM agreed to purchase Netezza Corp. for about $1.7 billion to expand its business analytics products for sales, marketing and product development. The deal values the Marlborough, Mass., company at $27 a share, a near 85% premium to its 3-month trading average of $14.54. Netezza has 500 employees and develops products that reduce the time it takes to load and extract massive amounts of historical data so it can run analytic queries more efficiently, according to IBM. The deal is expected to close in the fourth quarter. Financial advisors for the transaction were not listed. IBM said that in the last four years it has invested more than $12 billion in 23 analytics-related acquisitions. Shares of Netezza rose 13% premarket to $27.65.
John Hussman: "Though the lags are sometimes variable, as we saw in 1974 and 2008, normal lags would suggest an abrupt softening in the September ISM report (due in the beginning of October), with new claims for unemployment softening beginning somewhere around mid-October. It's possible that the historically tight relationships that we've reviewed iin recent weeks will not hold in this particular instance, but we have no reasonable basis to expect that. Indeed, if we look at the drivers of economic growth outside of the now fading impact of government stimulus spending, we continue to observe little intrinsic activity."
Treasury two-year yields were within 2 basis points of a record low on speculation the Federal Reserve will scale back its outlook for economic growth at a policy meeting tomorrow.
Officials will take additional steps to keep borrowing costs low at a subsequent meeting, according to Mohamed A. El- Erian, chief executive officer at Pacific Investment Management Co., which runs the world’s biggest bond fund. The Fed is scheduled to buy notes maturing from September 2016 to August 2020 today as part of its effort to sustain the expansion.
The rising cost of paying interest on its debt is one reason why the Irish government may not be able to cut its budget deficit to 3% of gross domestic product in 2014, the head of Ireland's central bank said Monday.
Central Bank of Ireland Governor Patrick Honohan said in a speech that further cuts in spending or tax changes may be needed to ensure the government meets that target. Mr. Honohan is also a member of the European Central Bank's governing council.
Rob Hanna: "There was some unusual action in the VIX on Friday. As many traders are aware, it typically trades counter to the S&P 500. So on days the SPX finishes up the VIX will normally close down. I have shown several times in the past that there are often bearish implications when both the SPX and VIX rise on the same day. One quirk of the VIX is that it has a natural tendency to fall on Friday afternoons and then rise on Monday mornings. So while it is unusual to see both the SPX and VIX rise on the same day, it is especially unusual to see it happen on a Friday."
Naked Capitalism: "Everywhere we look, across occupations and sectors, people with the skills to work their jobs are more likely to be working part-time for economic reasons in 2010 than they were before the recession. This is a story of aggregate demand, not a story of skills mismatch.
In light of the political climate and the impending elections, government officials may be loath to address this problem frontally. Such an approach, while politically expedient may be disastrous for the economy and for social welfare.
If the issues of long term unemployment and the large number of people dropping out of the labor force are not addressed soon then what is an aggregate demand problem can become a structural problem through hysteresis effects. Officials need to act in a bold and imaginative manner to repair the labor markets dysfunctions-much as Roosevelt did-or risk entrenching the social misery that engulfs many Americans today."
Charles Hugh Smith: "We have become a nation of complicit takers, with roughly half the populace receiving Central State-distributed cash or benefits."
A U.S. recovery is under way but at such a moderate pace that painfully high unemployment rates will persist for some time, the Organization for Economic Cooperation and Development said on Monday.
Reggie Middleton: "A cursory review of RIM's blowout earnings actually confirm my suspicions that the company is looking at material margin compression and significantly slower revenue growth as competition continues to eat Blackberries. Yes, the company looks fundamentally strong on the surface, but a broader perspective shows that it is weakening at a an ever quicker pace."
Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.
Investors in exchange-traded funds exited U.S. stocks in droves last month, pulling out $10.7 billion in assets. Their preferred alternative: emerging markets.
The National Association of Home Builders/Wells Fargo housing market index remained at 13 in September, tying the August reading for the worst showing since March 2009 and coming in below MarketWatch-compiled economist estimates for a reading of 14. At 13, the index remains far below the 50 line that indicates that more builders view conditions as good than poor. There hasn't been a reading above 50 since April 2006. “In general, builders haven’t seen any reason for improved optimism in market conditions over the past month,” said National Association of Home Builders Chairman Bob Jones in a statement. “If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy.”
Part of the reason for the low sentiment is the hesitancy builders see among potential home buyers, said National Association of Home Builder’s Chief Economist David Crowe in a statement.
“It also reflects the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87 percent of respondents reporting that their market has been negatively impacted by foreclosures,” Crowe said.
NYTmes: "Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.
After other recent downturns, older people who lost jobs fretted about how long it would take to return to the work force and worried that they might never recover their former incomes. But today, because it will take years to absorb the giant pool of unemployed at the economy’s recent pace, many of these older people may simply age out of the labor force before their luck changes."
ZeroHedge: "Malaysia which, courtesy of the FT, we learn has "bought renminbi-denominated bonds for its reserves, marking a significant advance for Beijing’s attempts to internationalise the use of its currency, pitched by Chinese policymakers as a long-term rival to the US dollar."
The Dow Jones Industrial Average gained 145.77, or 1.4%, to 10,753.62. The S&P 500 index rose 17.12 points, or 1.5%, to 1,142.71. The Nasdaq Composite gained 40.22 points, or 1.7%, to 2,355.83.
Crude oil for October delivery, the front-month contract expiring Tuesday, added $1.20, or 1.6%, to $74.86 a barrel on the New York Mercantile Exchange. The most-active November contract settled at $76.19 a barrel. Natural gas for October delivery retreated 20 cents, or 5%, to $3.82 per million British thermal units. That was the biggest one-day drop for natural gas since April 29, when it fell 8.5%.
Arnaud Mares: "The sovereign debt crisis is not European: it is global. And it is not over."
The Fed meets Tuesday to discuss interest rates, and investors are hoping for a sign that the central bank might make more moves to keep rates low. There is a growing expectation that the Fed's rate-setting committee could relaunch programs to buy Treasurys and mortgage bonds in an effort to stimulate the economy. At the very least, it might hint at future plans.
"The Fed will hint at it, put it on the table, but not do anything," predicted Brian Gendreau, a market strategist at Financial Network Investment Corp.
An ominous pattern forming in the stock market may be telling us the DOW is about to plummet to 2000-3000, says Robert R Prechter, Jr. One cause of Prechter's concern is a technical pattern called a "head and shoulders top." Historically, Prechter says, this pattern has often preceded extended bear moves. Prechter thinks the left-hand "shoulder" of this pattern was the market peak in early 2000, the "head" the higher market peak in 2007, and the "right shoulder" the recovery we're enjoying now.
If the pattern is followed by the same pullback Prechter has seen in other eras, Prechter says, the DOW could fall to 2000-3000.
Gordon Long: "The reality is we are on the cusp of an imminent and significant collapse in the standard of living for most Americans....My point is that there is a strong possibility that the 'Jaws of Death' is an orchestrated plan to reposition America's standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America's standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion."
Robert McHugh: "My point is that there is a strong possibility that the 'Jaws of Death' is an orchestrated plan to reposition America's standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America's standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion."
IBM agreed to purchase Netezza Corp. for about $1.7 billion to expand its business analytics products for sales, marketing and product development. The deal values the Marlborough, Mass., company at $27 a share, a near 85% premium to its 3-month trading average of $14.54. Netezza has 500 employees and develops products that reduce the time it takes to load and extract massive amounts of historical data so it can run analytic queries more efficiently, according to IBM. The deal is expected to close in the fourth quarter. Financial advisors for the transaction were not listed. IBM said that in the last four years it has invested more than $12 billion in 23 analytics-related acquisitions. Shares of Netezza rose 13% premarket to $27.65.
John Hussman: "Though the lags are sometimes variable, as we saw in 1974 and 2008, normal lags would suggest an abrupt softening in the September ISM report (due in the beginning of October), with new claims for unemployment softening beginning somewhere around mid-October. It's possible that the historically tight relationships that we've reviewed iin recent weeks will not hold in this particular instance, but we have no reasonable basis to expect that. Indeed, if we look at the drivers of economic growth outside of the now fading impact of government stimulus spending, we continue to observe little intrinsic activity."
Treasury two-year yields were within 2 basis points of a record low on speculation the Federal Reserve will scale back its outlook for economic growth at a policy meeting tomorrow.
Officials will take additional steps to keep borrowing costs low at a subsequent meeting, according to Mohamed A. El- Erian, chief executive officer at Pacific Investment Management Co., which runs the world’s biggest bond fund. The Fed is scheduled to buy notes maturing from September 2016 to August 2020 today as part of its effort to sustain the expansion.
The rising cost of paying interest on its debt is one reason why the Irish government may not be able to cut its budget deficit to 3% of gross domestic product in 2014, the head of Ireland's central bank said Monday.
Central Bank of Ireland Governor Patrick Honohan said in a speech that further cuts in spending or tax changes may be needed to ensure the government meets that target. Mr. Honohan is also a member of the European Central Bank's governing council.
Rob Hanna: "There was some unusual action in the VIX on Friday. As many traders are aware, it typically trades counter to the S&P 500. So on days the SPX finishes up the VIX will normally close down. I have shown several times in the past that there are often bearish implications when both the SPX and VIX rise on the same day. One quirk of the VIX is that it has a natural tendency to fall on Friday afternoons and then rise on Monday mornings. So while it is unusual to see both the SPX and VIX rise on the same day, it is especially unusual to see it happen on a Friday."
Naked Capitalism: "Everywhere we look, across occupations and sectors, people with the skills to work their jobs are more likely to be working part-time for economic reasons in 2010 than they were before the recession. This is a story of aggregate demand, not a story of skills mismatch.
In light of the political climate and the impending elections, government officials may be loath to address this problem frontally. Such an approach, while politically expedient may be disastrous for the economy and for social welfare.
If the issues of long term unemployment and the large number of people dropping out of the labor force are not addressed soon then what is an aggregate demand problem can become a structural problem through hysteresis effects. Officials need to act in a bold and imaginative manner to repair the labor markets dysfunctions-much as Roosevelt did-or risk entrenching the social misery that engulfs many Americans today."
Charles Hugh Smith: "We have become a nation of complicit takers, with roughly half the populace receiving Central State-distributed cash or benefits."
A U.S. recovery is under way but at such a moderate pace that painfully high unemployment rates will persist for some time, the Organization for Economic Cooperation and Development said on Monday.
Reggie Middleton: "A cursory review of RIM's blowout earnings actually confirm my suspicions that the company is looking at material margin compression and significantly slower revenue growth as competition continues to eat Blackberries. Yes, the company looks fundamentally strong on the surface, but a broader perspective shows that it is weakening at a an ever quicker pace."
Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.
Investors in exchange-traded funds exited U.S. stocks in droves last month, pulling out $10.7 billion in assets. Their preferred alternative: emerging markets.
The National Association of Home Builders/Wells Fargo housing market index remained at 13 in September, tying the August reading for the worst showing since March 2009 and coming in below MarketWatch-compiled economist estimates for a reading of 14. At 13, the index remains far below the 50 line that indicates that more builders view conditions as good than poor. There hasn't been a reading above 50 since April 2006. “In general, builders haven’t seen any reason for improved optimism in market conditions over the past month,” said National Association of Home Builders Chairman Bob Jones in a statement. “If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy.”
Part of the reason for the low sentiment is the hesitancy builders see among potential home buyers, said National Association of Home Builder’s Chief Economist David Crowe in a statement.
“It also reflects the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87 percent of respondents reporting that their market has been negatively impacted by foreclosures,” Crowe said.
NYTmes: "Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.
After other recent downturns, older people who lost jobs fretted about how long it would take to return to the work force and worried that they might never recover their former incomes. But today, because it will take years to absorb the giant pool of unemployed at the economy’s recent pace, many of these older people may simply age out of the labor force before their luck changes."
ZeroHedge: "Malaysia which, courtesy of the FT, we learn has "bought renminbi-denominated bonds for its reserves, marking a significant advance for Beijing’s attempts to internationalise the use of its currency, pitched by Chinese policymakers as a long-term rival to the US dollar."
The Dow Jones Industrial Average gained 145.77, or 1.4%, to 10,753.62. The S&P 500 index rose 17.12 points, or 1.5%, to 1,142.71. The Nasdaq Composite gained 40.22 points, or 1.7%, to 2,355.83.
Crude oil for October delivery, the front-month contract expiring Tuesday, added $1.20, or 1.6%, to $74.86 a barrel on the New York Mercantile Exchange. The most-active November contract settled at $76.19 a barrel. Natural gas for October delivery retreated 20 cents, or 5%, to $3.82 per million British thermal units. That was the biggest one-day drop for natural gas since April 29, when it fell 8.5%.
Arnaud Mares: "The sovereign debt crisis is not European: it is global. And it is not over."
The Fed meets Tuesday to discuss interest rates, and investors are hoping for a sign that the central bank might make more moves to keep rates low. There is a growing expectation that the Fed's rate-setting committee could relaunch programs to buy Treasurys and mortgage bonds in an effort to stimulate the economy. At the very least, it might hint at future plans.
"The Fed will hint at it, put it on the table, but not do anything," predicted Brian Gendreau, a market strategist at Financial Network Investment Corp.
An ominous pattern forming in the stock market may be telling us the DOW is about to plummet to 2000-3000, says Robert R Prechter, Jr. One cause of Prechter's concern is a technical pattern called a "head and shoulders top." Historically, Prechter says, this pattern has often preceded extended bear moves. Prechter thinks the left-hand "shoulder" of this pattern was the market peak in early 2000, the "head" the higher market peak in 2007, and the "right shoulder" the recovery we're enjoying now.
If the pattern is followed by the same pullback Prechter has seen in other eras, Prechter says, the DOW could fall to 2000-3000.
Sunday, September 19, 2010
0.08%
9/19/10 0.08%
WSJ: "0.08% — The annual rate at which U.S. consumers have pared down their debts since mid-2008, not counting defaults....Over the two years ending June 2010, banks and other lenders charged off a total of about $588 billion in mortgage and consumer loans, according to data from the Fed and the Federal Deposit Insurance Corp.
That means consumers managed to shave off only $22 billion in debt through the kind of belt-tightening we typically envision. In other words, in the absence of defaults, they would have achieved an annualized decline of only 0.08%...That said, the way U.S. consumers are shedding their debts isn’t encouraging. Aside from defaults, many are finding relief by refinancing mortgages at extremely low interest rates — the same low interest rates that are making it difficult for an increasing number of older folks to generate enough fixed income for a comfortable retirement. The relief might help debt-ridden consumers get into a position to start spending again sooner than they otherwise would, but the borrower’s gain is the saver’s loss."
Mike Burk: "The market is overbought going into a week that seasonally has been very weak.
I expect the major averages to be lower on Friday September 24 than they were on Friday September 17."
Indiana Rep. Mike Pence was the top choice for president among conservative activists who attended this weekend's Values Voter Summit in Washington, edging out a field of more well-known Republican figures in an early test of grass-roots support.
Pence, chair of the House Republican conference, received 24% of the vote, edging the winner of the 2009 straw poll, former Arkansas Gov. Mike Huckabee, who received 22%. Each addressed the gathering on Friday, as did third-place finisher Mitt Romney, who won 13% of the vote.
Former House Speaker Newt Gingrich, who spoke Saturday, received 10%. Former Alaska Gov. Sarah Palin, who did not attend, finished a distant fifth with 7%.
24/7WallSt: "The latest Gallup employment poll shows that “Unemployment increased to 9.4% in mid-September from 9.3% in August and 8.9% at the end of July. This finding makes it far more unlikely that there will be a significant decline in the U.S. unemployment rate prior to the midterm elections.” Total underemployment, which includes those out of work and those who work part-time by seen full-time jobs, is now 18.9%
Over 9% of Americans with part-time jobs still seek full-time jobs. This number has lingered above 9% almost all year and was 9.2% in mid-September according to Gallup.
Government employment numbers for September which will come out early next month could actually show that unemployment is worsening and that an economic recovery becomes less likely by the day."
Chinese chemical conglomerate Sinochem Group has formally asked the government to back a bid for Canada's Potash Corp , a local newspaper reported on Sunday.
The Economic Observer cited sources close to the deal as saying that, according to a preliminary assessment, Sinochem would need $40 billion to $60 billion to trump a $39 billion hostile offer by BHP Billiton for Potash Corp.
The amount would be too much for Sinochem, which reported $25 billion in total assets at the end of 2009, the Beijing-based weekly newspaper cited analysts as saying.
In its application to the government, Sinochem argued that Beijing should back a bid for the Canadian firm because potash is key to China's national food security, the paper said.
Indian conglomerate Sahara India Pariwar is in discussions about buying the debt of struggling film studio Metro-Goldwyn-Mayer for $1.5 billion to $2 billion, according to two people familiar with the matter.
The sources did not elaborate on Sahara India Pariwar's plans for MGM, which has about $4 billion in debt, and stressed that the talks were still at a preliminary stage.
"On mutual interest discussions are on but it's too early to comment on the issue," said Abhijit Sarkar, corporate communications chief of Sahara India Pariwar, which owns businesses in media, entertainment, real estate and insurance.
WSJ: "0.08% — The annual rate at which U.S. consumers have pared down their debts since mid-2008, not counting defaults....Over the two years ending June 2010, banks and other lenders charged off a total of about $588 billion in mortgage and consumer loans, according to data from the Fed and the Federal Deposit Insurance Corp.
That means consumers managed to shave off only $22 billion in debt through the kind of belt-tightening we typically envision. In other words, in the absence of defaults, they would have achieved an annualized decline of only 0.08%...That said, the way U.S. consumers are shedding their debts isn’t encouraging. Aside from defaults, many are finding relief by refinancing mortgages at extremely low interest rates — the same low interest rates that are making it difficult for an increasing number of older folks to generate enough fixed income for a comfortable retirement. The relief might help debt-ridden consumers get into a position to start spending again sooner than they otherwise would, but the borrower’s gain is the saver’s loss."
Mike Burk: "The market is overbought going into a week that seasonally has been very weak.
I expect the major averages to be lower on Friday September 24 than they were on Friday September 17."
Indiana Rep. Mike Pence was the top choice for president among conservative activists who attended this weekend's Values Voter Summit in Washington, edging out a field of more well-known Republican figures in an early test of grass-roots support.
Pence, chair of the House Republican conference, received 24% of the vote, edging the winner of the 2009 straw poll, former Arkansas Gov. Mike Huckabee, who received 22%. Each addressed the gathering on Friday, as did third-place finisher Mitt Romney, who won 13% of the vote.
Former House Speaker Newt Gingrich, who spoke Saturday, received 10%. Former Alaska Gov. Sarah Palin, who did not attend, finished a distant fifth with 7%.
24/7WallSt: "The latest Gallup employment poll shows that “Unemployment increased to 9.4% in mid-September from 9.3% in August and 8.9% at the end of July. This finding makes it far more unlikely that there will be a significant decline in the U.S. unemployment rate prior to the midterm elections.” Total underemployment, which includes those out of work and those who work part-time by seen full-time jobs, is now 18.9%
Over 9% of Americans with part-time jobs still seek full-time jobs. This number has lingered above 9% almost all year and was 9.2% in mid-September according to Gallup.
Government employment numbers for September which will come out early next month could actually show that unemployment is worsening and that an economic recovery becomes less likely by the day."
Chinese chemical conglomerate Sinochem Group has formally asked the government to back a bid for Canada's Potash Corp , a local newspaper reported on Sunday.
The Economic Observer cited sources close to the deal as saying that, according to a preliminary assessment, Sinochem would need $40 billion to $60 billion to trump a $39 billion hostile offer by BHP Billiton for Potash Corp.
The amount would be too much for Sinochem, which reported $25 billion in total assets at the end of 2009, the Beijing-based weekly newspaper cited analysts as saying.
In its application to the government, Sinochem argued that Beijing should back a bid for the Canadian firm because potash is key to China's national food security, the paper said.
Indian conglomerate Sahara India Pariwar is in discussions about buying the debt of struggling film studio Metro-Goldwyn-Mayer for $1.5 billion to $2 billion, according to two people familiar with the matter.
The sources did not elaborate on Sahara India Pariwar's plans for MGM, which has about $4 billion in debt, and stressed that the talks were still at a preliminary stage.
"On mutual interest discussions are on but it's too early to comment on the issue," said Abhijit Sarkar, corporate communications chief of Sahara India Pariwar, which owns businesses in media, entertainment, real estate and insurance.
Saturday, September 18, 2010
Hope
9/18/10 Hope
Regulators on Friday shut down three Georgia banks and one each in New Jersey and Ohio, boosting to 124 the number of U.S. bank failures this year amid the tough economic climate and growing loan defaults.
West Allis, Wis.-based Maritime Savings Bank was closed by regulators Friday, marking the 125th U.S. bank failure of the year. Maritime Savings Bank had $350.5 million in assets and $248.1 million in deposits as of June 30, the Federal Deposit Insurance Corp. said in a statement. The bank's failure will cost the deposit-insurance fund $83.6 million, the FDIC said.
ZeroHedge: "And today we discover that at the end of June, Fannie and Freddie are now the proud owners of 191,000 homes (double what they owned at the end of 2009) and rising with each passing day. And shockingly, the GSEs have decided to do the prudent thing and start selling this real estate, before the plunges really plunge and leave them straddled with millions of homes. On the other hand, this action alone will likely be sufficient to force the next leg lower in home prices. Because it gets worse: "Once they take homes back, Fannie and Freddie must not only cover the utility bills and property taxes, but they are also relying on thousands of real-estate agents and contractors to rehabilitate homes, mow lawns and clean pools. Fannie took a $13 billion charge during the second quarter just on carrying costs for its properties."
Bloomberg (Abigail Moses and Bryan Keogh): “Investors are paying record-high premiums to insure against default on European sovereign bonds relative to corporate notes as governments struggle to reduce fiscal deficits while companies repair balance sheets. An index of credit-default swaps on 15 European governments now exceeds a gauge of investment-grade credit risk by about 48 bps…”
California’s unemployment rate rose to a three-month high of 12.4% in August as non-farm payrolls lost 33,500 jobs… The jobless rate increased from 12.3% in July.
Doug Noland: "Going forward, one can envisage a scenario where “QE2” is implemented right into a backdrop of faltering dollar confidence. In such a scenario, Fed-created liquidity just might seek an immediate exit from the dollar – only exacerbating both dollar fragility and general Monetary Disorder. It’s reasonable that one facet of such a scenario would have the Japanese, Chinese and other central banks buying/Monetizing an increasingly problematic global surfeit of dollars – creating additional destabilizing liquidity in the process. And, having watched the way things have tended to unfold, I would see a rising tide of Competitive Monetization as a high probability development.
Is the dollar a bigger story than Ireland and Portugal? Perhaps a rapidly rising tide of liquidity has something to do with Gold’s run toward $1,300. Such a scenario might also help explain surging prices for silver, copper, wheat, corn, rice, soybeans, cattle, hogs, sugar, cotton, coffee, cocoa, etc. And, for awhile, liquidity excesses might even continue to inflate global bond prices. But if this is deflation, it’s an abnormally strange strain. "
Randall Forsyth: "Having run out of conventional options of lowering short-term interest rates and getting less from their relatively unconventional tool of buying bonds to bring down long-term rates, central bankers are utilizing their next option—currency intervention.
That was a forecast from MacroMavens proprietress Stephanie Pomboy in her Sept. 10 missive to clients, which quickly became fact Wednesday when the Bank of Japan surprised the currency markets by intervening to drive down the yen. It was a surprise because nobody took the Japanese threats seriously to dump yen and buy dollars seriously....But there is a potential dark side, concludes Pomboy. While the worldwide push down on interest rates "unleashed a torrent of capital, lifting all economic 'boats' and bringing the world together, pushing down [currencies] will tear the world apart. Everybody can lower rates simultaneously. Everybody cannot debase their currencies at once."
Economic Disconnect: "Nobody asked me, but I think massive intervention and some market friendly machinations built a bridge from panic right over to hope. We have been at hope for some time hoping for something to happen while the data gets worse as of late. Hoping for a miracle?"
"He that lives upon hope will die fasting" Benjamin Franklin
Regulators on Friday shut down three Georgia banks and one each in New Jersey and Ohio, boosting to 124 the number of U.S. bank failures this year amid the tough economic climate and growing loan defaults.
West Allis, Wis.-based Maritime Savings Bank was closed by regulators Friday, marking the 125th U.S. bank failure of the year. Maritime Savings Bank had $350.5 million in assets and $248.1 million in deposits as of June 30, the Federal Deposit Insurance Corp. said in a statement. The bank's failure will cost the deposit-insurance fund $83.6 million, the FDIC said.
ZeroHedge: "And today we discover that at the end of June, Fannie and Freddie are now the proud owners of 191,000 homes (double what they owned at the end of 2009) and rising with each passing day. And shockingly, the GSEs have decided to do the prudent thing and start selling this real estate, before the plunges really plunge and leave them straddled with millions of homes. On the other hand, this action alone will likely be sufficient to force the next leg lower in home prices. Because it gets worse: "Once they take homes back, Fannie and Freddie must not only cover the utility bills and property taxes, but they are also relying on thousands of real-estate agents and contractors to rehabilitate homes, mow lawns and clean pools. Fannie took a $13 billion charge during the second quarter just on carrying costs for its properties."
Bloomberg (Abigail Moses and Bryan Keogh): “Investors are paying record-high premiums to insure against default on European sovereign bonds relative to corporate notes as governments struggle to reduce fiscal deficits while companies repair balance sheets. An index of credit-default swaps on 15 European governments now exceeds a gauge of investment-grade credit risk by about 48 bps…”
California’s unemployment rate rose to a three-month high of 12.4% in August as non-farm payrolls lost 33,500 jobs… The jobless rate increased from 12.3% in July.
Doug Noland: "Going forward, one can envisage a scenario where “QE2” is implemented right into a backdrop of faltering dollar confidence. In such a scenario, Fed-created liquidity just might seek an immediate exit from the dollar – only exacerbating both dollar fragility and general Monetary Disorder. It’s reasonable that one facet of such a scenario would have the Japanese, Chinese and other central banks buying/Monetizing an increasingly problematic global surfeit of dollars – creating additional destabilizing liquidity in the process. And, having watched the way things have tended to unfold, I would see a rising tide of Competitive Monetization as a high probability development.
Is the dollar a bigger story than Ireland and Portugal? Perhaps a rapidly rising tide of liquidity has something to do with Gold’s run toward $1,300. Such a scenario might also help explain surging prices for silver, copper, wheat, corn, rice, soybeans, cattle, hogs, sugar, cotton, coffee, cocoa, etc. And, for awhile, liquidity excesses might even continue to inflate global bond prices. But if this is deflation, it’s an abnormally strange strain. "
Randall Forsyth: "Having run out of conventional options of lowering short-term interest rates and getting less from their relatively unconventional tool of buying bonds to bring down long-term rates, central bankers are utilizing their next option—currency intervention.
That was a forecast from MacroMavens proprietress Stephanie Pomboy in her Sept. 10 missive to clients, which quickly became fact Wednesday when the Bank of Japan surprised the currency markets by intervening to drive down the yen. It was a surprise because nobody took the Japanese threats seriously to dump yen and buy dollars seriously....But there is a potential dark side, concludes Pomboy. While the worldwide push down on interest rates "unleashed a torrent of capital, lifting all economic 'boats' and bringing the world together, pushing down [currencies] will tear the world apart. Everybody can lower rates simultaneously. Everybody cannot debase their currencies at once."
Economic Disconnect: "Nobody asked me, but I think massive intervention and some market friendly machinations built a bridge from panic right over to hope. We have been at hope for some time hoping for something to happen while the data gets worse as of late. Hoping for a miracle?"
"He that lives upon hope will die fasting" Benjamin Franklin
Friday, September 17, 2010
Tornado
9/17/10 Tornado
Yesterday there was a tornado in Brooklyn, N.Y. What are the chances of that happening? Are stocks, bonds, commodities etc. prepared for a tornado-like event?
Con Edison on Friday said about 37,000 customers were affected by the powerful storm in New York City as the company continues to work to repair downed power lines and restore electric service. The company said tornado-force winds and heavy rain drove trees into power lines and knocked out electricity. Con Edison said its crews have restored power to about 13,150 customers, while 25,609 are without power.
The index for U.S. consumer prices rose 0.3% in August for the second straight month, pulled higher by energy prices, the Labor Department reported Friday. The energy index in August rose 2.3% after a 2.6% gain in July. Meanwhile, food prices rose 0.2%, the largest increase since April. The core rate, which excludes volatile food and energy prices, was flat in August. Economists surveyed by MarketWatch had expected the overall CPI to rise 0.3%, and for the core to gain 0.1%. Over the past 12 months, overall consumer prices have climbed 1.1% in August, down from 1.2% in July. Core prices have gained 0.9%, the same rate as the last five months. Prices for shelter were unchanged in August after rising 0.1% in each of the prior three months.
Over the last 12 months, the index for all items less food and energy rose 0.9 percent, though the shelter component posted a 0.7 percent decline. The food index increased at a similar rate, rising 1.0 percent, with grocery store food prices up 0.8 percent. The energy index posted a somewhat larger increase, rising 3.8 percent with gasoline up 4.4 percent.
-- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter. Pessimists outnumber optimists four-to-one. European CFOs' optimism rate is 58; Asian CFOs' rate is 70.
-- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions.
-- Earnings are expected to rise 12 percent and capital spending almost 7 percent in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.
-- U.S. CFOs expect to increase domestic full-time employment by 0.7 percent in the next year. Nearly one-fourth of all recent hires have been contract and temporary employees.
-- Credit markets remain tight, especially for small companies. Most CFOs believe financial reform will add costs and restrictions that will dampen lending.
-- CFOs' economy-wide concerns include federal government policies, weak consumer demand, price pressure and the weak national employment outlook. By a wide margin, the top concern among CFOs about their own businesses is the struggle to maintain profit margins, followed by rising health care costs and low employee morale.
-- Exports are expected to increase by 50 percent over the next five years.
OPTIMISM PLUNGES
Optimism about the overall economy fell at 53 percent of U.S. firms and increased at only 14 percent. The optimism rate of 49 is at a level not seen since the first quarter of 2009, when CFOs rated the economy at 40.
"The CFO optimism index has proven to be an accurate predictor of future economic performance," said Julia Homer, executive vice president for content at CFO Publishing LLC. "Therefore, this dramatic drop in optimism bodes poorly for the economic outlook. Half of CFOs say there is only a six-month window -- and another one-fourth believe it's a 12-month window -- during which they can maintain current levels of business activity without improvement in the overall economy."
Intel has “dramatically” cut prices for microprocessors and chipsets to stimulate demand, offset the effects of the Apple iPad and clear inventory, according to Canaccord Genuity analyst Bobby Burleson. He says checks find the company has been discounting i3, i5, i7 and Atom processors by 50%, with certain chipsets discounted by 15%.
“While notebook demand is likely to uptick near term following these cuts,” he writes, “it will be in large part the result of channel fill by Intel’s OEM customers, especially in China.” He thinks Q4 will see a pause in demand, as high-end notebook customers wait for volume shipments of the new Sandy Bridge processor and low-end customers digest inventory.
A new Rasmussen Reports national telephone survey finds that just 25% of Likely U.S. Voters believe the current policies of the federal government have put the United States on the right course.
Fifty-six percent (56%) of voters disagree and say the government’s polices are not moving the country in the right direction. Another 19% are not sure.
There were 34,239 new and existing homes and condos sold in California in August, down 14% from last year, according to MDA DataQuick, a San Diego-based real estate data provider.
Home sales were down 2.7% from July as well.
In its financial stability report for 2010, the People's Bank of China also warned of a growing risk of asset bubbles and inflation.
The bank reaffirmed its appropriately loose monetary policy stance and said it would deploy various fiscal and monetary tools to manage inflationary expectations.
Turning to the global economy, the report warned of a potential sovereign debt crisis if major economies did not bring their budget deficits under control. Interest rates were likely to remain low for an extended period in many countries, it added.
Johnson & Johnson said Friday it is in advanced negotiations to buy Crucell NV for €1.75 billion ($2.29 billion), a move that would make the Dutch biotechnology company the core of its vaccine business.
U.S.-based J&J already owns 17.9% of Crucell, but wants full control so that it can develop and commercialize the Dutch company's pipeline of vaccines.
Crucell said its management and board are backing the proposed €24.75 a share offer.
U.S. consumer sentiment fell in September, according to media reports of a survey released Friday by Reuters and the University of Michigan. The UMich index declined to 66.6 in September - the lowest level since August 2009 -- from 68.9 in August. Economists polled by MarketWatch had expected a September reading of 70. Job worries have weighed on consumers for quite a while. The average level of the index was around 88 prior to the most recent recession.
Efforts to permanently plug the world's largest offshore oil spill reached a milestone when BP's crucial relief well reached its target - the blown-out Macondo well that began spewing oil almost five months ago, a U.S. official said.
Cotton futures extended a rally to the highest price in more than 15 years as demand from textile mills expands amid declining global inventories.
. Gold futures added $3.70, or 0.3%, to $1,277.50 an ounce on the Comex division of the New York Mercantile Exchange, handily supplanting Thursday's record. Silver soared to a 30-year high, settling at $20.82 an ounce.
Nonfinancial U.S. companies maintained record reserves of $1.845 trillion in cash and short-term assets at the end of the second quarter and net household wealth fell for the first time in a year, the Federal Reserve reported Friday. The latest "flow of funds" report by the central bank shows that businesses are still wary of the weak economy and anxious consumers continue to reduce debt. Net household wealth fell $1.5 trillion in the second quarter to $53.5 trillion. Net worth has tumbled almost 19% from a peak of $65.87 trillion in the second quarter of 2007, mostly from falling home and stock prices.
In the latest quarter Fed borrowing increased at a rate of 24.4%. At $43.7 trillion, US consumers are now back to the same net worth levels they had in Q3 of 2009.
Three bank failures in Georgia and one in Ohio has brought 2010's tally to 124, according to the Federal Deposit Insurance Corp. on Friday. The banks closed by regulators include Bramble Savings Bank in Milford, Ohio; the Bank of Ellijay in Ellijay, Ga.; First Commerce Community Bank in Douglasville, Ga.; and the Peoples Bank in Winder, Ga. The four failures will cost the deposit-insurance fund about $240.1 million, the FDIC said. Earlier in the day, the agency reported the failure of ISN Bank in Cherry Hill, N.J.
Up 1.4% for the week, the Dow Jones Industrial Average added 13.02 points, or 0.1%, to 10,607.85. The S&P 500 Index rose nearly 1 point, or less than 0.1%, to 1,125.6, leaving it 1.5% higher on the week. Finishing higher for an eighth straight session, its longest yet this year, the Nasdaq Composite Index gained 12.36 points, or 0.5%, to 2,315.61, up 3.3% from last Friday's close.
Yesterday there was a tornado in Brooklyn, N.Y. What are the chances of that happening? Are stocks, bonds, commodities etc. prepared for a tornado-like event?
Con Edison on Friday said about 37,000 customers were affected by the powerful storm in New York City as the company continues to work to repair downed power lines and restore electric service. The company said tornado-force winds and heavy rain drove trees into power lines and knocked out electricity. Con Edison said its crews have restored power to about 13,150 customers, while 25,609 are without power.
The index for U.S. consumer prices rose 0.3% in August for the second straight month, pulled higher by energy prices, the Labor Department reported Friday. The energy index in August rose 2.3% after a 2.6% gain in July. Meanwhile, food prices rose 0.2%, the largest increase since April. The core rate, which excludes volatile food and energy prices, was flat in August. Economists surveyed by MarketWatch had expected the overall CPI to rise 0.3%, and for the core to gain 0.1%. Over the past 12 months, overall consumer prices have climbed 1.1% in August, down from 1.2% in July. Core prices have gained 0.9%, the same rate as the last five months. Prices for shelter were unchanged in August after rising 0.1% in each of the prior three months.
Over the last 12 months, the index for all items less food and energy rose 0.9 percent, though the shelter component posted a 0.7 percent decline. The food index increased at a similar rate, rising 1.0 percent, with grocery store food prices up 0.8 percent. The energy index posted a somewhat larger increase, rising 3.8 percent with gasoline up 4.4 percent.
-- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter. Pessimists outnumber optimists four-to-one. European CFOs' optimism rate is 58; Asian CFOs' rate is 70.
-- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions.
-- Earnings are expected to rise 12 percent and capital spending almost 7 percent in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.
-- U.S. CFOs expect to increase domestic full-time employment by 0.7 percent in the next year. Nearly one-fourth of all recent hires have been contract and temporary employees.
-- Credit markets remain tight, especially for small companies. Most CFOs believe financial reform will add costs and restrictions that will dampen lending.
-- CFOs' economy-wide concerns include federal government policies, weak consumer demand, price pressure and the weak national employment outlook. By a wide margin, the top concern among CFOs about their own businesses is the struggle to maintain profit margins, followed by rising health care costs and low employee morale.
-- Exports are expected to increase by 50 percent over the next five years.
OPTIMISM PLUNGES
Optimism about the overall economy fell at 53 percent of U.S. firms and increased at only 14 percent. The optimism rate of 49 is at a level not seen since the first quarter of 2009, when CFOs rated the economy at 40.
"The CFO optimism index has proven to be an accurate predictor of future economic performance," said Julia Homer, executive vice president for content at CFO Publishing LLC. "Therefore, this dramatic drop in optimism bodes poorly for the economic outlook. Half of CFOs say there is only a six-month window -- and another one-fourth believe it's a 12-month window -- during which they can maintain current levels of business activity without improvement in the overall economy."
Intel has “dramatically” cut prices for microprocessors and chipsets to stimulate demand, offset the effects of the Apple iPad and clear inventory, according to Canaccord Genuity analyst Bobby Burleson. He says checks find the company has been discounting i3, i5, i7 and Atom processors by 50%, with certain chipsets discounted by 15%.
“While notebook demand is likely to uptick near term following these cuts,” he writes, “it will be in large part the result of channel fill by Intel’s OEM customers, especially in China.” He thinks Q4 will see a pause in demand, as high-end notebook customers wait for volume shipments of the new Sandy Bridge processor and low-end customers digest inventory.
A new Rasmussen Reports national telephone survey finds that just 25% of Likely U.S. Voters believe the current policies of the federal government have put the United States on the right course.
Fifty-six percent (56%) of voters disagree and say the government’s polices are not moving the country in the right direction. Another 19% are not sure.
There were 34,239 new and existing homes and condos sold in California in August, down 14% from last year, according to MDA DataQuick, a San Diego-based real estate data provider.
Home sales were down 2.7% from July as well.
In its financial stability report for 2010, the People's Bank of China also warned of a growing risk of asset bubbles and inflation.
The bank reaffirmed its appropriately loose monetary policy stance and said it would deploy various fiscal and monetary tools to manage inflationary expectations.
Turning to the global economy, the report warned of a potential sovereign debt crisis if major economies did not bring their budget deficits under control. Interest rates were likely to remain low for an extended period in many countries, it added.
Johnson & Johnson said Friday it is in advanced negotiations to buy Crucell NV for €1.75 billion ($2.29 billion), a move that would make the Dutch biotechnology company the core of its vaccine business.
U.S.-based J&J already owns 17.9% of Crucell, but wants full control so that it can develop and commercialize the Dutch company's pipeline of vaccines.
Crucell said its management and board are backing the proposed €24.75 a share offer.
U.S. consumer sentiment fell in September, according to media reports of a survey released Friday by Reuters and the University of Michigan. The UMich index declined to 66.6 in September - the lowest level since August 2009 -- from 68.9 in August. Economists polled by MarketWatch had expected a September reading of 70. Job worries have weighed on consumers for quite a while. The average level of the index was around 88 prior to the most recent recession.
Efforts to permanently plug the world's largest offshore oil spill reached a milestone when BP's crucial relief well reached its target - the blown-out Macondo well that began spewing oil almost five months ago, a U.S. official said.
Cotton futures extended a rally to the highest price in more than 15 years as demand from textile mills expands amid declining global inventories.
. Gold futures added $3.70, or 0.3%, to $1,277.50 an ounce on the Comex division of the New York Mercantile Exchange, handily supplanting Thursday's record. Silver soared to a 30-year high, settling at $20.82 an ounce.
Nonfinancial U.S. companies maintained record reserves of $1.845 trillion in cash and short-term assets at the end of the second quarter and net household wealth fell for the first time in a year, the Federal Reserve reported Friday. The latest "flow of funds" report by the central bank shows that businesses are still wary of the weak economy and anxious consumers continue to reduce debt. Net household wealth fell $1.5 trillion in the second quarter to $53.5 trillion. Net worth has tumbled almost 19% from a peak of $65.87 trillion in the second quarter of 2007, mostly from falling home and stock prices.
In the latest quarter Fed borrowing increased at a rate of 24.4%. At $43.7 trillion, US consumers are now back to the same net worth levels they had in Q3 of 2009.
Three bank failures in Georgia and one in Ohio has brought 2010's tally to 124, according to the Federal Deposit Insurance Corp. on Friday. The banks closed by regulators include Bramble Savings Bank in Milford, Ohio; the Bank of Ellijay in Ellijay, Ga.; First Commerce Community Bank in Douglasville, Ga.; and the Peoples Bank in Winder, Ga. The four failures will cost the deposit-insurance fund about $240.1 million, the FDIC said. Earlier in the day, the agency reported the failure of ISN Bank in Cherry Hill, N.J.
Up 1.4% for the week, the Dow Jones Industrial Average added 13.02 points, or 0.1%, to 10,607.85. The S&P 500 Index rose nearly 1 point, or less than 0.1%, to 1,125.6, leaving it 1.5% higher on the week. Finishing higher for an eighth straight session, its longest yet this year, the Nasdaq Composite Index gained 12.36 points, or 0.5%, to 2,315.61, up 3.3% from last Friday's close.
Thursday, September 16, 2010
Gold and Silver
9/16/10 Gold and Silver
D. Sherman Okst: "The Social Security “Trust Fund” that FDR started 75 years ago is now a 14 trillion dollar black hole.
We trusted Congress to manage the fund and the morons (fiscally responsible Ron Paul, Paul Ryan and a handful of other good eggs excluded) looted it.
The “Trust Fund” now consists of a bunch of IOU’s that will be passed onto our children. It was spent on the day to day operations of a bloated government. If you or I managed a pension fund and we stole from it - we’d do time. If we used the money we stole to buy votes - we’d do more time.
Like Health Care, Congress can pass laws that they themselves do not have to follow.
The insanity continues: Tomorrow the United States Department of Labor is holding a hearing on options for retirement plans."
The Reserve Bank of New Zealand left its key cash rate unchanged at 3.0% on Thursday. "While the global and domestic economies continue to recover, the outlook has weakened since our June Statement," said Reserve Bank Governor Alan Bollard. "The earthquake that struck Canterbury on 4 September has significantly disrupted economic activity and is likely to continue to do so for some time yet," he added.
Japanese monetary authorities are estimated to have spent as much as 1 trillion yen, or about $11.6 billion, on Wednesday in a bid to weaken the Japanese yen, the Yomiuri Shimbun reported on its website.
Natural-gas futures rose 3 cents, or 0.7%, to $4 per million British thermal units, its best settlement in three weeks and a return to the $4 level.
Diana Olick: "Given the combination of the expiration of the home buyer tax credit and the increasing number of loans moving to final foreclosure, we knew that home prices overall would take a hit, but it would take a while. Well, we're here."
There were 4 million homes listed with brokers for sale as of July. It would take a record 12.5 months for those properties to be sold at that month's sales pace, according to the Chicago-based Realtors group [National Association of Realtors].
Charles Hugh Smith: "That is the Chinese real estate dynamic in a nutshell: local governments have every incentive to push lease prices higher, further fueling China's real estate bubble, and zero incentive to build low-cost housing for the average citizen.
Minxin Pei, professor of government at Claremont McKenna College and a senior associate at the Carnegie Endowment for International Peace, recently described who benefits from what he termed China’s "irrationally exuberant" property market: local government and its officials, and state-owned enterprises (SEOs) which have exploited their ties to government-controlled banks to enter the speculative real estate market with a vengeance.
"With access to almost unlimited no-cost credit from the state-controlled banking system," he wrote, "these behemoths have abused their financial clout and plunged headlong into the real estate market, snapping up high-priced land and investing in high-end residential housing units that now sit empty across the country."
Once you understand this dynamic, it's not difficult to see why China's housing bubble will end badly. Local governments are so heavily dependent on development fees and taxes for their revenues that any fallback in new development will spell catastrophe for city and regional government budgets."
Spotify plans to celebrate reaching 10 million users later this month, according to a party invite sent to press and analysts.
That’s certainly an impressive milestone for the ad-supported streaming music service. But it’s not clear whether those are 10 million active users or just 10 million registered accounts.
It’s also not clear how many are now paying the monthly subscription fee for Spotify’s premium tier. In July, founder and CEO Daniel Ek pointed to a subscriber figure of 500,000.
The U.S. current account deficit widened to $123.3 billion in the second quarter, the Commerce Department reported Thursday. The current account deficit totaled 3.4% of gross domestic product, the highest percentage since the fourth quarter of 2008. The 12.9% increase in the deficit was due to an increase in the merchandise trade deficit. Net financial inflows increased to $36.6 billion in the second quarter from $34.7 billion.
Higher energy costs pushed U.S. wholesale prices up a seasonally adjusted 0.4% in August, the Labor Department reported Thursday. Yet core producer prices, which exclude the volatile food and energy categories, edged up a scant 0.1%. Economists surveyed by MarketWatch had predicted a 0.7% gain in overall produce prices and a 0.1% increase in the core rate. The core number tends to draw the most attention of economists. In the past 12 months, overall producer prices have risen 3.1%, while the core rate is up a much smaller 1.3%.
The number of people who filed new claims for unemployment benefits dipped 3,000 to 450,000 in the latest week, reflecting little change in a weak jobs market.
New applications for unemployment compensation have fallen almost 11% since spiking in early July, but they remain at elevated levels and have barely dropped in 2010.
Economists polled by MarketWatch had expected initial claims to rise to 460,000 in the week ended Sept. 11. Claims for last week were revised up by 2,000 to 453,000.
The four-week average sank 13,500 to 464,750.
The latest claims report relies on estimates for two states, Nebraska and Virginia. Both reported technical problems. Last week the Labor Department had to use estimates for nine states, including California, because of disruptions caused by the Labor Day holiday. There was a decline of half a million in those on Extended Benefits and Emergency Claims as more and more people exhaust their total maximum 99 week allottment.
Potash Corp is trying to stitch together a consortium led by China to back a management buyout to trump BHP Billiton's $38.6 billion hostile offer, the Globe and Mail said Thursday.
The Energy Department on Thursday is expected to report an increase of 88 billion to 92 billion cubic feet of natural gas storage inventories for the week ended Sept. 10, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. Working gas in storage was 3,267 Bcf as of Friday, September 10, 2010, according to EIA estimates. This represents a net increase of 103 Bcf from the previous week. Stocks were 182 Bcf less than last year at this time and 192 Bcf above the 5-year average of 3,075 Bcf. In the East Region, stocks were 7 Bcf above the 5-year average following net injections of 54 Bcf. Stocks in the Producing Region were 111 Bcf above the 5-year average of 899 Bcf after a net injection of 36 Bcf. Stocks in the West Region were 73 Bcf above the 5-year average after a net addition of 13 Bcf. At 3,267 Bcf, total working gas is within the 5-year historical range.
The increase compares to 67 billion cubic feet reported for the comparable week last year and a five-year average of 77 billion cubic feet.
The poverty rate rose to 14.3% in 2009, the highest since 1994, up from 13.2% in 2008, the Census Bureau reported Thursday. Last year there were a record 43.6 million people in poverty. Meanwhile, real median household income in 2009 was $49,777, not statistically different from the prior year. Real median income fell 1.8% for family households, and rose 1.6% for nonfamily households. Also, the number of people with health insurance fell to 253.6 million in 2009 from 255.1 million in 2008, the first year that the number of people with health insurance has decreased since 1987, when the government started collecting comparable data. The number of uninsured rose to 50.7 million from 46.3 million.
Fedex will cut 1,700 jobs.
The Philadelphia Fed's manufacturing index was -0.7 in September, an improvement from the -7.7 reading in August but a figure pointing to contracting activity. Economists polled by MarketWatch expected the reading to recover to 0.0. "For the second consecutive month, firms reported a decline in both new orders and shipments. Employment levels remained steady this month, but firms reported declines in average work hours. The survey's broad indicators of future activity continue to suggest that the region's manufacturing executives expect growth in business over the next six months, but optimism remains below levels earlier in the year," the Philly Fed said.
The Pew Center on the States reported this year that in eight states, at least one-third of the future pension obligations for all public employees, including teachers, are unfunded. As of 2008, Pew said, state and local governments had pension obligations totaling $3.35 trillion – $1 trillion of that not covered by the future stream of government and employee contributions specified under current law. Only four states – Florida, New York, Washington and Wisconsin – had fully funded pension systems as of 2008.
Since 2008, New Jersey and at least 19 other states from Wyoming to Rhode Island have rolled back pension benefits or seriously considered doing do -- and not just for new hires, but for current employees and people already retired.
A new study obtained by CNBC says Americans are $6.6 trillion short of what they need to retire. [..] ... the study notes, if the rate of return matches the return on U.S. Treasury Inflation-Protected Securities (TIPS), currently 1.87 percent, the deficit balloons to $7.9 trillion.
“The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month — a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers,” said James J. Saccacio, chief executive officer of RealtyTrac. “On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in steady stream rather than a flood — presumably to prevent further erosion of home prices.”
Foreign investors bought a net $61.2 billion of long-term U.S. assets in July up from $44.4 billion in June, the Treasury Department said Thursday. International demand for Treasurys accelerated to an increase of $73.8 billion in July from a gain of $33.9 billion in June. The data showed that private purchases of Treasurys accelerated in July while official purchases slowed. Foreign investors were net buyers of U.S. equities. They also were net buyers of U.S. corporate bonds. Including short-term securities and bank lending data, foreigners purchased a net $63.7 billion of U.S. assets compared with net sales of $5.2 billion a month earlier. According to the data, China increased its Treasury holdings in July after two straight monthly declines. Japan and the United Kingdom also increased their Treasury holdings.
Gold for December delivery rose $7.50, or 0.6%, to $1,276.30 an ounce on the Comex division of the New York Mercantile Exchange. A close around these levels would surpass Tuesday’s record-high settlement price of $1,271.70 an ounce. December silver added 15 cents, or 0.7%, to $20.72 an ounce. A finish at that level would mark silver’s highest since early in March 2008, when the then most-active silver contract finished at $20.69 an ounce.
An article published in the Financial Times Wednesday discusses a forecast by GFMS, a consultancy, which believes that the world’s central banks will purchase 15 tonnes of gold on a net basis this year, the first net purchase since 1988, according to GFMS. Central banks for a number of years have been liquidating their gold stockpiles in favor of holding paper currencies such as the U.S. dollar.
"For the second consecutive month, firms reported a decline in both new orders and shipments. Employment levels remained steady this month, but firms reported declines in average work hours. The survey's broad indicators of future activity continue to suggest that the region's manufacturing executives expect growth in business over the next six months, but optimism remains below levels earlier in the year," the Philly Fed said."For the second consecutive month, firms reported a decline in both new orders and shipments. Employment levels remained steady this month, but firms reported declines in average work hours. The survey's broad indicators of future activity continue to suggest that the region's manufacturing executives expect growth in business over the next six months, but optimism remains below levels earlier in the year," the Philly Fed said.
Silver rallies 1%, ends at $20.77 an ounce. Gold settles at fresh record high, at $1,273.80/oz.
Natural gas futures rose for a fifth day in New York on concern that a tropical weather system may develop in the Caribbean early next week and move into energy production regions of the Gulf of Mexico.
The National Weather Service’s noon update showed that a storm may grow in the southeastern Caribbean and head toward New Orleans by Sept. 30, according to Matt Rogers, a forecaster with Commodity Weather Group LLC in Bethesda, Maryland. Gas fell earlier after a government report showed U.S. inventories rose more than forecast last week.
“There are worries about the potential storm and traders are covering some shorts,” said Steven Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania.
It will take a couple of years for taxpayers to get back the billions they spent bailing out General Motors, but the company has a goal of returning the money, GM's new CEO said Thursday.
CEO Daniel Akerson told reporters that the government won't be repaid with the company's initial public stock offering, which could happen later this year, but couldn't answer more specific questions about the sale.
Oracle reported net profit of $1.35 billion, or 27 cents per share, compared with $1.12 billion, or 22 cents per share, in the year-ago quarter.
Excluding some items, it reported profit of 42 cents per share. That beat Wall Street's average estimate of 37 cents per share, according to Thomson Reuters I/B/E/S.
Sales rose 50 percent to $7.6 billion, helped by the acquisition of Sun Microsystems earlier this year. Analysts were expecting $7.27 billion, on average.
New software sales -- which generate long-term maintenance contracts, signaling future profitability -- were up 25 percent to $1.3 billion.
Research In Motion Ltd. saw earnings jumped 68% for the second fiscal quarter, beating Wall Street's expectations. For the quarter ended Aug. 28, RIMM reported net income of $796.7 million, or $1.46 per share, compared with net income of $475.6 million, or 83 cents per share, for the same period last year. The company said share buybacks boosted earnings per share by two cents for the recent period. Revenue jumped 31% to $4.62 billion. Analysts were expecting earnings of $1.36 per share on revenue of $4.49 billion, according to consensus estimates from FactSet Research.
The Dow Jones Industrial Average gained 22.10 points, or 0.2%, to end at 10,594.83. The S&P 500 index fell 0.41 point to 1,124.66. The Nasdaq Composite gained 1.93 points, or 0.1%, to 2,303.25.
D. Sherman Okst: "The Social Security “Trust Fund” that FDR started 75 years ago is now a 14 trillion dollar black hole.
We trusted Congress to manage the fund and the morons (fiscally responsible Ron Paul, Paul Ryan and a handful of other good eggs excluded) looted it.
The “Trust Fund” now consists of a bunch of IOU’s that will be passed onto our children. It was spent on the day to day operations of a bloated government. If you or I managed a pension fund and we stole from it - we’d do time. If we used the money we stole to buy votes - we’d do more time.
Like Health Care, Congress can pass laws that they themselves do not have to follow.
The insanity continues: Tomorrow the United States Department of Labor is holding a hearing on options for retirement plans."
The Reserve Bank of New Zealand left its key cash rate unchanged at 3.0% on Thursday. "While the global and domestic economies continue to recover, the outlook has weakened since our June Statement," said Reserve Bank Governor Alan Bollard. "The earthquake that struck Canterbury on 4 September has significantly disrupted economic activity and is likely to continue to do so for some time yet," he added.
Japanese monetary authorities are estimated to have spent as much as 1 trillion yen, or about $11.6 billion, on Wednesday in a bid to weaken the Japanese yen, the Yomiuri Shimbun reported on its website.
Natural-gas futures rose 3 cents, or 0.7%, to $4 per million British thermal units, its best settlement in three weeks and a return to the $4 level.
Diana Olick: "Given the combination of the expiration of the home buyer tax credit and the increasing number of loans moving to final foreclosure, we knew that home prices overall would take a hit, but it would take a while. Well, we're here."
There were 4 million homes listed with brokers for sale as of July. It would take a record 12.5 months for those properties to be sold at that month's sales pace, according to the Chicago-based Realtors group [National Association of Realtors].
Charles Hugh Smith: "That is the Chinese real estate dynamic in a nutshell: local governments have every incentive to push lease prices higher, further fueling China's real estate bubble, and zero incentive to build low-cost housing for the average citizen.
Minxin Pei, professor of government at Claremont McKenna College and a senior associate at the Carnegie Endowment for International Peace, recently described who benefits from what he termed China’s "irrationally exuberant" property market: local government and its officials, and state-owned enterprises (SEOs) which have exploited their ties to government-controlled banks to enter the speculative real estate market with a vengeance.
"With access to almost unlimited no-cost credit from the state-controlled banking system," he wrote, "these behemoths have abused their financial clout and plunged headlong into the real estate market, snapping up high-priced land and investing in high-end residential housing units that now sit empty across the country."
Once you understand this dynamic, it's not difficult to see why China's housing bubble will end badly. Local governments are so heavily dependent on development fees and taxes for their revenues that any fallback in new development will spell catastrophe for city and regional government budgets."
Spotify plans to celebrate reaching 10 million users later this month, according to a party invite sent to press and analysts.
That’s certainly an impressive milestone for the ad-supported streaming music service. But it’s not clear whether those are 10 million active users or just 10 million registered accounts.
It’s also not clear how many are now paying the monthly subscription fee for Spotify’s premium tier. In July, founder and CEO Daniel Ek pointed to a subscriber figure of 500,000.
The U.S. current account deficit widened to $123.3 billion in the second quarter, the Commerce Department reported Thursday. The current account deficit totaled 3.4% of gross domestic product, the highest percentage since the fourth quarter of 2008. The 12.9% increase in the deficit was due to an increase in the merchandise trade deficit. Net financial inflows increased to $36.6 billion in the second quarter from $34.7 billion.
Higher energy costs pushed U.S. wholesale prices up a seasonally adjusted 0.4% in August, the Labor Department reported Thursday. Yet core producer prices, which exclude the volatile food and energy categories, edged up a scant 0.1%. Economists surveyed by MarketWatch had predicted a 0.7% gain in overall produce prices and a 0.1% increase in the core rate. The core number tends to draw the most attention of economists. In the past 12 months, overall producer prices have risen 3.1%, while the core rate is up a much smaller 1.3%.
The number of people who filed new claims for unemployment benefits dipped 3,000 to 450,000 in the latest week, reflecting little change in a weak jobs market.
New applications for unemployment compensation have fallen almost 11% since spiking in early July, but they remain at elevated levels and have barely dropped in 2010.
Economists polled by MarketWatch had expected initial claims to rise to 460,000 in the week ended Sept. 11. Claims for last week were revised up by 2,000 to 453,000.
The four-week average sank 13,500 to 464,750.
The latest claims report relies on estimates for two states, Nebraska and Virginia. Both reported technical problems. Last week the Labor Department had to use estimates for nine states, including California, because of disruptions caused by the Labor Day holiday. There was a decline of half a million in those on Extended Benefits and Emergency Claims as more and more people exhaust their total maximum 99 week allottment.
Potash Corp is trying to stitch together a consortium led by China to back a management buyout to trump BHP Billiton's $38.6 billion hostile offer, the Globe and Mail said Thursday.
The Energy Department on Thursday is expected to report an increase of 88 billion to 92 billion cubic feet of natural gas storage inventories for the week ended Sept. 10, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. Working gas in storage was 3,267 Bcf as of Friday, September 10, 2010, according to EIA estimates. This represents a net increase of 103 Bcf from the previous week. Stocks were 182 Bcf less than last year at this time and 192 Bcf above the 5-year average of 3,075 Bcf. In the East Region, stocks were 7 Bcf above the 5-year average following net injections of 54 Bcf. Stocks in the Producing Region were 111 Bcf above the 5-year average of 899 Bcf after a net injection of 36 Bcf. Stocks in the West Region were 73 Bcf above the 5-year average after a net addition of 13 Bcf. At 3,267 Bcf, total working gas is within the 5-year historical range.
The increase compares to 67 billion cubic feet reported for the comparable week last year and a five-year average of 77 billion cubic feet.
The poverty rate rose to 14.3% in 2009, the highest since 1994, up from 13.2% in 2008, the Census Bureau reported Thursday. Last year there were a record 43.6 million people in poverty. Meanwhile, real median household income in 2009 was $49,777, not statistically different from the prior year. Real median income fell 1.8% for family households, and rose 1.6% for nonfamily households. Also, the number of people with health insurance fell to 253.6 million in 2009 from 255.1 million in 2008, the first year that the number of people with health insurance has decreased since 1987, when the government started collecting comparable data. The number of uninsured rose to 50.7 million from 46.3 million.
Fedex will cut 1,700 jobs.
The Philadelphia Fed's manufacturing index was -0.7 in September, an improvement from the -7.7 reading in August but a figure pointing to contracting activity. Economists polled by MarketWatch expected the reading to recover to 0.0. "For the second consecutive month, firms reported a decline in both new orders and shipments. Employment levels remained steady this month, but firms reported declines in average work hours. The survey's broad indicators of future activity continue to suggest that the region's manufacturing executives expect growth in business over the next six months, but optimism remains below levels earlier in the year," the Philly Fed said.
The Pew Center on the States reported this year that in eight states, at least one-third of the future pension obligations for all public employees, including teachers, are unfunded. As of 2008, Pew said, state and local governments had pension obligations totaling $3.35 trillion – $1 trillion of that not covered by the future stream of government and employee contributions specified under current law. Only four states – Florida, New York, Washington and Wisconsin – had fully funded pension systems as of 2008.
Since 2008, New Jersey and at least 19 other states from Wyoming to Rhode Island have rolled back pension benefits or seriously considered doing do -- and not just for new hires, but for current employees and people already retired.
A new study obtained by CNBC says Americans are $6.6 trillion short of what they need to retire. [..] ... the study notes, if the rate of return matches the return on U.S. Treasury Inflation-Protected Securities (TIPS), currently 1.87 percent, the deficit balloons to $7.9 trillion.
“The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month — a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers,” said James J. Saccacio, chief executive officer of RealtyTrac. “On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in steady stream rather than a flood — presumably to prevent further erosion of home prices.”
Foreign investors bought a net $61.2 billion of long-term U.S. assets in July up from $44.4 billion in June, the Treasury Department said Thursday. International demand for Treasurys accelerated to an increase of $73.8 billion in July from a gain of $33.9 billion in June. The data showed that private purchases of Treasurys accelerated in July while official purchases slowed. Foreign investors were net buyers of U.S. equities. They also were net buyers of U.S. corporate bonds. Including short-term securities and bank lending data, foreigners purchased a net $63.7 billion of U.S. assets compared with net sales of $5.2 billion a month earlier. According to the data, China increased its Treasury holdings in July after two straight monthly declines. Japan and the United Kingdom also increased their Treasury holdings.
Gold for December delivery rose $7.50, or 0.6%, to $1,276.30 an ounce on the Comex division of the New York Mercantile Exchange. A close around these levels would surpass Tuesday’s record-high settlement price of $1,271.70 an ounce. December silver added 15 cents, or 0.7%, to $20.72 an ounce. A finish at that level would mark silver’s highest since early in March 2008, when the then most-active silver contract finished at $20.69 an ounce.
An article published in the Financial Times Wednesday discusses a forecast by GFMS, a consultancy, which believes that the world’s central banks will purchase 15 tonnes of gold on a net basis this year, the first net purchase since 1988, according to GFMS. Central banks for a number of years have been liquidating their gold stockpiles in favor of holding paper currencies such as the U.S. dollar.
"For the second consecutive month, firms reported a decline in both new orders and shipments. Employment levels remained steady this month, but firms reported declines in average work hours. The survey's broad indicators of future activity continue to suggest that the region's manufacturing executives expect growth in business over the next six months, but optimism remains below levels earlier in the year," the Philly Fed said."For the second consecutive month, firms reported a decline in both new orders and shipments. Employment levels remained steady this month, but firms reported declines in average work hours. The survey's broad indicators of future activity continue to suggest that the region's manufacturing executives expect growth in business over the next six months, but optimism remains below levels earlier in the year," the Philly Fed said.
Silver rallies 1%, ends at $20.77 an ounce. Gold settles at fresh record high, at $1,273.80/oz.
Natural gas futures rose for a fifth day in New York on concern that a tropical weather system may develop in the Caribbean early next week and move into energy production regions of the Gulf of Mexico.
The National Weather Service’s noon update showed that a storm may grow in the southeastern Caribbean and head toward New Orleans by Sept. 30, according to Matt Rogers, a forecaster with Commodity Weather Group LLC in Bethesda, Maryland. Gas fell earlier after a government report showed U.S. inventories rose more than forecast last week.
“There are worries about the potential storm and traders are covering some shorts,” said Steven Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania.
It will take a couple of years for taxpayers to get back the billions they spent bailing out General Motors, but the company has a goal of returning the money, GM's new CEO said Thursday.
CEO Daniel Akerson told reporters that the government won't be repaid with the company's initial public stock offering, which could happen later this year, but couldn't answer more specific questions about the sale.
Oracle reported net profit of $1.35 billion, or 27 cents per share, compared with $1.12 billion, or 22 cents per share, in the year-ago quarter.
Excluding some items, it reported profit of 42 cents per share. That beat Wall Street's average estimate of 37 cents per share, according to Thomson Reuters I/B/E/S.
Sales rose 50 percent to $7.6 billion, helped by the acquisition of Sun Microsystems earlier this year. Analysts were expecting $7.27 billion, on average.
New software sales -- which generate long-term maintenance contracts, signaling future profitability -- were up 25 percent to $1.3 billion.
Research In Motion Ltd. saw earnings jumped 68% for the second fiscal quarter, beating Wall Street's expectations. For the quarter ended Aug. 28, RIMM reported net income of $796.7 million, or $1.46 per share, compared with net income of $475.6 million, or 83 cents per share, for the same period last year. The company said share buybacks boosted earnings per share by two cents for the recent period. Revenue jumped 31% to $4.62 billion. Analysts were expecting earnings of $1.36 per share on revenue of $4.49 billion, according to consensus estimates from FactSet Research.
The Dow Jones Industrial Average gained 22.10 points, or 0.2%, to end at 10,594.83. The S&P 500 index fell 0.41 point to 1,124.66. The Nasdaq Composite gained 1.93 points, or 0.1%, to 2,303.25.
Wednesday, September 15, 2010
Pain
9/15/10 Pain
Japan sold yen in the market on Wednesday for the first time in six years and promised more to come in a bid to stop the currency's relentless rise from hurting exporters and threatening a fragile economic recovery.
Fresh after victory in a party leadership contest, Japan's Prime Minister Naoto Kan appeared to be stepping up efforts to wrench the country out of deflation by targeting yen strength, which has weighed on stock prices and corporate profits.
Even as the U.S. dollar surged as much as 3 percent on the day against the yen, doubts lingered about the ultimate effectiveness of Japan's unilateral yen selling spree. A 15-month solo effort by Switzerland to weaken its currency did little to tame the Swiss franc.
The dollar was up 3.1 percent at 85.63, on track for its biggest daily gain in nearly two years. It fell below to a 15-year low beneath 83 yen overnight, which prompted the Bank of Japan to begin selling yen in the market for the first time in six years. The euro was also up 2.9 percent at 111.10 yen, its biggest one-day gain since February 2009.
China's state-owned Sinochem Corp appears unwilling to make a bid for Potash Corp, even as Beijing voiced concern over BHP Billiton's $39 billion bid for the Canadian firm on Wednesday.
Sinochem would instead consider buying some of Potash Corp's assets such as its nitrogen or phosphates businesses as an acquisition of the fertilizer giant would not be a good deal, a senior Sinochem official was quoted telling an influential Chinese magazine.
Prices of goods imported into the United States increased 0.6% in August in the largest gain since April, the Labor Department reported Wednesday. Fuel-import prices rose 1.7% in August, led by a 2.1% increase in petroleum prices. Meanwhile, prices for non-fuel imports rose 0.3%, driven by higher prices for finished goods and foods, feeds and beverages. Import prices are up 4.1% in the past year, the smallest 12-month gain since November 2009. Over the past year prices for fuel imports are up 9.1%, while prices for non-fuel imports are up 2.9%. Export prices rose 0.8% in August, the largest gain since April. Prices for agricultural exports rose 4.2%, the largest increase since June 2009. Meanwhile, prices for non-agricultural exports rose 0.5%. For the year, export prices are up 4.1%. In July, overall import prices rose 0.1%, while export prices fell 0.2%.
Conditions for manufacturing in the New York region softened a bit in September from August and remained well below levels of earlier in the summer, the New York Federal Reserve Bank said Wednesday. The bank's Empire State Manufacturing index fell to 4.1 in September from 7.1 in August. This is the lowest level since July 2009. Economists had forecast a small gain to 7.5. While positive, the index is well below the high of 31.9 in April and 19.6 in June and suggests growth at a tepid pace. The details of the report were stronger than the headline. After falling below zero last month, the new orders index turned positive. The employment index improved slightly.
Mortgage applications for home loan refinancing fell for a second straight week, dropping to its lowest level since early August, as rock-bottom interest rates failed to boost demand.
While historically low mortgage rates have been a glimmer of hope for a housing market that has struggled to find footing in the absence of government support, it failed to foster demand for loans to purchase a home last week.
The Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended September 10 decreased 8.9 percent.
China’s banking regulator may require the nation’s biggest lenders to boost their capital adequacy ratios to as high as 15 percent by the end of 2012, a person with knowledge of the matter said.
The regulator is drafting a plan that would call for Tier 1 capital of 8 percent, with the overall ratio set at 10 percent, the person said. The plan would add a buffer of up to 4 percent to protect against economic fluctuations, plus a further 1 percent for “systemically important” banks, the person said. The biggest banks must currently meet an 11.5 percent ratio.
(Bloomberg) -- The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.
Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.
AK Steel says it now expects to post an operating loss in the third quarter because of higher-than-expected raw materials prices and maintenance costs.
The steelmaker, based in West Chester, Ohio, said Wednesday it expects an operating loss of $20 per ton for the third quarter. It previously predicted an operating profit of $15 per ton. Shares fell 2.6 percent in premarket trading.
Accelerated maintenance work at AK's Ashland, Ky., blast furnace, as well as higher iron ore and operating costs will contribute to the loss.
Iron ore prices have skyrocketed on demand from emerging markets, especially China. AK Steel now thinks iron ore prices this year will be up more than the 65 percent jump it originally predicted.
The output of the nation's factories, mines and utilities rose 0.2% in August, the Federal Reserve said Wednesday. The increase was slightly stronger than expected. Economists surveyed by MarketWatch had expected a 0.1% increase. Output in July was revised down to a 0.6% rise compared with the prior estimate of a 1.0% gain. The revised data now shows this is the fourteenth straight gain in industrial output. Factory activity alone rose 0.2% in August after rising 0.7% in July. The slower production was the result of slower auto production which had bolstered output in July. Excluding autos, factory output increased 0.5% in August after a 0.2% gain in July. Capacity utilization - a gauge of slack in the economy -- rose to 74.7% in August from 74.6% in July. This is the highest level since September 2008.
Munger, Berkshire's vice chairman, said the job market is likely to stay "lousy" for an extended period, and that he doesn't see anything that would prompt employers to hire in the immediate future.
Munger also warned that the pain is not over in many sectors, citing timber and commercial real estate as two sectors where there is "more pain to come."
Southern California Home Sales Slide in August. Sales volume falls 2.1% and the median sale price drops 2.4% from July.
Owners cut prices on 26 percent of homes for sale last month, up from 25 percent in July and the highest since a matching 26 percent in October 2009, real estate website Trulia.com said.
The nation's banks repossessed a record number of homes in August, according to industry sources. RealtyTrac, an online foreclosure sale site, will release its monthly numbers on Thursday, but sources there confirm the number of repossessions will come in just shy of 100,000 for the month.
The Energy Information Administration reported crude oil stockpiles fell 2.5 million barrels for the week ended Sept. 10. Analysts polled by Platts had expected crude oil stocks to decline by 2.25 million barrels. Gasoline stocks declined 700,000 barrels, close to the forecast 400,000 barrels decline. Supplies of distillates, which include diesel and heating oil, dropped 300,000 barrels. Analysts surveyed by Platts had forecast a rise of 800,00 barrels.
Shares of Novell Inc. jumped nearly 6% to $5.90 Wednesday morning, after a newspaper reported that the company had reached a deal to put itself up for sale. The New York Post, citing unnamed sources, said the struggling business software maker plans to sell the company to a "strategic buyer" and a private equity firm.
Airgas Inc. shareholders threw their support behind Air Products & Chemicals Inc.’s proposed $5.5 billion hostile takeover by voting for all of the bidder’s director nominees and proxy questions.
Investors at the Airgas annual meeting in Drexel Hill, Pennsylvania, today elected Air Products’ nominees John P. Clancey, 65, Robert L. Lumpkins, 66, and Ted B. Miller Jr., 58.
More than 50 percent of votes cast were also cast in favor of holding another meeting on Jan. 18, giving Air Products nominees a chance to take control of the board in four months. Airgas CEO and founder Peter McCausland said in an interview that the meeting proposal wasn’t supported by half the shares outstanding and didn’t meet a Delaware law requirement for 67 percent of the votes.
Foreign investment in China weakened again in August after rebounding from a slowdown earlier this year, the government reported Wednesday.
Foreign direct investment rose 1.4 percent over a year earlier to $7.6 billion, Commerce Ministry spokesman Yao Jian said at a news conference. That was down from July's robust 29.2 percent.
FDI includes spending on factories, real estate and other assets but excludes investment in stocks and other financial instruments.
The Dow Jones Industrial Average gained 46 points, or 0.4%. The S&P 500 index gained 3.97 points, or 0.4%, to 1,125.07, while the Nasdaq Composite advanced 11.55, or 0.5%, to 2,301.32. So far September has experienced nearly $10 billion in equity outflows.
Silver posted a fresh 30-month high, with the December contract adding 14 cents to close at $20.57 an ounce.
Japan sold yen in the market on Wednesday for the first time in six years and promised more to come in a bid to stop the currency's relentless rise from hurting exporters and threatening a fragile economic recovery.
Fresh after victory in a party leadership contest, Japan's Prime Minister Naoto Kan appeared to be stepping up efforts to wrench the country out of deflation by targeting yen strength, which has weighed on stock prices and corporate profits.
Even as the U.S. dollar surged as much as 3 percent on the day against the yen, doubts lingered about the ultimate effectiveness of Japan's unilateral yen selling spree. A 15-month solo effort by Switzerland to weaken its currency did little to tame the Swiss franc.
The dollar was up 3.1 percent at 85.63, on track for its biggest daily gain in nearly two years. It fell below to a 15-year low beneath 83 yen overnight, which prompted the Bank of Japan to begin selling yen in the market for the first time in six years. The euro was also up 2.9 percent at 111.10 yen, its biggest one-day gain since February 2009.
China's state-owned Sinochem Corp appears unwilling to make a bid for Potash Corp, even as Beijing voiced concern over BHP Billiton's $39 billion bid for the Canadian firm on Wednesday.
Sinochem would instead consider buying some of Potash Corp's assets such as its nitrogen or phosphates businesses as an acquisition of the fertilizer giant would not be a good deal, a senior Sinochem official was quoted telling an influential Chinese magazine.
Prices of goods imported into the United States increased 0.6% in August in the largest gain since April, the Labor Department reported Wednesday. Fuel-import prices rose 1.7% in August, led by a 2.1% increase in petroleum prices. Meanwhile, prices for non-fuel imports rose 0.3%, driven by higher prices for finished goods and foods, feeds and beverages. Import prices are up 4.1% in the past year, the smallest 12-month gain since November 2009. Over the past year prices for fuel imports are up 9.1%, while prices for non-fuel imports are up 2.9%. Export prices rose 0.8% in August, the largest gain since April. Prices for agricultural exports rose 4.2%, the largest increase since June 2009. Meanwhile, prices for non-agricultural exports rose 0.5%. For the year, export prices are up 4.1%. In July, overall import prices rose 0.1%, while export prices fell 0.2%.
Conditions for manufacturing in the New York region softened a bit in September from August and remained well below levels of earlier in the summer, the New York Federal Reserve Bank said Wednesday. The bank's Empire State Manufacturing index fell to 4.1 in September from 7.1 in August. This is the lowest level since July 2009. Economists had forecast a small gain to 7.5. While positive, the index is well below the high of 31.9 in April and 19.6 in June and suggests growth at a tepid pace. The details of the report were stronger than the headline. After falling below zero last month, the new orders index turned positive. The employment index improved slightly.
Mortgage applications for home loan refinancing fell for a second straight week, dropping to its lowest level since early August, as rock-bottom interest rates failed to boost demand.
While historically low mortgage rates have been a glimmer of hope for a housing market that has struggled to find footing in the absence of government support, it failed to foster demand for loans to purchase a home last week.
The Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended September 10 decreased 8.9 percent.
China’s banking regulator may require the nation’s biggest lenders to boost their capital adequacy ratios to as high as 15 percent by the end of 2012, a person with knowledge of the matter said.
The regulator is drafting a plan that would call for Tier 1 capital of 8 percent, with the overall ratio set at 10 percent, the person said. The plan would add a buffer of up to 4 percent to protect against economic fluctuations, plus a further 1 percent for “systemically important” banks, the person said. The biggest banks must currently meet an 11.5 percent ratio.
(Bloomberg) -- The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.
Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.
AK Steel says it now expects to post an operating loss in the third quarter because of higher-than-expected raw materials prices and maintenance costs.
The steelmaker, based in West Chester, Ohio, said Wednesday it expects an operating loss of $20 per ton for the third quarter. It previously predicted an operating profit of $15 per ton. Shares fell 2.6 percent in premarket trading.
Accelerated maintenance work at AK's Ashland, Ky., blast furnace, as well as higher iron ore and operating costs will contribute to the loss.
Iron ore prices have skyrocketed on demand from emerging markets, especially China. AK Steel now thinks iron ore prices this year will be up more than the 65 percent jump it originally predicted.
The output of the nation's factories, mines and utilities rose 0.2% in August, the Federal Reserve said Wednesday. The increase was slightly stronger than expected. Economists surveyed by MarketWatch had expected a 0.1% increase. Output in July was revised down to a 0.6% rise compared with the prior estimate of a 1.0% gain. The revised data now shows this is the fourteenth straight gain in industrial output. Factory activity alone rose 0.2% in August after rising 0.7% in July. The slower production was the result of slower auto production which had bolstered output in July. Excluding autos, factory output increased 0.5% in August after a 0.2% gain in July. Capacity utilization - a gauge of slack in the economy -- rose to 74.7% in August from 74.6% in July. This is the highest level since September 2008.
Munger, Berkshire's vice chairman, said the job market is likely to stay "lousy" for an extended period, and that he doesn't see anything that would prompt employers to hire in the immediate future.
Munger also warned that the pain is not over in many sectors, citing timber and commercial real estate as two sectors where there is "more pain to come."
Southern California Home Sales Slide in August. Sales volume falls 2.1% and the median sale price drops 2.4% from July.
Owners cut prices on 26 percent of homes for sale last month, up from 25 percent in July and the highest since a matching 26 percent in October 2009, real estate website Trulia.com said.
The nation's banks repossessed a record number of homes in August, according to industry sources. RealtyTrac, an online foreclosure sale site, will release its monthly numbers on Thursday, but sources there confirm the number of repossessions will come in just shy of 100,000 for the month.
The Energy Information Administration reported crude oil stockpiles fell 2.5 million barrels for the week ended Sept. 10. Analysts polled by Platts had expected crude oil stocks to decline by 2.25 million barrels. Gasoline stocks declined 700,000 barrels, close to the forecast 400,000 barrels decline. Supplies of distillates, which include diesel and heating oil, dropped 300,000 barrels. Analysts surveyed by Platts had forecast a rise of 800,00 barrels.
Shares of Novell Inc. jumped nearly 6% to $5.90 Wednesday morning, after a newspaper reported that the company had reached a deal to put itself up for sale. The New York Post, citing unnamed sources, said the struggling business software maker plans to sell the company to a "strategic buyer" and a private equity firm.
Airgas Inc. shareholders threw their support behind Air Products & Chemicals Inc.’s proposed $5.5 billion hostile takeover by voting for all of the bidder’s director nominees and proxy questions.
Investors at the Airgas annual meeting in Drexel Hill, Pennsylvania, today elected Air Products’ nominees John P. Clancey, 65, Robert L. Lumpkins, 66, and Ted B. Miller Jr., 58.
More than 50 percent of votes cast were also cast in favor of holding another meeting on Jan. 18, giving Air Products nominees a chance to take control of the board in four months. Airgas CEO and founder Peter McCausland said in an interview that the meeting proposal wasn’t supported by half the shares outstanding and didn’t meet a Delaware law requirement for 67 percent of the votes.
Foreign investment in China weakened again in August after rebounding from a slowdown earlier this year, the government reported Wednesday.
Foreign direct investment rose 1.4 percent over a year earlier to $7.6 billion, Commerce Ministry spokesman Yao Jian said at a news conference. That was down from July's robust 29.2 percent.
FDI includes spending on factories, real estate and other assets but excludes investment in stocks and other financial instruments.
The Dow Jones Industrial Average gained 46 points, or 0.4%. The S&P 500 index gained 3.97 points, or 0.4%, to 1,125.07, while the Nasdaq Composite advanced 11.55, or 0.5%, to 2,301.32. So far September has experienced nearly $10 billion in equity outflows.
Silver posted a fresh 30-month high, with the December contract adding 14 cents to close at $20.57 an ounce.
Tuesday, September 14, 2010
Deluding
9/14/10 Deluding
John Williams: "The Federal government effectively is bankrupt, unable to meet its long-range obligations or even to cover physically its annual shortfall in operations (see the Hyperinflation Special Report). Accordingly, the efforts at fiscal stimulus rapidly are approaching their practical limits, the point at which the U.S. Treasury will have difficulty raising needed funds. There are three options open to the government for meeting its impossible fiscal needs: balancing its books, reneging on its obligations or printing the money it cannot possibly raise through taxation."
U.S. retail sales increased 0.4% in August, posting a second straight monthly gain, the Commerce Department estimated Tuesday. Sales for July were also downwardly revised to a 0.3% advance. Details of the August report were strong. Ahead of the report, economists surveyed by MarketWatch had expected total August retail sales to rise 0.3%. Excluding a 0.7% drop in motor-vehicle sales, retail sales rose 0.6%. Economists had forecast a 0.4% increase. Excluding autos, gas and building materials, August's 0.6% pickup was the strongest since March.
Inflation, not consumer exuberance, helped boost August’s retail sales tally, says Joan McCullough of East Shore Partners.
Sales at gasoline stations rose 1.9% last month before prices at the pump started to ease up. Groceries were up 1.5%. Economists are fond of stripping out the cost of those necessities from inflation, but sales seem to be another story.
Clothing and accessories were up a solid 1.2%, which Joanie notes might have something to do with the multitude of back-to-school sales-tax holidays and deep discounting.
“The klinkers? Electronics/Appliances, minus 1.1%,” notwithstanding Best Buy’s beat on its numbers this morning.
Also, furniture, off 0.5%, and autos and parts, down 0.7%.
“Nothin’ here folks, move it along,” she concludes.
Best Buy Co. said Tuesday that its fiscal second-quarter profit rose to $254 million, or 60 cents a share, from $158 million, or 37 cents, a year earlier. Revenue rose to $11.34 billion from $11.02 billion. The company raised its full-year forecast by 10 cents a share to $3.55 to $3.70, factoring in the year-to-date share repurchases. Analysts, on average, estimated the Minneapolis-based company to earn 44 cents a share on sales of $11.6 billion in the second quarter and $3.34 a share for the year, according to FactSet.
The Swiss franc strengthened to parity with the dollar for the first time since December as concern the global economic recovery is faltering drove investors to the perceived safety of the currency.
The yen traded at a 15-year high versus the dollar after sales at U.S. retailers rose more than forecast, easing concern the economic recovery is faltering and reducing demand for haven assets.
“Data like this helps the U.S. Dollar-yen has recovered a little bit,” Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “This takes away the concern on what a double dip could do to monetary policy.”
China’s yuan surged to the strongest level since 1993 on speculation the government will allow faster appreciation to head off U.S. trade sanctions as its economy improves.
The central bank fixed the reference rate at 6.7378 per dollar, the highest level since a peg against the dollar was scrapped in July 2005, before the U.S. House Ways and Means Committee discusses China’s currency policy tomorrow and Sept. 16. Premier Wen Jiabao said yesterday at a World Economic Forum meeting in Tianjin that the economy is in “good shape.”
"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).
He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said. Because of the job crisis the IMF sees a crisis of social unrest. So do I.
The federal government hired a New Orleans man for $18,000 to appraise whether news stories about its actions in the Gulf oil spill were positive or negative for the Obama administration, which was keenly sensitive to comparisons between its response and former President George W. Bush's much-maligned reaction to Hurricane Katrina.
The government also spent $10,000 for just over three minutes of video showing a routine offshore rig inspection for news organizations but couldn't say whether any ran the footage. And it awarded a $216,625 no-bid contract for a survey of seabirds to an environmental group that has criticized what it calls the "extreme anti-conservation record" of Sarah Palin, a possible 2012 rival to President Barack Obama.
The National Federation of Independent Business saw its Index of Small Business Optimism rise 0.7 points to 88.8, which the firm said is still indicative of a recessionary economy.
"We're still in the doldrums," NFIB President William Dunkelberg told CNBC in an interview.
The San Francisco Fed, which is known for coming out with sober economic analysis, has published its latest outlook for the economy.
It's not good.
They see sluggish growth, weak end demand, a horrible housing market, and yes... diminishing inflation (though not quite outright deflation).
German investor confidence fell more than economists forecast to an 19-month low in September as budget cuts across the euro region and slowing global growth clouded the outlook for Europe’s largest economy.
The last two times we witnessed mutual fund cash levels near these levels were directly before the 1999 market implosion and the 2008 market debacle.
Gallup: “In recent weeks, 63% of consumers have said economic conditions are “getting worse.” These future expectations for the economy are among the worst of 2010 and have deterioriated substantially from the improving trend that held sway at this point in 2009.” Gallup's Economic Confidence Index, at -34 during the week ending Sept. 12, confirms a downward trend in consumer confidence that started in mid-August."
China boasts a savings rate of 38%.
Inventories at U.S. businesses rose 1.0% in July, above expectations and faster than the 0.7% increase in sales, the Commerce Department said Tuesday. The inventory-to-sales ratio, an indication of demand, remained at 1.26 for the second consecutive month. It was at 1.35 a year ago. Economists had been expecting the nation's inventories to rise about 0.7% in July.
One U.S. dollar was buying 0.9937 Swiss francs in midmorning trading, down from 1.0079 Monday night. Gold futures surged as much as 2.3 percent to $1,276.20 an ounce. Silver surged 35 cents to $20.50.
ZeroHedge: "According to actuarial and consulting firm Miliman, in August 2010, the funded status of the 100 largest defined benefit pension plans sponsored by U.S. companies dropped by $108 billion to a 10-year low of 70.1%. Yes, that's a $100 billion + deterioration in one month! The culprit - Ben Bernanke - financial market performance was poor in August, but the main reason for the decline in funded status was a large decrease in corporate bond interest rates."
White House Chief of Staff Rahm Emanuel has commissioned his longtime pollster, Stanley Greenberg, to survey Chicagoans about a potential mayoral bid. “The mayoralty in Chicago is an unbelievably attractive opportunity, and I’m sure if Rahm decides to do that the president will support that decision,” Axelrod said in an interview with ABC radio.
The top two percent income earners in our country pay a whopping 40 percent of all taxes.
Cisco CEO: Plan to initiate 1%-2% dividend in 2011.
Market Still Deluding Itself That It Can Escape The Inevitable Denouement
By Albert Edwards
The current situation reminds me of mid 2007. Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun. But in August and September 2007, even though the wheels were clearly falling off the global economy, the S&P still managed to rally 15%! The recent reaction to data suggests the market is in a similar deluded state of mind. Yet again, equity investors refuse to accept they are now locked in a Vulcan death grip and are about to fall unconscious. (via John Mauldin)
The Dow Jones Industrial Average fell 17.64 points, or 0.2%, to end at 10,526.49. The S&P 500 index lost 0.8 point, or 0.1%, to 1,121.10. The Nasdaq Composite rose 4.06 points, or 0.2%, to 2,289.77.
John Williams: "The Federal government effectively is bankrupt, unable to meet its long-range obligations or even to cover physically its annual shortfall in operations (see the Hyperinflation Special Report). Accordingly, the efforts at fiscal stimulus rapidly are approaching their practical limits, the point at which the U.S. Treasury will have difficulty raising needed funds. There are three options open to the government for meeting its impossible fiscal needs: balancing its books, reneging on its obligations or printing the money it cannot possibly raise through taxation."
U.S. retail sales increased 0.4% in August, posting a second straight monthly gain, the Commerce Department estimated Tuesday. Sales for July were also downwardly revised to a 0.3% advance. Details of the August report were strong. Ahead of the report, economists surveyed by MarketWatch had expected total August retail sales to rise 0.3%. Excluding a 0.7% drop in motor-vehicle sales, retail sales rose 0.6%. Economists had forecast a 0.4% increase. Excluding autos, gas and building materials, August's 0.6% pickup was the strongest since March.
Inflation, not consumer exuberance, helped boost August’s retail sales tally, says Joan McCullough of East Shore Partners.
Sales at gasoline stations rose 1.9% last month before prices at the pump started to ease up. Groceries were up 1.5%. Economists are fond of stripping out the cost of those necessities from inflation, but sales seem to be another story.
Clothing and accessories were up a solid 1.2%, which Joanie notes might have something to do with the multitude of back-to-school sales-tax holidays and deep discounting.
“The klinkers? Electronics/Appliances, minus 1.1%,” notwithstanding Best Buy’s beat on its numbers this morning.
Also, furniture, off 0.5%, and autos and parts, down 0.7%.
“Nothin’ here folks, move it along,” she concludes.
Best Buy Co. said Tuesday that its fiscal second-quarter profit rose to $254 million, or 60 cents a share, from $158 million, or 37 cents, a year earlier. Revenue rose to $11.34 billion from $11.02 billion. The company raised its full-year forecast by 10 cents a share to $3.55 to $3.70, factoring in the year-to-date share repurchases. Analysts, on average, estimated the Minneapolis-based company to earn 44 cents a share on sales of $11.6 billion in the second quarter and $3.34 a share for the year, according to FactSet.
The Swiss franc strengthened to parity with the dollar for the first time since December as concern the global economic recovery is faltering drove investors to the perceived safety of the currency.
The yen traded at a 15-year high versus the dollar after sales at U.S. retailers rose more than forecast, easing concern the economic recovery is faltering and reducing demand for haven assets.
“Data like this helps the U.S. Dollar-yen has recovered a little bit,” Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “This takes away the concern on what a double dip could do to monetary policy.”
China’s yuan surged to the strongest level since 1993 on speculation the government will allow faster appreciation to head off U.S. trade sanctions as its economy improves.
The central bank fixed the reference rate at 6.7378 per dollar, the highest level since a peg against the dollar was scrapped in July 2005, before the U.S. House Ways and Means Committee discusses China’s currency policy tomorrow and Sept. 16. Premier Wen Jiabao said yesterday at a World Economic Forum meeting in Tianjin that the economy is in “good shape.”
"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).
He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said. Because of the job crisis the IMF sees a crisis of social unrest. So do I.
The federal government hired a New Orleans man for $18,000 to appraise whether news stories about its actions in the Gulf oil spill were positive or negative for the Obama administration, which was keenly sensitive to comparisons between its response and former President George W. Bush's much-maligned reaction to Hurricane Katrina.
The government also spent $10,000 for just over three minutes of video showing a routine offshore rig inspection for news organizations but couldn't say whether any ran the footage. And it awarded a $216,625 no-bid contract for a survey of seabirds to an environmental group that has criticized what it calls the "extreme anti-conservation record" of Sarah Palin, a possible 2012 rival to President Barack Obama.
The National Federation of Independent Business saw its Index of Small Business Optimism rise 0.7 points to 88.8, which the firm said is still indicative of a recessionary economy.
"We're still in the doldrums," NFIB President William Dunkelberg told CNBC in an interview.
The San Francisco Fed, which is known for coming out with sober economic analysis, has published its latest outlook for the economy.
It's not good.
They see sluggish growth, weak end demand, a horrible housing market, and yes... diminishing inflation (though not quite outright deflation).
German investor confidence fell more than economists forecast to an 19-month low in September as budget cuts across the euro region and slowing global growth clouded the outlook for Europe’s largest economy.
The last two times we witnessed mutual fund cash levels near these levels were directly before the 1999 market implosion and the 2008 market debacle.
Gallup: “In recent weeks, 63% of consumers have said economic conditions are “getting worse.” These future expectations for the economy are among the worst of 2010 and have deterioriated substantially from the improving trend that held sway at this point in 2009.” Gallup's Economic Confidence Index, at -34 during the week ending Sept. 12, confirms a downward trend in consumer confidence that started in mid-August."
China boasts a savings rate of 38%.
Inventories at U.S. businesses rose 1.0% in July, above expectations and faster than the 0.7% increase in sales, the Commerce Department said Tuesday. The inventory-to-sales ratio, an indication of demand, remained at 1.26 for the second consecutive month. It was at 1.35 a year ago. Economists had been expecting the nation's inventories to rise about 0.7% in July.
One U.S. dollar was buying 0.9937 Swiss francs in midmorning trading, down from 1.0079 Monday night. Gold futures surged as much as 2.3 percent to $1,276.20 an ounce. Silver surged 35 cents to $20.50.
ZeroHedge: "According to actuarial and consulting firm Miliman, in August 2010, the funded status of the 100 largest defined benefit pension plans sponsored by U.S. companies dropped by $108 billion to a 10-year low of 70.1%. Yes, that's a $100 billion + deterioration in one month! The culprit - Ben Bernanke - financial market performance was poor in August, but the main reason for the decline in funded status was a large decrease in corporate bond interest rates."
White House Chief of Staff Rahm Emanuel has commissioned his longtime pollster, Stanley Greenberg, to survey Chicagoans about a potential mayoral bid. “The mayoralty in Chicago is an unbelievably attractive opportunity, and I’m sure if Rahm decides to do that the president will support that decision,” Axelrod said in an interview with ABC radio.
The top two percent income earners in our country pay a whopping 40 percent of all taxes.
Cisco CEO: Plan to initiate 1%-2% dividend in 2011.
Market Still Deluding Itself That It Can Escape The Inevitable Denouement
By Albert Edwards
The current situation reminds me of mid 2007. Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun. But in August and September 2007, even though the wheels were clearly falling off the global economy, the S&P still managed to rally 15%! The recent reaction to data suggests the market is in a similar deluded state of mind. Yet again, equity investors refuse to accept they are now locked in a Vulcan death grip and are about to fall unconscious. (via John Mauldin)
The Dow Jones Industrial Average fell 17.64 points, or 0.2%, to end at 10,526.49. The S&P 500 index lost 0.8 point, or 0.1%, to 1,121.10. The Nasdaq Composite rose 4.06 points, or 0.2%, to 2,289.77.
Monday, September 13, 2010
Fed Debt Issuance
9/13/10 Fed Debt Issuance
Hewlett-Packard Co continued its recent acquisition strategy on Monday when it unveiled plans to buy cyber-security firm ArcSight Inc for $1.5 billion cash. The deal values ArcSight at $43.50 a share. ArcSight shares closed at $35.10 on Friday. ArcSight, based in Cupertino, Calif., helps organizations keep tabs on the data flowing through their computer networks and analyze it for signs of hacking, theft or fraud.
Genzyme Corp will sell its genetics unit to Laboratory Corp. of America Holdings for $925 million in cash.
"Sometimes I wonder if the world is being run by smart people who are putting us on, or by imbeciles who really mean it." ~ Mark Twain
In faulting contractors and a few unnamed BP employees in its report on the Macondo well blowout, BP may signal a legal strategy aimed at limiting corporate blame.
John Hussman: "The past three employment reports have not simply been bad - from the standpoint of how employment should have recovered, they have been among the worst job creation shortfalls on record....The typical lag with respect to new claims for unemployment is about 23-26 weeks (which puts the likely window of deterioration at about the October - November time frame), and the typical lag with respect to the payroll unemployment report is, not surprisingly, about 4 weeks beyond that. The critical risk area here extends for several months, not a few weeks....Overall then, we are facing the likelihood a fresh near-term deterioration in U.S. economic activity, as part of a longer multi-year adjustment, which is typical post-credit crisis behavior. My impression is that Wall Street is eager to treat the present cycle as a "V-shaped" recovery. We see little evidence to support that view, and the best evidence we do observe is more consistent with a double-dip (if not a continuation of a single ongoing recession)."
The Nikkei 225 is currently showing the "death cross" pattern, which is a bearish signal for the Japanese index, Joel Stainton, technical analyst at SEB Future Sales, told CNBC Friday.
BP may want to halt the sale of its assets in Prudhoe Bay and Russia. The company has told Citigroup analysts that it does not even expect to spend the $20 billion it is in the process of placing into escrow. BP CEO Bob Dudley said that the $32 billion reserves that the UK-based firm has taken will be more than enough.
Citigroup said that, after the meeting with Dudley, it had growing confidence BP would reinstate its dividend
early next year, according to ABC News.
Dollar Thrifty Automotive Group Inc.'s board said late Sunday that it accepted Hertz Global Holdings Inc.'s new $50-per-share offer -- up from the $41 it offered in April -- and amended the companies' merger agreement. The offer was made in an attempt to thwart a rival $1.3 billion cash-and-stock counteroffer by Avis Budget Group Inc.
ZeroHedge: "Another week in which the M2 jumped to a fresh all time high, increasing by $30 billion W/W to just under $8.7 trillion. This was only the fourth largest weekly jump in this broad money aggregate in 2010, with the prior biggest ones clustered just around the time of the Greek "out of court" reorganization and the flash crash in May. This was also the 8th sequential increase in the M2 in a row. Oddly enough this occurred even as the Monetary Base (NSA) declined by $11 billion to $1.983 trillion. Currently, the M2-MB ratio stands at 4.4x, close to its all time lows, with the recent decline purely a function of the modest contraction in the Fed's balance sheet as MBS had been rolling off for the past 4 months. With QE Lite in play, expect the Fed's Balance sheet to remain flat, which will likely mean that the ratio of the Fed's asset to the Monetary Base will remain more or less unchanged at its elevated ratio of 1.15x (with a tendency toward declining), compared to the historical average of around 1.00. Note the (as expected) inverse relationship between the M2-MB ratio and the total size of the Fed balance sheet, as the monetary base has exploded courtesy of excess reserves, without this number actually hitting M2. Is the recent leakage in M2 higher, coupled with a contraction in MB the critical step that all the inflationists have been dreading (yet at the same time expecting)?"
Rob Hanna: "In general very low volume and range when the market is not above its 200ma will lead to a pullback."
Corporate bonds due in 15 years or more have lost 3.15 percent since Aug. 31 while notes maturing in 1 to 10 years lost 0.67 percent, Bank of America Merrill Lynch index data show.
The U.S. government's budget deficit was $91 billion in August, the Treasury Department said Monday. Receipts were $164 billion in August, while outlays totaled $255 billion. The August shortfall was 13% less than recorded a year ago but marked the 23rd straight month that the government ran a deficit. At the same time, importantly, the comparable increase in debt in the month of August 2010 was $212 billion, compared to $143.6 billion a year earlier.Thus,
debt issuance is substantially in excess of the monthly deficit. According to zerohedge, "over the past 47 months, or almost 4 full fiscal years, the US has accumulated a $3.3 trillion deficit, while over the same period, total Federal debt increased by $4.9 trillion, from $8.6 trillion to $13.4 trillion."
Dow closes up 43 points, Nasdaq surges 43, and S&P plus 12.
U.S. equity funds have suffered outflows of $30 billion this year while European equity funds have seen outflows of $11+ billion.
The Chinese aluminum company Chinalco owns 9% of Rio Tinto. China buys A$22 billion of iron ore from Australia each year, and about 25% of the country's exports, A$42 billion, went to China.
China adds A$3,400 per annum to every Australian household through exports, imports, and foreign investment. Australia has a A$6.6 billion trade surplus with China.
White House senior adviser Valerie Jarrett said on “The View” on Monday that she doesn’t “want to change jobs” and become President Obama’s chief of staff if Rahm Emanuel runs for mayor of Chicago.
Fossil fuels will continue to be a vital component of the world's energy mix for many years, and natural gas will increasingly play a more prominent role, according to global energy leaders who spoke Monday at the World Energy Congress in Montreal. Royal Dutch Shell CEO Peter Voser said natural gas supplies have increased energy security in North America and may potentially "alter the energy landscape for the world as a whole."
Voser also called natural gas the "fossil fuel of the future."
Since World War II, the party of the president has lost an average 24 House seats and three to four Senate seats in midterm elections.
Bank of America Corp. is planning to try to sell or wind down billions of dollars of assets or businesses, the Financial Times reported Tuesday. Any such move would represent an attempt by the bank to ease shareholder concerns about its $2.3 trillion-plus balance sheet, according to the report. Non-core assets to be divested could exceed $100 billion and include some of the products and loans the lender acquired when it purchased mortgage firm Countrywide Financial, the report said, citing analysts and fund managers that recently attended meetings with B. of A. executives.
Hewlett-Packard Co continued its recent acquisition strategy on Monday when it unveiled plans to buy cyber-security firm ArcSight Inc for $1.5 billion cash. The deal values ArcSight at $43.50 a share. ArcSight shares closed at $35.10 on Friday. ArcSight, based in Cupertino, Calif., helps organizations keep tabs on the data flowing through their computer networks and analyze it for signs of hacking, theft or fraud.
Genzyme Corp will sell its genetics unit to Laboratory Corp. of America Holdings for $925 million in cash.
"Sometimes I wonder if the world is being run by smart people who are putting us on, or by imbeciles who really mean it." ~ Mark Twain
In faulting contractors and a few unnamed BP employees in its report on the Macondo well blowout, BP may signal a legal strategy aimed at limiting corporate blame.
John Hussman: "The past three employment reports have not simply been bad - from the standpoint of how employment should have recovered, they have been among the worst job creation shortfalls on record....The typical lag with respect to new claims for unemployment is about 23-26 weeks (which puts the likely window of deterioration at about the October - November time frame), and the typical lag with respect to the payroll unemployment report is, not surprisingly, about 4 weeks beyond that. The critical risk area here extends for several months, not a few weeks....Overall then, we are facing the likelihood a fresh near-term deterioration in U.S. economic activity, as part of a longer multi-year adjustment, which is typical post-credit crisis behavior. My impression is that Wall Street is eager to treat the present cycle as a "V-shaped" recovery. We see little evidence to support that view, and the best evidence we do observe is more consistent with a double-dip (if not a continuation of a single ongoing recession)."
The Nikkei 225 is currently showing the "death cross" pattern, which is a bearish signal for the Japanese index, Joel Stainton, technical analyst at SEB Future Sales, told CNBC Friday.
BP may want to halt the sale of its assets in Prudhoe Bay and Russia. The company has told Citigroup analysts that it does not even expect to spend the $20 billion it is in the process of placing into escrow. BP CEO Bob Dudley said that the $32 billion reserves that the UK-based firm has taken will be more than enough.
Citigroup said that, after the meeting with Dudley, it had growing confidence BP would reinstate its dividend
early next year, according to ABC News.
Dollar Thrifty Automotive Group Inc.'s board said late Sunday that it accepted Hertz Global Holdings Inc.'s new $50-per-share offer -- up from the $41 it offered in April -- and amended the companies' merger agreement. The offer was made in an attempt to thwart a rival $1.3 billion cash-and-stock counteroffer by Avis Budget Group Inc.
ZeroHedge: "Another week in which the M2 jumped to a fresh all time high, increasing by $30 billion W/W to just under $8.7 trillion. This was only the fourth largest weekly jump in this broad money aggregate in 2010, with the prior biggest ones clustered just around the time of the Greek "out of court" reorganization and the flash crash in May. This was also the 8th sequential increase in the M2 in a row. Oddly enough this occurred even as the Monetary Base (NSA) declined by $11 billion to $1.983 trillion. Currently, the M2-MB ratio stands at 4.4x, close to its all time lows, with the recent decline purely a function of the modest contraction in the Fed's balance sheet as MBS had been rolling off for the past 4 months. With QE Lite in play, expect the Fed's Balance sheet to remain flat, which will likely mean that the ratio of the Fed's asset to the Monetary Base will remain more or less unchanged at its elevated ratio of 1.15x (with a tendency toward declining), compared to the historical average of around 1.00. Note the (as expected) inverse relationship between the M2-MB ratio and the total size of the Fed balance sheet, as the monetary base has exploded courtesy of excess reserves, without this number actually hitting M2. Is the recent leakage in M2 higher, coupled with a contraction in MB the critical step that all the inflationists have been dreading (yet at the same time expecting)?"
Rob Hanna: "In general very low volume and range when the market is not above its 200ma will lead to a pullback."
Corporate bonds due in 15 years or more have lost 3.15 percent since Aug. 31 while notes maturing in 1 to 10 years lost 0.67 percent, Bank of America Merrill Lynch index data show.
The U.S. government's budget deficit was $91 billion in August, the Treasury Department said Monday. Receipts were $164 billion in August, while outlays totaled $255 billion. The August shortfall was 13% less than recorded a year ago but marked the 23rd straight month that the government ran a deficit. At the same time, importantly, the comparable increase in debt in the month of August 2010 was $212 billion, compared to $143.6 billion a year earlier.Thus,
debt issuance is substantially in excess of the monthly deficit. According to zerohedge, "over the past 47 months, or almost 4 full fiscal years, the US has accumulated a $3.3 trillion deficit, while over the same period, total Federal debt increased by $4.9 trillion, from $8.6 trillion to $13.4 trillion."
Dow closes up 43 points, Nasdaq surges 43, and S&P plus 12.
U.S. equity funds have suffered outflows of $30 billion this year while European equity funds have seen outflows of $11+ billion.
The Chinese aluminum company Chinalco owns 9% of Rio Tinto. China buys A$22 billion of iron ore from Australia each year, and about 25% of the country's exports, A$42 billion, went to China.
China adds A$3,400 per annum to every Australian household through exports, imports, and foreign investment. Australia has a A$6.6 billion trade surplus with China.
White House senior adviser Valerie Jarrett said on “The View” on Monday that she doesn’t “want to change jobs” and become President Obama’s chief of staff if Rahm Emanuel runs for mayor of Chicago.
Fossil fuels will continue to be a vital component of the world's energy mix for many years, and natural gas will increasingly play a more prominent role, according to global energy leaders who spoke Monday at the World Energy Congress in Montreal. Royal Dutch Shell CEO Peter Voser said natural gas supplies have increased energy security in North America and may potentially "alter the energy landscape for the world as a whole."
Voser also called natural gas the "fossil fuel of the future."
Since World War II, the party of the president has lost an average 24 House seats and three to four Senate seats in midterm elections.
Bank of America Corp. is planning to try to sell or wind down billions of dollars of assets or businesses, the Financial Times reported Tuesday. Any such move would represent an attempt by the bank to ease shareholder concerns about its $2.3 trillion-plus balance sheet, according to the report. Non-core assets to be divested could exceed $100 billion and include some of the products and loans the lender acquired when it purchased mortgage firm Countrywide Financial, the report said, citing analysts and fund managers that recently attended meetings with B. of A. executives.
Sunday, September 12, 2010
China
9/12/10 China
The National Bureau of Statistics announced on Saturday that consumer prices in China were 3.5 percent higher compared with a year earlier, the largest increase in nearly two years as unusually hot weather for the month pushed up food prices.
To make matters worse, inflation over the short term also seems to be accelerating. A seasonally adjusted comparison of August prices to July prices showed that inflation was running at an annualized pace closer to 4.8 percent.
Two of Intel's top Oregon executives will deliver keynote addresses this week. Software chief Renee James will tout an ecosystem of mobile apps, and Justin Rattner, chief technology officer, will highlight Intel's long-range vision.
The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama's watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
Census figures for 2009 -- the recession-ravaged first year of the Democrat's presidency -- are to be released in the coming week, and demographers expect grim findings.
Deutsche Bank AG said it will make a voluntary public takeover offer for Deutsche Postbank AG.
It will offer about 24 euros to 25 euros for each Postbank share, it said in a statement today. The final minimum price will be set in about one week. Deutsche Bank currently own about 29.95 percent of Postbank, it said.
Deutsche Bank also said it plans to increase its capital by at least 9.8 billion euros ($12.4 billion).
Mike Burk: "There is little to recommend the current market. It is a little overbought and the secondaries have been underperforming the blue chips.
I expect the major averages to be lower on Friday September 17 than they were on Friday September 10."
NYTimes: "from 2007 through 2009, the number of families in homeless shelters — households with at least one adult and one minor child — leapt to 170,000 from 131,000, according to the Department of Housing and Urban Development.
With long-term unemployment ballooning, those numbers could easily climb this year. Late in 2009, however, states began distributing $1.5 billion that has been made available over three years by the federal government as part of the stimulus package for the Homeless Prevention and Rapid Re-Housing Program, which provides financial assistance to keep people in their homes or get them back in one quickly if they lose them.
More than 550,000 people have received aid, including more than 1,800 in Rhode Island, with just over a quarter of the money for the program spent so far nationally, state and federal officials said."
A group of Chinese investors is considering a takeover of U.K. insurer Prudential PLC (PRU.LN), The Sunday Times said.
The investors are more interested in Prudential's Asian business than its U.K. or U.S. operations and would likely break the company up, the newspaper said without citing sources.
Austan Goolsbee -- Obama's new top econ chief -- says on Fox News Sunday: "I don't think the unemployment rate will be coming down significantly at any time in the near future," according to POLITICO's Mike Allen.
Scientists on a research vessel in the Gulf of Mexico are finding a substantial layer of oily sediment stretching for dozens of miles in all directions. Their discovery suggests that a lot of oil from the Deepwater Horizon didn't simply evaporate or dissipate into the water — it has settled to the seafloor.
The National Bureau of Statistics announced on Saturday that consumer prices in China were 3.5 percent higher compared with a year earlier, the largest increase in nearly two years as unusually hot weather for the month pushed up food prices.
To make matters worse, inflation over the short term also seems to be accelerating. A seasonally adjusted comparison of August prices to July prices showed that inflation was running at an annualized pace closer to 4.8 percent.
Two of Intel's top Oregon executives will deliver keynote addresses this week. Software chief Renee James will tout an ecosystem of mobile apps, and Justin Rattner, chief technology officer, will highlight Intel's long-range vision.
The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama's watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
Census figures for 2009 -- the recession-ravaged first year of the Democrat's presidency -- are to be released in the coming week, and demographers expect grim findings.
Deutsche Bank AG said it will make a voluntary public takeover offer for Deutsche Postbank AG.
It will offer about 24 euros to 25 euros for each Postbank share, it said in a statement today. The final minimum price will be set in about one week. Deutsche Bank currently own about 29.95 percent of Postbank, it said.
Deutsche Bank also said it plans to increase its capital by at least 9.8 billion euros ($12.4 billion).
Mike Burk: "There is little to recommend the current market. It is a little overbought and the secondaries have been underperforming the blue chips.
I expect the major averages to be lower on Friday September 17 than they were on Friday September 10."
NYTimes: "from 2007 through 2009, the number of families in homeless shelters — households with at least one adult and one minor child — leapt to 170,000 from 131,000, according to the Department of Housing and Urban Development.
With long-term unemployment ballooning, those numbers could easily climb this year. Late in 2009, however, states began distributing $1.5 billion that has been made available over three years by the federal government as part of the stimulus package for the Homeless Prevention and Rapid Re-Housing Program, which provides financial assistance to keep people in their homes or get them back in one quickly if they lose them.
More than 550,000 people have received aid, including more than 1,800 in Rhode Island, with just over a quarter of the money for the program spent so far nationally, state and federal officials said."
A group of Chinese investors is considering a takeover of U.K. insurer Prudential PLC (PRU.LN), The Sunday Times said.
The investors are more interested in Prudential's Asian business than its U.K. or U.S. operations and would likely break the company up, the newspaper said without citing sources.
Austan Goolsbee -- Obama's new top econ chief -- says on Fox News Sunday: "I don't think the unemployment rate will be coming down significantly at any time in the near future," according to POLITICO's Mike Allen.
Scientists on a research vessel in the Gulf of Mexico are finding a substantial layer of oily sediment stretching for dozens of miles in all directions. Their discovery suggests that a lot of oil from the Deepwater Horizon didn't simply evaporate or dissipate into the water — it has settled to the seafloor.
China
9/12/10 China
The National Bureau of Statistics announced on Saturday that consumer prices in China were 3.5 percent higher compared with a year earlier, the largest increase in nearly two years as unusually hot weather for the month pushed up food prices.
To make matters worse, inflation over the short term also seems to be accelerating. A seasonally adjusted comparison of August prices to July prices showed that inflation was running at an annualized pace closer to 4.8 percent.
Two of Intel's top Oregon executives will deliver keynote addresses this week. Software chief Renee James will tout an ecosystem of mobile apps, and Justin Rattner, chief technology officer, will highlight Intel's long-range vision.
The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama's watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
Census figures for 2009 -- the recession-ravaged first year of the Democrat's presidency -- are to be released in the coming week, and demographers expect grim findings.
Deutsche Bank AG said it will make a voluntary public takeover offer for Deutsche Postbank AG.
It will offer about 24 euros to 25 euros for each Postbank share, it said in a statement today. The final minimum price will be set in about one week. Deutsche Bank currently own about 29.95 percent of Postbank, it said.
Deutsche Bank also said it plans to increase its capital by at least 9.8 billion euros ($12.4 billion).
Mike Burk: "There is little to recommend the current market. It is a little overbought and the secondaries have been underperforming the blue chips.
I expect the major averages to be lower on Friday September 17 than they were on Friday September 10."
NYTimes: "from 2007 through 2009, the number of families in homeless shelters — households with at least one adult and one minor child — leapt to 170,000 from 131,000, according to the Department of Housing and Urban Development.
With long-term unemployment ballooning, those numbers could easily climb this year. Late in 2009, however, states began distributing $1.5 billion that has been made available over three years by the federal government as part of the stimulus package for the Homeless Prevention and Rapid Re-Housing Program, which provides financial assistance to keep people in their homes or get them back in one quickly if they lose them.
More than 550,000 people have received aid, including more than 1,800 in Rhode Island, with just over a quarter of the money for the program spent so far nationally, state and federal officials said."
A group of Chinese investors is considering a takeover of U.K. insurer Prudential PLC (PRU.LN), The Sunday Times said.
The investors are more interested in Prudential's Asian business than its U.K. or U.S. operations and would likely break the company up, the newspaper said without citing sources.
Austan Goolsbee -- Obama's new top econ chief -- says on Fox News Sunday: "I don't think the unemployment rate will be coming down significantly at any time in the near future," according to POLITICO's Mike Allen.
Scientists on a research vessel in the Gulf of Mexico are finding a substantial layer of oily sediment stretching for dozens of miles in all directions. Their discovery suggests that a lot of oil from the Deepwater Horizon didn't simply evaporate or dissipate into the water — it has settled to the seafloor.
The National Bureau of Statistics announced on Saturday that consumer prices in China were 3.5 percent higher compared with a year earlier, the largest increase in nearly two years as unusually hot weather for the month pushed up food prices.
To make matters worse, inflation over the short term also seems to be accelerating. A seasonally adjusted comparison of August prices to July prices showed that inflation was running at an annualized pace closer to 4.8 percent.
Two of Intel's top Oregon executives will deliver keynote addresses this week. Software chief Renee James will tout an ecosystem of mobile apps, and Justin Rattner, chief technology officer, will highlight Intel's long-range vision.
The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama's watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
Census figures for 2009 -- the recession-ravaged first year of the Democrat's presidency -- are to be released in the coming week, and demographers expect grim findings.
Deutsche Bank AG said it will make a voluntary public takeover offer for Deutsche Postbank AG.
It will offer about 24 euros to 25 euros for each Postbank share, it said in a statement today. The final minimum price will be set in about one week. Deutsche Bank currently own about 29.95 percent of Postbank, it said.
Deutsche Bank also said it plans to increase its capital by at least 9.8 billion euros ($12.4 billion).
Mike Burk: "There is little to recommend the current market. It is a little overbought and the secondaries have been underperforming the blue chips.
I expect the major averages to be lower on Friday September 17 than they were on Friday September 10."
NYTimes: "from 2007 through 2009, the number of families in homeless shelters — households with at least one adult and one minor child — leapt to 170,000 from 131,000, according to the Department of Housing and Urban Development.
With long-term unemployment ballooning, those numbers could easily climb this year. Late in 2009, however, states began distributing $1.5 billion that has been made available over three years by the federal government as part of the stimulus package for the Homeless Prevention and Rapid Re-Housing Program, which provides financial assistance to keep people in their homes or get them back in one quickly if they lose them.
More than 550,000 people have received aid, including more than 1,800 in Rhode Island, with just over a quarter of the money for the program spent so far nationally, state and federal officials said."
A group of Chinese investors is considering a takeover of U.K. insurer Prudential PLC (PRU.LN), The Sunday Times said.
The investors are more interested in Prudential's Asian business than its U.K. or U.S. operations and would likely break the company up, the newspaper said without citing sources.
Austan Goolsbee -- Obama's new top econ chief -- says on Fox News Sunday: "I don't think the unemployment rate will be coming down significantly at any time in the near future," according to POLITICO's Mike Allen.
Scientists on a research vessel in the Gulf of Mexico are finding a substantial layer of oily sediment stretching for dozens of miles in all directions. Their discovery suggests that a lot of oil from the Deepwater Horizon didn't simply evaporate or dissipate into the water — it has settled to the seafloor.
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