10/31/06 Orderly Adjustment
Pilgrim's Pride said it will reduce weekly chicken processing by 5%
year over year, or approximately 1.3 million head per week, by January 2007
as part of its continuing effort to better balance supply and demand amid
declining chicken prices and sharply higher costs for corn.
The reduction will begin with eggs set as of October 30, 2006, and will
take effect with weekly processing beginning January 1, 2007. The Company
said it intends that the reduction will remain in effect until average
industry margins return to more normalized levels.
"The U.S. chicken industry is subject to volatility and there are a
number of factors impacting near-term market conditions. Although industry
dynamics improved in the spring and early summer of 2006, market conditions
have weakened over the past few months, as evidenced by a decrease in
prices for boneless breast meat and leg quarters, as well as a sharp
increase over the past two months in the price of corn," said O.B. Goolsby
Jr., Pilgrim's Pride president and chief executive officer.
What implications might this have for the company's efforts to acquire Gold Kist?
Over one hundred of our fighting men and women have been killed in Iraq this month.
Bush says "we are winning the war." The voters will have their say on November 7.
The year-on-year rate of non food and energy inflation registered a strong 2.4 percent increase in September. What would the real inflation rate be with food and energy? Clearly the rate would exceed your monthly income gains. Maybe that's why Lacker of the Richmond Fed finds inflation "discomforting."
Goodyear Tire & Rubber Co. said on Monday that it plans to close a plant in Tyler, Texas, three weeks after workers at the factory and 15 other facilities went on strike in part because of the tire maker's plan to shut down the plant. The move will eliminate about 1,100 jobs and is part of Goodyear's strategy to end some of its private label tire business.
Real disposable incomes - after taxes and after adjusting for inflation - rose 0.8%, the most since last September. Consumer spending increased 0.1% in nominal terms, but rose 0.4% when adjusted for falling prices.
Rep. Ron Paul: “Once we accept that the federal government needs $2.7 trillion from us - and more each year - the only question left is from whom it will be collected.”
Gazprom delayed the start of production at its giant Shtokman offshore natural gas field in the Arctic by two years, to 2013, Interfax said Sunday.
The company had planned to produce its first liquefied natural gas, or LNG, at the field in July 2011, deputy CEO Alexander Ananenkov said in Ufa on Sunday, Interfax reported.
Richard Daughty relates "last night, Japanese Finance Minister Omi said that Japan would ‘welcome Russia’s decision to raise yen exposure in their currency reserves’”...Australia’s “Treasurer Peter Costello has called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments and ensure an orderly adjustment.”
Nouriel Roubini: "The first estimate of US Q3 GDP growth came out at a dismal 1.6% but, as reported by Bloomberg, the actual correct figure would have been 0.9% if the production of motor vehicles in Q3 had been measured correctly."
December gold climbed $6.40, or 1.1%, to close at $607.40 an ounce, the contract's loftiest closing level since Sept. 28. Meanwhile, crude closed down 4% at $58.36. December natural gas closed at a more than two-week low of $7.416 per million British thermal units, down 41.1 cents, or 5.3%.
An survey of homeowners conducted for Wells Fargo & Co., the San Francisco-based bank, found that about one in seven respondents had an adjustable-rate mortgage, or ARM. The study found that nearly 80 percent of homeowners with ARMs said they were "somewhat" concerned, "very" concerned or "extremely" concerned about rate increases.
Paul McCulley: "The FOMC's revealed bias is to nurture an increase in the unemployment rate with sustained below-trend growth, so as to pull inflation back down towards target."
Ford plans to cut North American output by up to 12% in the first half of 2007.
Monday, October 30, 2006
Saturday, October 28, 2006
Turning Back The Clock
10/29/06 Turning Back The Clock
I keep a history clock in my brain. It contains all types of thoughts and facts. It helps me to think clearly. Some might suggest I think differently.
Let's turn to thinking about today's stock market. I could care less that the vast majority of investor sentiment is optimistic. That and a buck+ will get you on the bus. I do care that 250 to 260 million shares of stock changes hands on the NYSE in the last 30 minutes of the trading day. I do care that the closing tick number lately has many times been 1000+. Yet, those machinations don't impress the specialists and the floor traders who are not buying on balance and frequently have been selling on balance into strength. That is some of the smart money in my book. I pay attention to the VIX which has trouble getting above 11. I also keep in my mind that the fiscal year end for many mutual funds and hedge funds is Oct. 31.
With more demand for calling buying, it is clearly in your best interest, in my view, to sell some out of the money calls against your holdings. A timeframe with the January 2007 option series is a good starting point. Should the calls get exercised, your profit won't be subject to tax until April 2008. Better you have the money than the government piss it away in Iraq and Afghanistan or on pork programs.
Are you keeping an eye on the insider selling figures? You're buying while insiders are selling. Dumb! To make matters worse, corporations are out buying their stock while the CEOs of many of those corporations are selling their own shares. The directors sit there and look the other way. Meanwhile, you are paying their director fees.
Robert McHugh: "Since August 25th, 1999, the Dow Industrials have formed their most significant tops within one week of a consecutive series of Fibonacci weeks from that date. What is so fascinating here, is the next top is scheduled for the week of November 17th, 2006 +/1 one week, shortly after the coming U.S. elections."
Bob Hoye: "Through the SEC, the Fed controls margin requirements and a recent announcement was described by the deputy director of the SEC as "a very significant change". Remember that this is essentially the same Fed and SEC that argued that no increases were needed during the late 1990s' tech mania. Now they are talking about lowering margin requirements for institutions on stocks, options, and futures. Now ranging from 25% to 50%, the proposal is to drop them to 15%." In my view, lowering margin requirements will be the last nail in the coffin. Should that occur, I suggest hedging your entire portfolio.
Bloomberg: "China's foreign-exchange reserves may double by 2010 should the government not control growth of foreign direct investment, said He Fan, senior economist at the Chinese Academy of Social Science. Holdings may reach $2 trillion, after they surged to $988 billion at the end of September, 28.5 percent higher than a year ago..."
Doug Noland: "It's not only the resurgent corporate debt Bubble that has me recalling 1999/2000. It was no coincidence that NASDAQ went parabolic about the time deterioration in underlying fundamentals was gathering pace. A spectacular short squeeze, flight into perceived safer corporate bonds, and liquidity creating securities/derivatives leveraging were prominent aspects of that period's Monetary Disorder. Today, an extraordinary confluence of factors including the housing downturn, economic vulnerability, destabilizing Credit excesses being "recycled" back to U.S. securities markets, and a major shift of speculation into riskier Credits is fueling a corporate debt Bubble with a present scope and future consequences that greatly exceed anything from 1999. The tech Bubble was only a warm-up... Dr. Issing is absolutely correct: "... Excessive liquidity world-wide is fueling asset prices and is something which has to be taken seriously by central banks." Tonight I've focused on U.S. Credit system dynamics. But our massive Current Account Deficits have as well spurred lending, liquidity and speculative excess around the world. Our degraded currency has certainly unleashed systemic global Credit inflation, with profligate domestic Credit systems no longer disciplined by the (dollar-anchored) global marketplace. It's more aptly described as "Global Wildcat Finance," with Credit and asset inflation readily condoned by a speculating community that has come to wield incredible power and influence."
Every week I get suggestions for changes in my daily format of ideas. I appreciate everyone's suggestions. Readers fail to comprehend that the daily writings are intended first and foremost for me and for me alone. I want to think smart and optimize my risk/reward opportuities. I do not look for praise from others. If I can make you a more successful investor, that's wonderful. I do not want anyone writing about me and I surely am not interested in being interviewed. Those days are in the history books.
I keep a history clock in my brain. It contains all types of thoughts and facts. It helps me to think clearly. Some might suggest I think differently.
Let's turn to thinking about today's stock market. I could care less that the vast majority of investor sentiment is optimistic. That and a buck+ will get you on the bus. I do care that 250 to 260 million shares of stock changes hands on the NYSE in the last 30 minutes of the trading day. I do care that the closing tick number lately has many times been 1000+. Yet, those machinations don't impress the specialists and the floor traders who are not buying on balance and frequently have been selling on balance into strength. That is some of the smart money in my book. I pay attention to the VIX which has trouble getting above 11. I also keep in my mind that the fiscal year end for many mutual funds and hedge funds is Oct. 31.
With more demand for calling buying, it is clearly in your best interest, in my view, to sell some out of the money calls against your holdings. A timeframe with the January 2007 option series is a good starting point. Should the calls get exercised, your profit won't be subject to tax until April 2008. Better you have the money than the government piss it away in Iraq and Afghanistan or on pork programs.
Are you keeping an eye on the insider selling figures? You're buying while insiders are selling. Dumb! To make matters worse, corporations are out buying their stock while the CEOs of many of those corporations are selling their own shares. The directors sit there and look the other way. Meanwhile, you are paying their director fees.
Robert McHugh: "Since August 25th, 1999, the Dow Industrials have formed their most significant tops within one week of a consecutive series of Fibonacci weeks from that date. What is so fascinating here, is the next top is scheduled for the week of November 17th, 2006 +/1 one week, shortly after the coming U.S. elections."
Bob Hoye: "Through the SEC, the Fed controls margin requirements and a recent announcement was described by the deputy director of the SEC as "a very significant change". Remember that this is essentially the same Fed and SEC that argued that no increases were needed during the late 1990s' tech mania. Now they are talking about lowering margin requirements for institutions on stocks, options, and futures. Now ranging from 25% to 50%, the proposal is to drop them to 15%." In my view, lowering margin requirements will be the last nail in the coffin. Should that occur, I suggest hedging your entire portfolio.
Bloomberg: "China's foreign-exchange reserves may double by 2010 should the government not control growth of foreign direct investment, said He Fan, senior economist at the Chinese Academy of Social Science. Holdings may reach $2 trillion, after they surged to $988 billion at the end of September, 28.5 percent higher than a year ago..."
Doug Noland: "It's not only the resurgent corporate debt Bubble that has me recalling 1999/2000. It was no coincidence that NASDAQ went parabolic about the time deterioration in underlying fundamentals was gathering pace. A spectacular short squeeze, flight into perceived safer corporate bonds, and liquidity creating securities/derivatives leveraging were prominent aspects of that period's Monetary Disorder. Today, an extraordinary confluence of factors including the housing downturn, economic vulnerability, destabilizing Credit excesses being "recycled" back to U.S. securities markets, and a major shift of speculation into riskier Credits is fueling a corporate debt Bubble with a present scope and future consequences that greatly exceed anything from 1999. The tech Bubble was only a warm-up... Dr. Issing is absolutely correct: "... Excessive liquidity world-wide is fueling asset prices and is something which has to be taken seriously by central banks." Tonight I've focused on U.S. Credit system dynamics. But our massive Current Account Deficits have as well spurred lending, liquidity and speculative excess around the world. Our degraded currency has certainly unleashed systemic global Credit inflation, with profligate domestic Credit systems no longer disciplined by the (dollar-anchored) global marketplace. It's more aptly described as "Global Wildcat Finance," with Credit and asset inflation readily condoned by a speculating community that has come to wield incredible power and influence."
Every week I get suggestions for changes in my daily format of ideas. I appreciate everyone's suggestions. Readers fail to comprehend that the daily writings are intended first and foremost for me and for me alone. I want to think smart and optimize my risk/reward opportuities. I do not look for praise from others. If I can make you a more successful investor, that's wonderful. I do not want anyone writing about me and I surely am not interested in being interviewed. Those days are in the history books.
Friday's Reports
10/28/06 Friday Reports
UMICH OCTOBER CONSUMER SENTIMENT 93.6 VS. 85.4: REPORTS. The current conditions index rose to 107.3 in late October from 106.1 earlier in the month. This is up from 96.6 in September and is the highest since April. The expectations index rose to 84.8 in late October from 83.4 previously. The index is up from 78.2 in September. It's the highest since July 2005.
Third quarter GDP rose a slim 1.6%. Meanwhile, core consumer prices increased at a 2.3% rate in the quarter, raising the year-over-year increase to 2.4% from 2.2% in the second quarter. A weakening housing sector and a drop in business inventories pulled GDP down in the quarter. Real final sales increased 1.7% annualized, down from 2.1% in the second quarter.
Chevron Corp. reported third-quarter earnings of $5.02 billion, or $2.29 a share, up from a year-ago profit of $3.59 billion, or $1.64 a share. Total revenue, including the contribution from equity affiliates and other income, reached $54.21 billion in the latest three months, down slightly from a year-ago equivalent total of $54.46 billion.
Ingersoll-Rand Co. said its third-quarter net income fell 4% to $243.8 million, or 76 cents a share, from $254.2 million, or 75 cents a share, in the year-earlier period, when there were 20 million more shares outstanding. Revenue rose 6% in the three months ended Sept. 30 to $2.77 billion from $2.62 billion. Ingersoll-Rand forecast a 3% rise in fourth-quarter revenue and earnings of 70 cents to 75 cents a share, making its full-year forecast $3.16 to $3.21 a share.
World leaders need to resolve massive imbalances in international trade to avoid the risk of global financial market and economic instability, former U.S. Treasury Secretary Lawrence Summers said on Thursday. "These imbalances have had people crying 'Wolf' for several years. They stand as a real risk," Summers said in a speech.
John Crudele: "Stocks have been moving steadily upward since July, when Paulson took over the Plunge Protection Team (and the Treasury). And one of the reasons could be that - as I mentioned back then - there is less risk in stocks if the government is providing a safety net. Less risk, that is, until something bad happens." It would be interesting to know why Paulson feels a need to have the Plunge Protection Team now meet every six weeks. Is there
a huge problem on the horizon?
U.K. inflation will accelerate to the fastest pace in at least nine years this quarter, requiring two interest-rate increases to bring it back down to target, the National Institute for Economic and Social Research said.
Rigzone reported " EnCana Oil & Gas, the third-largest producer of natural gas in the Barnett Shale last year, Wednesday became the first producer to announce a cutback in drilling because of rising expenses.
EnCana, which is based in Alberta, said it will pull four of its 12 rigs out of Barnett Shale production because of high costs. In 2005, EnCana produced 35 billion cubic feet of natural gas in the Barnett Shale, about 8 percent of the field's total production. It trailed only Devon Energy and XTO Energy among Barnett Shale producers.
"Rigs are costing between $20,000 and $22,000 per day," said Randy Eresman, EnCana's chief executive. "We think it is prudent for our shareholders to reduce our costs."
November natural gas fell 34.4 cents, or 4.6%, to close at $7.153 per million British thermal units. December crude climbed 39 cents to close at $60.75 a barrel, up 2.4% for the week.
December gold closed at $601 an ounce Friday, up $1.20 for the session and up 0.8% for the week.
The AP-AOL News telephone poll of 2,000 adults, 970 of whom are likely voters, conducted by Ipsos from Oct. 20-25, revealed 56 percent of likely voters said they would vote to send a Democrat to the House and 37 percent said they would vote Republican — a 19-point difference. Democrats had a 10-point edge in early October. However, this does not mean the Democrats will take control of the Senate.
Kean of NJ could win, so could George Allen of Virginia, and others.
Even though the Dow had a bad day, the VIX barely managed a small gain. There is so little fear of even a 10% correction.
UMICH OCTOBER CONSUMER SENTIMENT 93.6 VS. 85.4: REPORTS. The current conditions index rose to 107.3 in late October from 106.1 earlier in the month. This is up from 96.6 in September and is the highest since April. The expectations index rose to 84.8 in late October from 83.4 previously. The index is up from 78.2 in September. It's the highest since July 2005.
Third quarter GDP rose a slim 1.6%. Meanwhile, core consumer prices increased at a 2.3% rate in the quarter, raising the year-over-year increase to 2.4% from 2.2% in the second quarter. A weakening housing sector and a drop in business inventories pulled GDP down in the quarter. Real final sales increased 1.7% annualized, down from 2.1% in the second quarter.
Chevron Corp. reported third-quarter earnings of $5.02 billion, or $2.29 a share, up from a year-ago profit of $3.59 billion, or $1.64 a share. Total revenue, including the contribution from equity affiliates and other income, reached $54.21 billion in the latest three months, down slightly from a year-ago equivalent total of $54.46 billion.
Ingersoll-Rand Co. said its third-quarter net income fell 4% to $243.8 million, or 76 cents a share, from $254.2 million, or 75 cents a share, in the year-earlier period, when there were 20 million more shares outstanding. Revenue rose 6% in the three months ended Sept. 30 to $2.77 billion from $2.62 billion. Ingersoll-Rand forecast a 3% rise in fourth-quarter revenue and earnings of 70 cents to 75 cents a share, making its full-year forecast $3.16 to $3.21 a share.
World leaders need to resolve massive imbalances in international trade to avoid the risk of global financial market and economic instability, former U.S. Treasury Secretary Lawrence Summers said on Thursday. "These imbalances have had people crying 'Wolf' for several years. They stand as a real risk," Summers said in a speech.
John Crudele: "Stocks have been moving steadily upward since July, when Paulson took over the Plunge Protection Team (and the Treasury). And one of the reasons could be that - as I mentioned back then - there is less risk in stocks if the government is providing a safety net. Less risk, that is, until something bad happens." It would be interesting to know why Paulson feels a need to have the Plunge Protection Team now meet every six weeks. Is there
a huge problem on the horizon?
U.K. inflation will accelerate to the fastest pace in at least nine years this quarter, requiring two interest-rate increases to bring it back down to target, the National Institute for Economic and Social Research said.
Rigzone reported " EnCana Oil & Gas, the third-largest producer of natural gas in the Barnett Shale last year, Wednesday became the first producer to announce a cutback in drilling because of rising expenses.
EnCana, which is based in Alberta, said it will pull four of its 12 rigs out of Barnett Shale production because of high costs. In 2005, EnCana produced 35 billion cubic feet of natural gas in the Barnett Shale, about 8 percent of the field's total production. It trailed only Devon Energy and XTO Energy among Barnett Shale producers.
"Rigs are costing between $20,000 and $22,000 per day," said Randy Eresman, EnCana's chief executive. "We think it is prudent for our shareholders to reduce our costs."
November natural gas fell 34.4 cents, or 4.6%, to close at $7.153 per million British thermal units. December crude climbed 39 cents to close at $60.75 a barrel, up 2.4% for the week.
December gold closed at $601 an ounce Friday, up $1.20 for the session and up 0.8% for the week.
The AP-AOL News telephone poll of 2,000 adults, 970 of whom are likely voters, conducted by Ipsos from Oct. 20-25, revealed 56 percent of likely voters said they would vote to send a Democrat to the House and 37 percent said they would vote Republican — a 19-point difference. Democrats had a 10-point edge in early October. However, this does not mean the Democrats will take control of the Senate.
Kean of NJ could win, so could George Allen of Virginia, and others.
Even though the Dow had a bad day, the VIX barely managed a small gain. There is so little fear of even a 10% correction.
Thursday, October 26, 2006
Results
10/27/06 Results
Officials at Microsoft said they expect second-quarter revenue between $11.8 billion and $12.4 billion and diluted earnings per share of between 22 and 24 cents per share.
The next quarter will be affected by deferral of $1.5 billion in revenue related to the software maker's Vista guarantee program announced on Tuesday. In an effort not to slow down personal computer sales over the holidays, Microsoft said it will offer coupons that will allow computer buyers to upgrade to its upcoming Vista operating system for free or at a big discount when it becomes available to consumers after the first of the year.
General Motors was downgraded two notches to sell from buy at Merrill Lynch, citing disappointment over third-quarter operating results in North America and valuation.
December crude fell $1.04 to close at $60.34 a barrel.
The 10-year benchmark note closed up 10/32 at 101-6/32 with a yield of 4.717%, down from 4.769% in late trade on Wednesday.
For 2007, Lockheed Martin sees per-share earnings of $5.60 to $5.80, on revenue of $41 billion to $42 billion.
December gold climbed $9 to close at $599.80 an ounce Thursday. December silver added 35 cents, or 2.9%, to close at $12.24 an ounce. December copper closed down 0.45 cent at $3.40 a pound.
Demand was weaker than normal for the Treasury's auction of $14 billion in 5-year notes on Thursday. The notes were sold at a high yield of 4.694%.
Richard Dugas, CEO of Pulte Homes Inc, said although some evidence points to flattening inventory and stabilization in some regions, management will wait for the trends to continue and to broaden before concluding the housing market has hit bottom. "Given our expectations that market conditions will remain challenges for the foreseeable future, we continue to throttle back, consistent with operating a slow demand environment," the CEO said. During the call, Pulte management said it cut just under 800 employees in the third quarter, and about 1,400 positions during the first nine months of 2006.
The policy of many emerging market governments, including China, to accumulate large official reserves, is distorting market signals and adding to the considerable degree of uncertainty the Fed faces about the longer-term outlook for the U.S. economy, said Timothy Geithner, the president of the New York Fed bank on Thursday. "And the forces that have produced this constellation of capital flows and market conditions will evolve in ways we cannot anticipate," he said.
The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It's the second consecutive decline in inventories.
The volume of help-wanted advertising in major U.S. newspapers held steady in September, the Conference Board said Thursday. The help-wanted index stood at 30 in September. A year ago, the index was 37.
The dollar slid to a three-week low versus the euro.
Demand for U.S.-made durable goods soared 7.8% in September. The increase was almost entirely due to a jump in orders booked by Boeing.
Exxon Mobil Corp. reported third-quarter earnings of $10.49 billion, or $1.77 per share, up from a year-ago profit of $9.92 billion, or $1.58 per share. Excluding items in the year-ago period, the Dow component earned $8.3 billion, or $1.32 a share. Revenue slipped in the latest three months to $99.59 billion from $100.72 billion in the same period a year earlier.
Shares in Industrial & Commercial Bank of China , which raised US$19 billion in the world's largest IPO, rose as much as 18 percent in their Hong Kong debut on Friday.
"We're beginning to see some move from the dollar to the euro, both from the private sector ... but also from monetary authorities and central banks," Greenspan told a conference sponsored by the Commercial Finance Association. Actually, this move has been going on for some time. Greenspan must have been in a cocoon.
Chuck Butler: "Yesterday, I was reading a report from the Sydney Morning Herald that quoted Australian Treasurer, Peter Costello, calling for an “orderly withdrawal from the U.S. dollar by Asia's Central Banks.” WOW! Costello also said, “the strategy had changed, and Central Bankers were now looking for alternative investments.” Butler when on to point out that Gabor Steingart, who heads Der Spiegel’s Berlin office and was chosen as “The Economic Writer of the Year” in 2004, stated “These days, the dollar is making a lot of people uncomfortable. One morning many dollar-owners will wake up and look at the facts about the U.S. economy without their rose-colored glasses - just as private investors woke up one day and took an unflinching look at the New Economy, only to see companies whose market value couldn't be justified by even the most dramatic of profit increases. Some of the revenue forecasts that had been issued far exceeded the total value of the market. The NASDAQ presented the spectacle of a stock market whose added value increased by 1,000 percent in just a few years, when the nominal growth of the U.S. economy during the same period was only 25 percent."
Officials at Microsoft said they expect second-quarter revenue between $11.8 billion and $12.4 billion and diluted earnings per share of between 22 and 24 cents per share.
The next quarter will be affected by deferral of $1.5 billion in revenue related to the software maker's Vista guarantee program announced on Tuesday. In an effort not to slow down personal computer sales over the holidays, Microsoft said it will offer coupons that will allow computer buyers to upgrade to its upcoming Vista operating system for free or at a big discount when it becomes available to consumers after the first of the year.
General Motors was downgraded two notches to sell from buy at Merrill Lynch, citing disappointment over third-quarter operating results in North America and valuation.
December crude fell $1.04 to close at $60.34 a barrel.
The 10-year benchmark note closed up 10/32 at 101-6/32 with a yield of 4.717%, down from 4.769% in late trade on Wednesday.
For 2007, Lockheed Martin sees per-share earnings of $5.60 to $5.80, on revenue of $41 billion to $42 billion.
December gold climbed $9 to close at $599.80 an ounce Thursday. December silver added 35 cents, or 2.9%, to close at $12.24 an ounce. December copper closed down 0.45 cent at $3.40 a pound.
Demand was weaker than normal for the Treasury's auction of $14 billion in 5-year notes on Thursday. The notes were sold at a high yield of 4.694%.
Richard Dugas, CEO of Pulte Homes Inc, said although some evidence points to flattening inventory and stabilization in some regions, management will wait for the trends to continue and to broaden before concluding the housing market has hit bottom. "Given our expectations that market conditions will remain challenges for the foreseeable future, we continue to throttle back, consistent with operating a slow demand environment," the CEO said. During the call, Pulte management said it cut just under 800 employees in the third quarter, and about 1,400 positions during the first nine months of 2006.
The policy of many emerging market governments, including China, to accumulate large official reserves, is distorting market signals and adding to the considerable degree of uncertainty the Fed faces about the longer-term outlook for the U.S. economy, said Timothy Geithner, the president of the New York Fed bank on Thursday. "And the forces that have produced this constellation of capital flows and market conditions will evolve in ways we cannot anticipate," he said.
The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It's the second consecutive decline in inventories.
The volume of help-wanted advertising in major U.S. newspapers held steady in September, the Conference Board said Thursday. The help-wanted index stood at 30 in September. A year ago, the index was 37.
The dollar slid to a three-week low versus the euro.
Demand for U.S.-made durable goods soared 7.8% in September. The increase was almost entirely due to a jump in orders booked by Boeing.
Exxon Mobil Corp. reported third-quarter earnings of $10.49 billion, or $1.77 per share, up from a year-ago profit of $9.92 billion, or $1.58 per share. Excluding items in the year-ago period, the Dow component earned $8.3 billion, or $1.32 a share. Revenue slipped in the latest three months to $99.59 billion from $100.72 billion in the same period a year earlier.
Shares in Industrial & Commercial Bank of China , which raised US$19 billion in the world's largest IPO, rose as much as 18 percent in their Hong Kong debut on Friday.
"We're beginning to see some move from the dollar to the euro, both from the private sector ... but also from monetary authorities and central banks," Greenspan told a conference sponsored by the Commercial Finance Association. Actually, this move has been going on for some time. Greenspan must have been in a cocoon.
Chuck Butler: "Yesterday, I was reading a report from the Sydney Morning Herald that quoted Australian Treasurer, Peter Costello, calling for an “orderly withdrawal from the U.S. dollar by Asia's Central Banks.” WOW! Costello also said, “the strategy had changed, and Central Bankers were now looking for alternative investments.” Butler when on to point out that Gabor Steingart, who heads Der Spiegel’s Berlin office and was chosen as “The Economic Writer of the Year” in 2004, stated “These days, the dollar is making a lot of people uncomfortable. One morning many dollar-owners will wake up and look at the facts about the U.S. economy without their rose-colored glasses - just as private investors woke up one day and took an unflinching look at the New Economy, only to see companies whose market value couldn't be justified by even the most dramatic of profit increases. Some of the revenue forecasts that had been issued far exceeded the total value of the market. The NASDAQ presented the spectacle of a stock market whose added value increased by 1,000 percent in just a few years, when the nominal growth of the U.S. economy during the same period was only 25 percent."
Wednesday, October 25, 2006
For Real
10/26/06 For Real
"Saudi Arabia has already informed its customers in Asia and North America of its plan to cut 380,000 bpd from the beginning of November," a senior OPEC delegate said. "Other OPEC producers will cut their designated volumes from their actual production regardless of how it is being estimated."
Centex Corp. CEO Tim Eller: "Buyers are either waiting on the sidelines for conditions to improve or canceling their purchase all together, believing they will be unable to sell their existing home for their expected price."
Sales of U.S. existing homes fell for the sixth month in a row in September as median sales prices fell for the second straight month, the National Association of Realtors said Wednesday. Inventories of unsold homes fell for the second straight month, a sign that the market is correcting, said Laurence Yun, a senior economist for the realtors group.
It was back in July that Yankee Candle was exploring alternatives. The stock was selling for $24+. I looked at it and thought a sale price of $28 might be possible. So much for my analysis. The company reached an agreement at $34.75.
U.S. crude supplies fell by 3.3 million barrels in the week ended Oct. 20, the Department of Energy said Wednesday. Motor gasoline supplies fell by 2.8 million barrels and distillate fuel supplies fell by 1.4 million barrels. Separate data from the American Petroleum Institute showed crude supplies down by 3.7 million barrels, gasoline supplies down by 2.3 million barrels and distillates down by 588,000 barrels. Futures prices rallied with crude for December delivery up just over $2 at $61.40 a barrel after the data were released.
Altria owns 88+% of Kraft and will finalize its plans to distribute Kraft shares at their Jan. 31 board meeting.
Pulte Homes Inc. reported third-quarter net earnings of $190.2 million, or 74 cents a share, compared with $395.4 million, or $1.50 a share, during the year-ago period. The backlog as of Sept. 30 was valued at $5.8 billion, compared with a value of $8 billion last year. The company said it continues to expect that business conditions will remain difficult for at least the near term, and that additional charges are possible if conditions erode further.
Meritage Homes said that more cancellations have caused the percentage of unsold homes in inventory to more than double from historic levels, and it has had "to shrink" its employee base in certain markets.
Gold for December delivery closed up $3.20 at $590.80 an ounce. Silver futures added 4 cents to $11.89 an ounce, platinum was up $5.90 at $1,069 an ounce and palladium rose 10 cents to $323.10 an ounce. Copper fell 1.35 cents to $3.4045 a pound.
"Saudi Arabia has already informed its customers in Asia and North America of its plan to cut 380,000 bpd from the beginning of November," a senior OPEC delegate said. "Other OPEC producers will cut their designated volumes from their actual production regardless of how it is being estimated."
Centex Corp. CEO Tim Eller: "Buyers are either waiting on the sidelines for conditions to improve or canceling their purchase all together, believing they will be unable to sell their existing home for their expected price."
Sales of U.S. existing homes fell for the sixth month in a row in September as median sales prices fell for the second straight month, the National Association of Realtors said Wednesday. Inventories of unsold homes fell for the second straight month, a sign that the market is correcting, said Laurence Yun, a senior economist for the realtors group.
It was back in July that Yankee Candle was exploring alternatives. The stock was selling for $24+. I looked at it and thought a sale price of $28 might be possible. So much for my analysis. The company reached an agreement at $34.75.
U.S. crude supplies fell by 3.3 million barrels in the week ended Oct. 20, the Department of Energy said Wednesday. Motor gasoline supplies fell by 2.8 million barrels and distillate fuel supplies fell by 1.4 million barrels. Separate data from the American Petroleum Institute showed crude supplies down by 3.7 million barrels, gasoline supplies down by 2.3 million barrels and distillates down by 588,000 barrels. Futures prices rallied with crude for December delivery up just over $2 at $61.40 a barrel after the data were released.
Altria owns 88+% of Kraft and will finalize its plans to distribute Kraft shares at their Jan. 31 board meeting.
Pulte Homes Inc. reported third-quarter net earnings of $190.2 million, or 74 cents a share, compared with $395.4 million, or $1.50 a share, during the year-ago period. The backlog as of Sept. 30 was valued at $5.8 billion, compared with a value of $8 billion last year. The company said it continues to expect that business conditions will remain difficult for at least the near term, and that additional charges are possible if conditions erode further.
Meritage Homes said that more cancellations have caused the percentage of unsold homes in inventory to more than double from historic levels, and it has had "to shrink" its employee base in certain markets.
Gold for December delivery closed up $3.20 at $590.80 an ounce. Silver futures added 4 cents to $11.89 an ounce, platinum was up $5.90 at $1,069 an ounce and palladium rose 10 cents to $323.10 an ounce. Copper fell 1.35 cents to $3.4045 a pound.
Tuesday, October 24, 2006
More On Housing
10/25/06 More On Housing
According to Moody’s, the percentage of home loans
that are late on their payments for more than 60 days
rose to 7.23% in July from 5.9% the year before.
That’s the fastest rate of increase since 1998, says
Moody’s.
Freddie Mac, which buys mortgages and packages them
into mortgage-backed securities, expects sales of new
and existing homes to drop 9.4% in 2006 after five
consecutive years of increases, says Bloomberg.
December crude climbed 54 cents to close at $59.35 a barrel Tuesday. November natural gas gained 21 cents to end the session at $7.091 per million British thermal units. November unleaded gasoline added 6.45 cents, or 4.4%, to close at $1.536 a gallon and November heating oil rose 2.62 cents to end at $1.6952 a gallon.
December gold climbed $4.70 to close at $587.60 an ounce Tuesday. December silver recovered from a low of $11.35 an ounce to close at $11.85, up 18 cents for the day. December copper, however, continued lower to end at $3.418 a pound, down 3.3 cents. Gold stocks did not follow in the path of a rising gold price.
Bombardier said on Tuesday that it was planning to cut about 1,330 jobs, including management positions, at its facilities in the Montreal area and at its plants in Belfast, Northern Ireland, during the next nine months from a total workforce in the aerospace division of 26,900. The overall workforce has remained at a similar level since January 2004.
Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.
According to Moody’s, the percentage of home loans
that are late on their payments for more than 60 days
rose to 7.23% in July from 5.9% the year before.
That’s the fastest rate of increase since 1998, says
Moody’s.
Freddie Mac, which buys mortgages and packages them
into mortgage-backed securities, expects sales of new
and existing homes to drop 9.4% in 2006 after five
consecutive years of increases, says Bloomberg.
December crude climbed 54 cents to close at $59.35 a barrel Tuesday. November natural gas gained 21 cents to end the session at $7.091 per million British thermal units. November unleaded gasoline added 6.45 cents, or 4.4%, to close at $1.536 a gallon and November heating oil rose 2.62 cents to end at $1.6952 a gallon.
December gold climbed $4.70 to close at $587.60 an ounce Tuesday. December silver recovered from a low of $11.35 an ounce to close at $11.85, up 18 cents for the day. December copper, however, continued lower to end at $3.418 a pound, down 3.3 cents. Gold stocks did not follow in the path of a rising gold price.
Bombardier said on Tuesday that it was planning to cut about 1,330 jobs, including management positions, at its facilities in the Montreal area and at its plants in Belfast, Northern Ireland, during the next nine months from a total workforce in the aerospace division of 26,900. The overall workforce has remained at a similar level since January 2004.
Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.
Monday, October 23, 2006
Some Surprises
10/24/06 Some Surprises
December gold fell $13.50 to close at $582.90 an ounce and December silver lost 29.5 cents to end at $11.67 an ounce Monday. Those are the weakest closing levels for the contracts since Oct. 12. December copper fell by 1.1 cents to close at $3.451 a pound.
November natural gas fell 26.1 cents, or 3.6%, to $6.98 per million British thermal units in afternoon trading, reversing course after touching a nearly six-week high of $7.36. December crude lost 78 cents to trade at $58.55 a barrel.
Quite a surprise to see Wal-Mart spike from 49 to 52 in one day. Quite a surprise to see GM trading above 35.
John Hussman: "I personally don't trust this market at all, but with the Fund well hedged against the impact of substantial market losses, prevailing market action compels us to give a carefully limited benefit of the doubt to the investors passing out the Dow 12,000 party hats. The hedges, however, are essential."
From Richard Daughty: Richard Russell’s Dow Theory Letter says, “At times...the stock market is unclear about what lies ahead, and this is one of those times. I say that because the D-J Industrial Average and the D-J Transportation Average are at extreme odds. They just don't agree at all. The Industrials are saying that the situation is probably OK. The Transports are saying, ‘Don't you believe it, there's something very wrong going on.’”
While the price of gold bounces in a $35 an ounce range, gold stocks are beginning to find their footing.
The Mozilla Foundation will release the Firefox 2.0 browser on Tuesday, Mozilla Foundation officials confirmed Monday.
In recent weeks Iranian nuclear experts had started up a second pilot enrichment facility, diplomats in Vienna told The Associated Press Monday on condition of anonymity because they were not authorized to divulge the information to media.
The Motley Fool: "I believe that the larger worldwide perspective involves an ongoing need to replace and develop crude oil reserves. It's a need that clearly was important to Schlumberger's most recent quarter. It also renders a number of other service industry participants worth monitoring, including Halliburton, Baker Hughes and BJ Services."
Daniel Patrick Moynihan: "Everyone is entitled to his own opinion, but not his own facts."
December gold fell $13.50 to close at $582.90 an ounce and December silver lost 29.5 cents to end at $11.67 an ounce Monday. Those are the weakest closing levels for the contracts since Oct. 12. December copper fell by 1.1 cents to close at $3.451 a pound.
November natural gas fell 26.1 cents, or 3.6%, to $6.98 per million British thermal units in afternoon trading, reversing course after touching a nearly six-week high of $7.36. December crude lost 78 cents to trade at $58.55 a barrel.
Quite a surprise to see Wal-Mart spike from 49 to 52 in one day. Quite a surprise to see GM trading above 35.
John Hussman: "I personally don't trust this market at all, but with the Fund well hedged against the impact of substantial market losses, prevailing market action compels us to give a carefully limited benefit of the doubt to the investors passing out the Dow 12,000 party hats. The hedges, however, are essential."
From Richard Daughty: Richard Russell’s Dow Theory Letter says, “At times...the stock market is unclear about what lies ahead, and this is one of those times. I say that because the D-J Industrial Average and the D-J Transportation Average are at extreme odds. They just don't agree at all. The Industrials are saying that the situation is probably OK. The Transports are saying, ‘Don't you believe it, there's something very wrong going on.’”
While the price of gold bounces in a $35 an ounce range, gold stocks are beginning to find their footing.
The Mozilla Foundation will release the Firefox 2.0 browser on Tuesday, Mozilla Foundation officials confirmed Monday.
In recent weeks Iranian nuclear experts had started up a second pilot enrichment facility, diplomats in Vienna told The Associated Press Monday on condition of anonymity because they were not authorized to divulge the information to media.
The Motley Fool: "I believe that the larger worldwide perspective involves an ongoing need to replace and develop crude oil reserves. It's a need that clearly was important to Schlumberger's most recent quarter. It also renders a number of other service industry participants worth monitoring, including Halliburton, Baker Hughes and BJ Services."
Daniel Patrick Moynihan: "Everyone is entitled to his own opinion, but not his own facts."
Interest Rates
10/23/06 Interest Rates
"We are getting growth that is very close to potential, and that is the important point for monetary policy,'' says John B. Taylor, a Stanford University economist who was Treasury undersecretary for international affairs from 2001 to 2005. ``There will be increased tightening'' if the ``core'' inflation rate -- which excludes food and energy costs -- ``remains in the 2.5 percent range,'' he says. The economy will grow 2.5 percent over the second half of 2006, accelerating to a 2.9 percent rate by the third quarter of 2007, according to the median estimate in a Bloomberg survey. While a 25 percent decline in oil prices since July will reduce the overall rate of inflation, core measures may remain above the Fed's comfort zone. ``There's no reason to expect any rapid decline in core inflation from an economy that grows in a 2.5 percent range,'' says Allen Sinai, president of Decision Economics Inc. in New York. ``The Federal Reserve will make that conclusion."
There has been a significant momentum change in the U.S. treasury bond market. In recent weeks, the yield on the 5-year has risen from 4.50% to 4.82%. This yield remains very low on an historical basis-- especially if GDP grows 2 to 3 percent over the next several quarters. With that growth and 8 to 10 percent growth in China and India, demand for commodities will grow and there is a potential that prices could move much higher over the next eight to ten months. Such an event is not priced into current interest rates nor is it priced into the outlook for equities.
"We are getting growth that is very close to potential, and that is the important point for monetary policy,'' says John B. Taylor, a Stanford University economist who was Treasury undersecretary for international affairs from 2001 to 2005. ``There will be increased tightening'' if the ``core'' inflation rate -- which excludes food and energy costs -- ``remains in the 2.5 percent range,'' he says. The economy will grow 2.5 percent over the second half of 2006, accelerating to a 2.9 percent rate by the third quarter of 2007, according to the median estimate in a Bloomberg survey. While a 25 percent decline in oil prices since July will reduce the overall rate of inflation, core measures may remain above the Fed's comfort zone. ``There's no reason to expect any rapid decline in core inflation from an economy that grows in a 2.5 percent range,'' says Allen Sinai, president of Decision Economics Inc. in New York. ``The Federal Reserve will make that conclusion."
There has been a significant momentum change in the U.S. treasury bond market. In recent weeks, the yield on the 5-year has risen from 4.50% to 4.82%. This yield remains very low on an historical basis-- especially if GDP grows 2 to 3 percent over the next several quarters. With that growth and 8 to 10 percent growth in China and India, demand for commodities will grow and there is a potential that prices could move much higher over the next eight to ten months. Such an event is not priced into current interest rates nor is it priced into the outlook for equities.
Saturday, October 21, 2006
99 44/100%
10/21/06 99 44/100%
John Mauldin: "Much of the recent rise in the Dow 30 has been from less than ten of the components. Caterpillar has counted for 500 points by itself since the low. Richard Russell notes that the Dow Transports are not confirming a new bull.
Where are the new highs on the other indexes? Given the inverted yield curve, the continued problems in the critical housing markets and the rest of the forward looking themes I have discussed over the past few months, I still believe we are going to get to buy this market at much lower prices and better valuations."
Friday was not a prosperous day for Caterpillar shareowners. The 15% earnings increase was overwhelmed by the lowered management forecast going forward. You'd think the company had been in a terrible accident as the stock got creamed and closed at $59, a sharp drop from $70. It didn't help that it was option expiration day.
Barron's: "The Republicans will keep control of Congress, though just barely. So says our highly reliable seat-by-seat analysis of local political funding." Hopefully this forecast is as accurate as Alan Abelson's on-going forecasts that the market is coming to an end. In other words, 99 44/100 pure (BS).
A great deal was made of crude closing at $56.82. One should note that this price was for the November contract that ceased trading at the end of trading Friday. The December contract is trading about $2 a barrel higher and will be the contract for trading on Monday.
Not much was said about Schlumberger's 85% increase in earnings for the third quarter on a sales gain of 34%. The reason might be that the company is not named Google and investors have shunned the oil service stocks over the past 4 months. It was not too long ago that Schlumberger was trading at an all-time high. Now the all-time highs belong to the Dow Jones Utility Average.
Natural gas rose 28% in price this past week. In addition, zinc prices hit a record high.
In 2007 53 million Americans on Social Security will receive benefits with an increase of 3.3%, down from a rise of 4.1% in 2006. That means inflation was tamer in 2006. Sure it was!
Year to date the Dow has risen 12%, China 54%, Russia 44%, India 35%, and Mexico 30%.
The 10-year U.S. treasury bond is yielding 4.79%. Mexico's 10-year government bond has a yield of 5.79%. Pretty soon we can merge the governments and not miss a beat.
Did you notice the 6.5 earthquake offshore Peru?
How many more deaths will it take for Americans to acknowledge that there is a civil war in Iraq? When will there be a bumper sticker saying "a vote for Republicans is a vote for Iraqi civil war?"
Doug Noland: "With Global Credit conditions underpinning employment and income - while stoking systemwide liquidity over-abundance – I’ll continue to approach the unfolding housing bust with analytical caution. The housing grizzly goes on a rampage with the breakdown of the Mortgage Finance and Credit Bubbles. In the meantime, I am willing to predict escalating Monetary Disorder and resulting wild marketplace instability and divergences in housing, securities, and commodities prices – a backdrop poised to confound the Fed and limit their flexibility for responding to deepening housing troubles."
OPEC's plan to cut crude production by 1.2 million barrels a day won't affect the services industry, Schlumberger Ltd. Chief Executive Andrew Gould said Friday.
"OPEC is defending the price, but I don't think there is a huge danger of a price collapse," he said. "We don't need $65 oil for our customers' spending plans to be maintained," he said. "They will maintain them at a much lower price."
Gould said the task of replenishing reserves in the face of soaring demand will keep services companies busy. And demand shows no sign of slowing. The CEO of BJ Services has told me the same thing. I believe BJ Services offers the best risk/reward of any S&P 500 company.
New York-based Ripplewood Holdings LLC is preparing a likely bid for Delphi Corp., according to a published report in Saturday's Wall Street Journal. Ripplewood, a buyout firm, has looked at the possibility of taking over all or part of the bankrupt auto-parts maker, the Journal reported.
President Bush: "Another reason for the recent increase in attacks is that the
terrorists are trying to influence public opinion here in the United
States. They have a sophisticated propaganda strategy. They know they
cannot defeat us in the battle, so they conduct high-profile attacks,
hoping that the images of violence will demoralize our country and force us
to retreat." Tell that to the families whose loved ones come home in body bags.
John Mauldin: "Much of the recent rise in the Dow 30 has been from less than ten of the components. Caterpillar has counted for 500 points by itself since the low. Richard Russell notes that the Dow Transports are not confirming a new bull.
Where are the new highs on the other indexes? Given the inverted yield curve, the continued problems in the critical housing markets and the rest of the forward looking themes I have discussed over the past few months, I still believe we are going to get to buy this market at much lower prices and better valuations."
Friday was not a prosperous day for Caterpillar shareowners. The 15% earnings increase was overwhelmed by the lowered management forecast going forward. You'd think the company had been in a terrible accident as the stock got creamed and closed at $59, a sharp drop from $70. It didn't help that it was option expiration day.
Barron's: "The Republicans will keep control of Congress, though just barely. So says our highly reliable seat-by-seat analysis of local political funding." Hopefully this forecast is as accurate as Alan Abelson's on-going forecasts that the market is coming to an end. In other words, 99 44/100 pure (BS).
A great deal was made of crude closing at $56.82. One should note that this price was for the November contract that ceased trading at the end of trading Friday. The December contract is trading about $2 a barrel higher and will be the contract for trading on Monday.
Not much was said about Schlumberger's 85% increase in earnings for the third quarter on a sales gain of 34%. The reason might be that the company is not named Google and investors have shunned the oil service stocks over the past 4 months. It was not too long ago that Schlumberger was trading at an all-time high. Now the all-time highs belong to the Dow Jones Utility Average.
Natural gas rose 28% in price this past week. In addition, zinc prices hit a record high.
In 2007 53 million Americans on Social Security will receive benefits with an increase of 3.3%, down from a rise of 4.1% in 2006. That means inflation was tamer in 2006. Sure it was!
Year to date the Dow has risen 12%, China 54%, Russia 44%, India 35%, and Mexico 30%.
The 10-year U.S. treasury bond is yielding 4.79%. Mexico's 10-year government bond has a yield of 5.79%. Pretty soon we can merge the governments and not miss a beat.
Did you notice the 6.5 earthquake offshore Peru?
How many more deaths will it take for Americans to acknowledge that there is a civil war in Iraq? When will there be a bumper sticker saying "a vote for Republicans is a vote for Iraqi civil war?"
Doug Noland: "With Global Credit conditions underpinning employment and income - while stoking systemwide liquidity over-abundance – I’ll continue to approach the unfolding housing bust with analytical caution. The housing grizzly goes on a rampage with the breakdown of the Mortgage Finance and Credit Bubbles. In the meantime, I am willing to predict escalating Monetary Disorder and resulting wild marketplace instability and divergences in housing, securities, and commodities prices – a backdrop poised to confound the Fed and limit their flexibility for responding to deepening housing troubles."
OPEC's plan to cut crude production by 1.2 million barrels a day won't affect the services industry, Schlumberger Ltd. Chief Executive Andrew Gould said Friday.
"OPEC is defending the price, but I don't think there is a huge danger of a price collapse," he said. "We don't need $65 oil for our customers' spending plans to be maintained," he said. "They will maintain them at a much lower price."
Gould said the task of replenishing reserves in the face of soaring demand will keep services companies busy. And demand shows no sign of slowing. The CEO of BJ Services has told me the same thing. I believe BJ Services offers the best risk/reward of any S&P 500 company.
New York-based Ripplewood Holdings LLC is preparing a likely bid for Delphi Corp., according to a published report in Saturday's Wall Street Journal. Ripplewood, a buyout firm, has looked at the possibility of taking over all or part of the bankrupt auto-parts maker, the Journal reported.
President Bush: "Another reason for the recent increase in attacks is that the
terrorists are trying to influence public opinion here in the United
States. They have a sophisticated propaganda strategy. They know they
cannot defeat us in the battle, so they conduct high-profile attacks,
hoping that the images of violence will demoralize our country and force us
to retreat." Tell that to the families whose loved ones come home in body bags.
Thursday, October 19, 2006
Another Option Expiration Day
10/20/06 Another Option Expiration Day
Google reported it nearly doubled its net income in the third quarter to $733.4 million, or $2.36 a share, compared with $381.2 million, or $1.32 a share in the year-ago period. Revenue rose 70 percent to $2.69 billion from $1.58 billion last year. Not including payments Google makes to acquire Internet traffic, sales rose 79 percent to $1.86 billion. Outside the U.S., sales made up 44 percent of the company's total revenue, compared with 39 percent last year. In addition, Google said, it added 1,436 employees during the period to bring its work force to 9,378 full time employees.
Excluding items, Google said, it would have had income of $812 million, or $2.62 a share. Analysts had expected the company to show a profit of $760.1 million, excluding items, or $2.41 a share.
Median weekly earnings of the nation’s 108.2 million full-time wage and
salary workers were $675 in the third quarter of 2006, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 4.0
percent higher than a year earlier, compared with a gain of 3.3 percent in
the Consumer Price Index for All Urban Consumers (CPI-U) over the same
period. Women who usually worked full time had median earnings of $599 per
week, or 80.0 percent of the $749 median for men. The female-to-male earnings ratios were higher among Hispanics or Latinos (87.3 percent), Asians (84.9 percent), and blacks (83.8 percent) than among whites (79.6 percent).
Real average weekly earnings rose by 1.0 percent from August to September
after seasonal adjustment, according to preliminary data released by the
Bureau of Labor Statistics of the U.S. Department of Labor. This increase
stemmed from a 0.2 percent rise in average hourly earnings and a 0.7 percent
decline in the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W). Average weekly hours were unchanged. Average weekly earnings rose by 4.0 percent, seasonally adjusted, from September 2005 to September 2006. After deflation by the CPI-W, average weekly earnings increased by 2.2 percent. Before adjustment for seasonal change and inflation, average weekly earnings were $571.89 in September 2006, compared with $549.86 a year earlier.
Cerberus Capital Management LP said on Thursday that former Treasury Secretary John Snow has joined the $16.5 billion hedge fund firm as chairman. I hope Snow does a better job than he did as CEO of a railroad.
Broadcom Corp. late Thursday forecasted a lower sales target for the fourth quarter than it had previously estimated.
Crude for November delivery rose 1.9% to $58.72 a barrel. Natural gas rose 3.6% to $7.06 per million British thermal units.
December gold rose $9.90 to close at $602.50 an ounce in New York. December silver climbed 34 cents, or 2.9%, to end at $12.16 an ounce and December copper tacked on 1.35 cents to close at $3.5095 a pound.
The Philly Fed index fell 0.7 in October, vs. the average economist forecast compiled by MarketWatch of a rise of 7.8%.
NBC Universal to cut 700 jobs and AOL to cut 1300 jobs.
The index of leading economic indicators rose 0.1% in September after falling in July and August. The index has dropped in five of the past eight months, and is down 0.9% in the past six months.
OPEC has decided to cut production by 1.2 million barrels a day, the United Arab Emirates' oil minister said Friday.
Bonner and Wiggin: "The baby born when the empire began in 1913 came into the world with nothing. But he owed nothing. Now, he comes into the world owing his share of 37 trillion; that's about $128,560 with his name on it. Is he richer? Is he better off? What would the dead say? That doesn't include his share of Federal obligations and commitments that he'll have to pay, which could add $100,000 more."
Google reported it nearly doubled its net income in the third quarter to $733.4 million, or $2.36 a share, compared with $381.2 million, or $1.32 a share in the year-ago period. Revenue rose 70 percent to $2.69 billion from $1.58 billion last year. Not including payments Google makes to acquire Internet traffic, sales rose 79 percent to $1.86 billion. Outside the U.S., sales made up 44 percent of the company's total revenue, compared with 39 percent last year. In addition, Google said, it added 1,436 employees during the period to bring its work force to 9,378 full time employees.
Excluding items, Google said, it would have had income of $812 million, or $2.62 a share. Analysts had expected the company to show a profit of $760.1 million, excluding items, or $2.41 a share.
Median weekly earnings of the nation’s 108.2 million full-time wage and
salary workers were $675 in the third quarter of 2006, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 4.0
percent higher than a year earlier, compared with a gain of 3.3 percent in
the Consumer Price Index for All Urban Consumers (CPI-U) over the same
period. Women who usually worked full time had median earnings of $599 per
week, or 80.0 percent of the $749 median for men. The female-to-male earnings ratios were higher among Hispanics or Latinos (87.3 percent), Asians (84.9 percent), and blacks (83.8 percent) than among whites (79.6 percent).
Real average weekly earnings rose by 1.0 percent from August to September
after seasonal adjustment, according to preliminary data released by the
Bureau of Labor Statistics of the U.S. Department of Labor. This increase
stemmed from a 0.2 percent rise in average hourly earnings and a 0.7 percent
decline in the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W). Average weekly hours were unchanged. Average weekly earnings rose by 4.0 percent, seasonally adjusted, from September 2005 to September 2006. After deflation by the CPI-W, average weekly earnings increased by 2.2 percent. Before adjustment for seasonal change and inflation, average weekly earnings were $571.89 in September 2006, compared with $549.86 a year earlier.
Cerberus Capital Management LP said on Thursday that former Treasury Secretary John Snow has joined the $16.5 billion hedge fund firm as chairman. I hope Snow does a better job than he did as CEO of a railroad.
Broadcom Corp. late Thursday forecasted a lower sales target for the fourth quarter than it had previously estimated.
Crude for November delivery rose 1.9% to $58.72 a barrel. Natural gas rose 3.6% to $7.06 per million British thermal units.
December gold rose $9.90 to close at $602.50 an ounce in New York. December silver climbed 34 cents, or 2.9%, to end at $12.16 an ounce and December copper tacked on 1.35 cents to close at $3.5095 a pound.
The Philly Fed index fell 0.7 in October, vs. the average economist forecast compiled by MarketWatch of a rise of 7.8%.
NBC Universal to cut 700 jobs and AOL to cut 1300 jobs.
The index of leading economic indicators rose 0.1% in September after falling in July and August. The index has dropped in five of the past eight months, and is down 0.9% in the past six months.
OPEC has decided to cut production by 1.2 million barrels a day, the United Arab Emirates' oil minister said Friday.
Bonner and Wiggin: "The baby born when the empire began in 1913 came into the world with nothing. But he owed nothing. Now, he comes into the world owing his share of 37 trillion; that's about $128,560 with his name on it. Is he richer? Is he better off? What would the dead say? That doesn't include his share of Federal obligations and commitments that he'll have to pay, which could add $100,000 more."
Wednesday, October 18, 2006
The Real Deal
10/19/06 The Real Deal
Core consumer price inflation was rising at the fastest rate in four years in September, the Cleveland Federal Reserve Bank said Wednesday. The median consumer price index, an alternative way of measuring core inflation that does not automatically exclude food and energy prices, rose 0.3% in September, or a 3.6% annual pace, the Cleveland Fed said. Over the past year, the median CPI is up 3.5%, the biggest gain since the summer of 2002. By contrast, the Labor Department's core CPI, which excludes food and energy prices, is up 2.9% in the past year, the most in 10 years.
I believe the annual rate of 3.6% is understated; however, my opinion is not significant. The Cleveland Fed's is. With that inflation rate the Fed cannot stay on a pause mode.
Rates will need to be increased. Otherwise, the credibility of the Fed is nullified. Rising inflation and rising rates are a high colonic for equities. That combo will flush out complacency and bring back risk. You don't need to believe me. Listen to Cramer. He says fortunes are being made. That maybe so. It's an other thing to keep the fortunes.
Edward Hasbrouck: "The USA Department of Homeland Security (DHS) has proposed that airlines cruise lines, and operators of all other ships and planes -- including charter flights, air taxis, fishing vessels, etc. -- be required to get individual permission (”clearance”) from the DHS for each passenger on all flights or ocean voyages to, from, or via the USA. Unless the answer is “Yes” -- if the answer is “no” or “maybe”, or if the DHS doesn’t answer at all -- the airline wouldn’t be allowed to give you a boarding pass, or let you or your luggage on the plane."
According to DataQuick, existing single-family home prices fell 8.2% in the month of Sept. in Sonoma County, 6.5% in Napa County, and 3.3% in Marin County. When they raid the whorehouse, they take all the girls.
Richard Daughty: "Mogambo sez: I love the way that gold, silver and oil are falling into my trap! If I hadn't spent all my money at Patty's Palace of Pizza and Porn, I'd buy more. I only hope you don't make the same mistake."
November crude fell $1.28 to close at $57.65 a barrel. Meanwhile, November natural gas rallied 36.5 cents to close at a five-week high of $6.807 per million British thermal units. Tomorrow is the OPEC meeting. They will be bring their prayer shawls.
Mark Twain: "Facts are stubborn things, but statistics are more pliable."
Core consumer price inflation was rising at the fastest rate in four years in September, the Cleveland Federal Reserve Bank said Wednesday. The median consumer price index, an alternative way of measuring core inflation that does not automatically exclude food and energy prices, rose 0.3% in September, or a 3.6% annual pace, the Cleveland Fed said. Over the past year, the median CPI is up 3.5%, the biggest gain since the summer of 2002. By contrast, the Labor Department's core CPI, which excludes food and energy prices, is up 2.9% in the past year, the most in 10 years.
I believe the annual rate of 3.6% is understated; however, my opinion is not significant. The Cleveland Fed's is. With that inflation rate the Fed cannot stay on a pause mode.
Rates will need to be increased. Otherwise, the credibility of the Fed is nullified. Rising inflation and rising rates are a high colonic for equities. That combo will flush out complacency and bring back risk. You don't need to believe me. Listen to Cramer. He says fortunes are being made. That maybe so. It's an other thing to keep the fortunes.
Edward Hasbrouck: "The USA Department of Homeland Security (DHS) has proposed that airlines cruise lines, and operators of all other ships and planes -- including charter flights, air taxis, fishing vessels, etc. -- be required to get individual permission (”clearance”) from the DHS for each passenger on all flights or ocean voyages to, from, or via the USA. Unless the answer is “Yes” -- if the answer is “no” or “maybe”, or if the DHS doesn’t answer at all -- the airline wouldn’t be allowed to give you a boarding pass, or let you or your luggage on the plane."
According to DataQuick, existing single-family home prices fell 8.2% in the month of Sept. in Sonoma County, 6.5% in Napa County, and 3.3% in Marin County. When they raid the whorehouse, they take all the girls.
Richard Daughty: "Mogambo sez: I love the way that gold, silver and oil are falling into my trap! If I hadn't spent all my money at Patty's Palace of Pizza and Porn, I'd buy more. I only hope you don't make the same mistake."
November crude fell $1.28 to close at $57.65 a barrel. Meanwhile, November natural gas rallied 36.5 cents to close at a five-week high of $6.807 per million British thermal units. Tomorrow is the OPEC meeting. They will be bring their prayer shawls.
Mark Twain: "Facts are stubborn things, but statistics are more pliable."
Keep Your Eye On The Ball
10/18/06 Keep Your Eye On The Ball
The core producer price index, which excludes food and energy costs, rose 0.6%, the most since January 2005. Producer prices are up 0.9% in the past year, while core prices are up 1.2%.
Chicago Mercantile Holdings Inc. announced an agreement to acquire CBOT Holdings. The deal calls for a swap of 0.3006 shares of Chicago Mercantile Class A common stock for each CBOT Class A common share. CBOT shareholders can also elect to receive the cash equivalent to the value of the exchange ratio based on a ten day average of closing prices for Chicago Mercantile shares at the time of the merger, but the cash portion of the total consideration will be limited to $3 billion. Upon completion of the deal, Chicago Mercantile stockholders will own about 69% of the combined company with CBOT's shareholders owning the remaining 31% stake.
Eli Lilly said it was buying ICOS Corp. for $2.1 billion, or $32 a share, in cash. ICOS is the maker of Cialis, a treatment for ED in men. It was 1 3/4 years ago that I suggested patient investors take a look at Palatin Technologies. Since then the stock has gone from $2 to $4 and back to $2 and is now about $3. Palatin in trials with a treatment for ED in both men and women. It is the first to treat women.
Manufacturing output fell 0.3% in September, utility output sank 4.4% and mining output rose 0.7%. The capacity utilization rate for the industrial sector fell to 81.9% from 82.5%.
In very early trading on Tuesday, gold traded above $600 an ounce and crude oil traded at $60+ a barrel. November natural gas added 31.6 cents to $6.76 per million British thermal units.
Private investors, in August, bought a net $89.4 billion, compared with a net $31.8 billion in July. Official purchases, mostly by central banks increased to $30.1 billion, up from $22.7 billion. Americans bought $2.7 billion worth of securities abroad in August. Purchases of Treasury securities rose a net $46.3 billion, up from $6.6 billion in July. Demand for agency debt rose $31.3 billion from $18.5 billion. Foreign purchases of U.S. stocks rose $4.4 billion in August, down from $10.4 billion in July. Corporate bond buying climbed to $37.5 billion from $19 billion.
Countries should hold oil stocks equivalent to at least 90 days of net imports, according to recommendations by the International Energy Agency. China's demand will increase to 7 million barrels a day, the IEA, an adviser to 26 oil-consuming nations, said in an Oct. 11 forecast, from 3.68 million barrels a day in 1996.
The Labor Dept reported that the Sept. CPI core inflation rate rose 0.2%, the third consecutive monthly increase at that rate.
Housing starts in Sept. rose 6%. It was the first increase since May. However, permits declined for the 8th consecutive month. In Sept. the decline was 6%.
This morning the Dow powered over the 12,000 level- thanks to IBM and Intel.
From here on out please be careful with your words and actions. You don't want to have the label "enemy combatant" on your back. Our 200+ year experiment in democracy has come to an end. You see- your vote really does count. It's your voice- or was.
The core producer price index, which excludes food and energy costs, rose 0.6%, the most since January 2005. Producer prices are up 0.9% in the past year, while core prices are up 1.2%.
Chicago Mercantile Holdings Inc. announced an agreement to acquire CBOT Holdings. The deal calls for a swap of 0.3006 shares of Chicago Mercantile Class A common stock for each CBOT Class A common share. CBOT shareholders can also elect to receive the cash equivalent to the value of the exchange ratio based on a ten day average of closing prices for Chicago Mercantile shares at the time of the merger, but the cash portion of the total consideration will be limited to $3 billion. Upon completion of the deal, Chicago Mercantile stockholders will own about 69% of the combined company with CBOT's shareholders owning the remaining 31% stake.
Eli Lilly said it was buying ICOS Corp. for $2.1 billion, or $32 a share, in cash. ICOS is the maker of Cialis, a treatment for ED in men. It was 1 3/4 years ago that I suggested patient investors take a look at Palatin Technologies. Since then the stock has gone from $2 to $4 and back to $2 and is now about $3. Palatin in trials with a treatment for ED in both men and women. It is the first to treat women.
Manufacturing output fell 0.3% in September, utility output sank 4.4% and mining output rose 0.7%. The capacity utilization rate for the industrial sector fell to 81.9% from 82.5%.
In very early trading on Tuesday, gold traded above $600 an ounce and crude oil traded at $60+ a barrel. November natural gas added 31.6 cents to $6.76 per million British thermal units.
Private investors, in August, bought a net $89.4 billion, compared with a net $31.8 billion in July. Official purchases, mostly by central banks increased to $30.1 billion, up from $22.7 billion. Americans bought $2.7 billion worth of securities abroad in August. Purchases of Treasury securities rose a net $46.3 billion, up from $6.6 billion in July. Demand for agency debt rose $31.3 billion from $18.5 billion. Foreign purchases of U.S. stocks rose $4.4 billion in August, down from $10.4 billion in July. Corporate bond buying climbed to $37.5 billion from $19 billion.
Countries should hold oil stocks equivalent to at least 90 days of net imports, according to recommendations by the International Energy Agency. China's demand will increase to 7 million barrels a day, the IEA, an adviser to 26 oil-consuming nations, said in an Oct. 11 forecast, from 3.68 million barrels a day in 1996.
The Labor Dept reported that the Sept. CPI core inflation rate rose 0.2%, the third consecutive monthly increase at that rate.
Housing starts in Sept. rose 6%. It was the first increase since May. However, permits declined for the 8th consecutive month. In Sept. the decline was 6%.
This morning the Dow powered over the 12,000 level- thanks to IBM and Intel.
From here on out please be careful with your words and actions. You don't want to have the label "enemy combatant" on your back. Our 200+ year experiment in democracy has come to an end. You see- your vote really does count. It's your voice- or was.
Sunday, October 15, 2006
Differing Perspectives
10/16/06 Differing Perspectives
Gary Lammert: "The commodity market with oil, grains, and
gold will likely be competing with the equities for the investment
money during the next 27-28 days. On Friday 13 October 2006 all
future contracts for the CRB had but one level trade - limit up. The
next several day of trading will likely also have a single level of
trading - limit up. The CRB, oil, and gold all reached a selling
driving force comes in the complementary story that grain storage
levels are at 20 year lows. Grains are in a very defined period of
fractal growth. The current fractal growth sequence for the CRB is:
8/6 of 20/13-20 days.
Some of the investment money for the commodities will come from the
bond market, some from the equity markets 'which will become worried
about the ongoing CRB and 'grain -driven inflation' and some will be
borrowed at low interests and on margin for speculation. The best
fractal pattern for the equities is 11/15 of 26/17-18.
Nevertheless money should be exiting bonds and like the during the 2004 presidential election, equities may have some paradoxical growth during a falling bond
market and higher commodity prices..
27.5 days to a final ideal x/2.5x/2.5x commodity/equity high. For
macroeconomists, scientists, and 'economic fractalists' the next
final 28 trading days and what lies thereafter may provide a
fundamental change in the way the macroeconomy is viewed. The next 28
trading days and what lies thereafter may provide the basis for a new
macroeconomic saturation paradigm and macroeconomic science of 'how
things really work."
Beneath the averages you can find some differing perspectives. Last week on the NYSE there were 25 new lows and 558 new highs! Advances were 2 1/2 times the declines. The S&P SmallCap index and the Russell 2000 were both up over 3% for the week. Yet, stock index options told a different story. On the CBOE S&P 100 or OEX the put volume was 1 1/2 times the call volume, and on the S&P 500 put volume ran about 1 1/3 times the call volume. On the other hand, the call volume on the Nasdaq 100 was twice the put volume. The adage is the market climbs a wall of worry. For me, the question is the legitimacy of the worry. Over the last 90 days many segments of the market have had some of their best rallies in years- just look at Microsoft and Cisco. We knew 90 days ago that the Dow and the S&P were long overdue for a 10% or more correction. That still has not happened. My belief is to continually upgrade your holdings and place yourself in the best risk/reward position.
Mike Burk: "Although not as strong as last week, the coming week has had a strong positive bias. The OTC has been up 70% of the time during the 2nd year of the Presidential Cycle. The SPX has been up 62% of the time. Both indices have had average gains and been up over half the time over all periods."
Dominick: "My target, which was issued exactly 2 months ago today, was perfectly hit and The SPX now sits five points above it...this market is not advancing as it was in the past. Prior to the May highs we had leadership, now it seems as the S&P is pushing the old leaders up to achieve new highs. That is not the sign of a healthy market... The leadership would need to come back, for me to think there will be a large continuation from here...
The bottom line is, as Wall Street is getting more bullish by the day, I am seeing reasons to be concerned of any rally above 1360ish. I believe we are at an important price projection, accompanied by weekly Elliott wave counts that that finally can be counted as complete, bullish sentiment and technicals that are starting to diverge.
Just like going long in Aug, it won't look or feel good to try and short this market, but if we get the technical evidence to do so, we will look to take that trade. If we need to wait a while or for some additional gains, we will not be looking to short an advance. If there is a Santa Clause rally in the markets later this year, it will come from the low of that move, not from here."
From the Houston Chronicle: "The recruiting manager for Capital H Group said mechanical and chemical engineers are especially scarce.
The market for geophysicists and geologists is also tight because not many new ones have graduated in the past decade, he said."
From the Tulsa World: "The life of people who work at Air-X-Changers is about designing, bending, cutting, welding and painting.
Their jumbo-sized masterpiece? The air-cooled heat exchanger -- a key component in natural gas compression packages used to recover, process and transport natural gas...Additionally, the labor market is very tight for skilled welders, and the company is on a constant lookout for such workers. There are lots of opportunities at AXC for code welders, he said. The company is still trying to fill 30 to 40 total job openings. "We're going to continue to grow," Jacoby told the port's directors. "We see our business booming for some time."
Gary Lammert: "The commodity market with oil, grains, and
gold will likely be competing with the equities for the investment
money during the next 27-28 days. On Friday 13 October 2006 all
future contracts for the CRB had but one level trade - limit up. The
next several day of trading will likely also have a single level of
trading - limit up. The CRB, oil, and gold all reached a selling
driving force comes in the complementary story that grain storage
levels are at 20 year lows. Grains are in a very defined period of
fractal growth. The current fractal growth sequence for the CRB is:
8/6 of 20/13-20 days.
Some of the investment money for the commodities will come from the
bond market, some from the equity markets 'which will become worried
about the ongoing CRB and 'grain -driven inflation' and some will be
borrowed at low interests and on margin for speculation. The best
fractal pattern for the equities is 11/15 of 26/17-18.
Nevertheless money should be exiting bonds and like the during the 2004 presidential election, equities may have some paradoxical growth during a falling bond
market and higher commodity prices..
27.5 days to a final ideal x/2.5x/2.5x commodity/equity high. For
macroeconomists, scientists, and 'economic fractalists' the next
final 28 trading days and what lies thereafter may provide a
fundamental change in the way the macroeconomy is viewed. The next 28
trading days and what lies thereafter may provide the basis for a new
macroeconomic saturation paradigm and macroeconomic science of 'how
things really work."
Beneath the averages you can find some differing perspectives. Last week on the NYSE there were 25 new lows and 558 new highs! Advances were 2 1/2 times the declines. The S&P SmallCap index and the Russell 2000 were both up over 3% for the week. Yet, stock index options told a different story. On the CBOE S&P 100 or OEX the put volume was 1 1/2 times the call volume, and on the S&P 500 put volume ran about 1 1/3 times the call volume. On the other hand, the call volume on the Nasdaq 100 was twice the put volume. The adage is the market climbs a wall of worry. For me, the question is the legitimacy of the worry. Over the last 90 days many segments of the market have had some of their best rallies in years- just look at Microsoft and Cisco. We knew 90 days ago that the Dow and the S&P were long overdue for a 10% or more correction. That still has not happened. My belief is to continually upgrade your holdings and place yourself in the best risk/reward position.
Mike Burk: "Although not as strong as last week, the coming week has had a strong positive bias. The OTC has been up 70% of the time during the 2nd year of the Presidential Cycle. The SPX has been up 62% of the time. Both indices have had average gains and been up over half the time over all periods."
Dominick: "My target, which was issued exactly 2 months ago today, was perfectly hit and The SPX now sits five points above it...this market is not advancing as it was in the past. Prior to the May highs we had leadership, now it seems as the S&P is pushing the old leaders up to achieve new highs. That is not the sign of a healthy market... The leadership would need to come back, for me to think there will be a large continuation from here...
The bottom line is, as Wall Street is getting more bullish by the day, I am seeing reasons to be concerned of any rally above 1360ish. I believe we are at an important price projection, accompanied by weekly Elliott wave counts that that finally can be counted as complete, bullish sentiment and technicals that are starting to diverge.
Just like going long in Aug, it won't look or feel good to try and short this market, but if we get the technical evidence to do so, we will look to take that trade. If we need to wait a while or for some additional gains, we will not be looking to short an advance. If there is a Santa Clause rally in the markets later this year, it will come from the low of that move, not from here."
From the Houston Chronicle: "The recruiting manager for Capital H Group said mechanical and chemical engineers are especially scarce.
The market for geophysicists and geologists is also tight because not many new ones have graduated in the past decade, he said."
From the Tulsa World: "The life of people who work at Air-X-Changers is about designing, bending, cutting, welding and painting.
Their jumbo-sized masterpiece? The air-cooled heat exchanger -- a key component in natural gas compression packages used to recover, process and transport natural gas...Additionally, the labor market is very tight for skilled welders, and the company is on a constant lookout for such workers. There are lots of opportunities at AXC for code welders, he said. The company is still trying to fill 30 to 40 total job openings. "We're going to continue to grow," Jacoby told the port's directors. "We see our business booming for some time."
Saturday, October 14, 2006
Varying Views
10/15/06 Various Views
Marc Faber: "A major problem with the flood of liquidity that continues to engulf the world is that returns collapse so increased leverage is necessary to generate acceptable (to investors) returns. This increases risk and lowers returns further, producing a self-reinforcing spiral of higher leverage and increased risks...It’s one thing to be awash in liquidity generated from capital; it’s a completely different matter to be awash in credit-based liquidity. That’s why we are now seeing an increasing amount of hedge fund woes."
Charlie Maxwell: "In 1964, we found 48 billion barrels of oil and usedapproximately 12 million barrels. In 1988, we started finding less than we were using. In 2005, we found about 5 billion to 6 billion barrels, and we used 30 billion. These numbers are just overwhelming."
Think of NYSE specialists as having some similarities to dealers at the black jack table in Las Vegas. There is at least one big difference. The specialists in addition to seeing the order flow also have a book with buys and sells left with them from brokers. Over the last two weeks, as the Dow made several new all-time highs, specialists sold more stock than they bought. It's not smart to bet against the "house." The odds are not winning odds.
Last year at this time the VIX was trading at the 16 to 17 level. The last time this index traded above 13 was on Sept. 25. On Friday it closed at 10.75, the lowest in quite some time. We're in the middle of October and few expect volatility. Good luck.
Tim Wood: "Beginning in September as we approached the May 2006 highs I began being cautious of this advance and I remain cautious today. When I say cautious, what I really mean is that I know this advance is mature and subject to at least an intermediate-term top. Let me make it clear that at this time I have no indication of such top and I have not had an intermediate-term sell signal since my indicators turned up in June."
Peter Schiff: "In the first place, the fact that President Bush maintains a straight face while claiming to be a deficit cutter is a testament to his political skills and the media’s and Wall Street’s gullibility. Who does the President think he is kidding? So far, the national debt has increased by about three trillion dollars during his presidency, or about $500 billion per year. Those are the real numbers. The non-sense budget deficit the government reports excludes off-budget items and money borrowed from government “trust funds.” However, expenditures excluded from official budget numbers still must be financed, and the money borrowed to do so adds to the national debt. In addition, those numbers do not reflect expenses accrued during the year but not yet paid. Were such expenses properly accounted for, the official deficit would be several hundred billion dollars higher. Finally, the numbers do not include any growth in contingent liabilities, which now exceed $40 trillion, making the actual national debt over eight times the official figure, which includes only the funded portion."
For the week, two-year Treasury yields jumped 12.5 bps to 4.86%. Five-year yields rose 12 bps to 4.76%, and the 10-year yields gained 10 bps to 4.80%. With a blink of an eye, the five-year yield has risen 26bps. That's volatility.
Doug Noland: " Across the entire globe, loose Financial Conditions are fueling synchronized stock market Bubbles rarely experienced in history. Ultra-loose Financial Conditions in the U.S. and its Inflationary Manifestations (including Current Account Deficits) have unleashed Credit systems around the world.
And while consumers and securities markets are enjoying a respite from surging energy prices, I wouldn’t extrapolate today’s prices too far into the future. One only has to look at this week’s moves in wheat, corn, nickel, tin, lead, and orange juice for evidence of the Acute Inflationary Bias that continues to envelop the commodities market. Sure, there will be instances when perceived supply constraints fail to materialize and the speculators will be summarily beaten to a bloody pulp. But, as we saw again this week, supply shortages will incite spectacular price surges. In a world of basically unlimited finance and liquidity, how much is too much to pay for food, energy or important raw materials when there is not enough to go around? And I seriously doubt energy supply issues will not resurface, especially if the global economic boom surprises on the upside. Loose Global Financial Conditions seemingly guarantee as much."
Robert McHugh: "The rally since July has been almost entirely short-covering. We get one big move, about once a week, on buying panic, then no follow-up, with slightly down to sideways price action until the next week. What has been missing has been supply. Sellers have noticed these out of the blue short-covering rallies, so have disappeared. The interventionists have succeeded in muting supply pressure. This type of rally can continue for quite some time, and drive prices quite high, as we have seen. But it is a death trap. It is artificial. It will end as soon as some trigger event sends fear into markets, the kind that catches shorts on the sidelines, buyers exhausted, and interventionists helpless to play their game. We believe a Democrat victory in the coming election could be such an event."
Brett Steenbarger: "Losing Your Money Begins With Losing Your Focus"
George Bernard Shaw: "“We must always think about things, and we must think about things as they are, not as they are said to be.”
Marc Faber: "A major problem with the flood of liquidity that continues to engulf the world is that returns collapse so increased leverage is necessary to generate acceptable (to investors) returns. This increases risk and lowers returns further, producing a self-reinforcing spiral of higher leverage and increased risks...It’s one thing to be awash in liquidity generated from capital; it’s a completely different matter to be awash in credit-based liquidity. That’s why we are now seeing an increasing amount of hedge fund woes."
Charlie Maxwell: "In 1964, we found 48 billion barrels of oil and usedapproximately 12 million barrels. In 1988, we started finding less than we were using. In 2005, we found about 5 billion to 6 billion barrels, and we used 30 billion. These numbers are just overwhelming."
Think of NYSE specialists as having some similarities to dealers at the black jack table in Las Vegas. There is at least one big difference. The specialists in addition to seeing the order flow also have a book with buys and sells left with them from brokers. Over the last two weeks, as the Dow made several new all-time highs, specialists sold more stock than they bought. It's not smart to bet against the "house." The odds are not winning odds.
Last year at this time the VIX was trading at the 16 to 17 level. The last time this index traded above 13 was on Sept. 25. On Friday it closed at 10.75, the lowest in quite some time. We're in the middle of October and few expect volatility. Good luck.
Tim Wood: "Beginning in September as we approached the May 2006 highs I began being cautious of this advance and I remain cautious today. When I say cautious, what I really mean is that I know this advance is mature and subject to at least an intermediate-term top. Let me make it clear that at this time I have no indication of such top and I have not had an intermediate-term sell signal since my indicators turned up in June."
Peter Schiff: "In the first place, the fact that President Bush maintains a straight face while claiming to be a deficit cutter is a testament to his political skills and the media’s and Wall Street’s gullibility. Who does the President think he is kidding? So far, the national debt has increased by about three trillion dollars during his presidency, or about $500 billion per year. Those are the real numbers. The non-sense budget deficit the government reports excludes off-budget items and money borrowed from government “trust funds.” However, expenditures excluded from official budget numbers still must be financed, and the money borrowed to do so adds to the national debt. In addition, those numbers do not reflect expenses accrued during the year but not yet paid. Were such expenses properly accounted for, the official deficit would be several hundred billion dollars higher. Finally, the numbers do not include any growth in contingent liabilities, which now exceed $40 trillion, making the actual national debt over eight times the official figure, which includes only the funded portion."
For the week, two-year Treasury yields jumped 12.5 bps to 4.86%. Five-year yields rose 12 bps to 4.76%, and the 10-year yields gained 10 bps to 4.80%. With a blink of an eye, the five-year yield has risen 26bps. That's volatility.
Doug Noland: " Across the entire globe, loose Financial Conditions are fueling synchronized stock market Bubbles rarely experienced in history. Ultra-loose Financial Conditions in the U.S. and its Inflationary Manifestations (including Current Account Deficits) have unleashed Credit systems around the world.
And while consumers and securities markets are enjoying a respite from surging energy prices, I wouldn’t extrapolate today’s prices too far into the future. One only has to look at this week’s moves in wheat, corn, nickel, tin, lead, and orange juice for evidence of the Acute Inflationary Bias that continues to envelop the commodities market. Sure, there will be instances when perceived supply constraints fail to materialize and the speculators will be summarily beaten to a bloody pulp. But, as we saw again this week, supply shortages will incite spectacular price surges. In a world of basically unlimited finance and liquidity, how much is too much to pay for food, energy or important raw materials when there is not enough to go around? And I seriously doubt energy supply issues will not resurface, especially if the global economic boom surprises on the upside. Loose Global Financial Conditions seemingly guarantee as much."
Robert McHugh: "The rally since July has been almost entirely short-covering. We get one big move, about once a week, on buying panic, then no follow-up, with slightly down to sideways price action until the next week. What has been missing has been supply. Sellers have noticed these out of the blue short-covering rallies, so have disappeared. The interventionists have succeeded in muting supply pressure. This type of rally can continue for quite some time, and drive prices quite high, as we have seen. But it is a death trap. It is artificial. It will end as soon as some trigger event sends fear into markets, the kind that catches shorts on the sidelines, buyers exhausted, and interventionists helpless to play their game. We believe a Democrat victory in the coming election could be such an event."
Brett Steenbarger: "Losing Your Money Begins With Losing Your Focus"
George Bernard Shaw: "“We must always think about things, and we must think about things as they are, not as they are said to be.”
Friday, October 13, 2006
Trends And Opinions
10/14/06 Trends And Opinions
Chris Mennis, owner of oil broker New Wave Energy in Aptos, California: ``The demand is very good for distillate and it's better than last year for gasoline. The seasonal decline was about what it should have been'' and the world economy remains strong, he said.
Japan's producer prices rose the most in more than 25 years in September, increasing pressure on companies to pass on costs to consumers to protect profits.
An index of prices that companies pay for energy and raw materials such as iron ore increased 3.6 percent in September from a year earlier, up from a revised 3.5 percent gain a month earlier, the Bank of Japan said in Tokyo today. If this is a world economy, do you really believe the U.S. is immune from some of the same inflation pressures being experienced in Japan?
For the first time in almost six years, the rate on benchmark euro interest-rate futures contracts has dipped below 10-year bond yields. The levels crossed two weeks ago, measured by the contract closest to settlement and the benchmark German debt security. As I mentioned above, it is a world economy.
Britain’s new army chief said UK forces should leave Iraq soon because they are making the security problem there worse.
Such unusually frank remarks from a serving soldier suggest that General Sir Richard Dannatt disagrees with government policy, which calls for troops to stay until Iraqi forces can take over. Sir Richard said Britain should “get ourselves out sometime soon because our presence exacerbates the security problems”. That's the last of our friends standing shoulder to shoulder with our troops.
Rob Kirby: According to Wikipedia,"distillate usually refers to fuel oils produced through distillation, such as diesel and heating oil. This distinguishes them from the residual fuel oils, which are made from the residue left after distillation."
Now, when we review the EIA's graph below, we can clearly see that DISTILLATE growth [at Oct. 12, 2006] is POSITIVE! What I'd really like to know is what OTHER is - because that is what is making their annual demand projections appear "negative"?...The explosive growth of derivatives goes far to explain how / why prices are declining. 5.5 TRILLION GROWTH in a derivatives book at one bank [J.P. Morgan Chase] in one quarter should be sounding ALARM BELLS all over the world as to what is really going on. Does anyone beside me make a connection between the "insanely explosive growth" of J.P. Morgan's derivatives book and plunging energy prices in the face of seemingly structural supply / demand imbalances?"
Linda Davies: "The job of a derivatives trader is like that of a bookie once removed, taking bets on people making bets."
Michael Moskow, the president of the Chicago Federal Reserve Bank:
"The risk of inflation remaining too high is greater than the risk of growth being too low," Moskow said in a dinner speech to a real-estate group.
As a result, some additional rate hikes may be necessary to bring inflation back into a range of stable prices, he said. Moskow said that he expects inflation to gradually come down, but said there remain substantial risks to this forecast.
"By my standards, inflation has been too high," Moskow said.
Aetna will lay off 650 staff, or about 2% of its total workforce, in a move to cut administrative costs.
Imported petroleum prices fell 10.3% in September, the largest drop since December 2004. Imported natural gas prices fell 5.2%. Prices of imports excluding petroleum inched up 0.1%. Meanwhile, prices of U.S. exports fell 0.5%, the first decline since November 2005.
OCTOBER UMICH CONSUMER SENTIMENT 92.3 VS. 85.4 IN SEPT.
Orange-juice futures soared to a 16- year high after the U.S. government said Florida's orange crop will be the smallest in 17 years as cold temperatures and lingering hurricane damage hampered fruit growth. Florida, the world's second-biggest orange grower behind Brazil, will produce 135 million boxes in the 2006-2007 season, down from 147.9 million, the final revised estimate for last season's crop, the U.S. Department of Agriculture said.
China's foreign exchange reserves, the world's largest, reached $987.9 billion by the end of September, the central bank announced Friday. The figure was up 28.5 percent from a year earlier, said the report by the People's Bank of China. U.S. treasuries dominate these reserves; however, I see increasing amount of these reserves moving into metals, such as, gold as well as crude for its strategic oil reserve.
The USDA said global wheat production would fall by 11m tons to 585.1m, causing global stockpiles to drop a further 7.1m from its previous forecast, to 119.3m. This represents a fall of 20 per cent from a year ago, putting stocks at their lowest level since 1981. “The concern now is what happens next year. If we have poor conditions for growing wheat again, supplies could get very tight and we might see some demand rationing,” said Dan Cekander, grains analyst at Fimat.
James Barnett, grains analyst for Man Global Research, said there is more concern in the global corn market after the USDA cut crop estimates in the US by 209m bushels to 10.9bn after it said that 800,000 fewer acres were growing corn than had previously been expected. The US is the world’s largest corn grower. The growing demand for corn by the ethanol industry has exacerbated the situation, and represents another bonehead decision by the Bush Administration.
A recent International Monetary Fund report says Venezuela's gas prices are the cheapest in the world. American motorists are paying about 19 times more at the pump, despite a drop in prices since August.
Statoil and Shell are halting output of about 280,000 barrels daily at the Snorre A platform in the North Sea and Draugen in the Norwegian Sea. The government ordered the closures because tests found that one type of lifeboat is not strong enough to be dropped from the platforms to the sea, affecting the ability to evacuate in emergencies.
On Thursday it snowed in Detroit, Chicago, and Minnesota. On Friday it snowed from 1 1/2 to 2 1/2 feet of snow from Buffalo to Niagra Falls. A cold spell has arrived. The use of heating oil and natural gas will begin to increase. In my view, the energy market does not reflect the changing weather pattern.
December gold closed at $592.70 an ounce Friday, up $12.40 for the session and up 2.8% for the week. December silver added 30 cents to close at $11.68 an ounce, ending with a gain of 4.5% for the week. December copper added 2.7 cents to close at $3.4135 a pound, up 0.7% from last Friday's closing level.
According to the BLS, for the year ended in September, prices for imports from China declined 1.0 percent while prices for imports from Japan fell 1.5 percent.
With 30 minutes in the Fri. trading day left, November crude rose $1.09 to $58.95 a barrel, trading around 1% below last Friday's close. November heating oil climbed 4.93 cents to $1.737 a gallon and November unleaded gasoline was up 2.46 cents at $1.4755 a gallon. November natural gas fell by 8.2 cents to $5.70 per million British thermal units, trading more than 10% lower so far for the week.
Chris Mennis, owner of oil broker New Wave Energy in Aptos, California: ``The demand is very good for distillate and it's better than last year for gasoline. The seasonal decline was about what it should have been'' and the world economy remains strong, he said.
Japan's producer prices rose the most in more than 25 years in September, increasing pressure on companies to pass on costs to consumers to protect profits.
An index of prices that companies pay for energy and raw materials such as iron ore increased 3.6 percent in September from a year earlier, up from a revised 3.5 percent gain a month earlier, the Bank of Japan said in Tokyo today. If this is a world economy, do you really believe the U.S. is immune from some of the same inflation pressures being experienced in Japan?
For the first time in almost six years, the rate on benchmark euro interest-rate futures contracts has dipped below 10-year bond yields. The levels crossed two weeks ago, measured by the contract closest to settlement and the benchmark German debt security. As I mentioned above, it is a world economy.
Britain’s new army chief said UK forces should leave Iraq soon because they are making the security problem there worse.
Such unusually frank remarks from a serving soldier suggest that General Sir Richard Dannatt disagrees with government policy, which calls for troops to stay until Iraqi forces can take over. Sir Richard said Britain should “get ourselves out sometime soon because our presence exacerbates the security problems”. That's the last of our friends standing shoulder to shoulder with our troops.
Rob Kirby: According to Wikipedia,"distillate usually refers to fuel oils produced through distillation, such as diesel and heating oil. This distinguishes them from the residual fuel oils, which are made from the residue left after distillation."
Now, when we review the EIA's graph below, we can clearly see that DISTILLATE growth [at Oct. 12, 2006] is POSITIVE! What I'd really like to know is what OTHER is - because that is what is making their annual demand projections appear "negative"?...The explosive growth of derivatives goes far to explain how / why prices are declining. 5.5 TRILLION GROWTH in a derivatives book at one bank [J.P. Morgan Chase] in one quarter should be sounding ALARM BELLS all over the world as to what is really going on. Does anyone beside me make a connection between the "insanely explosive growth" of J.P. Morgan's derivatives book and plunging energy prices in the face of seemingly structural supply / demand imbalances?"
Linda Davies: "The job of a derivatives trader is like that of a bookie once removed, taking bets on people making bets."
Michael Moskow, the president of the Chicago Federal Reserve Bank:
"The risk of inflation remaining too high is greater than the risk of growth being too low," Moskow said in a dinner speech to a real-estate group.
As a result, some additional rate hikes may be necessary to bring inflation back into a range of stable prices, he said. Moskow said that he expects inflation to gradually come down, but said there remain substantial risks to this forecast.
"By my standards, inflation has been too high," Moskow said.
Aetna will lay off 650 staff, or about 2% of its total workforce, in a move to cut administrative costs.
Imported petroleum prices fell 10.3% in September, the largest drop since December 2004. Imported natural gas prices fell 5.2%. Prices of imports excluding petroleum inched up 0.1%. Meanwhile, prices of U.S. exports fell 0.5%, the first decline since November 2005.
OCTOBER UMICH CONSUMER SENTIMENT 92.3 VS. 85.4 IN SEPT.
Orange-juice futures soared to a 16- year high after the U.S. government said Florida's orange crop will be the smallest in 17 years as cold temperatures and lingering hurricane damage hampered fruit growth. Florida, the world's second-biggest orange grower behind Brazil, will produce 135 million boxes in the 2006-2007 season, down from 147.9 million, the final revised estimate for last season's crop, the U.S. Department of Agriculture said.
China's foreign exchange reserves, the world's largest, reached $987.9 billion by the end of September, the central bank announced Friday. The figure was up 28.5 percent from a year earlier, said the report by the People's Bank of China. U.S. treasuries dominate these reserves; however, I see increasing amount of these reserves moving into metals, such as, gold as well as crude for its strategic oil reserve.
The USDA said global wheat production would fall by 11m tons to 585.1m, causing global stockpiles to drop a further 7.1m from its previous forecast, to 119.3m. This represents a fall of 20 per cent from a year ago, putting stocks at their lowest level since 1981. “The concern now is what happens next year. If we have poor conditions for growing wheat again, supplies could get very tight and we might see some demand rationing,” said Dan Cekander, grains analyst at Fimat.
James Barnett, grains analyst for Man Global Research, said there is more concern in the global corn market after the USDA cut crop estimates in the US by 209m bushels to 10.9bn after it said that 800,000 fewer acres were growing corn than had previously been expected. The US is the world’s largest corn grower. The growing demand for corn by the ethanol industry has exacerbated the situation, and represents another bonehead decision by the Bush Administration.
A recent International Monetary Fund report says Venezuela's gas prices are the cheapest in the world. American motorists are paying about 19 times more at the pump, despite a drop in prices since August.
Statoil and Shell are halting output of about 280,000 barrels daily at the Snorre A platform in the North Sea and Draugen in the Norwegian Sea. The government ordered the closures because tests found that one type of lifeboat is not strong enough to be dropped from the platforms to the sea, affecting the ability to evacuate in emergencies.
On Thursday it snowed in Detroit, Chicago, and Minnesota. On Friday it snowed from 1 1/2 to 2 1/2 feet of snow from Buffalo to Niagra Falls. A cold spell has arrived. The use of heating oil and natural gas will begin to increase. In my view, the energy market does not reflect the changing weather pattern.
December gold closed at $592.70 an ounce Friday, up $12.40 for the session and up 2.8% for the week. December silver added 30 cents to close at $11.68 an ounce, ending with a gain of 4.5% for the week. December copper added 2.7 cents to close at $3.4135 a pound, up 0.7% from last Friday's closing level.
According to the BLS, for the year ended in September, prices for imports from China declined 1.0 percent while prices for imports from Japan fell 1.5 percent.
With 30 minutes in the Fri. trading day left, November crude rose $1.09 to $58.95 a barrel, trading around 1% below last Friday's close. November heating oil climbed 4.93 cents to $1.737 a gallon and November unleaded gasoline was up 2.46 cents at $1.4755 a gallon. November natural gas fell by 8.2 cents to $5.70 per million British thermal units, trading more than 10% lower so far for the week.
Wednesday, October 11, 2006
What's Real?
10/12/06 What's Real?
Hedge fund Atticus Capital LP said in a securities filing that, along with an investment bank, it had recently met with several potential investors "to discuss each firm's possible interest in pursuing an acquisition" of Phelps Dodge Corp. These possible buyers included private equity firms and strategic buyers, it said. Atticus owns about a 10% stake in Phelps Dodge. Is Attitus a real buyer or trying to push Phelps Dodge into a self-tender, for example. We saw that with Kerr McGee and Icahn.
We all know that gas at the pump is down about 65 cents a gallon. Let's say you drive 250 miles a week and get 25 miles to the gallon or a savings of $6.50 per week. Now let's compare that with food prices at the market. Do you like tomatoes? About 6 weeks ago they were $1.50 per pound. Now they're $3 a pound. Asparagus was $1.99 and now it's $4.00 a pound or maybe $4.99 a pound. I could go on with more examples. The point is that food prices, in general, have risen more than the price of gas has declined. You are still behind the eight ball when it comes to real inflation-- not the inflation statistics the government provides.
Keith Olbermann: "This president — in his bullying of the Senate last month and in his slandering of the Democrats this month — has shown us that he believes
whoever the enemies actually are, they are hiding themselves inside a
dangerous cloak called the Constitution of the United States of America."
November crude dropped 93 cents to close at $57.59 a barrel Wednesday, marking the contract's weakest closing level since June 2005. November unleaded gasoline fell 1.65 cents to close at $1.4503 a gallon and November heating oil closed at $1.672 a gallon, down 0.89 cent. November natural gas fell 31.6 cents, or 4.9%, to end at $6.15 per million British thermal units.
The 10-year benchmark Treasury closed down 8/32 at 100-22/32 with a yield of 4.78%.
Neither North Korea or the small plane flying into a NYC condo could stir the gold market. December gold climbed 30 cents to close at $576.50 an ounce. December silver climbed 11 cents to close at $11.33 an ounce and December copper added 3.2 cents to end at $3.41 a pound.
The U.S. median price for a new home probably will dip 0.2 percent to $240,500, the first decline since a drop of 2.4 percent 15 years ago, according to the NAR. The price for previously owned homes likely will rise 1.6 percent to $223,000, the smallest gain on record, the trade group said.
``Recent rates of core inflation, if they persisted, were seen as higher than consistent with price stability, and participants underscored the importance of ensuring a moderation in inflation,'' the Fed said in minutes of the Sept. 20 meeting. ``Members continued to see a substantial risk that inflation would not decline as anticipated by the committee.''
Winston Churchill: "In wartime, truth is so precious, she must be attended by a bodyguard of lies."
Hedge fund Atticus Capital LP said in a securities filing that, along with an investment bank, it had recently met with several potential investors "to discuss each firm's possible interest in pursuing an acquisition" of Phelps Dodge Corp. These possible buyers included private equity firms and strategic buyers, it said. Atticus owns about a 10% stake in Phelps Dodge. Is Attitus a real buyer or trying to push Phelps Dodge into a self-tender, for example. We saw that with Kerr McGee and Icahn.
We all know that gas at the pump is down about 65 cents a gallon. Let's say you drive 250 miles a week and get 25 miles to the gallon or a savings of $6.50 per week. Now let's compare that with food prices at the market. Do you like tomatoes? About 6 weeks ago they were $1.50 per pound. Now they're $3 a pound. Asparagus was $1.99 and now it's $4.00 a pound or maybe $4.99 a pound. I could go on with more examples. The point is that food prices, in general, have risen more than the price of gas has declined. You are still behind the eight ball when it comes to real inflation-- not the inflation statistics the government provides.
Keith Olbermann: "This president — in his bullying of the Senate last month and in his slandering of the Democrats this month — has shown us that he believes
whoever the enemies actually are, they are hiding themselves inside a
dangerous cloak called the Constitution of the United States of America."
November crude dropped 93 cents to close at $57.59 a barrel Wednesday, marking the contract's weakest closing level since June 2005. November unleaded gasoline fell 1.65 cents to close at $1.4503 a gallon and November heating oil closed at $1.672 a gallon, down 0.89 cent. November natural gas fell 31.6 cents, or 4.9%, to end at $6.15 per million British thermal units.
The 10-year benchmark Treasury closed down 8/32 at 100-22/32 with a yield of 4.78%.
Neither North Korea or the small plane flying into a NYC condo could stir the gold market. December gold climbed 30 cents to close at $576.50 an ounce. December silver climbed 11 cents to close at $11.33 an ounce and December copper added 3.2 cents to end at $3.41 a pound.
The U.S. median price for a new home probably will dip 0.2 percent to $240,500, the first decline since a drop of 2.4 percent 15 years ago, according to the NAR. The price for previously owned homes likely will rise 1.6 percent to $223,000, the smallest gain on record, the trade group said.
``Recent rates of core inflation, if they persisted, were seen as higher than consistent with price stability, and participants underscored the importance of ensuring a moderation in inflation,'' the Fed said in minutes of the Sept. 20 meeting. ``Members continued to see a substantial risk that inflation would not decline as anticipated by the committee.''
Winston Churchill: "In wartime, truth is so precious, she must be attended by a bodyguard of lies."
Tuesday, October 10, 2006
Some Forecasts
10/11/06 Some Forecasts
Many question my prediction that we have seen the lows in gasoline, heating oil, natural gas, and crude. You might want to ponder the following:
OPEC's current official production ceiling is 28 million bpd.
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, is working out details of the cut, but has yet to formally announce an agreement.
OPEC's president has proposed a plan that would give the output cut extra bite by applying it to real production and not just a theoretical ceiling, according to a letter sent to OPEC members.
Edmund Daukoru, who is also Nigerian Minister of State for Petroleum, wants responses by today to his plan to make the cut from group output of around 27.5 million barrels per day, according to an industry source who has seen the letter.
According to the EIA, OPEC in September produced about 29.640 million bpd, and "average OPEC crude oil production for 2007 is expected to be at current levels."
Surplus world crude oil production capacity, all of which is located in Saudi Arabia, will increase "only slightly" in 2007, which means that "surplus world oil production capacity is projected to remain near 30-year lows," EIA said.
You probably noticed that KB Homes and D.R. Horton had sharply lower sales for this quarter. Yet, many stocks in the group were upgraded by JP Morgan's analyst. This is despite the group's shares being roughly 15%+ off the bottom reached in June and July. If interest rates move closer to 5%, these shares should stall out. If interest rates move back to 5.25%, then you'll be seeing drops back to the summer lows- in my opinion.
Richard Daughty: “Long-term investors haven't made any real (inflation-adjusted) increases in wealth in six long years. If you figured to work forty years and have your ‘investments’ make you money to retire on, you have now lost 15% of your time and not made a dime.”
November crude fell $1.44 ,or 2.4%, to close at $58.52 a barrel in New York, the contract's weakest session-ending level since late July 2005. Despite the weakness in crude and a Goldman downgrade of ExxonMobil, the energy sector rallied. This divergence needs to be monitored closely. Why? Despite the weakness in housing in June and July and despite some weakness in various equity sectors, I pointed out that housing stocks rallied for three days in a row. That proved to be the low point.
The 10-year note closed down 13/32 at 100 31/32. It's yield rose to 4.751%, its highest level since September 19. The 30-year fell 21/32 to 94 3/32, yielding 4.881%.
JupiterResearch said it expects 2006 online holiday retail sales will grow 18% from last year's holiday season to $32 billion. The market researh group said it expects a record 114 million users, a 6% increase over last year, will buy online this holiday season.
Genentech also said it expects full-year 2006 earnings from continuing operations to rise between 65% and 70% over 2005.
Every day there are comments concerning the weakness in housing. No one is denying that closings have slowed, that incentives are necessary in many cases to close a deal, and that cancellations to buy have been rising. The stock market anticipated these events 9 to 10 months ago. Insiders expected it a year ago and there was heavy insider selling last winter. In sum, many of these stocks dropped 50 to 60%. The real story is that when interest rates topped in June it coincided with the housing stocks bottoming. To regurgitate all the bad news is a non event.
Paul Forward, an analyst at Stifel Nicolaus & Co., said since peaking on May 10, the average share price for the big six coal miners has shed more than 40 percent, and with supply levels where they are now, Forward said the situation looks a lot like the recession days of 2001, when production cutbacks caused a spike in demand in 2003, 2004 and 2005. Several weeks ago, I suggested one consider Peabody Energy and Foundation Coal for additions to a portfolio.
The 800-mile trans-Alaska pipeline was closed down today after operators lost communications amid rainy weather to remote valves that close in the event of a spill.
Mike Heatwole, spokesman for Alyeska Pipeline Service Co., said company protocol calls for the shutdown when valves cannot be shut down from long distance. The valves must be staffed by crews that can manually operate the valves, he said.
Many question my prediction that we have seen the lows in gasoline, heating oil, natural gas, and crude. You might want to ponder the following:
OPEC's current official production ceiling is 28 million bpd.
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, is working out details of the cut, but has yet to formally announce an agreement.
OPEC's president has proposed a plan that would give the output cut extra bite by applying it to real production and not just a theoretical ceiling, according to a letter sent to OPEC members.
Edmund Daukoru, who is also Nigerian Minister of State for Petroleum, wants responses by today to his plan to make the cut from group output of around 27.5 million barrels per day, according to an industry source who has seen the letter.
According to the EIA, OPEC in September produced about 29.640 million bpd, and "average OPEC crude oil production for 2007 is expected to be at current levels."
Surplus world crude oil production capacity, all of which is located in Saudi Arabia, will increase "only slightly" in 2007, which means that "surplus world oil production capacity is projected to remain near 30-year lows," EIA said.
You probably noticed that KB Homes and D.R. Horton had sharply lower sales for this quarter. Yet, many stocks in the group were upgraded by JP Morgan's analyst. This is despite the group's shares being roughly 15%+ off the bottom reached in June and July. If interest rates move closer to 5%, these shares should stall out. If interest rates move back to 5.25%, then you'll be seeing drops back to the summer lows- in my opinion.
Richard Daughty: “Long-term investors haven't made any real (inflation-adjusted) increases in wealth in six long years. If you figured to work forty years and have your ‘investments’ make you money to retire on, you have now lost 15% of your time and not made a dime.”
November crude fell $1.44 ,or 2.4%, to close at $58.52 a barrel in New York, the contract's weakest session-ending level since late July 2005. Despite the weakness in crude and a Goldman downgrade of ExxonMobil, the energy sector rallied. This divergence needs to be monitored closely. Why? Despite the weakness in housing in June and July and despite some weakness in various equity sectors, I pointed out that housing stocks rallied for three days in a row. That proved to be the low point.
The 10-year note closed down 13/32 at 100 31/32. It's yield rose to 4.751%, its highest level since September 19. The 30-year fell 21/32 to 94 3/32, yielding 4.881%.
JupiterResearch said it expects 2006 online holiday retail sales will grow 18% from last year's holiday season to $32 billion. The market researh group said it expects a record 114 million users, a 6% increase over last year, will buy online this holiday season.
Genentech also said it expects full-year 2006 earnings from continuing operations to rise between 65% and 70% over 2005.
Every day there are comments concerning the weakness in housing. No one is denying that closings have slowed, that incentives are necessary in many cases to close a deal, and that cancellations to buy have been rising. The stock market anticipated these events 9 to 10 months ago. Insiders expected it a year ago and there was heavy insider selling last winter. In sum, many of these stocks dropped 50 to 60%. The real story is that when interest rates topped in June it coincided with the housing stocks bottoming. To regurgitate all the bad news is a non event.
Paul Forward, an analyst at Stifel Nicolaus & Co., said since peaking on May 10, the average share price for the big six coal miners has shed more than 40 percent, and with supply levels where they are now, Forward said the situation looks a lot like the recession days of 2001, when production cutbacks caused a spike in demand in 2003, 2004 and 2005. Several weeks ago, I suggested one consider Peabody Energy and Foundation Coal for additions to a portfolio.
The 800-mile trans-Alaska pipeline was closed down today after operators lost communications amid rainy weather to remote valves that close in the event of a spill.
Mike Heatwole, spokesman for Alyeska Pipeline Service Co., said company protocol calls for the shutdown when valves cannot be shut down from long distance. The valves must be staffed by crews that can manually operate the valves, he said.
Monday, October 09, 2006
Observations
10/10/06 Observations
John Hussman: "In short, the favorable 4-year seasonal period has a “snap-back” component to it, where the market was typically recovering from a recession, a substantial market drop, or at least a period of consolidation. Indeed, many of the start-years (e.g. 1970, 1974, 1982, 1990, 2002) are familiar exactly because they represented memorable bear market lows.
Again, that doesn't rule out the potential for another instance of 4-year seasonal strength, given the historical record. But given that same record, it's clear that the present instance is outside the oval in terms of the conditions that have accompanied that strength in the past."
The Dolan family is looking to take Cablevision private for $27 a share.
Mercantile Bank gets $47.24 buyout offer from PNC, valued at soem $6 Billion.
Gunmen wearing military uniforms assassinated the brother of Iraq's Sunni Arab vice president in his home Monday-- the third sibling the official has lost this year to the country's violence.
Buffett's Berkshire Hathaway raised its stake in USG to 19% by buying 371,200 shares of USG on Wednesday at $46.10 each. When shares of USG have dipped to the $46-$47 range, Buffett has patiently raised the stake in the company. In sum, he lets the market come to him and does not chase shares on the upswing.
Ralph Waldo Emerson: “It is easy in the world to live after the world's opinion; it is easy in solitude to live after our own; but the great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.”
Mike Burk: "The market is overbought and has not been following the seasonal pattern for the past few weeks. I expect the major indices to be lower on Friday October 13 than they were on Friday October 6."
The following is some valuable work from Pinank Mehta:
"THIS IS THE MOST ALARMING PICTURE I HAVE SEEN IN THE FINANCIAL MARKETS SINCE SOME TIME.
The points to note are:
The current Long "Open" Interest in 10-year US treasury bond is greater than SIX Standard Deviations (12 SIGMA)!!!!!!! (The odds of a 6-Sigma event are one in 500 million or 1.37 million years, so it will be exponentially higher for a 12 Sigma event.)
This level is unprecedented.
Why Should We Be Worried:
What information has led to the professionals building up this unprecedented position in such an accelerated fashion?
What are the consequences of the unwinding of this position?
If it is an orderly unwinding the bond yields should be at the current levels or lower for some time from the beginning of the unwinding.
If it is an unorderly unwinding the bond yields start rising fast from the beginning of the unwinding.
Either way, the important consideration is the consequences of this unwinding on the other asset classes (please note that the bond markets are 4 times the size of the equity markets!!) and the dominoes effect on other asset classes and participants.
Why I Could Be Wrong:
Notwithstanding the odds of a 6-sigma event, we have seen a level of 6-sigma three times in the past two years and there have been no major dislocations in the markets!
The market size has grown and the liquidity is very much higher with bigger and "sophisticated" participants. The game is probably just being escalated to a higher level.
Some of the defensive steps:
Unwind leverage in the portfolio
Get out of long-dated debt preferably into the highest quality / sovereign short-term debt. Do not hold paper you do not intend to hold to maturity.
Pare down exposure to aggressive equities.
Hold investments that you intend to hold for the long term (at least 2 years) only.
Temporarily move out of synthetic instruments (structured paper, hedge funds, OTC derivatives, Fund of Funds, etc)"
I would like to repeat an observation and an action I took at the beginning of October: in my view, the treasury market with the 5 year at then 4.50% was not priced to perfection. It was priced to produce capital losses.
The question one might pose now is the following: will portfolio managers take money off the table and place those funds in equities? If so, where will the money go? Remember that these same money managers are, on the whole, sheep and most fail to produce returns that equa the returns on the S&P 500.
Volkmar Hable: "An especially serious concern for the stock market bulls is the VIX. Since more than two months it is plotting a falling wedge which in the past - if history is any guidance - always had resulted in a large down move for the stock market. A break out from this pattern with much higher volatility ahead should be at least expected by even the most optimistic bulls. Prepare with proper risk management."
Google Inc. said it's buying No. 1 Internet video sharing Web site YouTube Inc. for $1.65 billion in stock.
Crude for November delivery closed up 20 cents at $59.96 a barrel, well below the day's high of $61.30. Gold for December delivery closed up $5.70 at $582.50 an ounce. Silver added 24.5 cents to $11.42 an ounce and copper rose 2.45 cents to $3.413 a pound.
Fitch Ratings on Monday revised its rating outlook for oil and gas producer ConocoPhillips to "Positive" and affirmed the company's debt ratings, citing recent debt reduction. Fitch said the company significantly cut its debt since the closing of its Burlington Resources acquisition on March 31. In addition, Fitch expects that the company's debt will continue to decline as it uses proceeds from asset sales and free cash flow.
Former Secretary of State James A. Baker III: "I don't think you restrict your conversations to your friends. It's got to be hard-nosed. It's got to be determined. You don't give away anything. But in my view it is not appeasement to talk to your enemies."
Alvin Toffler: "In describing today's accelerating changes, the media fire blips of unrelated information at us. Experts bury us under mountains of narrowly specialized monographs. Popular forecasters present lists of unrelated trends, without any model to show us their interconnections or the forces likely to reverse them. As a result, change itself comes to be seen as anarchic, even lunatic."
John Hussman: "In short, the favorable 4-year seasonal period has a “snap-back” component to it, where the market was typically recovering from a recession, a substantial market drop, or at least a period of consolidation. Indeed, many of the start-years (e.g. 1970, 1974, 1982, 1990, 2002) are familiar exactly because they represented memorable bear market lows.
Again, that doesn't rule out the potential for another instance of 4-year seasonal strength, given the historical record. But given that same record, it's clear that the present instance is outside the oval in terms of the conditions that have accompanied that strength in the past."
The Dolan family is looking to take Cablevision private for $27 a share.
Mercantile Bank gets $47.24 buyout offer from PNC, valued at soem $6 Billion.
Gunmen wearing military uniforms assassinated the brother of Iraq's Sunni Arab vice president in his home Monday-- the third sibling the official has lost this year to the country's violence.
Buffett's Berkshire Hathaway raised its stake in USG to 19% by buying 371,200 shares of USG on Wednesday at $46.10 each. When shares of USG have dipped to the $46-$47 range, Buffett has patiently raised the stake in the company. In sum, he lets the market come to him and does not chase shares on the upswing.
Ralph Waldo Emerson: “It is easy in the world to live after the world's opinion; it is easy in solitude to live after our own; but the great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.”
Mike Burk: "The market is overbought and has not been following the seasonal pattern for the past few weeks. I expect the major indices to be lower on Friday October 13 than they were on Friday October 6."
The following is some valuable work from Pinank Mehta:
"THIS IS THE MOST ALARMING PICTURE I HAVE SEEN IN THE FINANCIAL MARKETS SINCE SOME TIME.
The points to note are:
The current Long "Open" Interest in 10-year US treasury bond is greater than SIX Standard Deviations (12 SIGMA)!!!!!!! (The odds of a 6-Sigma event are one in 500 million or 1.37 million years, so it will be exponentially higher for a 12 Sigma event.)
This level is unprecedented.
Why Should We Be Worried:
What information has led to the professionals building up this unprecedented position in such an accelerated fashion?
What are the consequences of the unwinding of this position?
If it is an orderly unwinding the bond yields should be at the current levels or lower for some time from the beginning of the unwinding.
If it is an unorderly unwinding the bond yields start rising fast from the beginning of the unwinding.
Either way, the important consideration is the consequences of this unwinding on the other asset classes (please note that the bond markets are 4 times the size of the equity markets!!) and the dominoes effect on other asset classes and participants.
Why I Could Be Wrong:
Notwithstanding the odds of a 6-sigma event, we have seen a level of 6-sigma three times in the past two years and there have been no major dislocations in the markets!
The market size has grown and the liquidity is very much higher with bigger and "sophisticated" participants. The game is probably just being escalated to a higher level.
Some of the defensive steps:
Unwind leverage in the portfolio
Get out of long-dated debt preferably into the highest quality / sovereign short-term debt. Do not hold paper you do not intend to hold to maturity.
Pare down exposure to aggressive equities.
Hold investments that you intend to hold for the long term (at least 2 years) only.
Temporarily move out of synthetic instruments (structured paper, hedge funds, OTC derivatives, Fund of Funds, etc)"
I would like to repeat an observation and an action I took at the beginning of October: in my view, the treasury market with the 5 year at then 4.50% was not priced to perfection. It was priced to produce capital losses.
The question one might pose now is the following: will portfolio managers take money off the table and place those funds in equities? If so, where will the money go? Remember that these same money managers are, on the whole, sheep and most fail to produce returns that equa the returns on the S&P 500.
Volkmar Hable: "An especially serious concern for the stock market bulls is the VIX. Since more than two months it is plotting a falling wedge which in the past - if history is any guidance - always had resulted in a large down move for the stock market. A break out from this pattern with much higher volatility ahead should be at least expected by even the most optimistic bulls. Prepare with proper risk management."
Google Inc. said it's buying No. 1 Internet video sharing Web site YouTube Inc. for $1.65 billion in stock.
Crude for November delivery closed up 20 cents at $59.96 a barrel, well below the day's high of $61.30. Gold for December delivery closed up $5.70 at $582.50 an ounce. Silver added 24.5 cents to $11.42 an ounce and copper rose 2.45 cents to $3.413 a pound.
Fitch Ratings on Monday revised its rating outlook for oil and gas producer ConocoPhillips to "Positive" and affirmed the company's debt ratings, citing recent debt reduction. Fitch said the company significantly cut its debt since the closing of its Burlington Resources acquisition on March 31. In addition, Fitch expects that the company's debt will continue to decline as it uses proceeds from asset sales and free cash flow.
Former Secretary of State James A. Baker III: "I don't think you restrict your conversations to your friends. It's got to be hard-nosed. It's got to be determined. You don't give away anything. But in my view it is not appeasement to talk to your enemies."
Alvin Toffler: "In describing today's accelerating changes, the media fire blips of unrelated information at us. Experts bury us under mountains of narrowly specialized monographs. Popular forecasters present lists of unrelated trends, without any model to show us their interconnections or the forces likely to reverse them. As a result, change itself comes to be seen as anarchic, even lunatic."
Sunday, October 08, 2006
The Latest Newsweek Poll
10/9/06 The Latest Newsweek Poll
I have included the detailed results of this poll because I believe many of its findings are significant. You can draw your own conclusions.
More than half of Americans-52 percent, including 29 percent of Republicans-believe that House Speaker Dennis Hastert was aware of Congressman Mark Foley's inappropriate messages to teenage Congressional pages and tried to cover it up, according to the latest Newsweek Poll. Only 24 percent say he did not.
A plurality of Americans, 42 percent, now say they trust Democrats to
do a better job of handling moral values; 36 percent say they trust
Republicans more. This represents almost a complete reversal from an Aug.
2-Sept. 1, 2002 Kaiser Family Foundation/Harvard/Washington Post poll in
which 31 percent of Americans said they would trust Democrats to handle
moral values better while 44 percent said they would trust Republicans
more. On the subject of the war on terror at home and abroad, 44 percent of
Americans trust the Democrats to handle it better-a five-point increase
from the Aug. 10-11, 2006 Newsweek Poll. Thirty-seven percent trust the
Republicans more-a seven-point drop from the same August Newsweek Poll.
When it comes to the situation in Iraq, 47 percent of Americans say the
Democrats would handle it better, versus 34 percent who say the Republicans
would. Fifty-three percent say the Democrats would do a better job with the
economy, while only 31 percent say Republicans would. Fifty-seven percent
of those polled say the Democrats would do a better job with health care;
43 percent say they would do a better job with immigration, versus 34
percent who say Republicans would. Fifty-six percent say the Democrats
would do a better job managing gas and oil prices and 53 percent say the
would do a better job managing federal spending and the deficit.
A majority of Americans, 53 percent, would like to see the Democrats
take control of Congress in this year's elections, according to the
Newsweek Poll. Only 35 percent say they would like the Republicans to keep
control. And 51 percent of registered voters say that if the elections were
held today they would vote for the Democratic candidate in their district,
versus 38 percent who say they would vote Republican. Among likely voters,
51 percent would vote for the Democratic candidate and 39 percent for the
Republican candidate.
President Bush's approval rating fell to a record low-33 percent-in the
Newsweek Poll, a three-point drop from the Aug. 24-25, 2006 poll.
Fifty-nine percent of Americans say they disapprove of how Bush is handling
his job as president. Sixty-seven percent say they are dissatisfied with
the way things are going in the United States; only 25 percent say they are
satisfied.
For the first time in the Newsweek Poll, a majority of Americans -- 58
percent -- believe that the Bush administration purposely misled the public
about evidence that Iraq had banned weapons in order to build support for
the war. Thirty-six percent say it did not. In general, 66 percent of
Americans say that the Iraq war has not made Americans safer from
terrorism; 29 percent say that it has. A 58-percent majority also say they
are not too confident or not at all confident that the United States will
successfully establish a stable democratic form of government in Iraq over
the long term. Only 38 percent say they are somewhat or very confident.
Secretary of Defense Donald Rumsfeld's approval rating has fallen to just
30 percent, with a plurality of Americans, 48 percent, saying he should
resign.
According to a Sunday report by Bloomberg, Saudi Arabia and five other OPEC members cut oil output by a total of 1 million barrels a day in an effort to revive prices that lost a quarter of their value in recent months, a spokesman for the group said.
Implementation of the agreed cut, which represents a 3.4 percent reduction from OPEC's September total, has ``already happened,'' Levi Ajuonuma said in a phone interview in Nigeria today. The cutbacks, which include pledges made by Venezuela and Nigeria late last month to reduce output by a total of 170,000 barrels a day from Oct. 1, are ``voluntary,'' he said.
Istithmar PJSC, an investment company owned by Dubai's ruling Maktoum family, bought an approximately $1 billion stake in Standard Chartered Plc as it seeks to diversify the emirate's income beyond oil.
Istithmar, which means ``investment'' in Arabic, holds 2.7 percent of the London-based bank that makes about two thirds of its profit in Asia. Dubai, United Arab Emirates-based Istithmar said it ``supports'' Standard Chartered's management.
IMF chief Rodrigo Rato: "The risk of a disorderly adjustment of global economic imbalances has not gone away, and could well be exacerbated by the other risks. Policy makers need to be ready to adapt to a more challenging environment."
Dorothy Thompson: "There is nothing to fear except the persistent refusal to find out the truth, the persistent refusal to analyze the causes of happenings."
Brett Steenbarger: "We saw 83% of S&P 500 stocks trading above their 50-day moving averages on Thursday--a level that has typified momentum peaks over the past several years."
Deepcaster: "Clearly the $3.2 TRILLION petroleum derivatives position, which the Fed-led Cartel opened last year when natural gas prices hit $15, is the number one candidate for this crude swoon...Those who doubt whether the Cartel has the capacity to manipulate the markets (and especially the larger markets like the multi-trillion dollar currency and bond markets) are invited to inform themselves about the $32 trillion interest rate derivatives colossus at J.P. Morgan Chase, or the $3.2 trillion derivatives position at the Bank for International Settlements (the Central Banker's Bank). And that $32 trillion derivative position at J.P. Morgan is the position at just one of the Fed’s several “primary dealer” firms."
I urge everyone to take the time to read the entire Oct. 6 Deepcaster posting:
http://news.goldseek.com/GoldSeek/1160150067.php
I have included the detailed results of this poll because I believe many of its findings are significant. You can draw your own conclusions.
More than half of Americans-52 percent, including 29 percent of Republicans-believe that House Speaker Dennis Hastert was aware of Congressman Mark Foley's inappropriate messages to teenage Congressional pages and tried to cover it up, according to the latest Newsweek Poll. Only 24 percent say he did not.
A plurality of Americans, 42 percent, now say they trust Democrats to
do a better job of handling moral values; 36 percent say they trust
Republicans more. This represents almost a complete reversal from an Aug.
2-Sept. 1, 2002 Kaiser Family Foundation/Harvard/Washington Post poll in
which 31 percent of Americans said they would trust Democrats to handle
moral values better while 44 percent said they would trust Republicans
more. On the subject of the war on terror at home and abroad, 44 percent of
Americans trust the Democrats to handle it better-a five-point increase
from the Aug. 10-11, 2006 Newsweek Poll. Thirty-seven percent trust the
Republicans more-a seven-point drop from the same August Newsweek Poll.
When it comes to the situation in Iraq, 47 percent of Americans say the
Democrats would handle it better, versus 34 percent who say the Republicans
would. Fifty-three percent say the Democrats would do a better job with the
economy, while only 31 percent say Republicans would. Fifty-seven percent
of those polled say the Democrats would do a better job with health care;
43 percent say they would do a better job with immigration, versus 34
percent who say Republicans would. Fifty-six percent say the Democrats
would do a better job managing gas and oil prices and 53 percent say the
would do a better job managing federal spending and the deficit.
A majority of Americans, 53 percent, would like to see the Democrats
take control of Congress in this year's elections, according to the
Newsweek Poll. Only 35 percent say they would like the Republicans to keep
control. And 51 percent of registered voters say that if the elections were
held today they would vote for the Democratic candidate in their district,
versus 38 percent who say they would vote Republican. Among likely voters,
51 percent would vote for the Democratic candidate and 39 percent for the
Republican candidate.
President Bush's approval rating fell to a record low-33 percent-in the
Newsweek Poll, a three-point drop from the Aug. 24-25, 2006 poll.
Fifty-nine percent of Americans say they disapprove of how Bush is handling
his job as president. Sixty-seven percent say they are dissatisfied with
the way things are going in the United States; only 25 percent say they are
satisfied.
For the first time in the Newsweek Poll, a majority of Americans -- 58
percent -- believe that the Bush administration purposely misled the public
about evidence that Iraq had banned weapons in order to build support for
the war. Thirty-six percent say it did not. In general, 66 percent of
Americans say that the Iraq war has not made Americans safer from
terrorism; 29 percent say that it has. A 58-percent majority also say they
are not too confident or not at all confident that the United States will
successfully establish a stable democratic form of government in Iraq over
the long term. Only 38 percent say they are somewhat or very confident.
Secretary of Defense Donald Rumsfeld's approval rating has fallen to just
30 percent, with a plurality of Americans, 48 percent, saying he should
resign.
According to a Sunday report by Bloomberg, Saudi Arabia and five other OPEC members cut oil output by a total of 1 million barrels a day in an effort to revive prices that lost a quarter of their value in recent months, a spokesman for the group said.
Implementation of the agreed cut, which represents a 3.4 percent reduction from OPEC's September total, has ``already happened,'' Levi Ajuonuma said in a phone interview in Nigeria today. The cutbacks, which include pledges made by Venezuela and Nigeria late last month to reduce output by a total of 170,000 barrels a day from Oct. 1, are ``voluntary,'' he said.
Istithmar PJSC, an investment company owned by Dubai's ruling Maktoum family, bought an approximately $1 billion stake in Standard Chartered Plc as it seeks to diversify the emirate's income beyond oil.
Istithmar, which means ``investment'' in Arabic, holds 2.7 percent of the London-based bank that makes about two thirds of its profit in Asia. Dubai, United Arab Emirates-based Istithmar said it ``supports'' Standard Chartered's management.
IMF chief Rodrigo Rato: "The risk of a disorderly adjustment of global economic imbalances has not gone away, and could well be exacerbated by the other risks. Policy makers need to be ready to adapt to a more challenging environment."
Dorothy Thompson: "There is nothing to fear except the persistent refusal to find out the truth, the persistent refusal to analyze the causes of happenings."
Brett Steenbarger: "We saw 83% of S&P 500 stocks trading above their 50-day moving averages on Thursday--a level that has typified momentum peaks over the past several years."
Deepcaster: "Clearly the $3.2 TRILLION petroleum derivatives position, which the Fed-led Cartel opened last year when natural gas prices hit $15, is the number one candidate for this crude swoon...Those who doubt whether the Cartel has the capacity to manipulate the markets (and especially the larger markets like the multi-trillion dollar currency and bond markets) are invited to inform themselves about the $32 trillion interest rate derivatives colossus at J.P. Morgan Chase, or the $3.2 trillion derivatives position at the Bank for International Settlements (the Central Banker's Bank). And that $32 trillion derivative position at J.P. Morgan is the position at just one of the Fed’s several “primary dealer” firms."
I urge everyone to take the time to read the entire Oct. 6 Deepcaster posting:
http://news.goldseek.com/GoldSeek/1160150067.php
Consider The Possibility
10/8/06 Consider This Possibility
This past week we saw a new all-time Dow high and a multi-year high for the S&P 500 and the Nasdaq. Consider the possibility that we also saw the low for the rest of the year in interest rates, crude, natural gas, heating oil, gasoline, and precious metals. In sum, it is quite possible that the equity indices mentioned above may very well have seen their highs for at least the rest of the year. Time will tell whether that view is correct. I am placing my money that it is. If you are not certain, I strongly suggest you consider 3-month treasury bills yielding 4.92%.
Aristotle: "Probable impossibilities are to be preferred to improbable possibilities."
On several occasions I have mentioned that housing stocks bottomed in June and July. Wall Street tries to predict events down the road. Consider the possibility that the worst is over for the housing industry. That might not mean a rebound- just that it doesn't get worse and bases out for a year or two. What would this scenario mean for the economy, bond prices, and equities? You might say this is the soft landing anticipated by many. Not exactly. If growth in the U.S. slides to 3% or slightly lower, that does not mean the rest of the world, like China and India, will slow. In fact, they will continue to have huge infrastructure demands. Thus, inflation could very well heat up in the months ahead.
"Prices are going to go down and stay down for awhile. It will take at least a couple of years to work off the excesses of the last decade," says Mark Zandi, chief economist at Economy.com.
Doug Noland: "More than housing - the system's weak link lies today, as it has for some time, in securities leveraging. And while the summer bond rally has provided relief for bond investors (as well as fun and games for some), it is been destabilizing for the system. The bond bears were run out of town, hedges against higher rates were unwound, while speculations and hedges for lower rates were established. And I would suspect the financial markets' overwhelming Inflationary Bias has not gone unnoticed by the Fed "hawks," including Messrs. Kohn, Lacker, Moscow and Plosser. It's my own view that the summer rally has likely only postponed any eventual move by the Fed to cut rates and has even increased the possibility that more hikes will be necessary. If the interest-rate markets are now forced to abruptly reverse course and price in such a scenario, well, the markets will have relished in the opportunity to do the most damage to the largest number. It is, after all, the dreaded "V" move in market yields - especially MBS - that can prove especially destabilizing to the leveraged players and derivative traders - hence system liquidity. And I don't want to get all carried away by a couple days of rising market yields. But I do see the current backdrop of Myriad Inflationary Biases with the distinct possibility of Deepening Chasms at the Fed."
According to Bloomberg, China's surplus on the current account, which measures exports and imports of goods and services, widened in the first half, the government said.The gap swelled to $91.6 billion from $67.3 billion the same period last year, the Beijing-based State Administration of Foreign Exchange said today on its Web site. That puts the surplus on track to top last year's record $161 billion in 2006.
Agnes Laut: " The very fact that possibilities are unknown gives scope to unbridled fancy and the wildest hopes."
This past week we saw a new all-time Dow high and a multi-year high for the S&P 500 and the Nasdaq. Consider the possibility that we also saw the low for the rest of the year in interest rates, crude, natural gas, heating oil, gasoline, and precious metals. In sum, it is quite possible that the equity indices mentioned above may very well have seen their highs for at least the rest of the year. Time will tell whether that view is correct. I am placing my money that it is. If you are not certain, I strongly suggest you consider 3-month treasury bills yielding 4.92%.
Aristotle: "Probable impossibilities are to be preferred to improbable possibilities."
On several occasions I have mentioned that housing stocks bottomed in June and July. Wall Street tries to predict events down the road. Consider the possibility that the worst is over for the housing industry. That might not mean a rebound- just that it doesn't get worse and bases out for a year or two. What would this scenario mean for the economy, bond prices, and equities? You might say this is the soft landing anticipated by many. Not exactly. If growth in the U.S. slides to 3% or slightly lower, that does not mean the rest of the world, like China and India, will slow. In fact, they will continue to have huge infrastructure demands. Thus, inflation could very well heat up in the months ahead.
"Prices are going to go down and stay down for awhile. It will take at least a couple of years to work off the excesses of the last decade," says Mark Zandi, chief economist at Economy.com.
Doug Noland: "More than housing - the system's weak link lies today, as it has for some time, in securities leveraging. And while the summer bond rally has provided relief for bond investors (as well as fun and games for some), it is been destabilizing for the system. The bond bears were run out of town, hedges against higher rates were unwound, while speculations and hedges for lower rates were established. And I would suspect the financial markets' overwhelming Inflationary Bias has not gone unnoticed by the Fed "hawks," including Messrs. Kohn, Lacker, Moscow and Plosser. It's my own view that the summer rally has likely only postponed any eventual move by the Fed to cut rates and has even increased the possibility that more hikes will be necessary. If the interest-rate markets are now forced to abruptly reverse course and price in such a scenario, well, the markets will have relished in the opportunity to do the most damage to the largest number. It is, after all, the dreaded "V" move in market yields - especially MBS - that can prove especially destabilizing to the leveraged players and derivative traders - hence system liquidity. And I don't want to get all carried away by a couple days of rising market yields. But I do see the current backdrop of Myriad Inflationary Biases with the distinct possibility of Deepening Chasms at the Fed."
According to Bloomberg, China's surplus on the current account, which measures exports and imports of goods and services, widened in the first half, the government said.The gap swelled to $91.6 billion from $67.3 billion the same period last year, the Beijing-based State Administration of Foreign Exchange said today on its Web site. That puts the surplus on track to top last year's record $161 billion in 2006.
Agnes Laut: " The very fact that possibilities are unknown gives scope to unbridled fancy and the wildest hopes."
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