3/1/07 Trust
One should ask whether the automated trading system on the NYSE can be trusted. What happened to the Plunge Protection Team?
According to Bloomberg, the U.S. stock market lost a measure of trust with traders after computer malfunctions sent the Dow Jones Industrial Average plummeting 178 points in one minute yesterday.``The system should be able to handle the capacity when you have high-volume days,'' said Thomas Garcia, head of trading at Thornburg Investment Management, which oversees about $34 billion in Santa Fe, New Mexico. ``If I was making decisions based off of bad data, then yeah, I have a huge problem with that.'' Dow Jones & Co. said its computers were responsible for the sudden nosedive in the 30-stock benchmark about an hour before markets closed because they failed to keep up with trades. The New York Stock Exchange said separately that it experienced ``intermittent delays'' in prices. Nasdaq Stock Market Inc. reported slower distribution of some market data. Together the two markets handle almost 90 percent of all shares that trade in the U.S., the world's biggest equity market.
Barry Ritholtz: "If anything, these delays made the sell off look more orderly than it really was. Contrary to what you may have read elsewhere, the glitch only made the selloff look more mild (orderly and less severe) until it turned more wild as the delays spooled out and unwound. I have seen several early news reports and comments that got this exactly ass backwards.Anyone who will uses this as a false excuse for Tuesday is a weasel...What's more likely is the growing recognition that inflation remains "worrisome," that growth is slowing, and that the sub-prime mortgage housing debacle will no longer remained "contained."
Brett Steenbarger: "I went back to 1990 (N = 4304 trading days) and could only find 25 occasions of a single day drop of 3% or more in the cash S&P 500 Index. What's even more rare is to have such a decline in the context of a bull market. How many times in the last 17+ years have we seen a 3+% decline in a market that had been up over the prior 20 and 60 days? It's only occurred three times out of all those trading days...So what happens after big down days? Let's start with the 25 occasions in which we've dropped 3% or more in a single day. At just about every time frame from one to twenty days out, returns following such a large single-day drop are quite bullish. One day later, the S&P averaged a gain of .47% (17 up, 8 down), much stronger than the average single day gain for the rest of the sample of .03% (2256 up, 2023 down). Twenty days later, the S&P was up by an average of a whopping 4.47% (20 up, 5 down), again much stronger than the average 20-day gain of .73% for the remainder of the sample (2641 up, 1638 down). In all, large down days have tended to represent buying opportunities since 1990...In short, big down days have tended to represent panic and, even when they've occurred in relatively strong markets, they have tended to occur nearer to market bottoms than tops."
Those findings may be a bit deceptive, however, because--of those 25 large down days--15 occurred in the context of a market that had *already fallen* 3% or more over the past 20 sessions. In other words, large down days have tended to occur toward the end of market downmoves--as a kind of washout. We don't typically see large down days following intermediate term strength, as noted above.
Figures showed Chinese imports of crude hit a record high in January. China's total energy consumption rose 9.3 percent from a year earlier to 2.46 billion tons of standard coal in 2006, the statistics bureau said today. Coal consumption rose 9.6 percent to 2.37 billion tons, crude oil demand climbed 7.1 percent to 320 million tons and natural gas use surged 20 percent to 55.6 billion cubic meters, it said.
The benchmark Shanghai Composite Index, which tracks shares listed on the bigger of China's two stock markets, ended 3.9% higher at 2881.07. The Shenzhen Composite Index, a gauge of shares on China's smaller exchange, rose 3.8% to 736.81.
Japan's Nikkei 225 Index ended the day 2.9% lower, falling 515.80 points to 17,604.12. The broader-market Topix index staged its biggest single-day decline in eight months, declining 3.2%, or 58.59 points, to end at 1,752.74. The Nikkei average shed more than 700 points in late morning trading before rebounding, reportedly exceeding its intraday decline recorded in the first day of trading following the terror attacks of Sept. 11, 2001.
Fourth quarter GDP revised down to 2.2% growth rate. Does it really matter? Can you trust government numbers? Can you trust this Administration? If you answer yes to either question, I suggest you get high on probiotics.
Home Depot forecast earnings per share would decline 4 percent to 9 percent in 2007 this year.
Airbus to cut 10,000 jobs.
Robert McHugh has a model for his S&P 500/DJIA PPI key trend-finder indicator and noted that, on Tuesday, this indicator gave the first new "sell" signal since July 19th, 2006's "buy" signal, 1,600 points ago from Tuesday's morning's open. He noted that on Tuesday, February 27th, the Dow Industrials dropped below their 50 day moving average for the first time since July 2006. In addition, he noted that Tuesday the weekly MACD triggered a "sell" signal on both the Dow Industrials and S&P 500 (this is an intermediate indicator).
CompUSA plans to shut 126 shops by the end of May, more than half its stores, because of competition in the consumer electronics market.
According to rigzone, GlobalSantaFe Corp. (GSF) is "very positive" on the idea of consolidation in the offshore drilling industry, but cost and compatibility obstacles remain, chief executive Jon Marshall said Tuesday. "It would be healthy for the industry," he said, in a conference call with analysts. "As to the possibilities, I think they remain fairly constant." Acquisition talks have swept the industry for months, focusing alternately on GlobalSantaFe, the second-largest publicly traded offshore driller by market capitalization, and several rivals. Seadrill, a Bermuda-based driller founded in 2005 by Norwegian shipping magnate John Fredriksen, is rumored to be in the market for a US driller.
Nouriel Roubini: "Today we had a meltdown of many stock markets, first in China, then in Europe, the U.S., emerging markets and globally. What happened today is consistent with my outlook for a U.S. hard landing this year...The US is likely to enter into a recession in 2007; and even a likely and early easing of monetary policy by the Fed will not prevent such a recession as there are too many weaknesses in the US economy: a housing recession, an auto recession, a manufacturing recession, a real investment recession (as corporations are reducing real capital investment and inventories are falling), a US consumer that is on the ropes and at its tipping point; a meltdown in sub-prime mortgages that is leading to a generalized credit crunch in the economy. It is already ugly and it will get uglier in the real economy and in the financial markets. We are likely to observe a vicious cycle where a credit crunch and a persistent sell-off in equities leads to a worsening of the real economy with a hard landing (recession) that then weakens further the financial system. One cannot rule out a broader banking crisis if a deep recession occurs. A Fed easing - likely in the next two-three months - will not prevent a recession; it will barely put a floor on it. It will not prevent is as we have in the US a glut of housing, a glut of durable goods, a glut of capital goods. Lower interest rates will not help for the same reasons why slashing the Fed Funds from 6.5% to 1% in 2001 and after did not prevent a recession: once a glut and overhang of capital goods occurs (tech goods in 2000, housing and durable goods today) the demand for such goods becomes interest rate insensitive."
The Chicago Board Options Exchange Volatility Index or VIX, shot up more than 70 percent to a high of 19.01 before subsiding somewhat to 17.97, still a gain of 61.2 per cent. Being long volatility took great patience. It's the old story. Know what you are buying.
Sales of new homes plunged 16.6% in January to a seasonally adjusted annual rate of 937,000, the Commerce Department reported Wednesday.
It was the lowest sales pace in four years, and was the biggest percentage decline in 13 years. Sales are down 20.1% compared with January 2006. New-home sales are down more than 50% year-on-year in the West, the largest percentage drop in the region since 1981.
The American Petroleum Institute reported a rise of 1 million barrels in crude supplies for the week ended Feb. 23. The Energy Department had reported a climb of 1.4 million barrels. Motor gasoline supplies were down 793,000 barrels, the API said, vs. the government's reported fall of 1.9 million. Distillate supplies were down 2.5 million barrels, the API said, compared with the government's 3.8 million-barrel decline.
Last year, China overtook France and the U.K. to become the world's fourth-largest economy. By the end of this year, China could overtake Germany's $3 trillion economy to rank third, behind the U.S. and Japan, according to Tao Dong, Hong Kong-based chief Asia economist for Credit Suisse Group.
Via Bloomberg: Last year, 160 million Chinese took to the skies for leisure and business travel -- a 15 percent increase over 2005, according to the General Administration of Civil Aviation. To keep pace with the increase, China needs about 3,000 new planes by 2025, costing as much as $288 billion combined, according to both Airbus and Boeing. Already, the country is the world's second-largest market for airplanes, after the U.S. (Just think about the growing demand for jet fuel in China.)
The aging of the population will have a profound impact on the economy in the next decades, Federal Reserve Vice Chairman Donald Kohn told lawmakers Wednesday. Kohn said Fed economists believe the labor force will grow just 0.25% per year by 2015, down from about 1.25% now. "A slowdown in the rate of labor-force growth will, all else equal, tend to slow the growth of output," Kohn said.
April crude closed higher for a sixth session in a row, up 33 cents to close at a two-month high of $61.79 a barrel. April natural gas fell 23.3 cents, or 3.1%, to close at $7.30 per million British thermal units.
April gold closed at $672.50 an ounce Wednesday, down $14.70 for the session. May silver dropped 45.5 cents to close at $14.235 an ounce. May copper fell 7.3 cents to end at $2.752 a pound.
In January, 53% of all U.S.-based Internet queries went through Google, compared to the 48.2% from January 2006.
Kenneth Heebner, the manager of the top performing real estate fund over the past 10 years, said the economic damage from high-risk mortgage defaults is only going to get worse.``We have a trillion dollars of subprime mortgages and we're going to have huge defaults,'' Heebner, 66, said in a telephone interview today from his office in Boston. ``If you're looking at the housing market, it's not the darkest before dawn, it's the darkest before pitch black,'' Heebner said.
Wednesday, February 28, 2007
Tuesday, February 27, 2007
Concerns
2/28/07 Concerns
China's stocks tumbled the most in 10 years on concern that a government crackdown on investments with borrowed money will end a rally that drove benchmarks to records. China's stock market capitalization, $1.16 trillion as of yesterday, is about 2 percent of the global total, according to data compiled by Bloomberg.
According to the WSJ, the reserves that banks set aside to cover bad loans stand at the lowest level since at least 1990. The issue is causing alarm among regulators.
A suicide bomber killed and wounded two dozen people outside the main U.S. military base in Afghanistan during a visit by Cheney, who was unharmed. The Taliban claimed responsibility, saying Cheney was the target. Cheney was whisked into a bomb shelter immediately after a Taliban suicide bomber struck the main American military base he was visiting in Afghanistan on Tuesday. With all his deferments, this may have been the first time Cheney has come close to war conditions.
From an email to George Ure concerning the bombing of the World Trade Center:
Watch this while it's still there. It's video of a BBC news show where they report WTC7 had collapsed over 20 minutes before it actually happened. About 3/4 of the way through, a live correspondent comes on the air talking about the collapse of WTC7 while the building is still clearly visible in the skyline behind her!
http://www.liveleak.com/view?i=49f_1172526096
According to the statement from the office of U.S. Ambassador Zalmay Khalilzad, all Iraqi revenues from oil sales would go into a single national account, but all regions and provinces would have a seat on an energy policy-making body, and provinces would receive shares of revenue and have control over how they spend it.
According to 24/7WallSt, as of December 2006, Wal-Mart already had 73 units in 36 cities throughout China, and 68 of these are the supercenter units. The company has acquired a 35% interest in Bounteous Company Ltd., which operates hypermarkets in China under the Trust-Mart name. Trust-Mart has 101 Trust-Mart retail stores in 34 cities across China.
Orders for new U.S.-made durable goods plunged 7.8% in January. Durable orders in December were revised to a 2.8% increase from 2.9% previously estimated. Shipments of durable goods increased 0.2% in January after a 0.5% rise in December. Orders for core capital goods equipment fell 6.0% in January. New orders excluding defense fell a record 7.8% in January. New orders excluding transportation fell 3.1%, the third drop in the past four months.
Freddie Mac, the second-largest provider of funds for U.S. home loans, will stop buying subprime mortgages that have a ``high likelihood'' of borrowers not meeting their monthly payments. One should note that both delinquencies and foreclosures are rising sharply.
President Hugo Chávez has ordered by decree the takeover of oil projects run by foreign oil companies in Venezuela's Orinoco River region. By May 1, the government will also take majority control of oil-upgrading projects from BP PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA.
Two of our our aircraft carriers - the Eisenhower and the Stennis - are in the Arabian Sea.
How strongly do foreign countries believe in “The full faith and credit” of the US dollar?
U.S. home prices fell 0.7% in the fourth quarter and are up just 0.4% in the past year, Standard & Poor's reported Tuesday. S&P unveiled its new national Case-Shiller price index, which compares sales on the same homes. Home prices in the top 10 metro areas fell 0.8% in the quarter and are unchanged for the year. Home prices in the top 20 metro areas fell 0.7% in the quarter and are up 0.5% in the past year. "Annual changes in home prices are either in decline, flat or yielding negative returns across all markets," said Robert J. Shiller, chief economist at MacroMarkets LLC, which produces the index for S&P.
In early Tuesday morning trading, oil prices fell about $1 a barrel amid worries that Chinese fuel demand could be dampened by a cooling economy. Chinese stocks dropped nearly 9 percent on Tuesday. I believe these concerns are way off the mark. After one and one half hours of trading, crude was back to unchanged. In the meantime, a U.S. government report due Wednesday will show both distillate and gasoline stockpiles fell significantly in the week ended Feb. 23. Heating oil demand is expected to rise with a winter storm that pounded the U.S. Midwest on Monday with as much as two feet of snow. The storm also dumped more than a foot of snow on some areas of the Northeast.
Sam Zell's proposal to buy the Tribune Co. involves buying the entire company with the participation of an employee stock ownership plan, according to the New York Times.
The Conference Board's index increased to 112.5 from 110.2 the prior month. This is the highest level of confidence since before 9/11.The proportion of people who said jobs are hard to get declined to the lowest since August 2001.
Sales of previously owned homes in the U.S. increased 3 percent last month to an annual rate of 6.46 million, up from a 6.27 million December rate that was higher than previously reported, the National Association of Realtors said today in Washington. Sales fell 4.3 percent compared with a year earlier.
Sanderson Farms Inc. said it narrowed its fiscal first-quarter loss as poultry prices improved, but shares fell as the company warned high feed prices would continue.
Irwin Kellner: "If the Fed slows money growth enough to starve inflation, short-term interest rates will rise further, thereby exacerbating the decline in housing. If the Fed does nothing to rein in the money supply, it will have a credibility problem when it comes to inflation and long-term rates will soar."
`"I would expect that the growth outcome for this year would turn out to be higher than it had earlier been expected,'' Garganas, who also heads the Greek central bank, said in an interview in Athens yesterday. ``The risks to inflation are clearly on the upside, and are growing.''
Money supply in the eurozone grew faster in January than at any time since early 1990, raising expectations of further interest rate rises by the European Central Bank in the coming months.
M3, the money supply measure that the ECB uses as an indicator for the likely course of inflation, was 9.8 per cent higher last month than in January 2006, the bank reported on Tuesday.
Richard Daughty: "All of this economic stupidity will end in tears (as it always has) as inflation in prices destroys economies by destroying a lot of people’s lives. That is the problem with creating money: It shows up in prices, higher and higher. And after awhile you get really sick and tired of hearing the whining and complaining of your family about how they can’t afford to buy anything, and how it is all your fault just because you are lazy and stupid, and how you are the worst parent and worst husband in the whole world. Then one day you find yourself thinking of murder-suicide scenarios and what the newspaper headline would say, until you say to yourself, “Whoa!”
Mike Shedlock reports via the Chicago Tribune that "Housing analyst David Seiders told Chicago-area builders Thursday that the federal estimate of 3.5 million homes for sale at the end of 2006 is "grossly understated." "There is a big inventory overhang out there, and it's bigger than anybody understands," he said. In an annual forecast on the local industry in Addison, Seiders, chief economist of the National Association of Home Builders, cited the high level of sales contract cancellations in 2006. It created a snag in the recordkeeping, so many homes marked as sales in government data ended up back on the market too late to be counted as inventory, he said. "Cancellation rates more than doubled between the end of 2005 and the end of 2006, meaning that net sales for the year nationally may be down 65 percent."
The VIX has finally perked up. The index tracking implied volatility for the S&P 500 ran up to its highest level seen in 5 months as the so-called "fear gauge" reacted to the sharp drop Tuesday morning in the equity market. The CBOE market volatility index for the S&P 500 ($VIX) was last up 14% at 12.72, and was up as much as 17% at its intraday high of 13.10. That was the highest level seen since Sept. 25.
The average retail cost of a gallon of self-serve regular gasoline rose 8.6 cents in California to $2.796, according to the Energy Department's weekly survey of service stations. That was almost 36 cents ahead of the average price a year ago and represents the most expensive tally ever for the first eight weeks of the year.
Nationally, the average price increased 8.7 cents to $2.383 a gallon, 13 cents ahead of the price last year, driven by 10-cent-a-gallon increases in New England and the Gulf Coast.
In parts of Oregon they had snow at sea level. The weather in San Francisco touched 40 degrees and they had some hail.
The Oil Drum: "After two decades of almost continuous growth, global oil production has been stagnant around 84 million barrels a day for the past two years. This, of course, is exactly consistent with the peak oil hypothesis, which predicts that supply constraints will force up prices, destroying growth in demand. It will be some years before we can tell for certain, but it is entirely possible that we're in the middle of peak oil right now. That's certainly consistent with the predictions of Kenneth Deffeyes, Colin Campbell, Matthew Simmons, and other geologists and oil industry analysts."
April gold fell $2.60 to close at $687.20 an ounce Tuesday. May silver fell 14.2 cents to close at $14.69 an ounce.
Bill Cara: "Traders in China are nervous. In a single session, 900 of 1400 stocks traded limit down on the Shanghai Exchange. The composite index dropped -8.9%, eliminating about $100 billion in the space of a few hours...The events in China today are just a symptom of problems in America. I suspect that when this story is complete, traders will think the 2000-2002 Bear was a mild one. But the Gnomes are bulldogs, and they have put their terriers into the U.S. Fed and Treasury. I believe there will be one final attempt to print the way out of a market crash. Ergo; I see one final push in precious metal prices.
But the end of the long-term global stock cycle is near. It has been driven by a credit balloon that cannot be pumped higher. The peak of the cycle would have occurred in May 2006 except for the programs of the U.S. Administration (including the Fed) to ramp up the money printing. The sad thing is that at the end of the day, when inflated stock prices blow up, those holding debt will still be holding the same level of debt. The banks will be demanding payment. That's what bankers do -- real bankers, not trader-bankers.
Yes, there is a storm raging in China, but it has its genesis in the West."
April crude climbed 7 cents to close at a two-month high of $61.46 a barrel Tuesday. Nevertheless, The Amex Oil Index finished the day with a 3.5% loss at 1,143 points, its lowest close since Jan. 29. The Amex Natural Gas Index fell nearly 2.4% to 454.3 points and the Philadelphia Oil Index dropped 3.3% to close at 196.7 points. Meanwhile, April natural gas declined by 17 cents to end at $7.533 per million British thermal units.
The Dow Jones average lost all its gains for the year. The S&P 500 index fell 49 points to 1,399, while the Nasdaq Composite dropped 96 points, or 3.9%, to 2,407.
China's stocks tumbled the most in 10 years on concern that a government crackdown on investments with borrowed money will end a rally that drove benchmarks to records. China's stock market capitalization, $1.16 trillion as of yesterday, is about 2 percent of the global total, according to data compiled by Bloomberg.
According to the WSJ, the reserves that banks set aside to cover bad loans stand at the lowest level since at least 1990. The issue is causing alarm among regulators.
A suicide bomber killed and wounded two dozen people outside the main U.S. military base in Afghanistan during a visit by Cheney, who was unharmed. The Taliban claimed responsibility, saying Cheney was the target. Cheney was whisked into a bomb shelter immediately after a Taliban suicide bomber struck the main American military base he was visiting in Afghanistan on Tuesday. With all his deferments, this may have been the first time Cheney has come close to war conditions.
From an email to George Ure concerning the bombing of the World Trade Center:
Watch this while it's still there. It's video of a BBC news show where they report WTC7 had collapsed over 20 minutes before it actually happened. About 3/4 of the way through, a live correspondent comes on the air talking about the collapse of WTC7 while the building is still clearly visible in the skyline behind her!
http://www.liveleak.com/view?i=49f_1172526096
According to the statement from the office of U.S. Ambassador Zalmay Khalilzad, all Iraqi revenues from oil sales would go into a single national account, but all regions and provinces would have a seat on an energy policy-making body, and provinces would receive shares of revenue and have control over how they spend it.
According to 24/7WallSt, as of December 2006, Wal-Mart already had 73 units in 36 cities throughout China, and 68 of these are the supercenter units. The company has acquired a 35% interest in Bounteous Company Ltd., which operates hypermarkets in China under the Trust-Mart name. Trust-Mart has 101 Trust-Mart retail stores in 34 cities across China.
Orders for new U.S.-made durable goods plunged 7.8% in January. Durable orders in December were revised to a 2.8% increase from 2.9% previously estimated. Shipments of durable goods increased 0.2% in January after a 0.5% rise in December. Orders for core capital goods equipment fell 6.0% in January. New orders excluding defense fell a record 7.8% in January. New orders excluding transportation fell 3.1%, the third drop in the past four months.
Freddie Mac, the second-largest provider of funds for U.S. home loans, will stop buying subprime mortgages that have a ``high likelihood'' of borrowers not meeting their monthly payments. One should note that both delinquencies and foreclosures are rising sharply.
President Hugo Chávez has ordered by decree the takeover of oil projects run by foreign oil companies in Venezuela's Orinoco River region. By May 1, the government will also take majority control of oil-upgrading projects from BP PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA.
Two of our our aircraft carriers - the Eisenhower and the Stennis - are in the Arabian Sea.
How strongly do foreign countries believe in “The full faith and credit” of the US dollar?
U.S. home prices fell 0.7% in the fourth quarter and are up just 0.4% in the past year, Standard & Poor's reported Tuesday. S&P unveiled its new national Case-Shiller price index, which compares sales on the same homes. Home prices in the top 10 metro areas fell 0.8% in the quarter and are unchanged for the year. Home prices in the top 20 metro areas fell 0.7% in the quarter and are up 0.5% in the past year. "Annual changes in home prices are either in decline, flat or yielding negative returns across all markets," said Robert J. Shiller, chief economist at MacroMarkets LLC, which produces the index for S&P.
In early Tuesday morning trading, oil prices fell about $1 a barrel amid worries that Chinese fuel demand could be dampened by a cooling economy. Chinese stocks dropped nearly 9 percent on Tuesday. I believe these concerns are way off the mark. After one and one half hours of trading, crude was back to unchanged. In the meantime, a U.S. government report due Wednesday will show both distillate and gasoline stockpiles fell significantly in the week ended Feb. 23. Heating oil demand is expected to rise with a winter storm that pounded the U.S. Midwest on Monday with as much as two feet of snow. The storm also dumped more than a foot of snow on some areas of the Northeast.
Sam Zell's proposal to buy the Tribune Co. involves buying the entire company with the participation of an employee stock ownership plan, according to the New York Times.
The Conference Board's index increased to 112.5 from 110.2 the prior month. This is the highest level of confidence since before 9/11.The proportion of people who said jobs are hard to get declined to the lowest since August 2001.
Sales of previously owned homes in the U.S. increased 3 percent last month to an annual rate of 6.46 million, up from a 6.27 million December rate that was higher than previously reported, the National Association of Realtors said today in Washington. Sales fell 4.3 percent compared with a year earlier.
Sanderson Farms Inc. said it narrowed its fiscal first-quarter loss as poultry prices improved, but shares fell as the company warned high feed prices would continue.
Irwin Kellner: "If the Fed slows money growth enough to starve inflation, short-term interest rates will rise further, thereby exacerbating the decline in housing. If the Fed does nothing to rein in the money supply, it will have a credibility problem when it comes to inflation and long-term rates will soar."
`"I would expect that the growth outcome for this year would turn out to be higher than it had earlier been expected,'' Garganas, who also heads the Greek central bank, said in an interview in Athens yesterday. ``The risks to inflation are clearly on the upside, and are growing.''
Money supply in the eurozone grew faster in January than at any time since early 1990, raising expectations of further interest rate rises by the European Central Bank in the coming months.
M3, the money supply measure that the ECB uses as an indicator for the likely course of inflation, was 9.8 per cent higher last month than in January 2006, the bank reported on Tuesday.
Richard Daughty: "All of this economic stupidity will end in tears (as it always has) as inflation in prices destroys economies by destroying a lot of people’s lives. That is the problem with creating money: It shows up in prices, higher and higher. And after awhile you get really sick and tired of hearing the whining and complaining of your family about how they can’t afford to buy anything, and how it is all your fault just because you are lazy and stupid, and how you are the worst parent and worst husband in the whole world. Then one day you find yourself thinking of murder-suicide scenarios and what the newspaper headline would say, until you say to yourself, “Whoa!”
Mike Shedlock reports via the Chicago Tribune that "Housing analyst David Seiders told Chicago-area builders Thursday that the federal estimate of 3.5 million homes for sale at the end of 2006 is "grossly understated." "There is a big inventory overhang out there, and it's bigger than anybody understands," he said. In an annual forecast on the local industry in Addison, Seiders, chief economist of the National Association of Home Builders, cited the high level of sales contract cancellations in 2006. It created a snag in the recordkeeping, so many homes marked as sales in government data ended up back on the market too late to be counted as inventory, he said. "Cancellation rates more than doubled between the end of 2005 and the end of 2006, meaning that net sales for the year nationally may be down 65 percent."
The VIX has finally perked up. The index tracking implied volatility for the S&P 500 ran up to its highest level seen in 5 months as the so-called "fear gauge" reacted to the sharp drop Tuesday morning in the equity market. The CBOE market volatility index for the S&P 500 ($VIX) was last up 14% at 12.72, and was up as much as 17% at its intraday high of 13.10. That was the highest level seen since Sept. 25.
The average retail cost of a gallon of self-serve regular gasoline rose 8.6 cents in California to $2.796, according to the Energy Department's weekly survey of service stations. That was almost 36 cents ahead of the average price a year ago and represents the most expensive tally ever for the first eight weeks of the year.
Nationally, the average price increased 8.7 cents to $2.383 a gallon, 13 cents ahead of the price last year, driven by 10-cent-a-gallon increases in New England and the Gulf Coast.
In parts of Oregon they had snow at sea level. The weather in San Francisco touched 40 degrees and they had some hail.
The Oil Drum: "After two decades of almost continuous growth, global oil production has been stagnant around 84 million barrels a day for the past two years. This, of course, is exactly consistent with the peak oil hypothesis, which predicts that supply constraints will force up prices, destroying growth in demand. It will be some years before we can tell for certain, but it is entirely possible that we're in the middle of peak oil right now. That's certainly consistent with the predictions of Kenneth Deffeyes, Colin Campbell, Matthew Simmons, and other geologists and oil industry analysts."
April gold fell $2.60 to close at $687.20 an ounce Tuesday. May silver fell 14.2 cents to close at $14.69 an ounce.
Bill Cara: "Traders in China are nervous. In a single session, 900 of 1400 stocks traded limit down on the Shanghai Exchange. The composite index dropped -8.9%, eliminating about $100 billion in the space of a few hours...The events in China today are just a symptom of problems in America. I suspect that when this story is complete, traders will think the 2000-2002 Bear was a mild one. But the Gnomes are bulldogs, and they have put their terriers into the U.S. Fed and Treasury. I believe there will be one final attempt to print the way out of a market crash. Ergo; I see one final push in precious metal prices.
But the end of the long-term global stock cycle is near. It has been driven by a credit balloon that cannot be pumped higher. The peak of the cycle would have occurred in May 2006 except for the programs of the U.S. Administration (including the Fed) to ramp up the money printing. The sad thing is that at the end of the day, when inflated stock prices blow up, those holding debt will still be holding the same level of debt. The banks will be demanding payment. That's what bankers do -- real bankers, not trader-bankers.
Yes, there is a storm raging in China, but it has its genesis in the West."
April crude climbed 7 cents to close at a two-month high of $61.46 a barrel Tuesday. Nevertheless, The Amex Oil Index finished the day with a 3.5% loss at 1,143 points, its lowest close since Jan. 29. The Amex Natural Gas Index fell nearly 2.4% to 454.3 points and the Philadelphia Oil Index dropped 3.3% to close at 196.7 points. Meanwhile, April natural gas declined by 17 cents to end at $7.533 per million British thermal units.
The Dow Jones average lost all its gains for the year. The S&P 500 index fell 49 points to 1,399, while the Nasdaq Composite dropped 96 points, or 3.9%, to 2,407.
Monday, February 26, 2007
Amazing
2/27/07 Amazing
Brad Setser: "I think anyone who visits Dubai right now is bound to be dumbstruck by the sheer scale of the construction. It, quite honestly, puts anything I saw in China in early 2005 to shame. To the naked eye Dubai looks to be building more office space than exists in lower Manhattan -- and Wall Street, despite a bit of competition from the City and Hong Kong, still attracts far more IPOs than Dubai’s new international financial center. Stephen Roach found the actual data -- and it turns out that Dubai is putting up the equivalent of down downtown Minneapolis in 2007, and downtown San Franscisco in 2008. Based on industry sources, 26.8 million square feet of office space is expected to come on line in Dubai in 2007, alone -- more than six times the peak rate of completions in Pudong in 1999 and nearly equal to the total stock of 30 million square feet of office space in downtown Minneapolis. Based on current projections, another 42 million square feet should come on line in Dubai in 2008 -- the equivalent of adding the office space of a downtown San Francisco. There is one obvious and critically important difference between these two urban development projects: Pudong has an indigenous support base of 1.3 billion Chinese citizens. Dubai’s current population is 1.3 million. Throw in the entire native population of the UAE and the support base is still only around 4 million domestic citizens. That's right, a region with less than 0.5% the population of China is out-building the biggest construction boom in modern Chinese history."
The survey of 47 top forecasters, released Monday by the National Association for Business Economics, found a greater expected impact from the ailing housing market this year than did the previous forecast in November. Stronger consumer spending will help offset the housing drag, according to the survey. The panel predicted that the overall economy will grow by 2.7 percent this year. It would be slowest annual increase in the gross domestic product since a 1.6 percent rise in 2002, when the economy was pulling out of the last recession. In 2006, the GDP rose by 3.4 percent. NABE's November forecast put GDP growth this year at 2.5 percent. The slight upward revision occurred even though the forecasters now believe housing construction will plunge by 14.9 percent this year. That would be nearly three times bigger than the 5.5 percent fall in residential construction they had projected in the earlier survey. Construction spending dropped by 4.2 percent for all of 2006.
The independent Postal Regulatory Commission scheduled a Monday morning briefing to announce its ruling on the Postal Service's requests to raise first-class rates 3 cents to 42 cents and to establish the permanent stamp.
Temple-Inland Inc. will spin off its mortgage-lending and commercial and retail banking units in Texas and California and spin off its real estate activities that hold 236,000 acres. Its timber holdings, to be sold, consist of about 1.8 million acres in Texas, Louisiana, Alabama and Georgia.
This year, Warren Buffett will release his shareholder letter on Thursday after U.S. markets close.
Alan Greenspan warned Monday that the American economy might slip into recession by year's end. I guess that means the economy will get stronger.
Chesapeake Energy says cost pressures now appear to be abating.
A fire that has caused a temporary outage at a refinery in Ontario. Fuel supplies are now being rationed in the Canadian province.
In a recent interview with Wall Street Journal, (Saudi Oil Minister) Ali Naimi said that Saudi oil production stood at 8.5 million barrels a day, about one million barrels a day less than the country's output six months ago.
Matthew Simmons, chairman of Simmons & Co. International in Houston, talked with Bloomberg's Rhonda Schaffler about the need to address energy use, his view that global supply has peaked and the likelihood oil prices could reach as much as $300 a barrel. (Source: Bloomberg)
Bill Fleckenstein: "The subprime industry was absolutely critical to the inflating of the real-estate bubble. If loans had been made only on a responsible basis -- to people who put money down and looked like they could actually repay the money, irrespective of rising house prices -- that bubble would never have achieved anything close to the heights it did. That game is obviously over. Let me repeat that -- over. The real-estate market of the past few years will not be seen again in our lifetimes. The only thing we don't know is at what rate this unwinding will play out across the economy and, more importantly (to me), in the minds of the Goldilocks-enthralled community on Wall Street."
Smith & Wollensky Restaurant Group Inc. has agreed to be acquired by Patina Restaurant Group LLC for $9.25 per share in cash.
India's economy is set to expand at a sustained 9 percent annual rate or above and is likely to reach the $1 trillion mark by the next financial year, according to a deputy governor of its central bank.
Washington is one of a group of states where a serious effort is underway to pass joint legislative resolutions that, thanks to Rules of the House penned by Thomas Jefferson and in effect for nearly length of the Republic, would put impeachment back on the table at the House right under Speaker Pelosi’s nose. The significance of the gathering in Olympia is that a freshman senator from Olympia, Eric Oemig, has introduced a bill in the state senate calling for such a resolution. His bill, S6018, is slated to go to a hearing on March 1, to determine whether it can be considered by the full senate. Some of Oemig's reason for impeachment: Bush’s order for the National Security Agency (NSA) to spy on American citizens, his use of so-called “signing statements” to invalidate (so far) 1200 laws or parts of laws passed by the Congress, and his authorization of torture. In the first case, he noted that the president has already been declared, by a federal judge, to have committed a felony by violating the Foreign Intelligence Surveillance Act. In the second case, he explained that Bush is claiming—illegally--that the so-called “War” on Terror makes him a commander in chief unfettered by the Constitution, with not just executive, but also legislative and judicial authority—a claim of dictatorial power that has no basis in the Constitution. Finally, he pointed out that in authorizing and failing to punish torture, the president, by making it less likely that enemy fighters will surrender, has been directly causing death and injury among US troops.
April gold rose $3.10 to close at $689.80 an ounce Monday. May silver climbed 9.6 cents to end at $14.832 an ounce and May copper added 1.7 cents to close at $2.87 a pound.
From The Oil Drum: World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 9 models that are predicting a peak before 2020 (Bakhiarti, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45]).
Executive Summary:
Monthly production records are unchanged:
All Liquids: the peak is still July 2006 at 85.47 mbpd, the year to date average production in 2006 (11 months) is 84.59 mbpd, up 0.01 mbpd from 2005.
Crude Oil + NGL: the peak date remains May 2005 at 82.08 mbpd, the year to date average production for 2006 (11 months) is 81.40 mbpd, down 0.03 mbpd from 2005 (11 months).
Crude Oil + Condensate: the peak date remains May 2005 at 74.15 mbpd, the year to date average production for 2006 (11 months) is 73.48 mbpd, down 0.09 mbpd from 2005 (11 months).
NGPL: the peak date remains February 2005 at 8.05 mbpd, the year to date average production for 2006 (11 months) is 7.92 mbpd, up 0.06 mbpd from 2005 (11 months).
No major revisions on the previous monthly estimates in this month release.
Weak growth continues: November 2006 estimate for crude oil + condensate is 73.41 mbpd compared to 74.11 mbpd one year ago.
In the March issue of GQ, correspondent Wil S. Hylton lays out the case for making Cheney the 18th federal official to face impeachment proceedings under the Constitution. "Over the past six years, as the country has spiraled into military misadventure, fiscal madness, and environmental meltdown, the vice president has not merely been wrong about the issues; he has been duplicitous, deceitful, and deliberately destructive to the American democracy," claims Hylton.
John Nichols: "When the Bush administration was asking in 2002 for Congressional approval of a resolution authorizing the use of force against Iraq, Vice President Cheney told the national convention of the Veterans of Foreign Wars that Saddam Hussein had "resumed his efforts to acquire nuclear weapons." He then claimed that, "Armed with an arsenal of these weapons of terror, and seated atop 10 percent of the world's oil reserves, Saddam Hussein could then be expected to seek domination of the entire Middle East, take control of the world's energy supplies, directly threaten American friends throughout the region, and subject the United States or any other nation to nuclear blackmail."
Crude closed at $61.42 a barrel.
Paladin Resources Ltd., an Australian-based uranium explorer, offered to buy Summit Resources for about A$997 million ($791 million) in shares as it seeks full ownership of a uranium deposit in Queensland.
Paladin is offering one share for every 2.04 Summit shares, the Perth-based company said today in a statement to the Australian Stock Exchange. That implies a price of A$5.05 per Summit share based on yesterday's closing price for Paladin stock, a premium of 26 percent over Summit's closing price.
Brad Setser: "I think anyone who visits Dubai right now is bound to be dumbstruck by the sheer scale of the construction. It, quite honestly, puts anything I saw in China in early 2005 to shame. To the naked eye Dubai looks to be building more office space than exists in lower Manhattan -- and Wall Street, despite a bit of competition from the City and Hong Kong, still attracts far more IPOs than Dubai’s new international financial center. Stephen Roach found the actual data -- and it turns out that Dubai is putting up the equivalent of down downtown Minneapolis in 2007, and downtown San Franscisco in 2008. Based on industry sources, 26.8 million square feet of office space is expected to come on line in Dubai in 2007, alone -- more than six times the peak rate of completions in Pudong in 1999 and nearly equal to the total stock of 30 million square feet of office space in downtown Minneapolis. Based on current projections, another 42 million square feet should come on line in Dubai in 2008 -- the equivalent of adding the office space of a downtown San Francisco. There is one obvious and critically important difference between these two urban development projects: Pudong has an indigenous support base of 1.3 billion Chinese citizens. Dubai’s current population is 1.3 million. Throw in the entire native population of the UAE and the support base is still only around 4 million domestic citizens. That's right, a region with less than 0.5% the population of China is out-building the biggest construction boom in modern Chinese history."
The survey of 47 top forecasters, released Monday by the National Association for Business Economics, found a greater expected impact from the ailing housing market this year than did the previous forecast in November. Stronger consumer spending will help offset the housing drag, according to the survey. The panel predicted that the overall economy will grow by 2.7 percent this year. It would be slowest annual increase in the gross domestic product since a 1.6 percent rise in 2002, when the economy was pulling out of the last recession. In 2006, the GDP rose by 3.4 percent. NABE's November forecast put GDP growth this year at 2.5 percent. The slight upward revision occurred even though the forecasters now believe housing construction will plunge by 14.9 percent this year. That would be nearly three times bigger than the 5.5 percent fall in residential construction they had projected in the earlier survey. Construction spending dropped by 4.2 percent for all of 2006.
The independent Postal Regulatory Commission scheduled a Monday morning briefing to announce its ruling on the Postal Service's requests to raise first-class rates 3 cents to 42 cents and to establish the permanent stamp.
Temple-Inland Inc. will spin off its mortgage-lending and commercial and retail banking units in Texas and California and spin off its real estate activities that hold 236,000 acres. Its timber holdings, to be sold, consist of about 1.8 million acres in Texas, Louisiana, Alabama and Georgia.
This year, Warren Buffett will release his shareholder letter on Thursday after U.S. markets close.
Alan Greenspan warned Monday that the American economy might slip into recession by year's end. I guess that means the economy will get stronger.
Chesapeake Energy says cost pressures now appear to be abating.
A fire that has caused a temporary outage at a refinery in Ontario. Fuel supplies are now being rationed in the Canadian province.
In a recent interview with Wall Street Journal, (Saudi Oil Minister) Ali Naimi said that Saudi oil production stood at 8.5 million barrels a day, about one million barrels a day less than the country's output six months ago.
Matthew Simmons, chairman of Simmons & Co. International in Houston, talked with Bloomberg's Rhonda Schaffler about the need to address energy use, his view that global supply has peaked and the likelihood oil prices could reach as much as $300 a barrel. (Source: Bloomberg)
Bill Fleckenstein: "The subprime industry was absolutely critical to the inflating of the real-estate bubble. If loans had been made only on a responsible basis -- to people who put money down and looked like they could actually repay the money, irrespective of rising house prices -- that bubble would never have achieved anything close to the heights it did. That game is obviously over. Let me repeat that -- over. The real-estate market of the past few years will not be seen again in our lifetimes. The only thing we don't know is at what rate this unwinding will play out across the economy and, more importantly (to me), in the minds of the Goldilocks-enthralled community on Wall Street."
Smith & Wollensky Restaurant Group Inc. has agreed to be acquired by Patina Restaurant Group LLC for $9.25 per share in cash.
India's economy is set to expand at a sustained 9 percent annual rate or above and is likely to reach the $1 trillion mark by the next financial year, according to a deputy governor of its central bank.
Washington is one of a group of states where a serious effort is underway to pass joint legislative resolutions that, thanks to Rules of the House penned by Thomas Jefferson and in effect for nearly length of the Republic, would put impeachment back on the table at the House right under Speaker Pelosi’s nose. The significance of the gathering in Olympia is that a freshman senator from Olympia, Eric Oemig, has introduced a bill in the state senate calling for such a resolution. His bill, S6018, is slated to go to a hearing on March 1, to determine whether it can be considered by the full senate. Some of Oemig's reason for impeachment: Bush’s order for the National Security Agency (NSA) to spy on American citizens, his use of so-called “signing statements” to invalidate (so far) 1200 laws or parts of laws passed by the Congress, and his authorization of torture. In the first case, he noted that the president has already been declared, by a federal judge, to have committed a felony by violating the Foreign Intelligence Surveillance Act. In the second case, he explained that Bush is claiming—illegally--that the so-called “War” on Terror makes him a commander in chief unfettered by the Constitution, with not just executive, but also legislative and judicial authority—a claim of dictatorial power that has no basis in the Constitution. Finally, he pointed out that in authorizing and failing to punish torture, the president, by making it less likely that enemy fighters will surrender, has been directly causing death and injury among US troops.
April gold rose $3.10 to close at $689.80 an ounce Monday. May silver climbed 9.6 cents to end at $14.832 an ounce and May copper added 1.7 cents to close at $2.87 a pound.
From The Oil Drum: World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 9 models that are predicting a peak before 2020 (Bakhiarti, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45]).
Executive Summary:
Monthly production records are unchanged:
All Liquids: the peak is still July 2006 at 85.47 mbpd, the year to date average production in 2006 (11 months) is 84.59 mbpd, up 0.01 mbpd from 2005.
Crude Oil + NGL: the peak date remains May 2005 at 82.08 mbpd, the year to date average production for 2006 (11 months) is 81.40 mbpd, down 0.03 mbpd from 2005 (11 months).
Crude Oil + Condensate: the peak date remains May 2005 at 74.15 mbpd, the year to date average production for 2006 (11 months) is 73.48 mbpd, down 0.09 mbpd from 2005 (11 months).
NGPL: the peak date remains February 2005 at 8.05 mbpd, the year to date average production for 2006 (11 months) is 7.92 mbpd, up 0.06 mbpd from 2005 (11 months).
No major revisions on the previous monthly estimates in this month release.
Weak growth continues: November 2006 estimate for crude oil + condensate is 73.41 mbpd compared to 74.11 mbpd one year ago.
In the March issue of GQ, correspondent Wil S. Hylton lays out the case for making Cheney the 18th federal official to face impeachment proceedings under the Constitution. "Over the past six years, as the country has spiraled into military misadventure, fiscal madness, and environmental meltdown, the vice president has not merely been wrong about the issues; he has been duplicitous, deceitful, and deliberately destructive to the American democracy," claims Hylton.
John Nichols: "When the Bush administration was asking in 2002 for Congressional approval of a resolution authorizing the use of force against Iraq, Vice President Cheney told the national convention of the Veterans of Foreign Wars that Saddam Hussein had "resumed his efforts to acquire nuclear weapons." He then claimed that, "Armed with an arsenal of these weapons of terror, and seated atop 10 percent of the world's oil reserves, Saddam Hussein could then be expected to seek domination of the entire Middle East, take control of the world's energy supplies, directly threaten American friends throughout the region, and subject the United States or any other nation to nuclear blackmail."
Crude closed at $61.42 a barrel.
Paladin Resources Ltd., an Australian-based uranium explorer, offered to buy Summit Resources for about A$997 million ($791 million) in shares as it seeks full ownership of a uranium deposit in Queensland.
Paladin is offering one share for every 2.04 Summit shares, the Perth-based company said today in a statement to the Australian Stock Exchange. That implies a price of A$5.05 per Summit share based on yesterday's closing price for Paladin stock, a premium of 26 percent over Summit's closing price.
Looking Out
2/26/07 Looking Out
Mike Burk: "Next week has had a modestly positive bias by most measures. During the 3rd year of the Presidential Cycle the SPX has been up a little less than half of the time (47%) but has had a modest gain (0.14%) over the period...The mid and small cap indices have been leading the market up and are overbought while the large cap indices are oversold. Seasonality doesn't help much either. The pull backs in the small and mid cap indices have been modest and the large cap indices are ready for an oversold rally. I expect the major indices to be higher on Friday March 2 than they were on Friday February 23."
David Zionts, owner of Connecticut Mortgage Lenders LLC: "Some consumers are being squeezed out of the market," Zionts said. "Some of the more forgiving guidelines are beginning to go away."
The U.K. tabloid the Sunday Express stated Dow Chemical will get a takeover bid worth up to $54 billion from a consortium of private-equity firms in the next few weeks. The newspaper didn't identify the source of its information.
It said the buyout team is "likely" to be composed of Kohlberg Kravis & Roberts, Blackstone Group and Carlyle Group. They intend to break up Dow Chemical into smaller companies, the report said. An offer is expected to come in at $60 a share, against Friday's close of $43.45, the report added. Unnamed "speculators" believe the break-up value could be up to $80 a share, it said.
San Francisco Bay Area home sales fell in January for the 24th straight month, and prices dropped to their lowest level in a year and a half. According to DataQuick, January 2006 sales were the lowest for any January in 11 years.
The world's largest economy expanded at an annual rate of 2.3 percent last quarter, compared with the 3.5 percent pace the Commerce Department reported last month, according to the median forecast in a Bloomberg News survey of economists.
Texas power company TXU Corp. said on Monday it agreed to be acquired by a group led by private equity firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group for $31.8 billion in the largest leveraged buyout in history. The investor group will pay $69.25 per share for TXU, a 15.4 percent premium over TXU's closing stock price of $60.02 on Friday.
Station Casinos Inc. said on Monday it agreed to a $5.4 billion management-led buyout, after the investor group buying the company raised its offer by about 10 percent. The Las Vegas-based company, which operates off-strip casinos used mostly by locals, is being taken over by a group called Fertitta Colony Partners, formed by Station Chief Executive Frank Fertitta, his brother and company vice chairman Lorenzo Fertitta, and a unit of private equity firm Colony Capital. The group said on Monday it would take over Station for $90 per share, or $5.4 billion in cash. It will also assume debt of about $3.4 billion.
Tribune Co. board of directors is considering an offer from real estate magnate Sam Zell to take the company private, but is leaning toward restructuring the company on its own, according to published reports.
Palatin released the following study: The results of this Phase IIa study showed that on a 14-item questionnaire, 73 percent of the women reported an increased level of genital arousal while on bremelanotide compared with 23 percent of women on placebo. Also, 46 percent of women on bremelanotide reported an increased level of sexual desire while only 19 percent of women responded similarly after placebo treatment. Additionally, subjects receiving bremelanotide reported a higher incidence of engaging in sexual activity compared to placebo. The current study follows a similarly designed clinical study conducted with pre-menopausal patients with FSAD, the results of which were recently published in the July 2006 issue of The Journal of Sexual Medicine.
Twenty-seven women with a diagnosis of FSAD were enrolled at two investigational sites in this double-blind, randomized, placebo-controlled, single dose, cross-over clinical study. All subjects enrolled in this clinical study were evaluated by an experienced clinical psychologist and were confirmed to have a diagnosis of FSAD. Subjects were administered a 20 mg dose (2 x 10 mg) of intranasal bremelanotide or placebo spray in a randomized manner and were monitored and evaluated for three hours post-dose before being discharged from the clinic. All subjects completed a Treatment Satisfaction Index questionnaire at 24-hours post-dose as a means of measuring their levels of sexual desire, genital arousal and, if applicable, satisfaction with sexual activity. Adverse events reported include nausea, headache and nasal congestion and were comparable to adverse events reported for other clinical studies evaluating this dose.
"The data strongly favor and support the companies' development program for bremelanotide," states Dr. Michael A. Perelman, Co-Director of the Human Sexuality Program at Weill Medical College of Cornell University, New York. "I enthusiastically await data from larger clinical trials which are underway."
Palatin Technologies and King Pharmaceuticals are currently enrolling 150 post-menopausal FSAD patients in a Phase IIb at-home clinical trial at approximately 20 clinical sites throughout the United States. The enrollment of pre-menopausal FSAD patients for this study has completed.
Mike Burk: "Next week has had a modestly positive bias by most measures. During the 3rd year of the Presidential Cycle the SPX has been up a little less than half of the time (47%) but has had a modest gain (0.14%) over the period...The mid and small cap indices have been leading the market up and are overbought while the large cap indices are oversold. Seasonality doesn't help much either. The pull backs in the small and mid cap indices have been modest and the large cap indices are ready for an oversold rally. I expect the major indices to be higher on Friday March 2 than they were on Friday February 23."
David Zionts, owner of Connecticut Mortgage Lenders LLC: "Some consumers are being squeezed out of the market," Zionts said. "Some of the more forgiving guidelines are beginning to go away."
The U.K. tabloid the Sunday Express stated Dow Chemical will get a takeover bid worth up to $54 billion from a consortium of private-equity firms in the next few weeks. The newspaper didn't identify the source of its information.
It said the buyout team is "likely" to be composed of Kohlberg Kravis & Roberts, Blackstone Group and Carlyle Group. They intend to break up Dow Chemical into smaller companies, the report said. An offer is expected to come in at $60 a share, against Friday's close of $43.45, the report added. Unnamed "speculators" believe the break-up value could be up to $80 a share, it said.
San Francisco Bay Area home sales fell in January for the 24th straight month, and prices dropped to their lowest level in a year and a half. According to DataQuick, January 2006 sales were the lowest for any January in 11 years.
The world's largest economy expanded at an annual rate of 2.3 percent last quarter, compared with the 3.5 percent pace the Commerce Department reported last month, according to the median forecast in a Bloomberg News survey of economists.
Texas power company TXU Corp. said on Monday it agreed to be acquired by a group led by private equity firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group for $31.8 billion in the largest leveraged buyout in history. The investor group will pay $69.25 per share for TXU, a 15.4 percent premium over TXU's closing stock price of $60.02 on Friday.
Station Casinos Inc. said on Monday it agreed to a $5.4 billion management-led buyout, after the investor group buying the company raised its offer by about 10 percent. The Las Vegas-based company, which operates off-strip casinos used mostly by locals, is being taken over by a group called Fertitta Colony Partners, formed by Station Chief Executive Frank Fertitta, his brother and company vice chairman Lorenzo Fertitta, and a unit of private equity firm Colony Capital. The group said on Monday it would take over Station for $90 per share, or $5.4 billion in cash. It will also assume debt of about $3.4 billion.
Tribune Co. board of directors is considering an offer from real estate magnate Sam Zell to take the company private, but is leaning toward restructuring the company on its own, according to published reports.
Palatin released the following study: The results of this Phase IIa study showed that on a 14-item questionnaire, 73 percent of the women reported an increased level of genital arousal while on bremelanotide compared with 23 percent of women on placebo. Also, 46 percent of women on bremelanotide reported an increased level of sexual desire while only 19 percent of women responded similarly after placebo treatment. Additionally, subjects receiving bremelanotide reported a higher incidence of engaging in sexual activity compared to placebo. The current study follows a similarly designed clinical study conducted with pre-menopausal patients with FSAD, the results of which were recently published in the July 2006 issue of The Journal of Sexual Medicine.
Twenty-seven women with a diagnosis of FSAD were enrolled at two investigational sites in this double-blind, randomized, placebo-controlled, single dose, cross-over clinical study. All subjects enrolled in this clinical study were evaluated by an experienced clinical psychologist and were confirmed to have a diagnosis of FSAD. Subjects were administered a 20 mg dose (2 x 10 mg) of intranasal bremelanotide or placebo spray in a randomized manner and were monitored and evaluated for three hours post-dose before being discharged from the clinic. All subjects completed a Treatment Satisfaction Index questionnaire at 24-hours post-dose as a means of measuring their levels of sexual desire, genital arousal and, if applicable, satisfaction with sexual activity. Adverse events reported include nausea, headache and nasal congestion and were comparable to adverse events reported for other clinical studies evaluating this dose.
"The data strongly favor and support the companies' development program for bremelanotide," states Dr. Michael A. Perelman, Co-Director of the Human Sexuality Program at Weill Medical College of Cornell University, New York. "I enthusiastically await data from larger clinical trials which are underway."
Palatin Technologies and King Pharmaceuticals are currently enrolling 150 post-menopausal FSAD patients in a Phase IIb at-home clinical trial at approximately 20 clinical sites throughout the United States. The enrollment of pre-menopausal FSAD patients for this study has completed.
Saturday, February 24, 2007
Possible Developments
2/25/07 Possible Developments
According to the Financial Times, Kohlberg Kravis Roberts and Texas Pacific Group were on Friday night in advanced talks to acquire TXU, one of America’s largest power companies, in a massive leveraged buy-out that could exceed $40bn including debt. People involved in the negotiations on Friday night described a “dream scenario” in which an agreement could be reached as early as Sunday or Monday morning. But they cautioned that a number of issues still needed to be resolved, which could delay an announcement.
Howard Schultz, chairman of Starbucks, has warned that the world’s largest coffee chain is “watering down” its brand by opening too many “sterile, cookie cutter” stores that lack soul and authenticity.
Vice President Dick Cheney said the U.S. is committed to a diplomatic course to resolve a nuclear dispute with Iran and warned that ``all options are still on the table'' to halt the country's atomic aspirations. It's fair to say all options are on the table to remove Cheney and Bush from office.
In a blunt memo to senior executives, titled “the commoditisation of the Starbucks experience”, Mr Schultz said the company’s expansion from 1,000 stores to 13,000 stores over the past decade had come at a heavy cost.
Doug Noland: "The Fed is not in control of any "general price level" and they certainly aren't in command of Credit Bubble and speculative asset market boom and bust dynamics. Contrast the old banking system where Fed tightening would reduce industry loan portfolio profitability, thereby inducing a general system tightening - to that of the current securities-based system where waning financial profits in one asset class simply induces greater lending, securitizing and speculating elsewhere (one boom and bust leads naturally to the next). And I'll further hypothesize that the more protracted the global Credit boom, the less reliant the world becomes to the U.S. economy and Credit excess. This has important implications for prospective U.S. and global inflation, dynamics increasingly outside the purview of our policymakers. I wouldn't go rambling on about the Fed's lack of control if grossly inflated asset markets weren't so convinced of the polar opposite. Perhaps the greatest Indictment should be reserved for highly over-liquefied and speculative marketplaces."
A top Israeli official Saturday denied a published report that Israel has a plan to attack Iran's nuclear facilities. Deputy Defense Minister MK Ephraim Sneh said Israel is not laying the groundwork to take out Iran's nuclear facilities, despite a report saying so in the British Daily Telegraph, the Jerusalem Post reported. The Telegraph said Israel has asked the United States for permission to fly over Iraq as part of the attack on Iran. The Telegraph quoted an Israeli source saying, "We are planning for every eventuality, and sorting out issues such as these are crucially important. "The only way to do this is to fly through U.S.-controlled air space. If we don't sort these issues out now we could have a situation where American and Israeli war planes start shooting at each other," said the source described.
The Supreme Court of Canada ruled Friday that the procedure used to deport suspected terrorists is unconstitutional.
The court ruled unanimously that detainees under security certificates have the right under Canada's constitution to know the evidence against them and to provide a defense, the Toronto Globe and Mail reported. The justices gave Parliament a year to revise the system, but they said detainees have the right immediately to a bail hearing within 48 hours of detention.
According to the Financial Times, Kohlberg Kravis Roberts and Texas Pacific Group were on Friday night in advanced talks to acquire TXU, one of America’s largest power companies, in a massive leveraged buy-out that could exceed $40bn including debt. People involved in the negotiations on Friday night described a “dream scenario” in which an agreement could be reached as early as Sunday or Monday morning. But they cautioned that a number of issues still needed to be resolved, which could delay an announcement.
Howard Schultz, chairman of Starbucks, has warned that the world’s largest coffee chain is “watering down” its brand by opening too many “sterile, cookie cutter” stores that lack soul and authenticity.
Vice President Dick Cheney said the U.S. is committed to a diplomatic course to resolve a nuclear dispute with Iran and warned that ``all options are still on the table'' to halt the country's atomic aspirations. It's fair to say all options are on the table to remove Cheney and Bush from office.
In a blunt memo to senior executives, titled “the commoditisation of the Starbucks experience”, Mr Schultz said the company’s expansion from 1,000 stores to 13,000 stores over the past decade had come at a heavy cost.
Doug Noland: "The Fed is not in control of any "general price level" and they certainly aren't in command of Credit Bubble and speculative asset market boom and bust dynamics. Contrast the old banking system where Fed tightening would reduce industry loan portfolio profitability, thereby inducing a general system tightening - to that of the current securities-based system where waning financial profits in one asset class simply induces greater lending, securitizing and speculating elsewhere (one boom and bust leads naturally to the next). And I'll further hypothesize that the more protracted the global Credit boom, the less reliant the world becomes to the U.S. economy and Credit excess. This has important implications for prospective U.S. and global inflation, dynamics increasingly outside the purview of our policymakers. I wouldn't go rambling on about the Fed's lack of control if grossly inflated asset markets weren't so convinced of the polar opposite. Perhaps the greatest Indictment should be reserved for highly over-liquefied and speculative marketplaces."
A top Israeli official Saturday denied a published report that Israel has a plan to attack Iran's nuclear facilities. Deputy Defense Minister MK Ephraim Sneh said Israel is not laying the groundwork to take out Iran's nuclear facilities, despite a report saying so in the British Daily Telegraph, the Jerusalem Post reported. The Telegraph said Israel has asked the United States for permission to fly over Iraq as part of the attack on Iran. The Telegraph quoted an Israeli source saying, "We are planning for every eventuality, and sorting out issues such as these are crucially important. "The only way to do this is to fly through U.S.-controlled air space. If we don't sort these issues out now we could have a situation where American and Israeli war planes start shooting at each other," said the source described.
The Supreme Court of Canada ruled Friday that the procedure used to deport suspected terrorists is unconstitutional.
The court ruled unanimously that detainees under security certificates have the right under Canada's constitution to know the evidence against them and to provide a defense, the Toronto Globe and Mail reported. The justices gave Parliament a year to revise the system, but they said detainees have the right immediately to a bail hearing within 48 hours of detention.
Friday, February 23, 2007
This Week
2/24/07 This week
The number of rigs drilling for oil and natural gas in North America fell by 25, or 1%, to 2,357, according to a weekly update by Baker Hughes Inc. The number of active oil rigs rose by 11 to 278, while the number of gas rigs fell by one to 1,472. The U.S. rig count rose by eight to 1,754, while the Canadian rig count fell by 33 to 603. The offshore rig count increased by one to 89.
Gold futures closed up $3.70 at $686.70 an ounce on the New York Mercantile Exchange. The contract has gained 2.1% on the week. March silver ended up 34.5 cents at $14.595 an ounce and April platinum closed up $7.60 at $1,237.60. March platinum rose $7.60 at $1,237.60 and March copper finished up 7.4 cents at $2.84 a pound.
With respect to a possible sale of Chrysler, Apollo Management, Blackstone, Carlyle and Cerberus Capital Management were contacted by DaimlerChrysler last week, according to the Financial Times. General Motors has also had talks with Chrysler while others, such as Volkswagen, Hyundai and Renault-Nissan, have said they aren't interested in buying the troubled U.S. automaker.
Four U.S. soldiers were killed Friday in attacks in Iraq, the military said. Three soldiers died Thursday in combat operations in Iraq's al-Anbar province, the military said. Another soldier was killed Thursday by an improvised explosive device in a separate incident near Diwaniyah, a city about 100 miles (160 kilometers) south of Baghdad, the military said in a further statement. Three soldiers were wounded in that attack. The total number of U.S. deaths in the Iraq war totals 3,146. When is the Congress going to call a halt to this insanity?
nearly 800 civilians working under contract to the Pentagon have been killed and more than 3,300 hurt doing jobs normally handled by the U.S. military, according to figures gathered by The Associated Press.
Winston Churchill: “It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time.”
Peter Schiff: "The current Wall Street bull market hype ignores the fact that all the major stock market averages are underperforming the price of gold. For example, year to date, while the Dow is up about 1.5%, the price of gold is up about 8%. Going back to January of 2000, while the Dow is only up about 15%, the price of gold price is up 150%, literally ten times as much. Even if you compare the Dow to gold starting from the Dow's October, 2002 low of about 7,200, the Dow is up about 75% verses 125% for gold. Call me crazy but how can we be in a bull market if investors are making more money owning gold than owing stocks?"
Chrysler Group plans to cut 1,000 salaried jobs by the end of June, the first action under a previously announced turnaround plan that targets a total of 13,000 job cuts, the automaker said on Friday.
Dominion Homes Inc. reported a fourth-quarter net loss of $17 million, or $2.09 a share. In the same quarter last year, the homebuilder posted a net profit of $991,000, or 12 cents a share. Revenue dropped to $54.2 million from $111.5 million. The company delivered 284 homes and sold 131 in the three months ended Dec. 31, compared with 571 homes delivered and 230 sold in the comparable period last year.
Crude for April delivery closed up 19 cents at $61.14 a barrel. Oil ended 2006 at $61.05.
"Enough is enough. If we do not demand impeachment of Bush and Cheney for war crimes, the entire world will be facing endless death and devastation," said supporter Elaine Brower, mother of a U.S. Marine who has served in Afghanistan and Iraq.
"We are allowing our government officials free reign to wreak havoc unless we, the people, get a backbone to stop them," Brower said.
National Impeachment Day is April 28.
International Herald Tribune: "Despite a quadrupling of Iran's oil revenues since 1998, the Islamic Republic's budget has grown eight-fold over the same period. Making matters worse, Iran's oil exports fell to a new low in December, and production is now 500,000 barrels per day below the OPEC quota."
Bush: "If the Iraqi regime is able to produce, buy or steal an amount of highly enriched uranium a little larger than a single softball, it could have a nuclear weapon in less than a year."
The number of rigs drilling for oil and natural gas in North America fell by 25, or 1%, to 2,357, according to a weekly update by Baker Hughes Inc. The number of active oil rigs rose by 11 to 278, while the number of gas rigs fell by one to 1,472. The U.S. rig count rose by eight to 1,754, while the Canadian rig count fell by 33 to 603. The offshore rig count increased by one to 89.
Gold futures closed up $3.70 at $686.70 an ounce on the New York Mercantile Exchange. The contract has gained 2.1% on the week. March silver ended up 34.5 cents at $14.595 an ounce and April platinum closed up $7.60 at $1,237.60. March platinum rose $7.60 at $1,237.60 and March copper finished up 7.4 cents at $2.84 a pound.
With respect to a possible sale of Chrysler, Apollo Management, Blackstone, Carlyle and Cerberus Capital Management were contacted by DaimlerChrysler last week, according to the Financial Times. General Motors has also had talks with Chrysler while others, such as Volkswagen, Hyundai and Renault-Nissan, have said they aren't interested in buying the troubled U.S. automaker.
Four U.S. soldiers were killed Friday in attacks in Iraq, the military said. Three soldiers died Thursday in combat operations in Iraq's al-Anbar province, the military said. Another soldier was killed Thursday by an improvised explosive device in a separate incident near Diwaniyah, a city about 100 miles (160 kilometers) south of Baghdad, the military said in a further statement. Three soldiers were wounded in that attack. The total number of U.S. deaths in the Iraq war totals 3,146. When is the Congress going to call a halt to this insanity?
nearly 800 civilians working under contract to the Pentagon have been killed and more than 3,300 hurt doing jobs normally handled by the U.S. military, according to figures gathered by The Associated Press.
Winston Churchill: “It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time.”
Peter Schiff: "The current Wall Street bull market hype ignores the fact that all the major stock market averages are underperforming the price of gold. For example, year to date, while the Dow is up about 1.5%, the price of gold is up about 8%. Going back to January of 2000, while the Dow is only up about 15%, the price of gold price is up 150%, literally ten times as much. Even if you compare the Dow to gold starting from the Dow's October, 2002 low of about 7,200, the Dow is up about 75% verses 125% for gold. Call me crazy but how can we be in a bull market if investors are making more money owning gold than owing stocks?"
Chrysler Group plans to cut 1,000 salaried jobs by the end of June, the first action under a previously announced turnaround plan that targets a total of 13,000 job cuts, the automaker said on Friday.
Dominion Homes Inc. reported a fourth-quarter net loss of $17 million, or $2.09 a share. In the same quarter last year, the homebuilder posted a net profit of $991,000, or 12 cents a share. Revenue dropped to $54.2 million from $111.5 million. The company delivered 284 homes and sold 131 in the three months ended Dec. 31, compared with 571 homes delivered and 230 sold in the comparable period last year.
Crude for April delivery closed up 19 cents at $61.14 a barrel. Oil ended 2006 at $61.05.
"Enough is enough. If we do not demand impeachment of Bush and Cheney for war crimes, the entire world will be facing endless death and devastation," said supporter Elaine Brower, mother of a U.S. Marine who has served in Afghanistan and Iraq.
"We are allowing our government officials free reign to wreak havoc unless we, the people, get a backbone to stop them," Brower said.
National Impeachment Day is April 28.
International Herald Tribune: "Despite a quadrupling of Iran's oil revenues since 1998, the Islamic Republic's budget has grown eight-fold over the same period. Making matters worse, Iran's oil exports fell to a new low in December, and production is now 500,000 barrels per day below the OPEC quota."
Bush: "If the Iraqi regime is able to produce, buy or steal an amount of highly enriched uranium a little larger than a single softball, it could have a nuclear weapon in less than a year."
Thursday, February 22, 2007
The Cloud
2/23/07 The Cloud
Bronco Drilling had a terrific earnings report for the quarter and for year. The stock is significantly under-appreciated. Here is a link to the report:
http://news.moneycentral.msn.com/ticker/article.aspx?feed=PR&date=20070222&id=6518579
``There are too many soft markets at this stage of the selling season to call a general upturn in the new home market,'' Robert Toll, CEO of Toll Brothers, said in the statement. ``Demand varies greatly from week to week in individual markets.'' Toll forecast earnings of $1.46 to $1.85 a share for fiscal 2007. The company said it will probably deliver 6,000 to 7,000 houses during the year, compared with an earlier forecast of 6,300 to 7,300 properties.
In the fiscal first quarter, Toll wrote down the value of assets by $96.9 million and took a charge of $9 million relating to an acquisition in Detroit in 1999. Excluding the writedowns and charge, earnings fell 27 percent to 72 cents a share. Revenue dropped 19 percent to $1.09 billion.
J.C.Penney said first-quarter profit would be about 99 cents, less than the $1.05 estimated by analysts.
Seasonally adjusted initial jobless claims fell by 27,000 to 332,000 in the week ending Feb. 17, the Labor Department reported Thursday. But the four-week average of new claims rose by 1,250 to 326,250. It's the highest since Dec. 2, 2006. At the same time, the number of people collecting unemployment benefits in the week ending Feb. 10 fell by 45,000 to 2.50 million, the lowest in two weeks. The four-week average of continuing claims rose by 6,750 to 2.52 million, the most since Feb. 4.
Seasonally adjusted initial jobless claims fell by 27,000 to 332,000 in the week ending Feb. 17, the Labor Department reported Thursday. But the four-week average of new claims -- which smoothes out one-time events such as holidays or weather -- rose by 1,250 to 326,250. It's the highest since Dec. 2, 2006. At the same time, the number of people collecting unemployment benefits in the week ending Feb. 10 fell by 45,000 to 2.50 million, the lowest in two weeks. The four-week average of continuing claims rose by 6,750 to 2.52 million, the most since Feb. 4.
“There is a cloud over the vice-president,” Patrick Fitzgerald, special prosecutor, told the jury on Tuesday. “He sent Libby off to the meeting with Judy [Judith Miller, a New York Times reporter] where Plame was discussed. That cloud is something that we just can’t pretend isn’t there.”
From The Int'l Herald Tribune Opinion Page on making martial law easier:
"A disturbing recent phenomenon in Washington is that laws that strike to the heart of American democracy have been passed in the dead of night. So it was with a provision quietly tucked into the enormous defense budget bill at the Bush administration's behest that makes it easier for a president to override local control of law enforcement and declare martial law.
The provision, signed into law in October, weakens two obscure but important bulwarks of liberty. One is the doctrine that bars military forces, including a federalized National Guard, from engaging in law enforcement. Called posse comitatus, it was enshrined in law after the Civil War to preserve the line between civil government and the military. The other is the Insurrection Act of 1807, which provides the major exemptions to posse comitatus. It essentially limits a president's use of the military in law enforcement to putting down lawlessness, insurrection and rebellion, where a state is violating federal law or depriving people of constitutional rights.
The newly enacted provisions upset this careful balance. They shift the focus from making sure that federal laws are enforced to restoring public order.
Beyond cases of actual insurrection, the president may now use military troops as a domestic police force in response to a natural disaster, a disease outbreak, terrorist attack or to any "other condition."
Changes of this magnitude should be made only after a thorough public airing. But these new presidential powers were slipped into the law without hearings or public debate. The president made no mention of the changes when he signed the measure, and neither the White House nor Congress consulted in advance with the country's governors.
There is a bipartisan bill, introduced by Senators Patrick Leahy, Democrat of Vermont, and Christopher Bond, Republican of Missouri, and backed unanimously by the nation's governors, that would repeal the stealthy revisions. Congress should pass it. If changes of this kind are proposed in the future, they must get a full and open debate."
The current farm bill, written in 2002, expires Sept. 30.
A proposal released last month by U.S. Agriculture Secretary Mike Johanns would cut agriculture spending by $18 billion over the next five years.
The Bush administration's plan would cost $87.3 billion over the next five years, not counting food stamps and other nutrition programs, compared to $105 billion spent on farm programs over the past five years.
Most payments go to growers of five major crops — corn, soybeans, wheat, rice and cotton.
Crude inventories rose by 3.7 million barrels to 327.6 million barrels in the week ending Feb. 16, the Energy Information Administration said Thursday. But gasoline inventories fell by 3.1 million barrels to 222.1 million barrels, and distillates, which include heating oil and diesel, fell by 5.0 million barrels to 128.3 million barrels. Oil prices briefly surpassed the $61 a barrel mark Thursday for the first time this year after the U.S. government reported surprisingly large drops in gasoline and heating oil inventories.
Mike Shedlock: "Here's an alarming fact about Sacramento's housing market: About one of every five existing homes on the market is a "short sale." That means the home is worth less than the value of the mortgage, and the lender is willing to accept less than full repayment of the loan to avoid foreclosure, says Tracey Saizan, president of the Sacramento Association of Realtors. That, in turn, puts pressure on the remaining 80% of sellers, who have equity in their homes, to cut prices. The median price in the state capital, one of the most overheated metro areas during the real estate boom, fell 4.3% in December compared with December 2005. "Sellers are having to give concessions and cut prices," Saizan says. "It's all about making the house show the best it can and aggressive pricing."
Venezuela and Argentina will offer a US$1.5 billion (euro1.1 billion) joint bond issue next week.
Gold for April delivery ended down $1 at $683 an ounce on the New York Mercantile Exchange. March silver futures fell 2.3 cents at $14.25 an ounce and April platinum ended down $3.20 at $1,230 an ounce. March palladium closed up $6.55 at $350.70 and March copper rose 11.2 cents at $2.766 a pound.
Bronco Drilling had a terrific earnings report for the quarter and for year. The stock is significantly under-appreciated. Here is a link to the report:
http://news.moneycentral.msn.com/ticker/article.aspx?feed=PR&date=20070222&id=6518579
``There are too many soft markets at this stage of the selling season to call a general upturn in the new home market,'' Robert Toll, CEO of Toll Brothers, said in the statement. ``Demand varies greatly from week to week in individual markets.'' Toll forecast earnings of $1.46 to $1.85 a share for fiscal 2007. The company said it will probably deliver 6,000 to 7,000 houses during the year, compared with an earlier forecast of 6,300 to 7,300 properties.
In the fiscal first quarter, Toll wrote down the value of assets by $96.9 million and took a charge of $9 million relating to an acquisition in Detroit in 1999. Excluding the writedowns and charge, earnings fell 27 percent to 72 cents a share. Revenue dropped 19 percent to $1.09 billion.
J.C.Penney said first-quarter profit would be about 99 cents, less than the $1.05 estimated by analysts.
Seasonally adjusted initial jobless claims fell by 27,000 to 332,000 in the week ending Feb. 17, the Labor Department reported Thursday. But the four-week average of new claims rose by 1,250 to 326,250. It's the highest since Dec. 2, 2006. At the same time, the number of people collecting unemployment benefits in the week ending Feb. 10 fell by 45,000 to 2.50 million, the lowest in two weeks. The four-week average of continuing claims rose by 6,750 to 2.52 million, the most since Feb. 4.
Seasonally adjusted initial jobless claims fell by 27,000 to 332,000 in the week ending Feb. 17, the Labor Department reported Thursday. But the four-week average of new claims -- which smoothes out one-time events such as holidays or weather -- rose by 1,250 to 326,250. It's the highest since Dec. 2, 2006. At the same time, the number of people collecting unemployment benefits in the week ending Feb. 10 fell by 45,000 to 2.50 million, the lowest in two weeks. The four-week average of continuing claims rose by 6,750 to 2.52 million, the most since Feb. 4.
“There is a cloud over the vice-president,” Patrick Fitzgerald, special prosecutor, told the jury on Tuesday. “He sent Libby off to the meeting with Judy [Judith Miller, a New York Times reporter] where Plame was discussed. That cloud is something that we just can’t pretend isn’t there.”
From The Int'l Herald Tribune Opinion Page on making martial law easier:
"A disturbing recent phenomenon in Washington is that laws that strike to the heart of American democracy have been passed in the dead of night. So it was with a provision quietly tucked into the enormous defense budget bill at the Bush administration's behest that makes it easier for a president to override local control of law enforcement and declare martial law.
The provision, signed into law in October, weakens two obscure but important bulwarks of liberty. One is the doctrine that bars military forces, including a federalized National Guard, from engaging in law enforcement. Called posse comitatus, it was enshrined in law after the Civil War to preserve the line between civil government and the military. The other is the Insurrection Act of 1807, which provides the major exemptions to posse comitatus. It essentially limits a president's use of the military in law enforcement to putting down lawlessness, insurrection and rebellion, where a state is violating federal law or depriving people of constitutional rights.
The newly enacted provisions upset this careful balance. They shift the focus from making sure that federal laws are enforced to restoring public order.
Beyond cases of actual insurrection, the president may now use military troops as a domestic police force in response to a natural disaster, a disease outbreak, terrorist attack or to any "other condition."
Changes of this magnitude should be made only after a thorough public airing. But these new presidential powers were slipped into the law without hearings or public debate. The president made no mention of the changes when he signed the measure, and neither the White House nor Congress consulted in advance with the country's governors.
There is a bipartisan bill, introduced by Senators Patrick Leahy, Democrat of Vermont, and Christopher Bond, Republican of Missouri, and backed unanimously by the nation's governors, that would repeal the stealthy revisions. Congress should pass it. If changes of this kind are proposed in the future, they must get a full and open debate."
The current farm bill, written in 2002, expires Sept. 30.
A proposal released last month by U.S. Agriculture Secretary Mike Johanns would cut agriculture spending by $18 billion over the next five years.
The Bush administration's plan would cost $87.3 billion over the next five years, not counting food stamps and other nutrition programs, compared to $105 billion spent on farm programs over the past five years.
Most payments go to growers of five major crops — corn, soybeans, wheat, rice and cotton.
Crude inventories rose by 3.7 million barrels to 327.6 million barrels in the week ending Feb. 16, the Energy Information Administration said Thursday. But gasoline inventories fell by 3.1 million barrels to 222.1 million barrels, and distillates, which include heating oil and diesel, fell by 5.0 million barrels to 128.3 million barrels. Oil prices briefly surpassed the $61 a barrel mark Thursday for the first time this year after the U.S. government reported surprisingly large drops in gasoline and heating oil inventories.
Mike Shedlock: "Here's an alarming fact about Sacramento's housing market: About one of every five existing homes on the market is a "short sale." That means the home is worth less than the value of the mortgage, and the lender is willing to accept less than full repayment of the loan to avoid foreclosure, says Tracey Saizan, president of the Sacramento Association of Realtors. That, in turn, puts pressure on the remaining 80% of sellers, who have equity in their homes, to cut prices. The median price in the state capital, one of the most overheated metro areas during the real estate boom, fell 4.3% in December compared with December 2005. "Sellers are having to give concessions and cut prices," Saizan says. "It's all about making the house show the best it can and aggressive pricing."
Venezuela and Argentina will offer a US$1.5 billion (euro1.1 billion) joint bond issue next week.
Gold for April delivery ended down $1 at $683 an ounce on the New York Mercantile Exchange. March silver futures fell 2.3 cents at $14.25 an ounce and April platinum ended down $3.20 at $1,230 an ounce. March palladium closed up $6.55 at $350.70 and March copper rose 11.2 cents at $2.766 a pound.
Wednesday, February 21, 2007
News
2/22/07 News
Tony Blair announced on Wednesday that Britain will cut the number of UK troops stationed in Iraq by about 1,600 – the first time the UK’s 7100 troop military presence in the country has been reduced since the 2003 invasion.
The Bank of Japan's policy board voted by an 8-to-1 majority to lift its overnight call rate by a quarter percentage point, bringing the benchmark lending rate to 0.5% Wednesday. The BOJ said the Japanese economy is likely to continue expanding moderately, noting that positive trends in production, spending and income continue.
Real average weekly earnings fell by 0.3 percent from December 2006 to January 2007 after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. This decline stemmed from a 0.3 percent decrease in the average weekly hours and a 0.1 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which were partially offset by a 0.2 percent increase in average hourly earnings.
Consumer prices in January rose 0.2 percent, while core prices, which
exclude food and energy costs, climbed 0.3 percent.
Bill Gross is so disenchanted with U.S. debt markets that
he's raised his holdings of cash-equivalent securities to the
highest level in almost two years. Cash equivalents including debt maturing in less than a year accounted for 43 percent of the assets of the $99.9 billion Total Return Fund as of Jan. 31, up from 26 percent at the end of last year and the most since February 2005, according to Pacific Investment Management Co.'s Web site.
Gross, chief investment officer of Newport Beach, California-based Pimco, has repeatedly said U.S. bond markets are too expensive in commentaries on the firm's Web site in the past year. The latest, published Jan. 29, said the prices of assets including bonds ``are increasingly being determined by value insensitive flows and speculative leverage as opposed to fundamentals.''
George Ure: "We are reading about how there is a propane shortage up in Maine. Doctors are in short supply in Alaska. Growth of industry in India has led to a shortage of good managers. And Esso stations in Ontario may run out of fuel this week due to not one, but two, refinery fires."
$3 a gallon gas has arrived in San Francisco. The stations couldn't wait for the summer driving season to begin.
Asda, the British supermarket unit of Wal-Mart Stores Inc , said on Wednesday it would create 8,000 jobs in the UK this year and build a minimum of 18 new stores.
Best Buy plans to open about 130 new stores in the U.S., Canada and China in fiscal 2008. The company estimates its store expansion plan will create about 12,000 retail jobs.
Scott Burns: "The average marginal tax rate on incomes between $20,000 and $500,000 is 40.3%, the median tax rate is 41.8%, and the standard deviation of all of those rates is 5.3 percentage points. Basically, most of us pay about 40%, plus or minus 5.3 percentage points."
Chief Justice Marshall: "The power to tax is the power to destroy." He might have added, if alive today, the power to print money is the power to destroy the value of our currency.
The index of leading economic indicators rose 0.1% in January after rising 0.6% in December and falling 0.1% in November, the Conference Board reported Wednesday. In January, the coincident index increased 0.1%, with three of the four indicators increasing. The lagging index fell 0.1%.
Kazakhstan threatened Wednesday to suspend Chevron Corp.'s license for operations at a giant Caspian Sea oil field and gave the U.S. energy giant a month to come up with a plan to remove hazardous waste.
Federal Reserve officials discussed dropping their inclination to raise interest rates, and rejected the idea because inflation was their ``predominant concern.''
Crude oil closed above $60 a barrel for the first time this year in New York. Crude for April delivery closed up $1.22 at $60.07. Fires and interrupted power supplies trimmed output at refineries in Texas, Pennsylvania, Colorado, Ontario and Delaware over the past two weeks. A pipeline supplying the U.S. Midwest and Northeast cut shipments.
Gold futures rallied to a seven-month high Wednesday. Gold for April delivery closed up $23 at $684 an ounce, its highest close since July 7. Silver futures rose 44.3 cents to $14.273 an ounce, platinum rose $14.10 to $1,233.20 an ounce and palladium was up $4.40 at $344.15 an ounce. Copper ended up 6.85 cents at $2.6545 a pound.
Whole Foods agreed to buy Wild Oats for $18.50 a share.
Corn rose to a 10-year high in Chicago. Ethanol was another brilliant government idea.
Janice Warman and Annunziata Rees-Mogg: "A typical meat-eating, milk-guzzling Westerner consumes as much as a hundred times their own weight in water every day," says Fred Pearce, former New Scientist news editor and author of When The Rivers Run Dry.That's because it takes between 2,000 and 5,000 litres of water to grow one kilogram of rice, 11,000 litres to grow the feed for enough cow for a quarter-pound hamburger, 50 cups of water for a teaspoon of sugar and 140 litres of water to produce just one cup of coffee. The world today grows twice as much food as it did in the 1960s, but uses three times as much water to grow it. Two-thirds of all the water taken from the environment goes to irrigate crops. "This is massively unsustainable, and has led many people to conclude that the apocalypse wasn't averted, only postponed," says Pearce.
Tony Blair announced on Wednesday that Britain will cut the number of UK troops stationed in Iraq by about 1,600 – the first time the UK’s 7100 troop military presence in the country has been reduced since the 2003 invasion.
The Bank of Japan's policy board voted by an 8-to-1 majority to lift its overnight call rate by a quarter percentage point, bringing the benchmark lending rate to 0.5% Wednesday. The BOJ said the Japanese economy is likely to continue expanding moderately, noting that positive trends in production, spending and income continue.
Real average weekly earnings fell by 0.3 percent from December 2006 to January 2007 after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. This decline stemmed from a 0.3 percent decrease in the average weekly hours and a 0.1 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which were partially offset by a 0.2 percent increase in average hourly earnings.
Consumer prices in January rose 0.2 percent, while core prices, which
exclude food and energy costs, climbed 0.3 percent.
Bill Gross is so disenchanted with U.S. debt markets that
he's raised his holdings of cash-equivalent securities to the
highest level in almost two years. Cash equivalents including debt maturing in less than a year accounted for 43 percent of the assets of the $99.9 billion Total Return Fund as of Jan. 31, up from 26 percent at the end of last year and the most since February 2005, according to Pacific Investment Management Co.'s Web site.
Gross, chief investment officer of Newport Beach, California-based Pimco, has repeatedly said U.S. bond markets are too expensive in commentaries on the firm's Web site in the past year. The latest, published Jan. 29, said the prices of assets including bonds ``are increasingly being determined by value insensitive flows and speculative leverage as opposed to fundamentals.''
George Ure: "We are reading about how there is a propane shortage up in Maine. Doctors are in short supply in Alaska. Growth of industry in India has led to a shortage of good managers. And Esso stations in Ontario may run out of fuel this week due to not one, but two, refinery fires."
$3 a gallon gas has arrived in San Francisco. The stations couldn't wait for the summer driving season to begin.
Asda, the British supermarket unit of Wal-Mart Stores Inc , said on Wednesday it would create 8,000 jobs in the UK this year and build a minimum of 18 new stores.
Best Buy plans to open about 130 new stores in the U.S., Canada and China in fiscal 2008. The company estimates its store expansion plan will create about 12,000 retail jobs.
Scott Burns: "The average marginal tax rate on incomes between $20,000 and $500,000 is 40.3%, the median tax rate is 41.8%, and the standard deviation of all of those rates is 5.3 percentage points. Basically, most of us pay about 40%, plus or minus 5.3 percentage points."
Chief Justice Marshall: "The power to tax is the power to destroy." He might have added, if alive today, the power to print money is the power to destroy the value of our currency.
The index of leading economic indicators rose 0.1% in January after rising 0.6% in December and falling 0.1% in November, the Conference Board reported Wednesday. In January, the coincident index increased 0.1%, with three of the four indicators increasing. The lagging index fell 0.1%.
Kazakhstan threatened Wednesday to suspend Chevron Corp.'s license for operations at a giant Caspian Sea oil field and gave the U.S. energy giant a month to come up with a plan to remove hazardous waste.
Federal Reserve officials discussed dropping their inclination to raise interest rates, and rejected the idea because inflation was their ``predominant concern.''
Crude oil closed above $60 a barrel for the first time this year in New York. Crude for April delivery closed up $1.22 at $60.07. Fires and interrupted power supplies trimmed output at refineries in Texas, Pennsylvania, Colorado, Ontario and Delaware over the past two weeks. A pipeline supplying the U.S. Midwest and Northeast cut shipments.
Gold futures rallied to a seven-month high Wednesday. Gold for April delivery closed up $23 at $684 an ounce, its highest close since July 7. Silver futures rose 44.3 cents to $14.273 an ounce, platinum rose $14.10 to $1,233.20 an ounce and palladium was up $4.40 at $344.15 an ounce. Copper ended up 6.85 cents at $2.6545 a pound.
Whole Foods agreed to buy Wild Oats for $18.50 a share.
Corn rose to a 10-year high in Chicago. Ethanol was another brilliant government idea.
Janice Warman and Annunziata Rees-Mogg: "A typical meat-eating, milk-guzzling Westerner consumes as much as a hundred times their own weight in water every day," says Fred Pearce, former New Scientist news editor and author of When The Rivers Run Dry.That's because it takes between 2,000 and 5,000 litres of water to grow one kilogram of rice, 11,000 litres to grow the feed for enough cow for a quarter-pound hamburger, 50 cups of water for a teaspoon of sugar and 140 litres of water to produce just one cup of coffee. The world today grows twice as much food as it did in the 1960s, but uses three times as much water to grow it. Two-thirds of all the water taken from the environment goes to irrigate crops. "This is massively unsustainable, and has led many people to conclude that the apocalypse wasn't averted, only postponed," says Pearce.
Tuesday, February 20, 2007
More Deals
2/21/07 More Deals
Smart & Final Inc. agreed to be acquired by private equity firm Apollo Management. The deal values shares of the Los Angeles-based warehouse food store operator at $22 each, compared to Friday's close at $19.06.
Warner Music Group Corp. confirmed it's approached EMI Group plc about a possible acquisition. Warner said it made the overture on Jan. 24.
US contingency plans for air strikes on Iran extend beyond nuclear sites and include most of the country's military infrastructure, the BBC has learned.
Crude for March delivery fell $1.32 to $58.07 a barrel. The contract expired today and will be replaced by the April contract, which was down last quoted at $58.85 a barrel.Natural gas prices closed 1.1% higher at $7.58 per million British thermal units.
Gold for April delivery closed down $11.80 at $661 an ounce on the New York Mercantile Exchange. March silver closed down 16 cents at $13.83 an ounce, while April platinum gained 8.70 to close at $1,219.10 an ounce. March palladium ended down $2.05 at $339.75 an ounce. March copper ended down 5.85 cents at $2.586 a pound.
Hewlett-Packard Co.'s first-quarter profit jumped 26 percent as the company benefited from higher sales of laptop computers, printers and printing supplies during a robust holiday spending season.
An extraordinary large amount of BJ Services 2008 30 and 35 calls as well as 2008 22.50 puts traded on Tuesday-- at least 5000 of each.
Smart & Final Inc. agreed to be acquired by private equity firm Apollo Management. The deal values shares of the Los Angeles-based warehouse food store operator at $22 each, compared to Friday's close at $19.06.
Warner Music Group Corp. confirmed it's approached EMI Group plc about a possible acquisition. Warner said it made the overture on Jan. 24.
US contingency plans for air strikes on Iran extend beyond nuclear sites and include most of the country's military infrastructure, the BBC has learned.
Crude for March delivery fell $1.32 to $58.07 a barrel. The contract expired today and will be replaced by the April contract, which was down last quoted at $58.85 a barrel.Natural gas prices closed 1.1% higher at $7.58 per million British thermal units.
Gold for April delivery closed down $11.80 at $661 an ounce on the New York Mercantile Exchange. March silver closed down 16 cents at $13.83 an ounce, while April platinum gained 8.70 to close at $1,219.10 an ounce. March palladium ended down $2.05 at $339.75 an ounce. March copper ended down 5.85 cents at $2.586 a pound.
Hewlett-Packard Co.'s first-quarter profit jumped 26 percent as the company benefited from higher sales of laptop computers, printers and printing supplies during a robust holiday spending season.
An extraordinary large amount of BJ Services 2008 30 and 35 calls as well as 2008 22.50 puts traded on Tuesday-- at least 5000 of each.
Results
2/20/07 Results
Wal-Mart Stores Inc. estimated that for the fiscal 2008 first quarter, it would earn 68 cents to 71 cents a share from continuing operations as U.S. comparable-store sales increase 1% to 3%. For the full fiscal year, Wal-Mart forecasts $3.15 to $3.23 of earnings from continuing operations. The company
reported fiscal fourth-quarter net income rose 9.8% on 11% higher revenue. Earnings from continuing operations rose 8.8%. For the quarter ended Jan. 31, the company earned $3.94 billion, or 95 cents a share, compared with $3.59 billion, or 86 cents, in the year-earlier period. Earnings from continuing operations were 95 cents compared with 87 cents.
In the latest quarter, Home Depot's earnings fell to 50 cents from 60 cents on a comp-sales decline of 6.6%.
Target Corp. expects February sales at stores open at least one year to climb between 4% to 6%, compared to sales in the same month a year ago.
XM shareholders would receive 4.6 Sirius shares for each XM share held, or a 21.7 percent premium based on the two companies' Friday closing prices.
Vulcan Materials to buy Florida Rock in a deal that values Florida Rock ata premium of 45% over Friday's closing prices. The deal, which values Florida Rock shares at $68.03, will pay 70% in cash and supplement that with shares in Vulcan on a pro-rated basis.
Brett Steenbarger: "We've had declining money flow, even as the S&P 500 Index has made new highs.".
Shire Plc, the U.K.'s third-largest drugmaker, agreed to buy New River Pharmaceuticals Inc. for $2.6 billion to gain the rights to attention-deficit drug Vyvanse. Shire will pay $64 a share for Radford, Virginia-based New River.
Jon Hussman: "Advances in overvalued markets are regularly given back at great cost to investors who overstay, and can be avoided at no cost to long-term investors. I believe that there are ways to capture a reasonable portion such advances at controlled risk. But there are also times when the attempt to capture speculative gains in overvalued markets would demand too much precision and leave risks poorly controlled. At those times, investors can and should sleep through them (or at least hedge their portfolios), comfortable that any missed, incremental market gains are unlikely to be retained over time."
Wal-Mart Stores Inc. estimated that for the fiscal 2008 first quarter, it would earn 68 cents to 71 cents a share from continuing operations as U.S. comparable-store sales increase 1% to 3%. For the full fiscal year, Wal-Mart forecasts $3.15 to $3.23 of earnings from continuing operations. The company
reported fiscal fourth-quarter net income rose 9.8% on 11% higher revenue. Earnings from continuing operations rose 8.8%. For the quarter ended Jan. 31, the company earned $3.94 billion, or 95 cents a share, compared with $3.59 billion, or 86 cents, in the year-earlier period. Earnings from continuing operations were 95 cents compared with 87 cents.
In the latest quarter, Home Depot's earnings fell to 50 cents from 60 cents on a comp-sales decline of 6.6%.
Target Corp. expects February sales at stores open at least one year to climb between 4% to 6%, compared to sales in the same month a year ago.
XM shareholders would receive 4.6 Sirius shares for each XM share held, or a 21.7 percent premium based on the two companies' Friday closing prices.
Vulcan Materials to buy Florida Rock in a deal that values Florida Rock ata premium of 45% over Friday's closing prices. The deal, which values Florida Rock shares at $68.03, will pay 70% in cash and supplement that with shares in Vulcan on a pro-rated basis.
Brett Steenbarger: "We've had declining money flow, even as the S&P 500 Index has made new highs.".
Shire Plc, the U.K.'s third-largest drugmaker, agreed to buy New River Pharmaceuticals Inc. for $2.6 billion to gain the rights to attention-deficit drug Vyvanse. Shire will pay $64 a share for Radford, Virginia-based New River.
Jon Hussman: "Advances in overvalued markets are regularly given back at great cost to investors who overstay, and can be avoided at no cost to long-term investors. I believe that there are ways to capture a reasonable portion such advances at controlled risk. But there are also times when the attempt to capture speculative gains in overvalued markets would demand too much precision and leave risks poorly controlled. At those times, investors can and should sleep through them (or at least hedge their portfolios), comfortable that any missed, incremental market gains are unlikely to be retained over time."
Sunday, February 18, 2007
Another Refinery Explosion
2/19/07 Another Refinery Explosion
Valero, the largest refiner in North America, operates 17 refineries, 16 in North America and one in Aruba. The McKee refinery, located in Sunray, is one of six in Texas and has a capacity of 170,000 barrels per day. More than 400 workers were evacuated from the Valero McKee Refinery after Friday's explosion, authorities said.
At least 19 people were injured, but thankfully there were no fatalities.
Eight U.S. service members were killed and 14 wounded when a military helicopter crashed Sunday in southeastern Afghanistan after reporting engine failure, the U.S. military said.
Kentucky, Texas and Ohio are the latest to adopt versions of the tax on companies' sales or profits, levied at a very low rate meant to apply to as broad a swath of corporate earnings as possible. Michigan Gov. Jennifer Granholm has also proposed a version as part of a tax system overhaul.
"There were far too many companies doing profitable business here but not paying their fair share of taxes," said Brad Cowgill, Kentucky state budget director.
The U.S. imported 1.139 million barrels a day from Venezuela in 2006, down 8.2 percent from 1.241 million the previous year, according to the EIA. That's the lowest level since 1994, when the United States imported 1.034 million barrels a day.
A barge holding about 17,000 gallons of crude oil burst into flames Saturday, leaving one person burned and another missing. It took 4 1/2 hours to put out the fire. The accident occurred at Garden Isle Bay near Pass a Loutre -- a waterway heading east through the delta at the tip of the Mississippi River.
Congressman John Conyers, Chair of the House Judiciary Committee, has used the following rhetoric repeatedly in recent weeks:
"George Bush has the habit of firing military leaders who tells him the Iraq war is failing. But let me tell you something. He can't fire you. He can't fire us. But we can fire him! We can fire him!" he will favor impeachment if Bush attacks Iran.
Mike Burk: "The market is overbought and seasonally next week has been flat. I expect the major indices to be lower on Friday February 23 than they were on Friday February 16.
Robert McHugh: "We believe the intermediate-term risks in Bonds have moved away from a decline to a rise in prices, and declining long-term interest rates. This is frightening, as it means we are about to enter another recession, one that could be deeper than we have seen in a long time."
Qatar's $40 billion investment fund is seeking a ``strategic'' stake in J Sainsbury Plc and is studying exactly how much of the U.K. retailer it wants to buy, the Gulf emirate's foreign minister said.
Oil Drum: "The US military is completely addicted to oil. Unsurprisingly, its oil consumption for aircraft, ships, ground vehicles and facilities makes the Pentagon the single largest oil consumer in the world. By the way, according to the 2006 CIA World Factbook rankings there are only 35 countries (out of 210) in the world that consume more oil per day than the Pentagon."
Abraham Lincoln: “I destroy my enemies when I make them my friends.”
Robert Lynd: "The belief in the possibility of a short decisive war appears to be one of the most ancient and dangerous of human illusions."
Valero, the largest refiner in North America, operates 17 refineries, 16 in North America and one in Aruba. The McKee refinery, located in Sunray, is one of six in Texas and has a capacity of 170,000 barrels per day. More than 400 workers were evacuated from the Valero McKee Refinery after Friday's explosion, authorities said.
At least 19 people were injured, but thankfully there were no fatalities.
Eight U.S. service members were killed and 14 wounded when a military helicopter crashed Sunday in southeastern Afghanistan after reporting engine failure, the U.S. military said.
Kentucky, Texas and Ohio are the latest to adopt versions of the tax on companies' sales or profits, levied at a very low rate meant to apply to as broad a swath of corporate earnings as possible. Michigan Gov. Jennifer Granholm has also proposed a version as part of a tax system overhaul.
"There were far too many companies doing profitable business here but not paying their fair share of taxes," said Brad Cowgill, Kentucky state budget director.
The U.S. imported 1.139 million barrels a day from Venezuela in 2006, down 8.2 percent from 1.241 million the previous year, according to the EIA. That's the lowest level since 1994, when the United States imported 1.034 million barrels a day.
A barge holding about 17,000 gallons of crude oil burst into flames Saturday, leaving one person burned and another missing. It took 4 1/2 hours to put out the fire. The accident occurred at Garden Isle Bay near Pass a Loutre -- a waterway heading east through the delta at the tip of the Mississippi River.
Congressman John Conyers, Chair of the House Judiciary Committee, has used the following rhetoric repeatedly in recent weeks:
"George Bush has the habit of firing military leaders who tells him the Iraq war is failing. But let me tell you something. He can't fire you. He can't fire us. But we can fire him! We can fire him!" he will favor impeachment if Bush attacks Iran.
Mike Burk: "The market is overbought and seasonally next week has been flat. I expect the major indices to be lower on Friday February 23 than they were on Friday February 16.
Robert McHugh: "We believe the intermediate-term risks in Bonds have moved away from a decline to a rise in prices, and declining long-term interest rates. This is frightening, as it means we are about to enter another recession, one that could be deeper than we have seen in a long time."
Qatar's $40 billion investment fund is seeking a ``strategic'' stake in J Sainsbury Plc and is studying exactly how much of the U.K. retailer it wants to buy, the Gulf emirate's foreign minister said.
Oil Drum: "The US military is completely addicted to oil. Unsurprisingly, its oil consumption for aircraft, ships, ground vehicles and facilities makes the Pentagon the single largest oil consumer in the world. By the way, according to the 2006 CIA World Factbook rankings there are only 35 countries (out of 210) in the world that consume more oil per day than the Pentagon."
Abraham Lincoln: “I destroy my enemies when I make them my friends.”
Robert Lynd: "The belief in the possibility of a short decisive war appears to be one of the most ancient and dangerous of human illusions."
Saturday, February 17, 2007
Happenings
2/18/07 Happenings
BBVA, Spain’s second-largest bank, on Friday stepped up its push into the US by unveiling an agreed $9.6bn acquisition of Compass Bancshares, a franchise covering six states.
Pertaining to rumors of GM buying Chrysler, a GM source said the company had nothing to say because: "We decided not to comment when something makes no sense."
"Loan officers, mortgage agents, real estate employees, development executives and construction workers are among the array of people who have lost jobs in the East Bay or are wondering when the ax might fall," Northern California's Contra Costa Times reports. "And directly or indirectly, those job losses are tied to a drastic slump in the sales, construction and financing of new homes...Now, a slowdown has arrived and relief has yet to arrive on the horizon."
Carl Swenlin: "Bottom Line: The Rydex Cash Flow Ratio shows that investors have been extremely reluctant to accept the market advance from the summer lows. Until they do, the advance is likely to continue."
George Ure: "You'll see a link to the Minneapolis Federal Reserve's inflation calculator. I want you to click on it because it has now been updated to 2007 data (they should have done a press release, but the effects of harsh economic facts are difficult to predict, so we had to make do with Chairman Ben's comments this week which were about as vanilla as one could hope for).
You'll see that if you plug in 11,723 which was the 2000 Dow high, and then put in 2007 (sort of like asking "What should the Dow be priced at today to have just kept even with inflation?) you'll find we need the Dow to have hit 13,989.99 to have just held its value.
No, that's not likely to make a front page headline in the WSJ or Forbes. After all, what kind of fool editor would proclaim "Dow Loses 8.6% (excluding commission/dividends/etc) Despite Record Highs" except me?"
"Examination of data within the quarter shows home prices stabilizing toward the end," said a statement from David Lereah, the NAR's chief economist. "When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices." This guy is the second coming of Helicopter Ben.
"Doug Noland: "It is my view that, at least for the most part, subprime is not a viable business over the entire life of the business cycle. Invariably during the boom - with cheap finance too readily available and a broadening cadre of aggressive lenders, financiers, and speculators actively pursuing their share of ballooning profits - subprime loans will be under-priced and grossly overextended. There will be dire circumstances. And the more protracted the boom, the greater will be the systemic impact of the mispricing and overexpansion of subprime finance. Inevitably, there is no escaping the reality that the industry is a Ponzi Finance Unit, acutely dependent upon new liquidity to sustain lending volumes and, hence, asset prices, borrower solvency and loan quality. Importantly, amidst Credit Euphoria, the overextension of loans will inflate collateral values (home prices) and boost the general economy. With home prices up, unemployment down, and Credit all around, few will be forced into default and foreclosure. Subprime profits will be distorted both by inflated revenue growth (surging loan volumes, gain on sale at inflated prices, and attractive spreads on retained portfolios) and by artificially low Credit losses. The outstanding performance of subprime securitizations and related derivatives will entice only greater speculator interest and sector liquidity overabundance, pushing up the price (down the yield) of risky mortgages. In the real economy, easy finance and housing price inflation spur overbuilding, overspending, and a misallocation of resources...Wednesday, California originator ResMae filed for bankruptcy after Merrill Lynch sought to return $520 million "worth" of mortgages."
John Mauldin: "The subprime mortgage market is going to be a scandal by the end of this year, as these loans have been packaged and sold as investment-grade bonds by numerous investment banks, mostly to European and Asian institutions. Some of these Collateralized Debt Obligations, or CDOs, are going to default and there is going to be a major wave of lawsuits.So, will there be a recession? I still think so, and I think the culprit is going to be the housing market, which is going to trigger a slowdown in consumer spending, the first such slowdown since 1991."
BBVA, Spain’s second-largest bank, on Friday stepped up its push into the US by unveiling an agreed $9.6bn acquisition of Compass Bancshares, a franchise covering six states.
Pertaining to rumors of GM buying Chrysler, a GM source said the company had nothing to say because: "We decided not to comment when something makes no sense."
"Loan officers, mortgage agents, real estate employees, development executives and construction workers are among the array of people who have lost jobs in the East Bay or are wondering when the ax might fall," Northern California's Contra Costa Times reports. "And directly or indirectly, those job losses are tied to a drastic slump in the sales, construction and financing of new homes...Now, a slowdown has arrived and relief has yet to arrive on the horizon."
Carl Swenlin: "Bottom Line: The Rydex Cash Flow Ratio shows that investors have been extremely reluctant to accept the market advance from the summer lows. Until they do, the advance is likely to continue."
George Ure: "You'll see a link to the Minneapolis Federal Reserve's inflation calculator. I want you to click on it because it has now been updated to 2007 data (they should have done a press release, but the effects of harsh economic facts are difficult to predict, so we had to make do with Chairman Ben's comments this week which were about as vanilla as one could hope for).
You'll see that if you plug in 11,723 which was the 2000 Dow high, and then put in 2007 (sort of like asking "What should the Dow be priced at today to have just kept even with inflation?) you'll find we need the Dow to have hit 13,989.99 to have just held its value.
No, that's not likely to make a front page headline in the WSJ or Forbes. After all, what kind of fool editor would proclaim "Dow Loses 8.6% (excluding commission/dividends/etc) Despite Record Highs" except me?"
"Examination of data within the quarter shows home prices stabilizing toward the end," said a statement from David Lereah, the NAR's chief economist. "When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices." This guy is the second coming of Helicopter Ben.
"Doug Noland: "It is my view that, at least for the most part, subprime is not a viable business over the entire life of the business cycle. Invariably during the boom - with cheap finance too readily available and a broadening cadre of aggressive lenders, financiers, and speculators actively pursuing their share of ballooning profits - subprime loans will be under-priced and grossly overextended. There will be dire circumstances. And the more protracted the boom, the greater will be the systemic impact of the mispricing and overexpansion of subprime finance. Inevitably, there is no escaping the reality that the industry is a Ponzi Finance Unit, acutely dependent upon new liquidity to sustain lending volumes and, hence, asset prices, borrower solvency and loan quality. Importantly, amidst Credit Euphoria, the overextension of loans will inflate collateral values (home prices) and boost the general economy. With home prices up, unemployment down, and Credit all around, few will be forced into default and foreclosure. Subprime profits will be distorted both by inflated revenue growth (surging loan volumes, gain on sale at inflated prices, and attractive spreads on retained portfolios) and by artificially low Credit losses. The outstanding performance of subprime securitizations and related derivatives will entice only greater speculator interest and sector liquidity overabundance, pushing up the price (down the yield) of risky mortgages. In the real economy, easy finance and housing price inflation spur overbuilding, overspending, and a misallocation of resources...Wednesday, California originator ResMae filed for bankruptcy after Merrill Lynch sought to return $520 million "worth" of mortgages."
John Mauldin: "The subprime mortgage market is going to be a scandal by the end of this year, as these loans have been packaged and sold as investment-grade bonds by numerous investment banks, mostly to European and Asian institutions. Some of these Collateralized Debt Obligations, or CDOs, are going to default and there is going to be a major wave of lawsuits.So, will there be a recession? I still think so, and I think the culprit is going to be the housing market, which is going to trigger a slowdown in consumer spending, the first such slowdown since 1991."
Long Overdue
2/17/06 Long Overdue
Goldman Sachs on Friday cut its earnings estimates on Home Depot Inc. for 2007 to $2.77 a share from $2.92 a share, and for 2008 to $3.08 a share from $3.36. These new estimates were long overdue.
The Commerce Department said housing starts last month plunged 14.3% from December levels to a seasonally adjusted annual rate of 1.408 million, the lowest rate for starts since August 1997. Building permits dropped 2.8% to 1.568 million in January, 28.6% below the same month a year ago.
Prices paid by producers fell 0.6% in January, while core prices, which exclude food and energy prices, rose 0.2%.
Real estate investment trust Mills Corp. said Friday that Simon Property Group Inc. and hedge fund Farallon Capital Management will acquire the company for $25.25 a share in cash. The group had earlier offered to acquire Mills for $24 a share.
The Philadelphia region's manufacturing weakened in February since orders fell and shipments weakened. The derived composite fell to 49.5 from 53.5. That is the lowest level of the composite since August 2003.
Rigzone: " Worldwide offshore rig utilization inched up slightly this week to 83.6% with 556 of 665 offshore rigs currently under contract. Worldwide rig utilization and the worldwide rig count have been setting highs not reached since the 1980’s."
According to researchers at the University of Michigan on Friday. the consumer sentiment index retreated to 93.3 in February after jumping to 96.9 in January from 91.7 in December. The current conditions index fell to 108.3 in February from 111.3 in January. The expectations index slipped to 83.7 from 87.6 in the previous month.
"This country needs a dramatic change of course in Iraq and it is the responsibility of this Congress to consummate that change," said Rep. John Murtha.
The U.S. warned that militant attacks in Nigeria, Africa's biggest oil producer, may expand to new areas and become more violent. Nigeria is the fifth-biggest U.S. oil supplier. Refineries in Pennsylvania, Delaware and Ontario have slowed output this week because of fires and power outages.
From Oil Drum: "They cannot increase; the only way is for production to go down," said Mohamed Zine, Middle East regional manager for energy analyst firm IHS. "There has been no improvement, nothing," said Zine, whose views on the situation in Iraq are often less dramatic than Chalabi's. "It is getting worse."
Xerox said late Friday it expects 2007 operating cash flows to fall to a range of $1.2 billion to $1.5 billion from $1.6 billion last year.
SanDisk said it is cutting expenses with actions such as reducing its worldwide workforce by up to 10%, or 250 employees, and reducing salaries for all executives, with the chief executive's base pay falling 20%.
Crude for March delivery closed up $1.40 at $59.39 a barrel on the New York Mercantile Exchange. Natural-gas futures were up 21.1 cents at $7.503 per million British thermal units, down 4.1% from a week ago.
Gold for April delivery closed up $1.40 at $672.80 an ounce on the New York Mercantile Exchange. March silver closed up 2.8 cents at $13.99 an ounce. April platinum ended down $6.50 at $1,210.40 an ounce, and March palladium dropped $1 at $341.80 an ounce. March copper closed down 1.95 cents at $2.6445 a pound.
Goldman Sachs on Friday cut its earnings estimates on Home Depot Inc. for 2007 to $2.77 a share from $2.92 a share, and for 2008 to $3.08 a share from $3.36. These new estimates were long overdue.
The Commerce Department said housing starts last month plunged 14.3% from December levels to a seasonally adjusted annual rate of 1.408 million, the lowest rate for starts since August 1997. Building permits dropped 2.8% to 1.568 million in January, 28.6% below the same month a year ago.
Prices paid by producers fell 0.6% in January, while core prices, which exclude food and energy prices, rose 0.2%.
Real estate investment trust Mills Corp. said Friday that Simon Property Group Inc. and hedge fund Farallon Capital Management will acquire the company for $25.25 a share in cash. The group had earlier offered to acquire Mills for $24 a share.
The Philadelphia region's manufacturing weakened in February since orders fell and shipments weakened. The derived composite fell to 49.5 from 53.5. That is the lowest level of the composite since August 2003.
Rigzone: " Worldwide offshore rig utilization inched up slightly this week to 83.6% with 556 of 665 offshore rigs currently under contract. Worldwide rig utilization and the worldwide rig count have been setting highs not reached since the 1980’s."
According to researchers at the University of Michigan on Friday. the consumer sentiment index retreated to 93.3 in February after jumping to 96.9 in January from 91.7 in December. The current conditions index fell to 108.3 in February from 111.3 in January. The expectations index slipped to 83.7 from 87.6 in the previous month.
"This country needs a dramatic change of course in Iraq and it is the responsibility of this Congress to consummate that change," said Rep. John Murtha.
The U.S. warned that militant attacks in Nigeria, Africa's biggest oil producer, may expand to new areas and become more violent. Nigeria is the fifth-biggest U.S. oil supplier. Refineries in Pennsylvania, Delaware and Ontario have slowed output this week because of fires and power outages.
From Oil Drum: "They cannot increase; the only way is for production to go down," said Mohamed Zine, Middle East regional manager for energy analyst firm IHS. "There has been no improvement, nothing," said Zine, whose views on the situation in Iraq are often less dramatic than Chalabi's. "It is getting worse."
Xerox said late Friday it expects 2007 operating cash flows to fall to a range of $1.2 billion to $1.5 billion from $1.6 billion last year.
SanDisk said it is cutting expenses with actions such as reducing its worldwide workforce by up to 10%, or 250 employees, and reducing salaries for all executives, with the chief executive's base pay falling 20%.
Crude for March delivery closed up $1.40 at $59.39 a barrel on the New York Mercantile Exchange. Natural-gas futures were up 21.1 cents at $7.503 per million British thermal units, down 4.1% from a week ago.
Gold for April delivery closed up $1.40 at $672.80 an ounce on the New York Mercantile Exchange. March silver closed up 2.8 cents at $13.99 an ounce. April platinum ended down $6.50 at $1,210.40 an ounce, and March palladium dropped $1 at $341.80 an ounce. March copper closed down 1.95 cents at $2.6445 a pound.
Thursday, February 15, 2007
New Threats
2/16/07 New Threats
A Saudi wing of al Qaeda called for attacks on suppliers of oil to the United States around the world, saying targets should not be limited to the Middle East and listing Canada, Venezuela and Mexico as under threat.
The threat appeared in the al Qaeda Organisation in the Arabian Peninsula's e-magazine, Sawt al-Jihad (Voice of Holy War), which was posted on a website used by Islamist militants.
"It is necessary to hit oil interests in all regions which serve the United States, not just in the Middle East. The goal is to cut its supplies or reduce them through any means," it said.
China and Russia are fighting U.S. efforts at the United Nations to prevent Iran from building nuclear bombs while working to strip North Korea of the same weapons.
Diplomats said the international effort to punish Iran has been stymied, chiefly by China and Russia. Russian diplomats said they favor negotiations aimed at persuading Iran to halt nuclear enrichment work, rather than carrying out sanctions right away. Chinese envoys expressed the same view.
Hershey Foods Corp. detailed a three-year plan to change its supply chain operations, saying it expects a total net reduction of about 1,500 jobs.
Proved reserves of natural gas and oil added through drilling replaced 197% of EnCana's North American production for 2006, the company said.
Baker Hughes said that it's expecting revenue outside North America to rise by between 17% and 19% in 2007.
From the Financial Times: "Expectations that the Bank of Japan would raise interest rates soon strengthened on Thursday after fourth quarter GDP figures showed the Japanese economy grew at its fastest pace in nearly three years.
The Japanese economy in the October to December period grew 1.2 per cent from the previous quarter, much stronger than a consensus forecast of a 0.9 per cent increase. It translated to an annualized 4.8 per cent growth, the highest in nearly three years."
Import prices fell 1.2 percent in January after increases of 1.1 percent
and 0.5 percent, respectively, in December and November. A 7.3 percent
decrease in petroleum prices drove the overall January drop, as petroleum
prices resumed a recent downward pattern after increasing 4.6 percent in
December. Nonpetroleum prices were unchanged in January after a 0.5
percent advance the previous month. Prices for nonpetroleum imports rose 1.6
percent over the 12 months ended in January.
Changes in prices for nonpetroleum imports were highlighted by a
turnaround in the index for nonpetroleum industrial supplies and materials
prices, which declined 1.0 percent. The January decrease followed increases
of 1.7 percent and 4.1 percent, respectively, in December and November.
The Federal Reserve Bank of New York's general economic index rose to 24.4 in February from 9.1 the month before, the bank said today. The increase was the largest since July 2005.
George Ure: "an email from a long-time reader/contributor Bruce C who laid an amazing series of emails on me:
"Since the July '06 low, the SPX has run nearly 20%; this 7-mth. rally eclipses the 7-mth. blow-off episodes before the '00 top, the '87 top, and the '73 top.
It required 13 mths. to rally a similar 19-20% to the top in '72-'73; 9-10 mths. in '87; and 12-13 mths. in '00.
Additionally, it took 17-18 mths. for the 19-20% rise and blow off in 1891-93; 16 mths. in 1906-07; 9 mths. in 1919; only 2-3 mths. in 1929; 7 mths. in '36-'37; 17 mths. in '67-'68; 7-8 mths. in '90; and 6-7 mths. in '98.
Thus, we're duplicating, even surpassing, the periods immediately preceding the tops in '19, '37, '68, '73, '87, '90, '98, and '00.
Again, it is "different this time". We might well look back on this 7-mth. period, and the 3-4 years that preceded it, as the last best period for stocks for many years to come, perhaps a decade or more."
George Ure asks: "If the Saudis really have all the oil that's claimed, why would they even think of pursuing a nuclear deal with Russia? " If you are short oil and/or the oil sector, then you might think carefully about this question. In the stock market one should watch the flow of money.
In the Saudi Ghawar oil field, one should watch the flow of water.
U.S. industrial production fell 0.5% in January, the biggest drop since Hurricane Katrina struck the Gulf Coast in September 2005, the Federal Reserve reported Thursday. Capacity utilization fell sharply to 81.2% from 81.8%. Manufacturing output fell 0.7% in January.
Monthly capital flows to the United States reversed in December to the first outflow in a year-and-a-half, the Treasury Department reported Thursday. Monthly capital flows reversed to an outflow of $11 billion in December compared to an inflow of $70.5 billion in November. Net long-term capital inflows, meanwhile, fell to $15.6 billion in December from $84.9 billion in November. This is the lowest inflow since January 2002.
Rigzone reports as an aging generation of workers retires, industry experts say the resulting shortfall in skilled labor could lead to an increase in delays and problems on mega oil and gas projects.
"We're running out of water," said Montana Gov. Brian Schweitzer. "It's getting worse every year as Wyoming is using more and more water our farmers and ranchers who depend on this water for irrigation are having difficulty raising their crops."
The Energy Department said natural-gas inventories fell 259 billion cubic feet for the week ended Feb. 9. Total stocks now stand at 2.088 trillion cubic feet, down 193 billion cubic feet from the year-ago level, but 268 billion cubic feet above the five-year average, the government data said.
The Labor Department reported the number of Americans filing first-time claims for state unemployment benefits rose to 357,000 last week from a revised 313,000 the prior week.
March crude closed at $57.99 a barrel Thursday, ending the session with a loss of one penny after dropping to a low of $56.65 earlier. March natural-gas also recovered from a low of $7.05 to close at $7.292 million British thermal units, up 5.1 cents.
George Friedman (courtesy of John Mauldin) : "Russia is not only a major exporter of energy supplies, it is currently the world's top oil producer. The Russians have a need to maintain robust energy prices, and working with the Iranians and Saudis in some way to achieve this is directly in line with Moscow's interest. To be more specific, the Russians do not want the Saudis increasing oil production."
"Some of the Windows revenue forecasts I've seen are overly aggressive,'' Chief Executive Officer Steve Ballmer said at a meeting with analysts in New York today. ``You shouldn't think of a huge surge in fiscal year `08 relative to `07. There's a few that think we are going to do so much better than PC growth.''
Home prices fell in half of U.S. cities in the fourth quarter as a housing slump forced sellers to accept lower prices, the National Association of Realtors said.
The median price for a single-family home fell in 73 of 149 metropolitan areas studied by the Chicago-based real estate trade group. The national median price for a previously owned house was $219,300 in the fourth quarter, down 2.7 percent from a year earlier when the median price was $225,300, the group said in a report today.
A majority of Americans -- 53 percent -- said the U.S. should withdraw from Iraq, according to Pew. That is up 5 points in the past month and the highest percentage favoring a troop pullout since the war began almost four years ago. Thirty-five percent said the withdrawal should be gradual over the next year or two, and 16 percent said it should be immediate.
Mike Steinhardt: " Very few people have the ability to pick a high, and I don't think that this is the exact moment. One stays long, but one becomes very sensitive. You say to yourself that the next major, major move is going the other way.''
All of the greater Houston area, with the exception of the immediate coast, will experience freezing temperatures overnight.
Temperatures will fall below freezing around midnight, likely falling into the upper 20s, and will remain so until the sun rises Friday, forecasters at the Houston/Galveston office of the National Weather Service said. The record low at Bush Intercontinental Airport for Feb. 16 is 28 degrees, so it could be tied or broken. If the temperature falls below 30 degrees it will be the coldest night of the 2006-2007 winter. Temperatures this month are about 2.2 degrees below normal, and temperatures have been cooler than normal on 25 of the last 31 days.
A Saudi wing of al Qaeda called for attacks on suppliers of oil to the United States around the world, saying targets should not be limited to the Middle East and listing Canada, Venezuela and Mexico as under threat.
The threat appeared in the al Qaeda Organisation in the Arabian Peninsula's e-magazine, Sawt al-Jihad (Voice of Holy War), which was posted on a website used by Islamist militants.
"It is necessary to hit oil interests in all regions which serve the United States, not just in the Middle East. The goal is to cut its supplies or reduce them through any means," it said.
China and Russia are fighting U.S. efforts at the United Nations to prevent Iran from building nuclear bombs while working to strip North Korea of the same weapons.
Diplomats said the international effort to punish Iran has been stymied, chiefly by China and Russia. Russian diplomats said they favor negotiations aimed at persuading Iran to halt nuclear enrichment work, rather than carrying out sanctions right away. Chinese envoys expressed the same view.
Hershey Foods Corp. detailed a three-year plan to change its supply chain operations, saying it expects a total net reduction of about 1,500 jobs.
Proved reserves of natural gas and oil added through drilling replaced 197% of EnCana's North American production for 2006, the company said.
Baker Hughes said that it's expecting revenue outside North America to rise by between 17% and 19% in 2007.
From the Financial Times: "Expectations that the Bank of Japan would raise interest rates soon strengthened on Thursday after fourth quarter GDP figures showed the Japanese economy grew at its fastest pace in nearly three years.
The Japanese economy in the October to December period grew 1.2 per cent from the previous quarter, much stronger than a consensus forecast of a 0.9 per cent increase. It translated to an annualized 4.8 per cent growth, the highest in nearly three years."
Import prices fell 1.2 percent in January after increases of 1.1 percent
and 0.5 percent, respectively, in December and November. A 7.3 percent
decrease in petroleum prices drove the overall January drop, as petroleum
prices resumed a recent downward pattern after increasing 4.6 percent in
December. Nonpetroleum prices were unchanged in January after a 0.5
percent advance the previous month. Prices for nonpetroleum imports rose 1.6
percent over the 12 months ended in January.
Changes in prices for nonpetroleum imports were highlighted by a
turnaround in the index for nonpetroleum industrial supplies and materials
prices, which declined 1.0 percent. The January decrease followed increases
of 1.7 percent and 4.1 percent, respectively, in December and November.
The Federal Reserve Bank of New York's general economic index rose to 24.4 in February from 9.1 the month before, the bank said today. The increase was the largest since July 2005.
George Ure: "an email from a long-time reader/contributor Bruce C who laid an amazing series of emails on me:
"Since the July '06 low, the SPX has run nearly 20%; this 7-mth. rally eclipses the 7-mth. blow-off episodes before the '00 top, the '87 top, and the '73 top.
It required 13 mths. to rally a similar 19-20% to the top in '72-'73; 9-10 mths. in '87; and 12-13 mths. in '00.
Additionally, it took 17-18 mths. for the 19-20% rise and blow off in 1891-93; 16 mths. in 1906-07; 9 mths. in 1919; only 2-3 mths. in 1929; 7 mths. in '36-'37; 17 mths. in '67-'68; 7-8 mths. in '90; and 6-7 mths. in '98.
Thus, we're duplicating, even surpassing, the periods immediately preceding the tops in '19, '37, '68, '73, '87, '90, '98, and '00.
Again, it is "different this time". We might well look back on this 7-mth. period, and the 3-4 years that preceded it, as the last best period for stocks for many years to come, perhaps a decade or more."
George Ure asks: "If the Saudis really have all the oil that's claimed, why would they even think of pursuing a nuclear deal with Russia? " If you are short oil and/or the oil sector, then you might think carefully about this question. In the stock market one should watch the flow of money.
In the Saudi Ghawar oil field, one should watch the flow of water.
U.S. industrial production fell 0.5% in January, the biggest drop since Hurricane Katrina struck the Gulf Coast in September 2005, the Federal Reserve reported Thursday. Capacity utilization fell sharply to 81.2% from 81.8%. Manufacturing output fell 0.7% in January.
Monthly capital flows to the United States reversed in December to the first outflow in a year-and-a-half, the Treasury Department reported Thursday. Monthly capital flows reversed to an outflow of $11 billion in December compared to an inflow of $70.5 billion in November. Net long-term capital inflows, meanwhile, fell to $15.6 billion in December from $84.9 billion in November. This is the lowest inflow since January 2002.
Rigzone reports as an aging generation of workers retires, industry experts say the resulting shortfall in skilled labor could lead to an increase in delays and problems on mega oil and gas projects.
"We're running out of water," said Montana Gov. Brian Schweitzer. "It's getting worse every year as Wyoming is using more and more water our farmers and ranchers who depend on this water for irrigation are having difficulty raising their crops."
The Energy Department said natural-gas inventories fell 259 billion cubic feet for the week ended Feb. 9. Total stocks now stand at 2.088 trillion cubic feet, down 193 billion cubic feet from the year-ago level, but 268 billion cubic feet above the five-year average, the government data said.
The Labor Department reported the number of Americans filing first-time claims for state unemployment benefits rose to 357,000 last week from a revised 313,000 the prior week.
March crude closed at $57.99 a barrel Thursday, ending the session with a loss of one penny after dropping to a low of $56.65 earlier. March natural-gas also recovered from a low of $7.05 to close at $7.292 million British thermal units, up 5.1 cents.
George Friedman (courtesy of John Mauldin) : "Russia is not only a major exporter of energy supplies, it is currently the world's top oil producer. The Russians have a need to maintain robust energy prices, and working with the Iranians and Saudis in some way to achieve this is directly in line with Moscow's interest. To be more specific, the Russians do not want the Saudis increasing oil production."
"Some of the Windows revenue forecasts I've seen are overly aggressive,'' Chief Executive Officer Steve Ballmer said at a meeting with analysts in New York today. ``You shouldn't think of a huge surge in fiscal year `08 relative to `07. There's a few that think we are going to do so much better than PC growth.''
Home prices fell in half of U.S. cities in the fourth quarter as a housing slump forced sellers to accept lower prices, the National Association of Realtors said.
The median price for a single-family home fell in 73 of 149 metropolitan areas studied by the Chicago-based real estate trade group. The national median price for a previously owned house was $219,300 in the fourth quarter, down 2.7 percent from a year earlier when the median price was $225,300, the group said in a report today.
A majority of Americans -- 53 percent -- said the U.S. should withdraw from Iraq, according to Pew. That is up 5 points in the past month and the highest percentage favoring a troop pullout since the war began almost four years ago. Thirty-five percent said the withdrawal should be gradual over the next year or two, and 16 percent said it should be immediate.
Mike Steinhardt: " Very few people have the ability to pick a high, and I don't think that this is the exact moment. One stays long, but one becomes very sensitive. You say to yourself that the next major, major move is going the other way.''
All of the greater Houston area, with the exception of the immediate coast, will experience freezing temperatures overnight.
Temperatures will fall below freezing around midnight, likely falling into the upper 20s, and will remain so until the sun rises Friday, forecasters at the Houston/Galveston office of the National Weather Service said. The record low at Bush Intercontinental Airport for Feb. 16 is 28 degrees, so it could be tied or broken. If the temperature falls below 30 degrees it will be the coldest night of the 2006-2007 winter. Temperatures this month are about 2.2 degrees below normal, and temperatures have been cooler than normal on 25 of the last 31 days.
Wednesday, February 14, 2007
Shifting Sands
2/15/07 Shifting Sands
Tribune Co. after Tuesday's closing bell said the review of strategic alternatives is ongoing, and the media company's board expects to make a decision on a course of action and have an announcement before the end of the first quarter. "The review process has been rigorous and will continue to move forward with the assistance of our outside financial and legal advisors," said William Osborn, Tribune's lead independent director, in a statement.
DaimlerChrysler dropped its long-standing commitment to the Chrysler group today and said it was prepared to review all its options, including finding new partners for its loss-making U.S. arm. The company is
going to cut 13,000 jobs from 2007 to 2009, with 11,000 hourly workers being cut and 2,000 salaried employees losing their jobs.
In the fourth quarter of 2006, there were 1,444 mass layoff events that
resulted in the separation of 255,886 workers from their jobs for at least
31 days, according to preliminary figures released by the U.S. Department
of Labor’s Bureau of Labor Statistics. Both the total number of layoff
events and the number of separations were higher than during the October-
December 2005 time period. (See table A.) The over-the-year increases
in layoffs were most notable in transportation equipment manufacturing,
insurance carriers and related activities, and food and beverage stores.
Fifty-seven percent of all employers reporting an extended layoff in the
fourth quarter of 2006 indicated they would recall some number of workers.
This was the lowest proportion of employers expecting to recall workers for
any fourth quarter since 2002.
A growing body of research is being done exploring the
relationship between the potential of melanocortins to
treat hypertension. This could have a significant impact
on Palatin in future years.
The company is starting a melanocortin 1 receptor agonist program.
Oil Drum points out Matt Simmons thinks that we will peak in oil production this year, because the spare
capacity to replace the collapsing fields of Mexico and the North Sea
is just not there.
Nouriel Roubini: "It now looks like the alleged growth rebound in Q4, from the 2.0% of Q3
to the 3.5% of Q4 was an illusion based on incomplete data. Based on
recent data on inventories for December (much lower than initially
predicted by BEA) and today’s December trade balance figures (much
worse than initially forecasted by BEA) the initial estimate for Q4
growth will be revised downward to 2.0% or at best 2.2%."
Russia will spend at least $11 billion to build the first leg of its oil pipeline to Asia, up from initial estimates of $6.6 billion, pipeline monopoly Transneft said in its eurobond prospectus.
Sol Palha: "When the oil to Gold ratio drops below 9 then it pays to get out of oil and buy Gold. When this ratio trades above 11 the opposite is true; it's good to jump out of gold and buy oil...The current ratio stands at 12.5 and thus it more then makes sense to go long Oil and get out of Gold. What this pattern is basically illustrating is that Oil is now a better investment then Gold."
The U.S. is the main supplier of weapons to the oil-rich kingdom but relations have been strained since the Sept. 11 attacks and Saudi Arabia may be looking to Russia to diversify its military suppliers.
David S. Elliott: "Thus, it is indeed disquieting to note that the volume of water used to obtain Ghawar's oil has been steadily increasing. In fact, on a daily basis, an astounding 7 million barrels of seawater is being injected into the old oil reservoir to increase the oil flow. According to industry experts a few months ago Ghawar was producing 55 percent water -- in other words, more than half of the fluid brought to the surface was not oil.
In fact, a number of signs clearly indicate that Ghawar is in decline. Back in April 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8 percent per year. This, of course, implies that Ghawar may have peaked. The spokesman went on to say that measures were being taken to offset the decline, but that the only true solution to declining oil supplies is to locate new fields, and it is beyond debate that discoveries have not kept pace with growing global demand. Roughly 80 percent of oil being produced today is from fields discovered before 1973."
The first Iran's Oil Refining Forum is to be held in Tehran on February 17-18 with the participation of 300 domestic and foreign experts in the field of oil refining, IRNA reported. Organized by the National Iranian Oil Refining and Distribution Company (NIORDC), the conference is aimed at attracting foreign sponsors for investments on development of Iran's oil refining industry.
The American Petroleum Institute reported a fall of 372,000 barrels in distillate supplies for the week ended Feb. 9. The Energy Department had reported a decline of 3 million barrels. Motor gasoline supplies were down 603,000 barrels, the API said, vs. the government's reported fall of 2 million. Crude supplies were down 3.4 million barrels, the API said, compared with the government's 600,000-barrel decline.
Noble Energy Inc. said it expects to record year-end 2006 reserves of 834.6 million barrels of oil equivalent. The Houston-based energy company said it sees reserve additions from all sources totaling 122.1 MMBoe, or 179% of 2006 production.
April gold climbed $3.50 to close at $672 an ounce Wednesday March silver gained 5 cents to close at $13.965 an ounce. Over the past several months we have been able to
realize a profit of $100 an ounce in gold. I would recommend booking that profit and investing the profit in crude oil at roughly $58 a barrel.
Masco will cut 8,000 jobs by the end of the first quarter, including 1,000 salaried positions, Chief Executive Officer Richard Manoogian said today on a conference call. Fewer purchases at Lowe's Cos. and Home Depot Inc. and the slowdown in new home construction, which accounts for 40 percent of Masco's sales, hurt revenue in the fourth quarter. This does not sound like the worst of the housing decline is behind us.
The price of West Texas Intermediate, the benchmark U.S. crude, may average $69 this year, Goldman economist James Gutman said Feb. 8. Others like Sanford Bernstein predict oil prices will decline. That's what makes for horse racing, as one might say.
March crude fell $1.06 to close at $58 a barrel Wednesday. March natural gas fell 12.6 cents to close at $7.241 per million British thermal units.
Tribune Co. after Tuesday's closing bell said the review of strategic alternatives is ongoing, and the media company's board expects to make a decision on a course of action and have an announcement before the end of the first quarter. "The review process has been rigorous and will continue to move forward with the assistance of our outside financial and legal advisors," said William Osborn, Tribune's lead independent director, in a statement.
DaimlerChrysler dropped its long-standing commitment to the Chrysler group today and said it was prepared to review all its options, including finding new partners for its loss-making U.S. arm. The company is
going to cut 13,000 jobs from 2007 to 2009, with 11,000 hourly workers being cut and 2,000 salaried employees losing their jobs.
In the fourth quarter of 2006, there were 1,444 mass layoff events that
resulted in the separation of 255,886 workers from their jobs for at least
31 days, according to preliminary figures released by the U.S. Department
of Labor’s Bureau of Labor Statistics. Both the total number of layoff
events and the number of separations were higher than during the October-
December 2005 time period. (See table A.) The over-the-year increases
in layoffs were most notable in transportation equipment manufacturing,
insurance carriers and related activities, and food and beverage stores.
Fifty-seven percent of all employers reporting an extended layoff in the
fourth quarter of 2006 indicated they would recall some number of workers.
This was the lowest proportion of employers expecting to recall workers for
any fourth quarter since 2002.
A growing body of research is being done exploring the
relationship between the potential of melanocortins to
treat hypertension. This could have a significant impact
on Palatin in future years.
The company is starting a melanocortin 1 receptor agonist program.
Oil Drum points out Matt Simmons thinks that we will peak in oil production this year, because the spare
capacity to replace the collapsing fields of Mexico and the North Sea
is just not there.
Nouriel Roubini: "It now looks like the alleged growth rebound in Q4, from the 2.0% of Q3
to the 3.5% of Q4 was an illusion based on incomplete data. Based on
recent data on inventories for December (much lower than initially
predicted by BEA) and today’s December trade balance figures (much
worse than initially forecasted by BEA) the initial estimate for Q4
growth will be revised downward to 2.0% or at best 2.2%."
Russia will spend at least $11 billion to build the first leg of its oil pipeline to Asia, up from initial estimates of $6.6 billion, pipeline monopoly Transneft said in its eurobond prospectus.
Sol Palha: "When the oil to Gold ratio drops below 9 then it pays to get out of oil and buy Gold. When this ratio trades above 11 the opposite is true; it's good to jump out of gold and buy oil...The current ratio stands at 12.5 and thus it more then makes sense to go long Oil and get out of Gold. What this pattern is basically illustrating is that Oil is now a better investment then Gold."
The U.S. is the main supplier of weapons to the oil-rich kingdom but relations have been strained since the Sept. 11 attacks and Saudi Arabia may be looking to Russia to diversify its military suppliers.
David S. Elliott: "Thus, it is indeed disquieting to note that the volume of water used to obtain Ghawar's oil has been steadily increasing. In fact, on a daily basis, an astounding 7 million barrels of seawater is being injected into the old oil reservoir to increase the oil flow. According to industry experts a few months ago Ghawar was producing 55 percent water -- in other words, more than half of the fluid brought to the surface was not oil.
In fact, a number of signs clearly indicate that Ghawar is in decline. Back in April 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8 percent per year. This, of course, implies that Ghawar may have peaked. The spokesman went on to say that measures were being taken to offset the decline, but that the only true solution to declining oil supplies is to locate new fields, and it is beyond debate that discoveries have not kept pace with growing global demand. Roughly 80 percent of oil being produced today is from fields discovered before 1973."
The first Iran's Oil Refining Forum is to be held in Tehran on February 17-18 with the participation of 300 domestic and foreign experts in the field of oil refining, IRNA reported. Organized by the National Iranian Oil Refining and Distribution Company (NIORDC), the conference is aimed at attracting foreign sponsors for investments on development of Iran's oil refining industry.
The American Petroleum Institute reported a fall of 372,000 barrels in distillate supplies for the week ended Feb. 9. The Energy Department had reported a decline of 3 million barrels. Motor gasoline supplies were down 603,000 barrels, the API said, vs. the government's reported fall of 2 million. Crude supplies were down 3.4 million barrels, the API said, compared with the government's 600,000-barrel decline.
Noble Energy Inc. said it expects to record year-end 2006 reserves of 834.6 million barrels of oil equivalent. The Houston-based energy company said it sees reserve additions from all sources totaling 122.1 MMBoe, or 179% of 2006 production.
April gold climbed $3.50 to close at $672 an ounce Wednesday March silver gained 5 cents to close at $13.965 an ounce. Over the past several months we have been able to
realize a profit of $100 an ounce in gold. I would recommend booking that profit and investing the profit in crude oil at roughly $58 a barrel.
Masco will cut 8,000 jobs by the end of the first quarter, including 1,000 salaried positions, Chief Executive Officer Richard Manoogian said today on a conference call. Fewer purchases at Lowe's Cos. and Home Depot Inc. and the slowdown in new home construction, which accounts for 40 percent of Masco's sales, hurt revenue in the fourth quarter. This does not sound like the worst of the housing decline is behind us.
The price of West Texas Intermediate, the benchmark U.S. crude, may average $69 this year, Goldman economist James Gutman said Feb. 8. Others like Sanford Bernstein predict oil prices will decline. That's what makes for horse racing, as one might say.
March crude fell $1.06 to close at $58 a barrel Wednesday. March natural gas fell 12.6 cents to close at $7.241 per million British thermal units.
Tuesday, February 13, 2007
Events
2/14/07 Events
At the end of trading Monday, Palatin closed at $2.29 per share. Prior to Tuesday's trading this was released: "Palatin Technologies, Inc. announced today that it has priced an underwritten offering of 13.75 million shares of its common stock at $2.00 per share, for $27.5 million in gross proceeds, before commissions and expenses. Palatin expects the net proceeds from the sale of the shares will be approximately $25.5 million. Under the terms of the financing, the underwriter has agreed to purchase the shares from Palatin. All shares of the common stock offered by Palatin are to be issued pursuant to effective shelf registration statements on Form S-3. The closing of the offering is scheduled to occur on or about February 15, 2007 and is subject to customary closing conditions. Pacific Growth Equities, LLC acted as the sole underwriter for this offering."
KB Home swung to a loss of $49.6 million, or 64 cents a share in the fourth quarter driven by previously announced land charges of $343.3 million. In a statement, Chief Executive Jeffrey Mezger said during the second half of 2006, "an oversupply of unsold new and resale homes, reduced affordability, and greater caution among potential homebuyers heightened competition among homebuilders and sellers of existing homes, prompting the aggressive use of price concessions and sales incentives." The result was pressure on profit margins, while results "were further affected by declining land values and the resulting charges we recorded in the fourth quarter to reflect lower land values," the CEO added.
Mills said it has received a definitive offer from Simon and Farallon to acquire the company for $24 a share in cash by means of a tender offer for all outstanding shares of Mills' common stock.
The Commerce Department said the nation's trade gap widened by 5.3% in December to $61.2 billion, exceeding the MarketWatch forecast for an increase to $59.5 billion. The higher-than-expected monthly trade gap is expected to contribute to a downward revision of fourth-quarter growth from an initial projection of 3.5%.
Applebee's is exploring a possible sale or recapitalization.
Barry Ritholtz: "The changes in the GSCI led to a subsequent sell off in the gasoline futures market. After a 5 year run in energy prices, there was a 30% drop in the price of oil after their rebalancing -- and during the 2 months prior to the election. Another lucky coincidence! Another fortuitous coincidence: GS had a blockbuster quarter following the ramp of the markets."
Oil exploration and production costs have climbed 53 percent in the past two years as prices for everything from drilling rigs to labor continue to surge, according to a new price index released Monday.
The Upstream Capital Costs Index, a compilation of nine items central to the oil and gas industry, has been on the rise since 2000, but it spiked sharply beginning in 2005, said Richard Ward, senior director of upstream research for Cambridge Energy Research Associates, which is holding its annual conference in Houston this week. Starting with 100 as the base in 2000, the index rose gradually to 103.9 in 2002, 105.8 in 2003 and 109.5 in 2004. But in 2005 it shot up to 126 and reached 148 by last November.
In the past year, the largest increase came in the cost of leasing offshore drilling rigs, which rose 309.2 percent. Rig contractors are expected to expand their fleets by more than 100 in the next four years, but rates likely won't ease until 2009
Rates for offshore equipment installation vessels, such as heavy-lift cranes that lay undersea pipelines, rose 41 percent in the last year. And rates for engineering and project management staff have grown 23 percent, despite an increase in new design centers in Asia and the Middle East, where labor costs are cheaper.
Coca-Cola Enterprises Inc., the biggest bottler of Coca-Cola Co. beverages, said it will cut about 3,500 jobs as part of a restructuring expected to cost $300 million.
Unit Petroleum Company set new company-records for nearly ever major category: total proved reserves, annual production, and wells drilled and achieved its stated annual goal to replace more than 150% of its production.
Nouriel Roubini points out that Ed Altman argues that the reason behind the very low corporate default rates is not better corporate and economic fundamentals as default rates are well below what fundamentals would predict based on historical data. Rather temporary factors such a surge in liquidity and demand coming from non-traditional lenders (hedge funds and private equity) explains - among other factors - the very low corporate risk spreads and the unprecedented record low default rates. Once these temporary conditions fizzle out - as he expect them to in 2007 - default rates will return to their higher historical averages as predicted by firm and economic fundamentals.
Martin Weiss: "Overall, Latin America's exports to Asia have surged to $47.5 billion, growing by a breakneck pace of 20% per year since 2000. Brazil's trade with China, which was under $20 million in the mid-1970s, has now grown by over one thousand times, to nearly $20 billion. And it's still skyrocketing. With no slowdown in sight. The value of Brazil's iron ore exports have tripled just in the last six years -- from $2.9 billion in 2001 to at least $10 billion this year. And most of that new growth is driven by China."
China's dependency for import oil has risen to 47.0 percent of its annual demand in 2006, an increase of 4.1 percentage points from the previous year, sources with the Ministry of Commerce said on Tuesday.
Last year, China produced 183.68 million tons of crude oil, up 1.7 percent. Its net oil imports amounted to 162.87 million tons, up 19.6 percent. The total net imports included 138.84 million tons of crude oil, up 16.9 percent, and 24.03 million tons of oil products, up 37.9 percent.
Industry observers forecast that in 2007, China's crude oil output will grow only less than two percent, while demand for both crude and oil products will rise six percent or so.
According to the General Administration of Customs, in January China imported 13.69 million tons of crude oil, up 3.5 percent over the same month of last year, and 2.77 million tons of oil products, up 5.7 percent.
The IEA said 2007 global oil demand is expected to rise at almost double the pace from last year on robust demand in China and the Middle East and warned that global consumption may outpace the growth of new oil supplies. This should have been anticipated some time ago but the market price for crude has yet to keep up with reality.
Aon Corp. said on Tuesday that a previously announced restructuring would likely reduce head count by about 3,600 employees.
Rigzone: Baker Hughes' U.S. gas rig count hit a 21-year high of 1,466 in January, and has spent 25 of the last 26 weeks above 1,400 rigs. Despite flat gas prices, the count is likely to hover around 1,370 in 2007, according to Ziff Energy Group, a Calgary-based gas consulting firm.
Leanan on Oil Drum: "Oil and gas production in the North Sea is now expected to be about 10 per cent lower over the next few years than previously thought, according to the leading survey of the state of the industry. The faster than expected decline in production is bad news for Britain’s energy security, increasing the country’s dependence on imported oil and gas, and also for the exchequer."
The Times of London reported that Australia-based mining companies BHP Billiton Ltd. and Rio Tinto PLC are each considering offering to buy Pittsburgh-based Alcoa for $40 billion. Billiton denied the report.
Richard Daughty: "Paul van Eeden writes that to calculate real, inflation-adjusted interest rates, the kind that determine your buying power tomorrow, you combine the two inflations: Monetary inflation and price inflation. Ergo, "Real interest rates should be calculated by subtracting monetary inflation (as calculated by M3, for example) from interest rates. If you did, you would find that real interest rates are negative." Wow! Negative interest rates! Let's see: 4% interest rates minus 11% inflation in the money supply equals (and I can't believe what I am seeing!) a negative 7%! What in the hell are bondholders thinking about, paying these ridiculous prices for bonds in order to lock in these insanely-low interest rates? What in the hell are the central banks thinking about when they create the money to let people borrow money to do that?"
Sony Corp. plans to cut capital expenditures at its semiconductor operations by a “large amount,” a company executive said.
Well Fargo is going to offer its brokerage customers up to 100 free trades, if they keep at least $25,000 in their accounts. Bank of America made a similar offer several months ago.
The full text of an internal European Union document on Iran reveals that officials from the bloc are pessimistic about the chances of stopping Iran from getting enough fissile material for a nuclear bomb.
India's domestic crude oil import requirement may go up to about 85% by 2012 from current level of 70%. At the same time, refining capacity in India is poised to increase by 58% to touch 235 million tonnes in the next 5 years from present level of about 159 million tonnes in view of growing demand of energy and few resources at India`s disposal for harnessing its alternate sources.
As per industry body ASSOCHAM, that present trends indicate that oil will continue to hold an important position as the preferred fuel in the long term.
The chamber is of the view that India’s energy demand would multiply and would rise to the level of 12-13% compared to 7-8% now. It also says that India`s dependence on crude oil will increase as domestic discoveries have not been taking place and at the same time it is unable to harness its alternate sources of energy though it is available in abundance.
April gold climbed $1.20 to close at $668.50 an ounce in New York, but it was below the day's peak of $673.70, which was the contract's highest level since August. March silver ended at $13.915 an ounce, up 1.5%, or 20 cents, for the session. March copper gained 4.3%, or 10.7 cents, to close at $2.5845 a pound.
A winter storm dumped about a foot of snow on the Midwest U.S. as it headed toward the East Coast, impeding travel and prompting advisories in more than 20 states. More than 500 flights have been canceled into and out of Chicago's O'Hare International Airport, a hub for both AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, with some flights delayed as much as two hours from the storm. Snow- covered highways in Illinois, Missouri, Ohio, Iowa and Kansas made conditions hazardous for drivers.``We expect a pretty broad area of heavy snow,'' said Bob Oravec, a meteorologist with the U.S. National Weather Service's Hydrometeorological Prediction Center in Camp Springs, Maryland. By tomorrow, the storm will ``spread out across from the mid- Mississippi Valley into the Midwest and then into part of the northeastern states -- Pennsylvania and upstate New York.''
March crude closed at $59.06 a barrel, gaining $1.25 Tuesday after losing over 3% on Monday. March natural gas tacked on 2%, or 14.1 cents, to end the day at $7.367 per million British thermal units.
At the end of trading Monday, Palatin closed at $2.29 per share. Prior to Tuesday's trading this was released: "Palatin Technologies, Inc. announced today that it has priced an underwritten offering of 13.75 million shares of its common stock at $2.00 per share, for $27.5 million in gross proceeds, before commissions and expenses. Palatin expects the net proceeds from the sale of the shares will be approximately $25.5 million. Under the terms of the financing, the underwriter has agreed to purchase the shares from Palatin. All shares of the common stock offered by Palatin are to be issued pursuant to effective shelf registration statements on Form S-3. The closing of the offering is scheduled to occur on or about February 15, 2007 and is subject to customary closing conditions. Pacific Growth Equities, LLC acted as the sole underwriter for this offering."
KB Home swung to a loss of $49.6 million, or 64 cents a share in the fourth quarter driven by previously announced land charges of $343.3 million. In a statement, Chief Executive Jeffrey Mezger said during the second half of 2006, "an oversupply of unsold new and resale homes, reduced affordability, and greater caution among potential homebuyers heightened competition among homebuilders and sellers of existing homes, prompting the aggressive use of price concessions and sales incentives." The result was pressure on profit margins, while results "were further affected by declining land values and the resulting charges we recorded in the fourth quarter to reflect lower land values," the CEO added.
Mills said it has received a definitive offer from Simon and Farallon to acquire the company for $24 a share in cash by means of a tender offer for all outstanding shares of Mills' common stock.
The Commerce Department said the nation's trade gap widened by 5.3% in December to $61.2 billion, exceeding the MarketWatch forecast for an increase to $59.5 billion. The higher-than-expected monthly trade gap is expected to contribute to a downward revision of fourth-quarter growth from an initial projection of 3.5%.
Applebee's is exploring a possible sale or recapitalization.
Barry Ritholtz: "The changes in the GSCI led to a subsequent sell off in the gasoline futures market. After a 5 year run in energy prices, there was a 30% drop in the price of oil after their rebalancing -- and during the 2 months prior to the election. Another lucky coincidence! Another fortuitous coincidence: GS had a blockbuster quarter following the ramp of the markets."
Oil exploration and production costs have climbed 53 percent in the past two years as prices for everything from drilling rigs to labor continue to surge, according to a new price index released Monday.
The Upstream Capital Costs Index, a compilation of nine items central to the oil and gas industry, has been on the rise since 2000, but it spiked sharply beginning in 2005, said Richard Ward, senior director of upstream research for Cambridge Energy Research Associates, which is holding its annual conference in Houston this week. Starting with 100 as the base in 2000, the index rose gradually to 103.9 in 2002, 105.8 in 2003 and 109.5 in 2004. But in 2005 it shot up to 126 and reached 148 by last November.
In the past year, the largest increase came in the cost of leasing offshore drilling rigs, which rose 309.2 percent. Rig contractors are expected to expand their fleets by more than 100 in the next four years, but rates likely won't ease until 2009
Rates for offshore equipment installation vessels, such as heavy-lift cranes that lay undersea pipelines, rose 41 percent in the last year. And rates for engineering and project management staff have grown 23 percent, despite an increase in new design centers in Asia and the Middle East, where labor costs are cheaper.
Coca-Cola Enterprises Inc., the biggest bottler of Coca-Cola Co. beverages, said it will cut about 3,500 jobs as part of a restructuring expected to cost $300 million.
Unit Petroleum Company set new company-records for nearly ever major category: total proved reserves, annual production, and wells drilled and achieved its stated annual goal to replace more than 150% of its production.
Nouriel Roubini points out that Ed Altman argues that the reason behind the very low corporate default rates is not better corporate and economic fundamentals as default rates are well below what fundamentals would predict based on historical data. Rather temporary factors such a surge in liquidity and demand coming from non-traditional lenders (hedge funds and private equity) explains - among other factors - the very low corporate risk spreads and the unprecedented record low default rates. Once these temporary conditions fizzle out - as he expect them to in 2007 - default rates will return to their higher historical averages as predicted by firm and economic fundamentals.
Martin Weiss: "Overall, Latin America's exports to Asia have surged to $47.5 billion, growing by a breakneck pace of 20% per year since 2000. Brazil's trade with China, which was under $20 million in the mid-1970s, has now grown by over one thousand times, to nearly $20 billion. And it's still skyrocketing. With no slowdown in sight. The value of Brazil's iron ore exports have tripled just in the last six years -- from $2.9 billion in 2001 to at least $10 billion this year. And most of that new growth is driven by China."
China's dependency for import oil has risen to 47.0 percent of its annual demand in 2006, an increase of 4.1 percentage points from the previous year, sources with the Ministry of Commerce said on Tuesday.
Last year, China produced 183.68 million tons of crude oil, up 1.7 percent. Its net oil imports amounted to 162.87 million tons, up 19.6 percent. The total net imports included 138.84 million tons of crude oil, up 16.9 percent, and 24.03 million tons of oil products, up 37.9 percent.
Industry observers forecast that in 2007, China's crude oil output will grow only less than two percent, while demand for both crude and oil products will rise six percent or so.
According to the General Administration of Customs, in January China imported 13.69 million tons of crude oil, up 3.5 percent over the same month of last year, and 2.77 million tons of oil products, up 5.7 percent.
The IEA said 2007 global oil demand is expected to rise at almost double the pace from last year on robust demand in China and the Middle East and warned that global consumption may outpace the growth of new oil supplies. This should have been anticipated some time ago but the market price for crude has yet to keep up with reality.
Aon Corp. said on Tuesday that a previously announced restructuring would likely reduce head count by about 3,600 employees.
Rigzone: Baker Hughes' U.S. gas rig count hit a 21-year high of 1,466 in January, and has spent 25 of the last 26 weeks above 1,400 rigs. Despite flat gas prices, the count is likely to hover around 1,370 in 2007, according to Ziff Energy Group, a Calgary-based gas consulting firm.
Leanan on Oil Drum: "Oil and gas production in the North Sea is now expected to be about 10 per cent lower over the next few years than previously thought, according to the leading survey of the state of the industry. The faster than expected decline in production is bad news for Britain’s energy security, increasing the country’s dependence on imported oil and gas, and also for the exchequer."
The Times of London reported that Australia-based mining companies BHP Billiton Ltd. and Rio Tinto PLC are each considering offering to buy Pittsburgh-based Alcoa for $40 billion. Billiton denied the report.
Richard Daughty: "Paul van Eeden writes that to calculate real, inflation-adjusted interest rates, the kind that determine your buying power tomorrow, you combine the two inflations: Monetary inflation and price inflation. Ergo, "Real interest rates should be calculated by subtracting monetary inflation (as calculated by M3, for example) from interest rates. If you did, you would find that real interest rates are negative." Wow! Negative interest rates! Let's see: 4% interest rates minus 11% inflation in the money supply equals (and I can't believe what I am seeing!) a negative 7%! What in the hell are bondholders thinking about, paying these ridiculous prices for bonds in order to lock in these insanely-low interest rates? What in the hell are the central banks thinking about when they create the money to let people borrow money to do that?"
Sony Corp. plans to cut capital expenditures at its semiconductor operations by a “large amount,” a company executive said.
Well Fargo is going to offer its brokerage customers up to 100 free trades, if they keep at least $25,000 in their accounts. Bank of America made a similar offer several months ago.
The full text of an internal European Union document on Iran reveals that officials from the bloc are pessimistic about the chances of stopping Iran from getting enough fissile material for a nuclear bomb.
India's domestic crude oil import requirement may go up to about 85% by 2012 from current level of 70%. At the same time, refining capacity in India is poised to increase by 58% to touch 235 million tonnes in the next 5 years from present level of about 159 million tonnes in view of growing demand of energy and few resources at India`s disposal for harnessing its alternate sources.
As per industry body ASSOCHAM, that present trends indicate that oil will continue to hold an important position as the preferred fuel in the long term.
The chamber is of the view that India’s energy demand would multiply and would rise to the level of 12-13% compared to 7-8% now. It also says that India`s dependence on crude oil will increase as domestic discoveries have not been taking place and at the same time it is unable to harness its alternate sources of energy though it is available in abundance.
April gold climbed $1.20 to close at $668.50 an ounce in New York, but it was below the day's peak of $673.70, which was the contract's highest level since August. March silver ended at $13.915 an ounce, up 1.5%, or 20 cents, for the session. March copper gained 4.3%, or 10.7 cents, to close at $2.5845 a pound.
A winter storm dumped about a foot of snow on the Midwest U.S. as it headed toward the East Coast, impeding travel and prompting advisories in more than 20 states. More than 500 flights have been canceled into and out of Chicago's O'Hare International Airport, a hub for both AMR Corp.'s American Airlines and UAL Corp.'s United Airlines, with some flights delayed as much as two hours from the storm. Snow- covered highways in Illinois, Missouri, Ohio, Iowa and Kansas made conditions hazardous for drivers.``We expect a pretty broad area of heavy snow,'' said Bob Oravec, a meteorologist with the U.S. National Weather Service's Hydrometeorological Prediction Center in Camp Springs, Maryland. By tomorrow, the storm will ``spread out across from the mid- Mississippi Valley into the Midwest and then into part of the northeastern states -- Pennsylvania and upstate New York.''
March crude closed at $59.06 a barrel, gaining $1.25 Tuesday after losing over 3% on Monday. March natural gas tacked on 2%, or 14.1 cents, to end the day at $7.367 per million British thermal units.
Monday, February 12, 2007
Thoughts
2/13/07 Thoughts
Art Smith, head of John S. Herold research: "I'm in the camp that says we could easily have $80 oil this year."
Ali al-Naimi, Saudi Arabia's oil minister: "If you are asking me are we (OPEC) going to take additional cuts or increase supply, I do not know," the Wall Street Journal quoted Naimi as saying in an interview. "Most probably, if the trend is like what it is like today, with the market getting in much, much better health and balance, there may not be any reason to change."
Warren Buffett: "I think people would be better off if they only had 10 opportunities to buy stocks throughout their lifetime. You know what would happen? They would make sure that each buy was a good one. They would do lots and lots of research before they made the buy. You don¡¯t have to have many 4X growth opportunities to get rich. You don¡¯t need to do too much, but the environment makes you feel like you need to do something all the time...Rationality is the only thing that helps you. One thing that could help would be to write down the reason you are buying a stock before your purchase."
Adeza Biomedical Corp. has agreed to be bought by Cytyc Corp. for $24 a share, or approximately $450 million.
China¡¯s trade surplus reached $15.9bn in January, up from $9.6bn year-on-year, driven by a rise of 33 per cent in the value of exports. China¡¯s trade surplus, according to its own figures, nearly doubled in 2006, to $177bn, and is expected to top $200bn this year, despite recent statements from top leaders that China¡¯s trade should be ¡°basically balanced.¡±
Warren Buffett: "When we invest we ask one question, how long do you have to wait to raise the prices?"
Nawaf Obaid on Nov 9th 2006 in a PowerPoint presentation to the Center for Strategic and International Studies (CSIS) in Washington D.C.:
Slide 3: Saudi Arabia has a production capacity of 11.1 - 11.3 mb/d; exports 8 mb/d; and produces between 8.6 - 9.0 mb/d and 1 - 1.3 mb/d of natural gas liquids.
Slide 6: March 2006 - Aug 2009 estimated sustainable oil production capacity will increase by a net of 1.55 Mb/d. Depletion rate used works out at about 1.8% per annum.
11,000,000 b/d Estimated sustainable capacity in March 2006
+ 2,350,000 b/d Estimated increase in capacity 2006-09
- 800,000 b/d Estimated natural production decline 2005-09
¡Ö 12,550,000 b/d Estimated sustainable capacity in August 2009
Slide 9: Aug 2009 - 2011 estimated sustainable oil production capacity will increase by a net of 0.9 Mb/d. Depletion rate used works out at about 2.8% per annum over two years.
12,550,000 b/d Estimated sustainable capacity in August 2009
+ 1,400,000 b/d Estimated increase in capacity 2009 - 2011
- 500,000 b/d Estimated natural production decline 2009 - 2011
¡Ö 13,450,000 b/d Estimated sustainable capacity by 2011
In summary:
Net new capacity to 2009: 1.55 Mb/d
Net new capacity 2009-2011: 0.9 Mb/d
These charts were provided by the Oil Depletion Analysis Centre.
Therefore, the net new capacity offered by Saudi Arabia in the next few years has been grossly overstated.
Toyota Motor Corp. plans to build a new plant by 2010 in southern Indian concentrating on inexpensive, smaller model cars, the Nikkei business daily reported on Monday.
The new plant, which would be built close to the company's first plant in the country near Bangalore, would aim at producing 100,000 cars a year, roughly doubling the firm's output capacity in India.
There is a definitive agreement to take Four Seasons private at $82 a share by Bill Gates and Saudi Prince Alwaleed Bin Talal for $3.8 billion including debt.
SXR Uranium One Inc. agreed to buy UrAsia Energy Ltd. for $3.1 billion, to form the world's second- largest uranium producer as rising demand for nuclear fuel drives prices to records. SXR, owner of South Africa's largest undeveloped uranium deposit, offered C$7.05 ($6.01) a share in stock for Vancouver- based UrAsia, which owns uranium mines in Central Asia.
WCI Communities retained Goldman Sachs to assist it in identifying ways to increase shareholder value. The company said that it expects to generate $1 billion in free cash flow in 2007, and will look at asset sales to help reduce debt. Once the balance sheet is improved, the company will review strategic alternatives.
Tenaris SA, the world's largest maker of seamless steel oil and gas pipes, agreed to buy Hydril for as much as $2.2 billion to gain valves, meters and related equipment used in deepwater drilling and nature reserves. Tenaris, based in Luxembourg, will pay $97 a share in cash for the ordinary and B-class stock of Houston-based Hydril, 17 percent more than the closing price on Feb. 9.
Jim Cramer: " What do Hydril, Hanover Compressor and Universal Compression have in common? Two things. First, they're all in the compression services business for oil and gas. Second, they're all involved in mergers; UC and Hanover are getting together, and today Tenaris, an oil and drilling giant from Europe, buys Hydril. These deals are extraordinary for two reasons: nobody on Wall Street gives a darn about them and the companies are very oriented to natural gas, the pariah part of the energy business (witness the pronounced underperformance of nat gas-linked Nabors and Halliburton). When you consider that General Electric also made an acquisition in this sector a month ago, you would think that there's some froth in these oil and gas suppliers. Just the opposite."
The Wall Street Journal's ad sales rose 5.7 percent on a 7.5 percent increase in advertising volume. Increases in financial and general advertising volume were partially offset by decreases in technology and classified advertising volume. Classified advertising in the Journal fell 1 percent because of fewer real estate ads.
Lamson & Sessions said Monday its board hired Perella Weinberg Partners as financial adviser to explore "a range of strategic and financial alternatives" for the company.
Snow, rain and sleet will move into the Eastern Seaboard tomorrow and become heaviest the following day, according to Casey Crosbie, a meteorologist at the National Storm Prediction Center in Norman, Oklahoma. Travel in Washington and Philadelphia is likely to be impaired because of slippery conditions from freezing rain and sleet, he said.
BJ Process and Pipeline Services announced that it has opened a new base of operations in Doha, Qatar. The base joins BJ PPS facilities throughout the Middle East in Dubai, United Arab Emirates and Damman, Saudi Arabia. It will serve as the centre of operations for all BJ PPS activities in Qatar. "By providing greater support and resources to our clients operating in Qatar, we are firmly focused on achieving consistent, solid growth in this vibrant country," said Lindsay Link, general manager of BJ PPS.
April gold fell $5 to close at $667.30 an ounce Monday. March silver lost 1.4%, or 20 cents, to end the day at $13.715 an ounce and March copper fell by 4.05 cents to close at $2.477 a pound.
Subprime loans that have gone bad are at the highest level in at least six years, according to a Friedman, Billings, Ramsey Group report. The U.S. Mortgage Bankers Association said payments were late on almost 13 percent of subprime loans in the third quarter of 2006.
John Hussman: "With regard to present stock market conditions, it would take a correction of only about 10% in the S&P 500 to put the market behind Treasury bills for the most recent 3-year period."
March crude fell 3.5%, or $2.08, to close at $57.81 a barrel Monday. March natural gas dropped 60.1 cents to close at a two-week low of $7.226 per million British thermal units.
Art Smith, head of John S. Herold research: "I'm in the camp that says we could easily have $80 oil this year."
Ali al-Naimi, Saudi Arabia's oil minister: "If you are asking me are we (OPEC) going to take additional cuts or increase supply, I do not know," the Wall Street Journal quoted Naimi as saying in an interview. "Most probably, if the trend is like what it is like today, with the market getting in much, much better health and balance, there may not be any reason to change."
Warren Buffett: "I think people would be better off if they only had 10 opportunities to buy stocks throughout their lifetime. You know what would happen? They would make sure that each buy was a good one. They would do lots and lots of research before they made the buy. You don¡¯t have to have many 4X growth opportunities to get rich. You don¡¯t need to do too much, but the environment makes you feel like you need to do something all the time...Rationality is the only thing that helps you. One thing that could help would be to write down the reason you are buying a stock before your purchase."
Adeza Biomedical Corp. has agreed to be bought by Cytyc Corp. for $24 a share, or approximately $450 million.
China¡¯s trade surplus reached $15.9bn in January, up from $9.6bn year-on-year, driven by a rise of 33 per cent in the value of exports. China¡¯s trade surplus, according to its own figures, nearly doubled in 2006, to $177bn, and is expected to top $200bn this year, despite recent statements from top leaders that China¡¯s trade should be ¡°basically balanced.¡±
Warren Buffett: "When we invest we ask one question, how long do you have to wait to raise the prices?"
Nawaf Obaid on Nov 9th 2006 in a PowerPoint presentation to the Center for Strategic and International Studies (CSIS) in Washington D.C.:
Slide 3: Saudi Arabia has a production capacity of 11.1 - 11.3 mb/d; exports 8 mb/d; and produces between 8.6 - 9.0 mb/d and 1 - 1.3 mb/d of natural gas liquids.
Slide 6: March 2006 - Aug 2009 estimated sustainable oil production capacity will increase by a net of 1.55 Mb/d. Depletion rate used works out at about 1.8% per annum.
11,000,000 b/d Estimated sustainable capacity in March 2006
+ 2,350,000 b/d Estimated increase in capacity 2006-09
- 800,000 b/d Estimated natural production decline 2005-09
¡Ö 12,550,000 b/d Estimated sustainable capacity in August 2009
Slide 9: Aug 2009 - 2011 estimated sustainable oil production capacity will increase by a net of 0.9 Mb/d. Depletion rate used works out at about 2.8% per annum over two years.
12,550,000 b/d Estimated sustainable capacity in August 2009
+ 1,400,000 b/d Estimated increase in capacity 2009 - 2011
- 500,000 b/d Estimated natural production decline 2009 - 2011
¡Ö 13,450,000 b/d Estimated sustainable capacity by 2011
In summary:
Net new capacity to 2009: 1.55 Mb/d
Net new capacity 2009-2011: 0.9 Mb/d
These charts were provided by the Oil Depletion Analysis Centre.
Therefore, the net new capacity offered by Saudi Arabia in the next few years has been grossly overstated.
Toyota Motor Corp. plans to build a new plant by 2010 in southern Indian concentrating on inexpensive, smaller model cars, the Nikkei business daily reported on Monday.
The new plant, which would be built close to the company's first plant in the country near Bangalore, would aim at producing 100,000 cars a year, roughly doubling the firm's output capacity in India.
There is a definitive agreement to take Four Seasons private at $82 a share by Bill Gates and Saudi Prince Alwaleed Bin Talal for $3.8 billion including debt.
SXR Uranium One Inc. agreed to buy UrAsia Energy Ltd. for $3.1 billion, to form the world's second- largest uranium producer as rising demand for nuclear fuel drives prices to records. SXR, owner of South Africa's largest undeveloped uranium deposit, offered C$7.05 ($6.01) a share in stock for Vancouver- based UrAsia, which owns uranium mines in Central Asia.
WCI Communities retained Goldman Sachs to assist it in identifying ways to increase shareholder value. The company said that it expects to generate $1 billion in free cash flow in 2007, and will look at asset sales to help reduce debt. Once the balance sheet is improved, the company will review strategic alternatives.
Tenaris SA, the world's largest maker of seamless steel oil and gas pipes, agreed to buy Hydril for as much as $2.2 billion to gain valves, meters and related equipment used in deepwater drilling and nature reserves. Tenaris, based in Luxembourg, will pay $97 a share in cash for the ordinary and B-class stock of Houston-based Hydril, 17 percent more than the closing price on Feb. 9.
Jim Cramer: " What do Hydril, Hanover Compressor and Universal Compression have in common? Two things. First, they're all in the compression services business for oil and gas. Second, they're all involved in mergers; UC and Hanover are getting together, and today Tenaris, an oil and drilling giant from Europe, buys Hydril. These deals are extraordinary for two reasons: nobody on Wall Street gives a darn about them and the companies are very oriented to natural gas, the pariah part of the energy business (witness the pronounced underperformance of nat gas-linked Nabors and Halliburton). When you consider that General Electric also made an acquisition in this sector a month ago, you would think that there's some froth in these oil and gas suppliers. Just the opposite."
The Wall Street Journal's ad sales rose 5.7 percent on a 7.5 percent increase in advertising volume. Increases in financial and general advertising volume were partially offset by decreases in technology and classified advertising volume. Classified advertising in the Journal fell 1 percent because of fewer real estate ads.
Lamson & Sessions said Monday its board hired Perella Weinberg Partners as financial adviser to explore "a range of strategic and financial alternatives" for the company.
Snow, rain and sleet will move into the Eastern Seaboard tomorrow and become heaviest the following day, according to Casey Crosbie, a meteorologist at the National Storm Prediction Center in Norman, Oklahoma. Travel in Washington and Philadelphia is likely to be impaired because of slippery conditions from freezing rain and sleet, he said.
BJ Process and Pipeline Services announced that it has opened a new base of operations in Doha, Qatar. The base joins BJ PPS facilities throughout the Middle East in Dubai, United Arab Emirates and Damman, Saudi Arabia. It will serve as the centre of operations for all BJ PPS activities in Qatar. "By providing greater support and resources to our clients operating in Qatar, we are firmly focused on achieving consistent, solid growth in this vibrant country," said Lindsay Link, general manager of BJ PPS.
April gold fell $5 to close at $667.30 an ounce Monday. March silver lost 1.4%, or 20 cents, to end the day at $13.715 an ounce and March copper fell by 4.05 cents to close at $2.477 a pound.
Subprime loans that have gone bad are at the highest level in at least six years, according to a Friedman, Billings, Ramsey Group report. The U.S. Mortgage Bankers Association said payments were late on almost 13 percent of subprime loans in the third quarter of 2006.
John Hussman: "With regard to present stock market conditions, it would take a correction of only about 10% in the S&P 500 to put the market behind Treasury bills for the most recent 3-year period."
March crude fell 3.5%, or $2.08, to close at $57.81 a barrel Monday. March natural gas dropped 60.1 cents to close at a two-week low of $7.226 per million British thermal units.
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