1/5/08 Employment Data
The People's Bank of China pledged to keep monetary policy on a tightening bias, with the focus to remain on using further increases in the ratio of reserves banks must set aside as deposits as the main policy tool to rein in the economy, according to reports. Wire reports citing a report by the 21st Century Business Herald also said China's central bank plans to allow more flexibility in the yuan exchange mechanism, a euphemism that normally means faster appreciation of the Chinese currency against the U.S. dollar.
China Petroleum & Chemical Corp., or Sinopec, saw it net profit climb to 70 billion yuan ($9.6 billion) in 2007, up 38.2% from a year earlier, according to wire reports which cited a Xinhua News Agency report.
An investment group led by U.S. investment fund Aetos Capital LLC has emerged as the highest bidder for Japanese property developer Daito Trust Construction Co, offering up to 930 billion yen ($8.5 billion) to acquire all outstanding shares in the company, according to reports.
Patterson-UTI Energy Inc. operated fewer drilling rigs last month, the oil drilling contractor said Friday, as daily contract rates for the broader sector remained under pressure. Patterson operated an average of 239 rigs in December, down from 246 the previous month and 278 a year earlier. It posted an average 230 rigs in the U.S. and 9 in Canada. During the fourth quarter, Patterson operated an average 241 rigs, including 231 in the U.S. and 10 in Canada.
United Airlines, the nation's second largest carrier, said its December traffic slipped 1.2 percent as bad weather hit its two biggest hubs.
Microsoft Corp sold 4.3 million Xbox 360 video game consoles in the last three months of 2007, helped by hit titles such as "Halo 3" and "Mass Effect," according to company data released on Thursday; however, the company said it was "disappointed" with problems that had plagued its online gaming service for days and offered a free downloadable game to more than 8 million worldwide users of the network.
Japanese stock prices fell 4% Friday after weakness on Wall Street and higher oil prices raised concerns about the state of the global economy. It was the lowest level in the last year and one half. A sharply higher yen, which erodes earnings Japanese companies make on overseas markets when repatriated, also weighed on stock prices.
The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession. Payments are considered delinquent if they are 30 or more days past due.
A Silicon Valley startup is promising to blanket San Francisco with free wireless Internet service, reviving a crusade that crumbled last year after two much larger companies, EarthLink Inc. and Google Inc., scrapped their plans to build a high-speed network for Web surfing. Meraki Networks Inc., whose financial backers include Google, hopes to complete the ambitious project within the next year by persuading thousands of San Francisco residents to set up free radio repeaters on their rooftops and in their homes. The 21-month-old company is to announce its plans Friday.
Barry Ritoltz: "It has been my position that the increasing proportion of Birth Death jobs as a total percentage of NFP has rendered the BLS data meaningless. The straight line extrapolation of the B/D adjustment is, by design, unable to catch any change in economic direction. Hence, the absurd determination that 199,000 small business construction jobs have been created since January 2007. Consider: The B/D generated 1,239,000 jobs from February thru November 2007. That's rather surprising, since the total NFP jobs created since January 2007 was 1,208,000. In other words, the Net Birth/Death jobs created over 10 months was actually greater than the total NFP jobs created in all of 2007. That's rather odd, don't you think?."
Credit-default swaps on the Markit CDX North America Investment Grade Series 8 Index rose 1 basis point to 84.75 at 8:02 a.m. in New York, according to Deutsche Bank AG. The index has risen 7 basis points this week and is poised for its biggest increase since the week of Nov. 9, Bloomberg data show.
Asian liquefied petroleum gas rose on speculation colder winter weather may boost demand as inventories drop in the U.S. and China.
Retailer Talbots Inc. said Friday it will close 78 kids' and mens' stores by September and discontinue those businesses as part of a bid to focus more on its core customer — women who are 35 years old or older. The company also said its fourth-quarter sales so far were trending lower for both its Talbots and J.Jill brands.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$8.343 billion in the week ended 1/2/08 with Domestic funds reporting net outflows of -$8.228 billion and Non-domestic funds reporting net outflows of -$115 million; Excluding ETF activity, equity funds report net cash outflows totaling -$4.061 billion with Domestic funds reporting net outflows of -$2.779 billion and Non-domestic funds reporting net outflows totaling -$1.283 billion, as net outflows are reported in every sector but Gold & NR ($154 Mil), Energy ($20 Mil), and Utilities ($15 Mil).
The dollar fell sharply against other major currencies on Friday, after a report showed that the unemployment rate shot up to 5% in December as job growth stalled, a sign that the U.S. economic slump has spread to the labor market. U.S. seasonally adjusted nonfarm payrolls rose by 18,000 in December, the weakest job growth since August 2003, according to a survey of thousands of businesses. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.5% at 75.495.
Job growth was revised up by a total of 10,000 in November and October. Private-sector payrolls fell by 13,000, the biggest decline in more than four years.
The number of unemployed persons increased by 474,000 to 7.7 million in December and the unemployment rate rose by 0.3 percentage point to 5.0 percent. A year earlier, the number of unemployed persons was 6.8 million, and the jobless rate was 4.4 percent.
Bed Bath & Beyond Inc. dropped $2.31 to $25.09. The largest U.S. home-furnishings retailer said quarterly profit fell for the first time in at least 15 years as customers grappled with declining home values and higher energy costs.
Treasury two-year note yields fell to the lowest since November 2004 after job growth slowed in December, increasing speculation the Federal Reserve will cut borrowing costs more than forecast to prevent a recession.
YRC Worldwide Inc. declined $1.70, or 12 percent, to $12.12, the lowest since June 2000. The largest U.S. trucking company had its debt lowered to junk by Fitch Ratings, which cited weak industry conditions and a planned writedown in the value of two units.
U.S. Energy Information Administration reported natural gas inventories in the world's largest energy consumer fell by 87 billion cubic feet in the week ending Dec. 28, less than a drop of 157 billion cubic feet expected by analysts at energy research firm Global Insight. After the data, natural gas futures for February delivery fell 12.4 cents, or 1.5%, to $7.550 per million British thermal units on the New York Mercantile Exchange. However, they then rallied back up to close at $7.84.
Investors now expect the Federal Reserve to cut its overnight interest rate by a half percentage point in January, according to prices in the Chicago Board of Trade's federal funds futures markets. The odds of a 50-basis-point interest-rate cut rose to 56% on Friday following a very weak employment report showing the jobless rate jumping to 5%.
Sallie Mae, formally known as SLM Corp., said in a regulatory filing Thursday that it planned to "be more selective" in making student loans, both those backed by the federal government and the higher-rate private loans. The Reston, Va.-based company reaped a bonanza in recent years from the boom in student lending, with some 10 million customers, and around $25 billion in private student loans and $128 billion in government-backed loans outstanding. The company said in its filing with the Securities and Exchange Commission that it was retrenching in the business because of market conditions and the landmark student-loan law that took effect last October, cutting billions of dollars in federal subsidies for student lenders. Meanwhile, defaults are rising on student loans, and credit-market tremors similar to those linked to the mortgage crisis have recently started to surface in the $85 billion student-loan market.
Crude for February delivery closed down $1.27, or 1.3%, at $97.91 a barrel on the New York Mercantile Exchange.
PHH Corp. said late Friday it received a $50 million reverse termination fee from Blackstone Capital Partners.
Motorola Inc.said late Friday that it laid of an additional 1,600 employees during the fourth quarter in a company-wide restructuring effort.
The New York Mercantile Exchange Inc., a subsidiary of Nymex Holdings Inc., will list European-style crude oil and natural gas options contracts on the CME Globex electronic trading platform on Jan. 20 for trade on Jan 22, Nymex said late Friday. Starting Jan. 22, European-style crude oil options contracts will also be available for trading on the Nymex trading floor during normal open outcry hours.
In the first week of trading in a new year can you ever remember, in a single day, that the Nasdaq dropped 98 points, the S&P 35 points, and the Dow 256 points?
With credit markets continuing their downward spiral, investors could see their dividends disappearing in 2008. Dividend cuts or suspensions will continue to pick up among financial services firms in 2008, said Howard Silverblatt, a senior index analyst at Standard & Poor's.
Saturday, January 05, 2008
Thursday, January 03, 2008
Jobs
1/4/08 Jobs
Landmark Communications, a privately held company held by the Batten family, is putting its Weather Channel property up for sale, and the winning bidder could end up spending more than $5 billion, according to a report in The New York Times on Thursday.
State Street Corp.said it's taking a fourth-quarter charge of $279 million, or 71 cents a share, to establish a reserve to address legal exposure and other costs associated with the under-performance of certain active fixed-income strategies managed by State Street Global Advisors, its investment arm.
Harrah's Entertainment Inc. extended Chairman, President and Chief Executive Gary Loveman's contract Thursday and said the executive is likely to stay in those roles after its $17.1 billion buyout is complete. Harrah's, which is being taken private by affiliates of Texas Pacific Group and Apollo Management LP, said the acquisition is expected to close early this year.
Federal Reserve policy makers agreed at last month's meeting that they might need to cut interest rates again as turmoil in the credit and housing markets began to crimp consumer spending. Some Fed members even saw the risk of a vicious cycle pulling down both financial markets and the economy, and possibly requiring "substantial further easing of policy," according to minutes of the Federal Open Market Committee's Dec. 11 meeting.
Greg Ip: "U.S. house prices "likely would have to fall considerably" to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly. The study tracks rents and home prices back to 1960.
Beijing says it is plowing $34 billion into building up for the Olympics -- five times what Sydney spent for the 2000 games.
Brett Steenbarger: "This past week, we've seen 10-year Treasury yields fall over 7% and the S&P 500 Index (SPY) drop by nearly 3%. With fears of recession, traders and investors appear to be seeking the safe haven of Treasuries. I went back to 2002 (N = 1488 trading days) and found 51 occasions in which ten-year yields dropped more than 5% in a week during a stock market decline. Interestingly, the following week, the S&P 500 Index averaged a whopping gain of 1.73% (40 up, 11 down)--much stronger than the average five-day gain of .05% (766 up, 671 down) for the remainder of the sample. It appears that the flight to quality may also represent panic selling, something we see more at a short-term market bottom than a top."
A new report by the Organization of Petroleum Exporting Countries (OPEC) indicates the group will be more hard pressed than previously thought to meet the world's surging oil needs and could fail to supply its share of global oil markets by 2037. The report in the December issue of the OPEC Review, published by the organization's Vienna-based Secretariat, also says Kuwait is likely to be an extremely inconsistent and unstable supplier and questions Saudi Arabia's assertion it is capable of meeting world oil demand for the next 50 years.
Two-year Treasury notes rose, with the yield spread against 10-year securities at the widest since January 2005, as traders added to bets the Federal Reserve will cut interest rates to stave off recession.
Companies in the U.S. private sector added 40,000 jobs in December, according to the ADP employment report released Thursday. The report comes a day before the Labor Department reports on nonfarm payroll growth for December. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 65,000, close to the 58,000 now expected. Services industries added 71,000 jobs in December, while goods-producing industries cut 31,000 jobs, including 16,000 in manufacturing.
Homa Bahrami: “Job security is gone. The driving force of a career must come from the individual.”
Big corporations took a breather from cutting jobs in December, with announced layoff plans falling 39% to 44,416, the lowest level of the year, according to the monthly tally from outplacement firm Challenger Gray & Christmas released Thursday. For all of 2007, announced layoffs fell 8.5% to 768,264, the lowest since the recession year of 2001. The financial sector was battered in 2007, with 153,105 announced cuts, more than three times the previous year's total. Automakers eliminated 78,880 jobs in 2007, about half the 158,766 jobs cut in 2006. In December, the retail sector cut the most jobs (7,961), followed by automotive, pharmaceutical and financial.
Seasonally adjusted initial jobless claims fell 21,000 to 336,000 in the week ended Dec. 29, the government reported Thursday. The four-week moving average for initial jobless claims fell 750 to 343,750, according to the Labor Department. The prior week's initial jobless claims level was revised to 357,000 from an earlier estimate of 349,000. Continuing jobless claims gained 46,000, reaching 2.76 million for the week ended Dec. 22 - the highest level since Oct. 22, 2005. The four-week moving average for continuing jobless claims rose 42,000 to 2.69 million - the highest since Nov. 19, 2005. A Labor Department spokesman said states with large increases in claims cited short-term layoffs.
For fiscal 2008, Monsanto projected earnings of $2.50 to $2.60 a share, excluding the impact of former unit Solutia Inc.'s emergence from bankruptcy. Monsanto said it could post a gain of 22 cents to 24 cents a share in the second quarter for the settlement of its claim, in which Monsanto will receive a 17% stake in the reorganized Solutia. The St. Louis genetically modified seed and chemical company expects the fiscal second and third quarters to be the primary drivers for the company's fiscal 2008 earnings.
CVS Caremark narrows 2007 EPS forecast upward to $1.91-$1.92
ConocoPhillips' debt balance is expected to be approximately $21.7 billion at the end of the fourth quarter. The company anticipates fourth-quarter repurchases under the share repurchase program to be approximately $2.5 billion, for a total of approximately $7 billion for the year.
Higher oil prices pushed the value of factory orders up by 1.5% in November, the biggest increase in four months, the Commerce Department reported Thursday. Orders for durable goods were weaker than reported a week ago, falling 0.1% instead rising 0.1% gain as initially reported. Orders for nondurable goods surged 3% on higher oil prices. Excluding the 15.9% rise in petroleum orders, new orders fell 0.2%. Factory shipments rose 1.5%, also the biggest gain since July.
German unemployment fell to a six-year low last month, more than double the fall economists had predicted, underlying the strength of Europe's largest economy ahead of what could be a challenging year. In its monthly report, published yesterday, the Federal Labour Agency said seasonally-adjusted unemployment had dropped by 78,000 to 3.4m, almost twice the average monthly fall in the past year. Altogether, more than half-a-million people came off jobless benefits in the past year.
According to Bloomberg, the risk of companies defaulting rose to the highest in a month on concern the U.S. economy is heading toward recession, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index climbed 2.25 basis points to 83.25 today, according to Deutsche Bank AG. Credit-default swap indexes in Europe and Asia also reached the highest since the start of December. Investors are speculating the worst U.S. housing slump in 27 years is spreading to the wider economy after the Institute of Supply Management reported the biggest fall in manufacturing in five years yesterday.
A total of 179 North American companies have a high risk of default or may need to change details of their debt agreements, Moody's Investors Service said.
India's tourism minister said Thursday that the dollar will no longer be accepted at the Taj Mahal and other national tourist sites.
Crude inventories fell by 700,000 barrels to 297.7 million barrels in the week ending Dec. 28, the American Petroleum Institute reported on Thursday, according to Moody's Economy.com. Distillate stocks rose by 4.7 million barrels to 133.7 million barrels in the same period, while gasoline stocks gained by 6.9 million barrels to 212.9 million barrels, the API said. Also on Thursday, U.S. Energy Information Administration reported crude supplies fell by 4 million barrels to 289.6 million barrels in the latest week. Crude-oil futures broke over $100 a barrel level on Thursday after a government report showed U.S. crude inventories dropped more than expected.
Drugstores reported unusually weak December sales on Thursday, weighed down by a slow flu season, lower-priced generic drugs and sluggish sales of seasonal items.
Since August, asset-backed paper has fallen by $421 billion, or 35%. Total commercial paper rose by $13.2 billion, or 0.7%, last week, as financial paper fell $3.4 billion and non-financial paper dropped $9.6 billion.
“Obviously, the recession risk is rising sharply,” said David Wyss, chief economist at Standard & Poors. “We're getting to near even odds for recession in the first half of the year.”
Gold for February delivery rose $9.10 to end at $869.10 an ounce on the New York Mercantile Exchange, a 28-year high. Crude for February delivery closed down 44 cents, or 0.4%, at $99.18 a barrel on the New York Mercantile Exchange.
Ford Motor Co. reported U.S. December sales fell 9% to 212,094 vehicles from a year ago, with the Lincoln and Land Rover models posting the biggest percentage declines. Ford said 2007 U.S. sales dropped 12% to 2.57 million, with its namesake Ford and Jaguar models posting the biggest declines. In a press release, Ford said it expects the economic environment to "remain challenging" in 2008.
Sales of GM cars and light trucks fell 4.4% to 319,837 in December.
U.S. personal bankruptcy filings jumped 40 percent in 2007 due to rising mortgage payments, job losses and other financial pressures.
Ford Motor Co. named Tata Motors Ltd. the top bidder for its Jaguar and Land Rover brands Thursday and entered into "focused negotiations at a more detailed level," meaning Tata was named preferred bidder for the storied British automakers.
Frank P. Louchheim: “Handled creatively, getting fired allows an executive to actually experience a sense of relief that he never wanted the job he has lost.”
Bed Bath & Beyond Inc.reported its fiscal third-quarter profit slipped 3% and warned its full-year profit will fall short of Wall Street's targets. Shares fell more than 7% in late trades. Bed Bath & Beyond pegged earnings for the year ending March 1 between $2.08 and $2.11 a share. Analysts polled by Thomson Financial are targeting $2.20 a share.
Landmark Communications, a privately held company held by the Batten family, is putting its Weather Channel property up for sale, and the winning bidder could end up spending more than $5 billion, according to a report in The New York Times on Thursday.
State Street Corp.said it's taking a fourth-quarter charge of $279 million, or 71 cents a share, to establish a reserve to address legal exposure and other costs associated with the under-performance of certain active fixed-income strategies managed by State Street Global Advisors, its investment arm.
Harrah's Entertainment Inc. extended Chairman, President and Chief Executive Gary Loveman's contract Thursday and said the executive is likely to stay in those roles after its $17.1 billion buyout is complete. Harrah's, which is being taken private by affiliates of Texas Pacific Group and Apollo Management LP, said the acquisition is expected to close early this year.
Federal Reserve policy makers agreed at last month's meeting that they might need to cut interest rates again as turmoil in the credit and housing markets began to crimp consumer spending. Some Fed members even saw the risk of a vicious cycle pulling down both financial markets and the economy, and possibly requiring "substantial further easing of policy," according to minutes of the Federal Open Market Committee's Dec. 11 meeting.
Greg Ip: "U.S. house prices "likely would have to fall considerably" to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly. The study tracks rents and home prices back to 1960.
Beijing says it is plowing $34 billion into building up for the Olympics -- five times what Sydney spent for the 2000 games.
Brett Steenbarger: "This past week, we've seen 10-year Treasury yields fall over 7% and the S&P 500 Index (SPY) drop by nearly 3%. With fears of recession, traders and investors appear to be seeking the safe haven of Treasuries. I went back to 2002 (N = 1488 trading days) and found 51 occasions in which ten-year yields dropped more than 5% in a week during a stock market decline. Interestingly, the following week, the S&P 500 Index averaged a whopping gain of 1.73% (40 up, 11 down)--much stronger than the average five-day gain of .05% (766 up, 671 down) for the remainder of the sample. It appears that the flight to quality may also represent panic selling, something we see more at a short-term market bottom than a top."
A new report by the Organization of Petroleum Exporting Countries (OPEC) indicates the group will be more hard pressed than previously thought to meet the world's surging oil needs and could fail to supply its share of global oil markets by 2037. The report in the December issue of the OPEC Review, published by the organization's Vienna-based Secretariat, also says Kuwait is likely to be an extremely inconsistent and unstable supplier and questions Saudi Arabia's assertion it is capable of meeting world oil demand for the next 50 years.
Two-year Treasury notes rose, with the yield spread against 10-year securities at the widest since January 2005, as traders added to bets the Federal Reserve will cut interest rates to stave off recession.
Companies in the U.S. private sector added 40,000 jobs in December, according to the ADP employment report released Thursday. The report comes a day before the Labor Department reports on nonfarm payroll growth for December. Adding in some 25,000 jobs created by government, the ADP report suggests nonfarm payrolls grew by about 65,000, close to the 58,000 now expected. Services industries added 71,000 jobs in December, while goods-producing industries cut 31,000 jobs, including 16,000 in manufacturing.
Homa Bahrami: “Job security is gone. The driving force of a career must come from the individual.”
Big corporations took a breather from cutting jobs in December, with announced layoff plans falling 39% to 44,416, the lowest level of the year, according to the monthly tally from outplacement firm Challenger Gray & Christmas released Thursday. For all of 2007, announced layoffs fell 8.5% to 768,264, the lowest since the recession year of 2001. The financial sector was battered in 2007, with 153,105 announced cuts, more than three times the previous year's total. Automakers eliminated 78,880 jobs in 2007, about half the 158,766 jobs cut in 2006. In December, the retail sector cut the most jobs (7,961), followed by automotive, pharmaceutical and financial.
Seasonally adjusted initial jobless claims fell 21,000 to 336,000 in the week ended Dec. 29, the government reported Thursday. The four-week moving average for initial jobless claims fell 750 to 343,750, according to the Labor Department. The prior week's initial jobless claims level was revised to 357,000 from an earlier estimate of 349,000. Continuing jobless claims gained 46,000, reaching 2.76 million for the week ended Dec. 22 - the highest level since Oct. 22, 2005. The four-week moving average for continuing jobless claims rose 42,000 to 2.69 million - the highest since Nov. 19, 2005. A Labor Department spokesman said states with large increases in claims cited short-term layoffs.
For fiscal 2008, Monsanto projected earnings of $2.50 to $2.60 a share, excluding the impact of former unit Solutia Inc.'s emergence from bankruptcy. Monsanto said it could post a gain of 22 cents to 24 cents a share in the second quarter for the settlement of its claim, in which Monsanto will receive a 17% stake in the reorganized Solutia. The St. Louis genetically modified seed and chemical company expects the fiscal second and third quarters to be the primary drivers for the company's fiscal 2008 earnings.
CVS Caremark narrows 2007 EPS forecast upward to $1.91-$1.92
ConocoPhillips' debt balance is expected to be approximately $21.7 billion at the end of the fourth quarter. The company anticipates fourth-quarter repurchases under the share repurchase program to be approximately $2.5 billion, for a total of approximately $7 billion for the year.
Higher oil prices pushed the value of factory orders up by 1.5% in November, the biggest increase in four months, the Commerce Department reported Thursday. Orders for durable goods were weaker than reported a week ago, falling 0.1% instead rising 0.1% gain as initially reported. Orders for nondurable goods surged 3% on higher oil prices. Excluding the 15.9% rise in petroleum orders, new orders fell 0.2%. Factory shipments rose 1.5%, also the biggest gain since July.
German unemployment fell to a six-year low last month, more than double the fall economists had predicted, underlying the strength of Europe's largest economy ahead of what could be a challenging year. In its monthly report, published yesterday, the Federal Labour Agency said seasonally-adjusted unemployment had dropped by 78,000 to 3.4m, almost twice the average monthly fall in the past year. Altogether, more than half-a-million people came off jobless benefits in the past year.
According to Bloomberg, the risk of companies defaulting rose to the highest in a month on concern the U.S. economy is heading toward recession, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index climbed 2.25 basis points to 83.25 today, according to Deutsche Bank AG. Credit-default swap indexes in Europe and Asia also reached the highest since the start of December. Investors are speculating the worst U.S. housing slump in 27 years is spreading to the wider economy after the Institute of Supply Management reported the biggest fall in manufacturing in five years yesterday.
A total of 179 North American companies have a high risk of default or may need to change details of their debt agreements, Moody's Investors Service said.
India's tourism minister said Thursday that the dollar will no longer be accepted at the Taj Mahal and other national tourist sites.
Crude inventories fell by 700,000 barrels to 297.7 million barrels in the week ending Dec. 28, the American Petroleum Institute reported on Thursday, according to Moody's Economy.com. Distillate stocks rose by 4.7 million barrels to 133.7 million barrels in the same period, while gasoline stocks gained by 6.9 million barrels to 212.9 million barrels, the API said. Also on Thursday, U.S. Energy Information Administration reported crude supplies fell by 4 million barrels to 289.6 million barrels in the latest week. Crude-oil futures broke over $100 a barrel level on Thursday after a government report showed U.S. crude inventories dropped more than expected.
Drugstores reported unusually weak December sales on Thursday, weighed down by a slow flu season, lower-priced generic drugs and sluggish sales of seasonal items.
Since August, asset-backed paper has fallen by $421 billion, or 35%. Total commercial paper rose by $13.2 billion, or 0.7%, last week, as financial paper fell $3.4 billion and non-financial paper dropped $9.6 billion.
“Obviously, the recession risk is rising sharply,” said David Wyss, chief economist at Standard & Poors. “We're getting to near even odds for recession in the first half of the year.”
Gold for February delivery rose $9.10 to end at $869.10 an ounce on the New York Mercantile Exchange, a 28-year high. Crude for February delivery closed down 44 cents, or 0.4%, at $99.18 a barrel on the New York Mercantile Exchange.
Ford Motor Co. reported U.S. December sales fell 9% to 212,094 vehicles from a year ago, with the Lincoln and Land Rover models posting the biggest percentage declines. Ford said 2007 U.S. sales dropped 12% to 2.57 million, with its namesake Ford and Jaguar models posting the biggest declines. In a press release, Ford said it expects the economic environment to "remain challenging" in 2008.
Sales of GM cars and light trucks fell 4.4% to 319,837 in December.
U.S. personal bankruptcy filings jumped 40 percent in 2007 due to rising mortgage payments, job losses and other financial pressures.
Ford Motor Co. named Tata Motors Ltd. the top bidder for its Jaguar and Land Rover brands Thursday and entered into "focused negotiations at a more detailed level," meaning Tata was named preferred bidder for the storied British automakers.
Frank P. Louchheim: “Handled creatively, getting fired allows an executive to actually experience a sense of relief that he never wanted the job he has lost.”
Bed Bath & Beyond Inc.reported its fiscal third-quarter profit slipped 3% and warned its full-year profit will fall short of Wall Street's targets. Shares fell more than 7% in late trades. Bed Bath & Beyond pegged earnings for the year ending March 1 between $2.08 and $2.11 a share. Analysts polled by Thomson Financial are targeting $2.20 a share.
Wednesday, January 02, 2008
Cash As A Performer
1/3/08 Cash As A Perfomer
Most Californians believe the state is in a poor economic condition that will continue through 2008, according to a recent poll. Fifty-two percent said California was in bad economic times, and 20 percent said it was in good economic times. When asked about the next 12 months, 70 percent said they expected the state's economy to worsen or stay the same. The last time a majority of Californians thought the state was in good economic condition was 2001, when 69 percent of the respondents said the state was in good economic times. In the most recent poll, 49 percent of the respondents said they expected no change in their personal situations during the new year. Among those foreseeing a change, more than twice as many expect to be worse off financially. The survey was conducted by The Field Poll, which spoke to 649 registered California voters between December 10 and December 17. The survey's margin of error is +/- 4 percent.
Centro Properties Group, the Australian owner of 700 U.S. shopping malls, put itself up for sale before a Feb. 15 deadline to refinance A$3.9 billion ($3.4 billion) of debt.
A federal judge in California ruled on Monday that wireless chip maker Qualcomm Inc must immediately stop selling third-generation, or 3G, WCDMA cellular chips that infringe on the Broadcom Corp patents. U.S. District Judge James Selna ruled, however, that Qualcomm can keep selling some chips whose designs infringe three patents held by rival Broadcom through January 2009.
Bloomberg writes that GM (GM) and Ford (F) December sales probably dropped ending the slowest year for US car sales since 1998.
Gold futures for February delivery rose $11.60, or 1.4 percent, to $849.60 an ounce at 9:01 a.m. on the Comex division of the New York Mercantile Exchange. The metal earlier reached $852.30, the highest for a most-active contract since Jan. 21, 1980, the day futures reached a record $873. Silver for March delivery gained 17.5 cents, or 1.2 percent, to $15.095 an ounce. The metal rose 15 percent last year.
Crude-oil futures rose as high as $98.29 a barrel, and in Wednesday morning trade rose $2.02 to $98 a barrel, a day before the release of weekly inventory data. More violence in oil-producing Nigeria also contributed to the gains in crude.
Citigroup Inc. may have to reduce the value of holdings by $12 billion in the fourth quarter because of financial-market swings, according to Sanford C. Bernstein & Co. analysts.
Nouriel Roubini: "In 2007 cash (in the form of holdings of short-term Treasuries or money market funds) outperformed the stock market in the US. The year ended with a bearish note as all major indices down on Monday. The broad index of the US stock market, the S&P500, ended the year up a mediocre 3.5%: that is less than the inflation rate for the year (that was above 4%) and that is less than holding a money market fund or a basket of short-term US Treasuries.
Natural gas producer Chesapeake Energy Corp. said Wednesday it sold a non-operating stake in certain producing assets in Kentucky and West Virginia to UBS AG and Deutsche Bank's DB Energy Trading LLC unit for $1.1 billion.
China Petrochemical Corp. will attempt to become a global energy competitor through more acquisitions foreign oil and gas assets, China's No. 2 oil producer, also known as Sinopec, said Wednesday.
Acacia entered a license agreement with Sprint Nextel.
Cameron International Corp.received a $190 million contract to provide subsea equipment and services to the Venezuelan national oil company Petroleos De Venezuela S.A.
Chain-store sales for the week ended Dec. 29 rose 2.3% from the year-ago period, according to a survey released Wednesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales fell 0.2%. "Gift cards once again made up a significant portion of holiday gift expenditures this year and that will propel sales into January," ICSC Chief Economist Michael Niemira said. ICSC forecasts retailers' sales in November and December combined to rise by 2.5% or lower.
National City Mortgage to cut staffing by 900 more positions in mortgage unit. National City cuts quarterly dividend 49% to 21 cents/share.
The Institute of Supply Management said the U.S. factory sector contracted in December. The ISM index fell to 47.7% from 50.8% in November. Seven of 18 industries were expanding in December. The new-orders index fell to 45.7% from 52.6%, and the production index fell to 47.3% from 51.9%. One less widely followed indicator is the ISM Commodities Survey which is released within each month's ISM report. The indicator has generally had a pretty good record at anticipating moves in the CPI. This month's commodity survey showed that 15 commodities were up in price for the month, which is the highest monthly reading since May 2006 and the third straight monthly gain.
The dollar index, which measures the greenback against a basket of six major currencies and finished 2007 trade with a loss of about 9%, was down sharply at 75.96.
Under a new Texas state law that replaces the franchise tax with a margin tax, businesses will pay based on gross revenues. The number of companies paying taxes will rise to 900,000 in May 2008 from 700,000 in 2007. The amount of state business taxes paid is expected to more than double to $11.9 billion during the next two years versus $5.7 billion for the last two-year period under the outgoing franchise tax, according to the Texas Comptroller's Office. And a business could have to pay a margin tax even if it loses money, according to federal tax calculations.
More than nine million individuals in Britain are now believed to be struggling to pay credit card bills and mortgages, with the average owed by problem debtors hitting £30,000. Grant Thornton predicts the total number of personal insolvencies will jump to at least 120,000 this year, almost triple the equivalent figure in 2004, when just under 47,000 people went bankrupt.
Overnight lows in Chicago on Jan. 2 may be 7 degrees Fahrenheit (-14 degrees Celsius), or about 10 degrees lower than typical, AccuWeather.com said in an outlook. Temperatures in New York may be 1 degree lower than seasonal at 26 degrees, the State College, Pennsylvania-based forecaster said. Heating demand on Jan. 2 in the U.S. Midwest, the country's largest home-heating market, may be as much as 23 percent higher than average, forecaster David Salmon of Belton, Missouri-based Weather Derivatives Inc. said in a Dec. 28 note. Demand may also be boosted as businesses and offices reopen after shutting down for New Year's Day.
In mid-morning on Wednesday, natural gas had risen 22 cents to $7.70; however, in New York it jumped $1.56 to $9.14.
Crude-oil futures hit the $100 a barrel mark Wednesday and rallied $3.64, or 3.8%, to close at $99.62 a barrel on the New York Mercantile Exchange, and natural gas closed up 36 cents at $7.85 while in NY it closed at $9.14. Heating oil closed up 9.10 at 274.10. Gold closed up $22 an ounce at $860 and silver rose 37 cents to end at $15.29.
President George W. Bush does not plan to release oil from the Strategic Petroleum Reserve to counter crude oil prices that hit $100 a barrel today, his spokeswoman said.
The first day of trading clearly was a day for commodities.
Byron Wien, the strategist whose New Year's predictions have influenced investors for a quarter century, said the U.S. economy will fall into a recession in 2008 and stocks will tumble before rallying in the second half. The Standard & Poor's 500 Index will post a 10 percent drop during the year, meeting the common definition of a market ``correction,'' Wien, chief investment strategist of Westport, Connecticut-based hedge fund Pequot Capital Management Inc., wrote in his 23rd annual list of 10 ``surprises.'' Democrat Barack Obama will beat Republican Mitt Romney in a ``landslide'' to win the U.S. presidency, he added.
The first trading day of 2008 was the worst for equities since the first trading day in 1932.
Robert Prechter Jr. : “There's nothing wrong with cash. It gives you time to think.”
Most Californians believe the state is in a poor economic condition that will continue through 2008, according to a recent poll. Fifty-two percent said California was in bad economic times, and 20 percent said it was in good economic times. When asked about the next 12 months, 70 percent said they expected the state's economy to worsen or stay the same. The last time a majority of Californians thought the state was in good economic condition was 2001, when 69 percent of the respondents said the state was in good economic times. In the most recent poll, 49 percent of the respondents said they expected no change in their personal situations during the new year. Among those foreseeing a change, more than twice as many expect to be worse off financially. The survey was conducted by The Field Poll, which spoke to 649 registered California voters between December 10 and December 17. The survey's margin of error is +/- 4 percent.
Centro Properties Group, the Australian owner of 700 U.S. shopping malls, put itself up for sale before a Feb. 15 deadline to refinance A$3.9 billion ($3.4 billion) of debt.
A federal judge in California ruled on Monday that wireless chip maker Qualcomm Inc must immediately stop selling third-generation, or 3G, WCDMA cellular chips that infringe on the Broadcom Corp patents. U.S. District Judge James Selna ruled, however, that Qualcomm can keep selling some chips whose designs infringe three patents held by rival Broadcom through January 2009.
Bloomberg writes that GM (GM) and Ford (F) December sales probably dropped ending the slowest year for US car sales since 1998.
Gold futures for February delivery rose $11.60, or 1.4 percent, to $849.60 an ounce at 9:01 a.m. on the Comex division of the New York Mercantile Exchange. The metal earlier reached $852.30, the highest for a most-active contract since Jan. 21, 1980, the day futures reached a record $873. Silver for March delivery gained 17.5 cents, or 1.2 percent, to $15.095 an ounce. The metal rose 15 percent last year.
Crude-oil futures rose as high as $98.29 a barrel, and in Wednesday morning trade rose $2.02 to $98 a barrel, a day before the release of weekly inventory data. More violence in oil-producing Nigeria also contributed to the gains in crude.
Citigroup Inc. may have to reduce the value of holdings by $12 billion in the fourth quarter because of financial-market swings, according to Sanford C. Bernstein & Co. analysts.
Nouriel Roubini: "In 2007 cash (in the form of holdings of short-term Treasuries or money market funds) outperformed the stock market in the US. The year ended with a bearish note as all major indices down on Monday. The broad index of the US stock market, the S&P500, ended the year up a mediocre 3.5%: that is less than the inflation rate for the year (that was above 4%) and that is less than holding a money market fund or a basket of short-term US Treasuries.
Natural gas producer Chesapeake Energy Corp. said Wednesday it sold a non-operating stake in certain producing assets in Kentucky and West Virginia to UBS AG and Deutsche Bank's DB Energy Trading LLC unit for $1.1 billion.
China Petrochemical Corp. will attempt to become a global energy competitor through more acquisitions foreign oil and gas assets, China's No. 2 oil producer, also known as Sinopec, said Wednesday.
Acacia entered a license agreement with Sprint Nextel.
Cameron International Corp.received a $190 million contract to provide subsea equipment and services to the Venezuelan national oil company Petroleos De Venezuela S.A.
Chain-store sales for the week ended Dec. 29 rose 2.3% from the year-ago period, according to a survey released Wednesday by the International Council of Shopping Centers and UBS Securities. On a week-over-week basis, sales fell 0.2%. "Gift cards once again made up a significant portion of holiday gift expenditures this year and that will propel sales into January," ICSC Chief Economist Michael Niemira said. ICSC forecasts retailers' sales in November and December combined to rise by 2.5% or lower.
National City Mortgage to cut staffing by 900 more positions in mortgage unit. National City cuts quarterly dividend 49% to 21 cents/share.
The Institute of Supply Management said the U.S. factory sector contracted in December. The ISM index fell to 47.7% from 50.8% in November. Seven of 18 industries were expanding in December. The new-orders index fell to 45.7% from 52.6%, and the production index fell to 47.3% from 51.9%. One less widely followed indicator is the ISM Commodities Survey which is released within each month's ISM report. The indicator has generally had a pretty good record at anticipating moves in the CPI. This month's commodity survey showed that 15 commodities were up in price for the month, which is the highest monthly reading since May 2006 and the third straight monthly gain.
The dollar index, which measures the greenback against a basket of six major currencies and finished 2007 trade with a loss of about 9%, was down sharply at 75.96.
Under a new Texas state law that replaces the franchise tax with a margin tax, businesses will pay based on gross revenues. The number of companies paying taxes will rise to 900,000 in May 2008 from 700,000 in 2007. The amount of state business taxes paid is expected to more than double to $11.9 billion during the next two years versus $5.7 billion for the last two-year period under the outgoing franchise tax, according to the Texas Comptroller's Office. And a business could have to pay a margin tax even if it loses money, according to federal tax calculations.
More than nine million individuals in Britain are now believed to be struggling to pay credit card bills and mortgages, with the average owed by problem debtors hitting £30,000. Grant Thornton predicts the total number of personal insolvencies will jump to at least 120,000 this year, almost triple the equivalent figure in 2004, when just under 47,000 people went bankrupt.
Overnight lows in Chicago on Jan. 2 may be 7 degrees Fahrenheit (-14 degrees Celsius), or about 10 degrees lower than typical, AccuWeather.com said in an outlook. Temperatures in New York may be 1 degree lower than seasonal at 26 degrees, the State College, Pennsylvania-based forecaster said. Heating demand on Jan. 2 in the U.S. Midwest, the country's largest home-heating market, may be as much as 23 percent higher than average, forecaster David Salmon of Belton, Missouri-based Weather Derivatives Inc. said in a Dec. 28 note. Demand may also be boosted as businesses and offices reopen after shutting down for New Year's Day.
In mid-morning on Wednesday, natural gas had risen 22 cents to $7.70; however, in New York it jumped $1.56 to $9.14.
Crude-oil futures hit the $100 a barrel mark Wednesday and rallied $3.64, or 3.8%, to close at $99.62 a barrel on the New York Mercantile Exchange, and natural gas closed up 36 cents at $7.85 while in NY it closed at $9.14. Heating oil closed up 9.10 at 274.10. Gold closed up $22 an ounce at $860 and silver rose 37 cents to end at $15.29.
President George W. Bush does not plan to release oil from the Strategic Petroleum Reserve to counter crude oil prices that hit $100 a barrel today, his spokeswoman said.
The first day of trading clearly was a day for commodities.
Byron Wien, the strategist whose New Year's predictions have influenced investors for a quarter century, said the U.S. economy will fall into a recession in 2008 and stocks will tumble before rallying in the second half. The Standard & Poor's 500 Index will post a 10 percent drop during the year, meeting the common definition of a market ``correction,'' Wien, chief investment strategist of Westport, Connecticut-based hedge fund Pequot Capital Management Inc., wrote in his 23rd annual list of 10 ``surprises.'' Democrat Barack Obama will beat Republican Mitt Romney in a ``landslide'' to win the U.S. presidency, he added.
The first trading day of 2008 was the worst for equities since the first trading day in 1932.
Robert Prechter Jr. : “There's nothing wrong with cash. It gives you time to think.”
New Trading Year
1/2/08 New Trading Year
PHH Corp., the Mount Laurel, N.J., provider of residential-mortgage and vehicle-fleet-management services, said it ended its plan to be acquired by General Electric Co.'s GE Capital financing unit. The deal, reached in mid-March, had been valued at $31.50 a share, or $1.69 billion. As a condition of the deal, an affiliate of the New York investment firm Blackstone Group was to acquire PHH's mortgage business from GE Capital. PHH said it had been notified that the Blackstone entity was unable to secure financing for this part of the deal. Thus, PHH said it is seeking a $50 million merger-termination fee from the Blackstone unit.
Projections for S&P 500 companies' fourth-quarter earnings swung to a 6.1 percent drop on Monday from an 11.5 percent rise on October 1, in the biggest quarterly move since Reuters Estimates started compiling analysts' forecasts in 1999.
Martin Hutchinson writes of "The Decade of Deception." It is well worth reading.
http://prudentbear.com/index.php/BearsLairHome
Brett Steenbarger: "Interestingly, simply buying stocks at the close on Tuesday and selling at the close on Wednesday accounted for all of the market's gains for 2007--and then some. My look at the data suggests that this is not because returns were more volatile on Wednesdays. Rather, more of the big point days were winners on Wednesday than on other days."
The Oil Drum: "The energy crisis has started and the world is about to go through a profound and wrenching change. We face an energy crisis never before confronted in human history. Energy for transportation, manufacturing and everyday living will have to come from other sources than the one we use now, most likely less efficient sources. That beautiful black liquid with the fantastic power / mass ratio that was the base building block of our civilization is going to hit its mid point, global peak oil, and then slid into permanent decline and we will be forced to make major changes in our way of living. Population goes up, the oil supply goes down. Year after year, decade after decade, demand and population increase, supplies of oil decrease. Until all the oil is gone."
China today introduces a new labor law that enhances rights for the nation's workers, including open- ended work contracts and severance pay.``The government that is making the most concerted effort to protect workers rights is China,'' said Auret van Heerden, Geneva-based head of Fair Labor Association, which monitors work conditions in 60 countries. That ``goes against the conventional wisdom that China is leading the race to the bottom.''
Nokia Siemens Networks will buy Apertio, a provider of mobile subscriber data platforms and applications, for around 140 million euros ($206 million).
The U.K. CIPS manufacturing purchasing managers index dropped to 52.9 in December from 54.3 in November.
In early Wednesday trading gold futures rose $9.30 to $847.30 an ounce.
Recruitment company Hudson Highland Group Inc. said Wednesday that its Hudson Employment Index fell 4.6 points in December to 87.3 as worker confidence in the U.S. labor market continued to decline. The reading was more than 15 points below the 102.7 level recorded a year ago.
South Korea recorded its first trade deficit in nearly five years last month, as crude-oil prices in the mid-$90-per-barrel-level pushed up import costs while prices for memory chips continued to weaken. Preliminary data showed a trade deficit of $865 million in December, down from a $2.13 billion surplus in November, according to reports which cited data from the Ministry of Commerce, Industry and Energy said Wednesday.
China's tax 2007 revenue climbed to 4.94 trillion yuan ($677.1 billion), up 31.4% from the preceding year, according to media reports which cited a statement by the State Administration of Taxation Tuesday. The tax figure did not include revenue from customs levies, land taxes and contract taxes.
Singapore's economy contracted 3.2% in the fourth quarter on an inflation-adjusted basis, marking the first time the economy has shrunk in 15 quarters, as slumping factory output weighed on growth, the government said in advanced estimates released Wednesday. The contraction follows a 4.4% expansion in the third quarter, Singapore's Ministry of Trade and Industry said.
PHH Corp., the Mount Laurel, N.J., provider of residential-mortgage and vehicle-fleet-management services, said it ended its plan to be acquired by General Electric Co.'s GE Capital financing unit. The deal, reached in mid-March, had been valued at $31.50 a share, or $1.69 billion. As a condition of the deal, an affiliate of the New York investment firm Blackstone Group was to acquire PHH's mortgage business from GE Capital. PHH said it had been notified that the Blackstone entity was unable to secure financing for this part of the deal. Thus, PHH said it is seeking a $50 million merger-termination fee from the Blackstone unit.
Projections for S&P 500 companies' fourth-quarter earnings swung to a 6.1 percent drop on Monday from an 11.5 percent rise on October 1, in the biggest quarterly move since Reuters Estimates started compiling analysts' forecasts in 1999.
Martin Hutchinson writes of "The Decade of Deception." It is well worth reading.
http://prudentbear.com/index.php/BearsLairHome
Brett Steenbarger: "Interestingly, simply buying stocks at the close on Tuesday and selling at the close on Wednesday accounted for all of the market's gains for 2007--and then some. My look at the data suggests that this is not because returns were more volatile on Wednesdays. Rather, more of the big point days were winners on Wednesday than on other days."
The Oil Drum: "The energy crisis has started and the world is about to go through a profound and wrenching change. We face an energy crisis never before confronted in human history. Energy for transportation, manufacturing and everyday living will have to come from other sources than the one we use now, most likely less efficient sources. That beautiful black liquid with the fantastic power / mass ratio that was the base building block of our civilization is going to hit its mid point, global peak oil, and then slid into permanent decline and we will be forced to make major changes in our way of living. Population goes up, the oil supply goes down. Year after year, decade after decade, demand and population increase, supplies of oil decrease. Until all the oil is gone."
China today introduces a new labor law that enhances rights for the nation's workers, including open- ended work contracts and severance pay.``The government that is making the most concerted effort to protect workers rights is China,'' said Auret van Heerden, Geneva-based head of Fair Labor Association, which monitors work conditions in 60 countries. That ``goes against the conventional wisdom that China is leading the race to the bottom.''
Nokia Siemens Networks will buy Apertio, a provider of mobile subscriber data platforms and applications, for around 140 million euros ($206 million).
The U.K. CIPS manufacturing purchasing managers index dropped to 52.9 in December from 54.3 in November.
In early Wednesday trading gold futures rose $9.30 to $847.30 an ounce.
Recruitment company Hudson Highland Group Inc. said Wednesday that its Hudson Employment Index fell 4.6 points in December to 87.3 as worker confidence in the U.S. labor market continued to decline. The reading was more than 15 points below the 102.7 level recorded a year ago.
South Korea recorded its first trade deficit in nearly five years last month, as crude-oil prices in the mid-$90-per-barrel-level pushed up import costs while prices for memory chips continued to weaken. Preliminary data showed a trade deficit of $865 million in December, down from a $2.13 billion surplus in November, according to reports which cited data from the Ministry of Commerce, Industry and Energy said Wednesday.
China's tax 2007 revenue climbed to 4.94 trillion yuan ($677.1 billion), up 31.4% from the preceding year, according to media reports which cited a statement by the State Administration of Taxation Tuesday. The tax figure did not include revenue from customs levies, land taxes and contract taxes.
Singapore's economy contracted 3.2% in the fourth quarter on an inflation-adjusted basis, marking the first time the economy has shrunk in 15 quarters, as slumping factory output weighed on growth, the government said in advanced estimates released Wednesday. The contraction follows a 4.4% expansion in the third quarter, Singapore's Ministry of Trade and Industry said.
Monday, December 31, 2007
Happy New Year
1/1/2008 Happy New Year
Sales of semiconductors rose 0.7% in November compared to October to $22.5 billion, or 2.3% more than last year, the Semiconductor Industry Association said Monday.
Kirk Kerkorian's Tracinda is going to buy 35% of Delta Petroleum for $684 million, or $19 a share, the companies said Monday. The investment is at 23% premium to Friday's close.
New York City Mayor Michael Bloomberg is moving closer to a run for president, as he schedules bipartisan meetings with major U.S. political figures and his aides study how to mount independent campaigns in the 50 states, The New York Times reported.
Republican presidential candidate Ron Paul may lag behind in public-opinion polls. But after raising about $19 million for the final three months of the year, he is now among his party's front-runners in the race for campaign cash.
Online spending from Nov. 1 through Dec. 27 increased 19 percent to almost $28 billion, from $24 billion a year earlier, Reston, Virginia-based ComScore Inc. said.
"The Brazilian economy is probably at its best moment in 25 years," said Paulo Levy, economist at a Rio de Janeiro-based think tank known by its Portuguese initials IPEA, citing four years of good economic growth.
Exports of manufactured goods and services have given Brazil's economy balance and helped foreign reserves climb to $167 billion, double the figure of September 2006. The country has paid down its debt, lowered interest rates and kept a lid on spending. Economic growth will come in at 5.3% this year, lower than the hemisphere's 5.7%, but quite a feat for a country that over the previous 10 years averaged only 2.5% annual expansion.
Count David Seiders, the chief economist of the National Association of Home Builders: "I'm viewing 2008 as another down year," he told reporters in a recent conference call. He sees new-home sales next year slipping even lower than in 2007: His forecast calls for about 741,000, compared to the 1.2 million seen in the glory days of 2005. "One heck of a contraction," he called it.
Brett Steenbarger: "Continued Weakness in Cumulative TICK - My Cumulative TICK line has been showing notable weakness during the recent bounce and the last couple of days of pullback. This leads me to suspect that we're putting in a lower high in ES and could be testing the lows from earlier in the month. My indicators that treat buying and selling interest as separate variables show significantly below average buying interest all four trading days last week. During the last two sessions of the week, selling interest was pretty average relative to the prior 30 trading sessions. In short, buyers have been on strike. Tough to mount a rally when that happens."
China International United Petroleum & Chemical Corp., or Unipec, hired the tanker Hyundai Banner at a rate of 232.5 Worldscale points, according to a report today from Simpson, Spence & Young Ltd. That's 15 percent below a comparable assessment for voyages to Japan, according to data compiled by Bloomberg. Hyundai Banner is fitted with one steel hull. Tankers fitted with double hulls to cut the risk of an oil spill normally cost more to hire. The London-based Baltic Exchange's last assessment was on Dec. 24 and the next will be on Jan. 2.
BHP Billiton is considering submitting an unchanged US$150 billion bid to Rio Tinto's shareholders ahead of the February 6 deadline set by the UK Takeover Panel for BHP to make a formal offer for Rio, the UK's Sunday Times reported at the weekend, without citing sources. This is one of several options being considered by BHP, along with increasing the cash component of any bid, the newspaper said.
John Hussman: "On the subject of employment, it's useful to recall that the non-farm employment figure for November came in at 138,467,000, up by 94,000 (which is very sluggish to begin with), but the figures for the prior two months were simultaneously revised lower by 48,000, so that the net gain over the number reported in October was only 46,000 jobs. The tendency of the jobs numbers to be subject to major revisions introduces noise into their month-to-month interpretation, but figure that the total non-farm employment number reported in November was 138,467,000. If the December figure comes in below about 138,539,000 (a gain of 72,000 jobs, net of any revisions), that would represent year-over-year employment growth of less than 1%, which is about the level where prior recessions have started. Anything less than 138,663,000 (which is nearly certain) would represent 6-month growth less than 0.5%, which is also a slowing that is typically seen as the economy tips into recession. As for the unemployment rate, the start-date of a recession frequently coincides with the point where the rate moves about 0.4% above its 12-month trough. That trough was 4.4% in March, so a move from the current 4.7% to even 4.8% would be consistent with an economy rolling over."
Earthfiles: NASA: “After a 13.6 year absence, Comet 8P/Tuttle is once again traveling through the inner solar system and on January 1 - 2, 2008, it makes its closest approach to Earth at only 24 million miles away. The emerald-colored comet will brighten to a predicted magnitude of 5.8, visible to the unaided eye from dark-sky sites and will be a fine target for backyard telescopes. Look straight up after sunset on January 1, 2008, and north of the big ‘W’ of Cassiopeia to see the emerald green glow of Comet 8P/Tuttle.”
The Pakistani government is likely to delay elections scheduled for next week because of violent unrest in the wake of the assassination of Benazir Bhutto.
Algeria's hydrocarbons' revenues will total $59 billion in 2007, Energy and Mines Minister Chakib Khelil said in a statement. According to Khelil, $2 billion of this year's income was earned from a windfall tax on the profits of foreign energy firms. Under Algerian law, Sonatrach holds at least a 51% share in every oil and gas exploration contract awarded to foreign companies. Windfall taxes range from 5% to 50% on excess profits when Brent crude averages more than $30 per barrel.
It was the year the residential real estate industry slid from sublime to subprime - "and we still haven't hit bottom," said Miami-based real estate analyst Lewis Goodkin of Goodkin Consulting. Never one to pull his punches, Goodkin said the residential industry went from talk to walk. From "build it and they will come" to a fear of how many buyers will walk from their deposits at the closing table.
ConocoPhillips signed a production-sharing contract with Malaysian national oil company Petronas for the exploration and development of natural gas fields offshore Sabah, Malaysia. Petronas will hold a 40% stake under the contract through its unit Petronas Carigali, while Shell and ConocoPhillips will each hold 30%.
M/I Homes Inc. has sold land located primarily in Florida to various buyers for $82 million and that it is exiting the West Palm Beach housing market. The home builder said as a result of the lot sales, it will book pretax land impairment charges of about $80 million in the fourth quarter, and expects to see a $50 million cash tax refund in the second quarter of 2008. M/I Homes said it is "likely" that further impairment charges will be recorded in the fourth quarter. The company said the land sold represented 3,700 lots; at the end of the third quarter, it owned 16,767 lots.
BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. halted more than half of Australia's oil production as the first tropical cyclone of the season struck the northwest coast.
A law taking effect Tuesday makes Missouri just the third state -- behind Minnesota and Hawaii -- to implement a wide-ranging ethanol mandate. Because the corn-based fuel is cheaper than gasoline, most of Missouri's gas stations quietly made the switch months in advance.
Home resales rose to a 5.00 million annual rate, a 0.4% increase from October's revised 4.98 million annual pace, the National Association of Realtors said Monday. October's rate was originally estimated at 4.97 million. The median price of a previously owned home was $210,200 in November, down 3.3% from $217,300 in November 2006. The median price in October this year was $206,900.
United States banks on average borrowed $4.83 billion a day directly from the Federal Reserve in the week ended Dec. 26, up from $4.62 billion a day the previous week, Fed data released Thursday showed.
Chinese iron ore imports in November climbed to 35.5 Mt, the second-highest monthly total, according to preliminary customs data. If confirmed, November imports would be up 5.7 Mt on the previous month, with the year-to-date total of 349.5 Mt running some 17% above last year’s level.
Meanwhile, the preliminary data indicate that soybean imports in November were the highest for 17 months. The YTD total is now 27.9 Mt, up 2 Mt year-on-year.
For the year, the Nasdaq climbed 9.8%, the blue-chip index rose 6.4%, and the broader index gained 3.5%.
The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October.
Beijing said on Monday that a unit of its new $200bn sovereign wealth fund would inject $20bn into China Development Bank in a move intended to smooth the policy lender's transformation into a commercially-oriented institution.
G.K.Chesterton: “The object of a new year is not that we should have a new year. It is that we should have a new soul”
Sales of semiconductors rose 0.7% in November compared to October to $22.5 billion, or 2.3% more than last year, the Semiconductor Industry Association said Monday.
Kirk Kerkorian's Tracinda is going to buy 35% of Delta Petroleum for $684 million, or $19 a share, the companies said Monday. The investment is at 23% premium to Friday's close.
New York City Mayor Michael Bloomberg is moving closer to a run for president, as he schedules bipartisan meetings with major U.S. political figures and his aides study how to mount independent campaigns in the 50 states, The New York Times reported.
Republican presidential candidate Ron Paul may lag behind in public-opinion polls. But after raising about $19 million for the final three months of the year, he is now among his party's front-runners in the race for campaign cash.
Online spending from Nov. 1 through Dec. 27 increased 19 percent to almost $28 billion, from $24 billion a year earlier, Reston, Virginia-based ComScore Inc. said.
"The Brazilian economy is probably at its best moment in 25 years," said Paulo Levy, economist at a Rio de Janeiro-based think tank known by its Portuguese initials IPEA, citing four years of good economic growth.
Exports of manufactured goods and services have given Brazil's economy balance and helped foreign reserves climb to $167 billion, double the figure of September 2006. The country has paid down its debt, lowered interest rates and kept a lid on spending. Economic growth will come in at 5.3% this year, lower than the hemisphere's 5.7%, but quite a feat for a country that over the previous 10 years averaged only 2.5% annual expansion.
Count David Seiders, the chief economist of the National Association of Home Builders: "I'm viewing 2008 as another down year," he told reporters in a recent conference call. He sees new-home sales next year slipping even lower than in 2007: His forecast calls for about 741,000, compared to the 1.2 million seen in the glory days of 2005. "One heck of a contraction," he called it.
Brett Steenbarger: "Continued Weakness in Cumulative TICK - My Cumulative TICK line has been showing notable weakness during the recent bounce and the last couple of days of pullback. This leads me to suspect that we're putting in a lower high in ES and could be testing the lows from earlier in the month. My indicators that treat buying and selling interest as separate variables show significantly below average buying interest all four trading days last week. During the last two sessions of the week, selling interest was pretty average relative to the prior 30 trading sessions. In short, buyers have been on strike. Tough to mount a rally when that happens."
China International United Petroleum & Chemical Corp., or Unipec, hired the tanker Hyundai Banner at a rate of 232.5 Worldscale points, according to a report today from Simpson, Spence & Young Ltd. That's 15 percent below a comparable assessment for voyages to Japan, according to data compiled by Bloomberg. Hyundai Banner is fitted with one steel hull. Tankers fitted with double hulls to cut the risk of an oil spill normally cost more to hire. The London-based Baltic Exchange's last assessment was on Dec. 24 and the next will be on Jan. 2.
BHP Billiton is considering submitting an unchanged US$150 billion bid to Rio Tinto's shareholders ahead of the February 6 deadline set by the UK Takeover Panel for BHP to make a formal offer for Rio, the UK's Sunday Times reported at the weekend, without citing sources. This is one of several options being considered by BHP, along with increasing the cash component of any bid, the newspaper said.
John Hussman: "On the subject of employment, it's useful to recall that the non-farm employment figure for November came in at 138,467,000, up by 94,000 (which is very sluggish to begin with), but the figures for the prior two months were simultaneously revised lower by 48,000, so that the net gain over the number reported in October was only 46,000 jobs. The tendency of the jobs numbers to be subject to major revisions introduces noise into their month-to-month interpretation, but figure that the total non-farm employment number reported in November was 138,467,000. If the December figure comes in below about 138,539,000 (a gain of 72,000 jobs, net of any revisions), that would represent year-over-year employment growth of less than 1%, which is about the level where prior recessions have started. Anything less than 138,663,000 (which is nearly certain) would represent 6-month growth less than 0.5%, which is also a slowing that is typically seen as the economy tips into recession. As for the unemployment rate, the start-date of a recession frequently coincides with the point where the rate moves about 0.4% above its 12-month trough. That trough was 4.4% in March, so a move from the current 4.7% to even 4.8% would be consistent with an economy rolling over."
Earthfiles: NASA: “After a 13.6 year absence, Comet 8P/Tuttle is once again traveling through the inner solar system and on January 1 - 2, 2008, it makes its closest approach to Earth at only 24 million miles away. The emerald-colored comet will brighten to a predicted magnitude of 5.8, visible to the unaided eye from dark-sky sites and will be a fine target for backyard telescopes. Look straight up after sunset on January 1, 2008, and north of the big ‘W’ of Cassiopeia to see the emerald green glow of Comet 8P/Tuttle.”
The Pakistani government is likely to delay elections scheduled for next week because of violent unrest in the wake of the assassination of Benazir Bhutto.
Algeria's hydrocarbons' revenues will total $59 billion in 2007, Energy and Mines Minister Chakib Khelil said in a statement. According to Khelil, $2 billion of this year's income was earned from a windfall tax on the profits of foreign energy firms. Under Algerian law, Sonatrach holds at least a 51% share in every oil and gas exploration contract awarded to foreign companies. Windfall taxes range from 5% to 50% on excess profits when Brent crude averages more than $30 per barrel.
It was the year the residential real estate industry slid from sublime to subprime - "and we still haven't hit bottom," said Miami-based real estate analyst Lewis Goodkin of Goodkin Consulting. Never one to pull his punches, Goodkin said the residential industry went from talk to walk. From "build it and they will come" to a fear of how many buyers will walk from their deposits at the closing table.
ConocoPhillips signed a production-sharing contract with Malaysian national oil company Petronas for the exploration and development of natural gas fields offshore Sabah, Malaysia. Petronas will hold a 40% stake under the contract through its unit Petronas Carigali, while Shell and ConocoPhillips will each hold 30%.
M/I Homes Inc. has sold land located primarily in Florida to various buyers for $82 million and that it is exiting the West Palm Beach housing market. The home builder said as a result of the lot sales, it will book pretax land impairment charges of about $80 million in the fourth quarter, and expects to see a $50 million cash tax refund in the second quarter of 2008. M/I Homes said it is "likely" that further impairment charges will be recorded in the fourth quarter. The company said the land sold represented 3,700 lots; at the end of the third quarter, it owned 16,767 lots.
BHP Billiton Ltd., Woodside Petroleum Ltd. and Santos Ltd. halted more than half of Australia's oil production as the first tropical cyclone of the season struck the northwest coast.
A law taking effect Tuesday makes Missouri just the third state -- behind Minnesota and Hawaii -- to implement a wide-ranging ethanol mandate. Because the corn-based fuel is cheaper than gasoline, most of Missouri's gas stations quietly made the switch months in advance.
Home resales rose to a 5.00 million annual rate, a 0.4% increase from October's revised 4.98 million annual pace, the National Association of Realtors said Monday. October's rate was originally estimated at 4.97 million. The median price of a previously owned home was $210,200 in November, down 3.3% from $217,300 in November 2006. The median price in October this year was $206,900.
United States banks on average borrowed $4.83 billion a day directly from the Federal Reserve in the week ended Dec. 26, up from $4.62 billion a day the previous week, Fed data released Thursday showed.
Chinese iron ore imports in November climbed to 35.5 Mt, the second-highest monthly total, according to preliminary customs data. If confirmed, November imports would be up 5.7 Mt on the previous month, with the year-to-date total of 349.5 Mt running some 17% above last year’s level.
Meanwhile, the preliminary data indicate that soybean imports in November were the highest for 17 months. The YTD total is now 27.9 Mt, up 2 Mt year-on-year.
For the year, the Nasdaq climbed 9.8%, the blue-chip index rose 6.4%, and the broader index gained 3.5%.
The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October.
Beijing said on Monday that a unit of its new $200bn sovereign wealth fund would inject $20bn into China Development Bank in a move intended to smooth the policy lender's transformation into a commercially-oriented institution.
G.K.Chesterton: “The object of a new year is not that we should have a new year. It is that we should have a new soul”
Sunday, December 30, 2007
2007 Comes To A Close
12/31/07 2007 Comes To A Close
According to Bloomberg, the dollar's share of global foreign-exchange reserves fell to a record low in the third quarter as demand for U.S. assets waned after the subprime- mortgage market collapsed. The dollar accounted for 63.8 percent of reserves at the end of September, down from 65 percent three months earlier, the International Monetary Fund said.
LawyerUCLA.com currently serves as a directory for over 6,000 lawyers across the United States. And when it comes to the 2008 presidential election, the website has decided not to keep quiet -- making a firm case for Ron Paul. Ron Paul, self proclaimed champion of the Constitution, is a 10-term congressman from Texas. According to the statistics provided on their website, 61 percent of the mentions of the Constitution at the 2008 presidential debates were made by Ron Paul himself, despite being a candidate that has not been given a fair amount of time to speak.
Saxo Bank, the Danish online investment bank, issues a cautionary 2008 outlook - warning investors of the end of cheap money, tighter lending conditions, rising inflation and a UK recession ushering in a new mood of "forced savings" for Western consumers.
President Bush on Saturday signed into law legislation that extends a U.S. children's health insurance program after twice vetoing bills to increase funding. The State Children's Health Insurance Program, which covers about 6.6 million children whose families who earn too much to qualify for Medicaid, will maintain coverage at its current funding level through March 31, 2009. The measure, titled the Medicare, Medicaid and SCHIP Extension Act of 2007, also increases Medicare payments to doctors.
Mike Burk: "Historically the 3rd year of the Presidential cycle is the strongest. By the averages 2007 was sub standard...Historically next week has been one of the most volatile. The indices have been up about 2/3 of the time and the average returns are all positive, but the drawdowns have been huge. The largest, 10.4% recorded by the OTC on 1/2/2001...The OTC has been up 68% of the time in January with an average gain of 3.4% making it the strongest month of the year for that index. During the 4th year of the Presidential Cycle it has been up 73% of the time with an average return of 2.5%...Since 1928 SPX has been up 64% of the time in January (second to December at 74%) with an average return of 1.4%, the best of any month. During the 4th year of the Presidential Cycle the SPX has been up 60% of the time with an average gain of 0.5% making it an average month...The secondaries have been underperforming and the breadth indicators have been weak. Seasonally next week has been one of extremes. I expect the major indices to be lower on Friday January 4 than they were on Friday December 28."
"Whether you're shopping for a mortgage or for a home, there probably has not been as challenged a year as this one in years," says Keith Gumbinger, vice president of HSH, a mortgage-information provider. "This year, home is where the anxiety is."
According to Bloomberg, China, the world's biggest grain producer, will tax exports of wheat, corn and rice to increase domestic supply and control rising food prices. Exporters of wheat will start paying a 20 percent tax on Jan. 1, while the tax for corn and rice was set at 5 percent, the Finance Ministry said in a statement on its web site today. The government, concerned that inflation may disrupt social stability, has sought to curb price increases by selling grain from stockpiles and by canceling export tax rebates. Food prices in the world's fastest-growing major economy rose 18.2 percent in November, spurring a jump to an 11-year high of 6.9 percent in the consumer price index.
According to an article in the FT, Qwest Communications in Colorado would like to purchase Sprint’s long distance operations, the only long distance business of scale left in the US. In addition, several weeks ago at a conference, Sprint’s interim CEO Paul Saleh expressed a willingness to spin off or sell spectrum in the 2.3 to 2.5-megahertz range. The first banker said the upcoming government-sponsored 700MHz might erode the spectrum’s value because some consider 700MHZ superior, but the spectrum is the largest of its kind. Tim Horan, analyst at CIBC, noted that Clearwire, with whom Sprint could merge its WiMAX spectrum, is worth USD 2.6bn depsite losses and an annual revenue run-rate of under USD 200m. Horan estimated Sprint has 50% more spectrum than Clearwire.
According to Bloomberg, payrolls rose by 70,000 after increasing 94,000 in November, according to the median forecast in a Bloomberg survey of economists before a Jan. 4 government report. The jobless rate probably rose to 4.8 percent, the highest level in more than a year. The figures may raise concern that wage gains, which have kept American consumers afloat, will weaken in coming months.
Brazil's real advanced the most among major currencies versus the dollar this year.
The Chinese government has said it will allow direct election of Hong Kong's governmental leader, called the chief executive, by 2017, according to a media report.
Iran's first atomic power plant will start operating in mid-2008, Foreign Minister Manouchehr Mottaki said on Sunday, two days after the country received a second delivery of nuclear fuel from Russia.
Oil rose above $96 a barrel on Monday, lifted by mounting political instability in Pakistan and growing tensions between Iran and the United States over Tehran's nuclear ambitions.
According to Bloomberg, the dollar's share of global foreign-exchange reserves fell to a record low in the third quarter as demand for U.S. assets waned after the subprime- mortgage market collapsed. The dollar accounted for 63.8 percent of reserves at the end of September, down from 65 percent three months earlier, the International Monetary Fund said.
LawyerUCLA.com currently serves as a directory for over 6,000 lawyers across the United States. And when it comes to the 2008 presidential election, the website has decided not to keep quiet -- making a firm case for Ron Paul. Ron Paul, self proclaimed champion of the Constitution, is a 10-term congressman from Texas. According to the statistics provided on their website, 61 percent of the mentions of the Constitution at the 2008 presidential debates were made by Ron Paul himself, despite being a candidate that has not been given a fair amount of time to speak.
Saxo Bank, the Danish online investment bank, issues a cautionary 2008 outlook - warning investors of the end of cheap money, tighter lending conditions, rising inflation and a UK recession ushering in a new mood of "forced savings" for Western consumers.
President Bush on Saturday signed into law legislation that extends a U.S. children's health insurance program after twice vetoing bills to increase funding. The State Children's Health Insurance Program, which covers about 6.6 million children whose families who earn too much to qualify for Medicaid, will maintain coverage at its current funding level through March 31, 2009. The measure, titled the Medicare, Medicaid and SCHIP Extension Act of 2007, also increases Medicare payments to doctors.
Mike Burk: "Historically the 3rd year of the Presidential cycle is the strongest. By the averages 2007 was sub standard...Historically next week has been one of the most volatile. The indices have been up about 2/3 of the time and the average returns are all positive, but the drawdowns have been huge. The largest, 10.4% recorded by the OTC on 1/2/2001...The OTC has been up 68% of the time in January with an average gain of 3.4% making it the strongest month of the year for that index. During the 4th year of the Presidential Cycle it has been up 73% of the time with an average return of 2.5%...Since 1928 SPX has been up 64% of the time in January (second to December at 74%) with an average return of 1.4%, the best of any month. During the 4th year of the Presidential Cycle the SPX has been up 60% of the time with an average gain of 0.5% making it an average month...The secondaries have been underperforming and the breadth indicators have been weak. Seasonally next week has been one of extremes. I expect the major indices to be lower on Friday January 4 than they were on Friday December 28."
"Whether you're shopping for a mortgage or for a home, there probably has not been as challenged a year as this one in years," says Keith Gumbinger, vice president of HSH, a mortgage-information provider. "This year, home is where the anxiety is."
According to Bloomberg, China, the world's biggest grain producer, will tax exports of wheat, corn and rice to increase domestic supply and control rising food prices. Exporters of wheat will start paying a 20 percent tax on Jan. 1, while the tax for corn and rice was set at 5 percent, the Finance Ministry said in a statement on its web site today. The government, concerned that inflation may disrupt social stability, has sought to curb price increases by selling grain from stockpiles and by canceling export tax rebates. Food prices in the world's fastest-growing major economy rose 18.2 percent in November, spurring a jump to an 11-year high of 6.9 percent in the consumer price index.
According to an article in the FT, Qwest Communications in Colorado would like to purchase Sprint’s long distance operations, the only long distance business of scale left in the US. In addition, several weeks ago at a conference, Sprint’s interim CEO Paul Saleh expressed a willingness to spin off or sell spectrum in the 2.3 to 2.5-megahertz range. The first banker said the upcoming government-sponsored 700MHz might erode the spectrum’s value because some consider 700MHZ superior, but the spectrum is the largest of its kind. Tim Horan, analyst at CIBC, noted that Clearwire, with whom Sprint could merge its WiMAX spectrum, is worth USD 2.6bn depsite losses and an annual revenue run-rate of under USD 200m. Horan estimated Sprint has 50% more spectrum than Clearwire.
According to Bloomberg, payrolls rose by 70,000 after increasing 94,000 in November, according to the median forecast in a Bloomberg survey of economists before a Jan. 4 government report. The jobless rate probably rose to 4.8 percent, the highest level in more than a year. The figures may raise concern that wage gains, which have kept American consumers afloat, will weaken in coming months.
Brazil's real advanced the most among major currencies versus the dollar this year.
The Chinese government has said it will allow direct election of Hong Kong's governmental leader, called the chief executive, by 2017, according to a media report.
Iran's first atomic power plant will start operating in mid-2008, Foreign Minister Manouchehr Mottaki said on Sunday, two days after the country received a second delivery of nuclear fuel from Russia.
Oil rose above $96 a barrel on Monday, lifted by mounting political instability in Pakistan and growing tensions between Iran and the United States over Tehran's nuclear ambitions.
Saturday, December 29, 2007
Worst Case Scenario
12/30/07 Worst Case Scenario
Former First Republic Bank shareholders sued Merrill Lynch & Co on Friday accusing the Wall Street investment bank and brokerage of hiding billions of dollars of losses related to subprime mortgages while the companies' merger was pending.
Charles Rotblut, senior markets analyst at Zacks.com, said he expects the markets to stay choppy until the fourth-quarter earnings picture becomes clearer.
As of earlier this week, Thomson Financial had pegged earnings to fall 4.5% in the fourth quarter.
On Friday, federal funds futures priced in 98% chance that the central bank will ease the benchmark interest rate by a quarter-point to 4%, according to Action Economics.
Doug Noland: "During the year 2007, it became clear that the Federal Reserve had lost control of inflationary forces. The year ended with Import Prices up 11.4% y-o-y, the Producer Price index up 7.2% y-o-y, and the Consumer Price index up 4.3% y-o-y. Despite a weakened economy and another year of dollar devaluation, the U.S. Current Account Deficit remained in the neighborhood of $800bn. Coupled with huge speculative outflows seeking profits from global inflation, the world was absolutely inundated with dollar liquidity. It was, as well, a year of shattered myths: That astute global central bankers have inflation in check; contemporary finance effectively disburses risk to the marketplace, in the process shielding the banking system from Credit and market risk; “AAA” stands for safety and liquidity; nationwide home prices won’t decline; the Federal Reserve controls marketplace liquidity; commercial paper is safe; CDOs make sense; the financial guarantors face minimal risk. Indeed, the entire bullish notion of contemporary risk modeling, structuring, hedging, and financial guarantees (“Credit insurance”) is now in serious jeopardy. 2007 saw the initial bursting of the Great Credit Bubble. To be sure, the enormous Bubble in Wall Street-backed finance abruptly went from runaway boom to astounding bust. Much of the mortgage origination market collapsed spectacularly. Thirty percent annualized broker/dealer balance sheet growth came to an abrupt halt during this year’s second half. “Private-label” MBS issuance ground to a halt. The booming asset-backed securities and CDO markets faltered badly. The banking system’s off-balance sheet structured “vehicles” collapsed in illiquidity, another factor forcing the major lending institutions to balloon their balance sheets. The global inter-bank lending market seized up. The hedge fund industry waited anxiously for redemption notices. Counter-party risk became a very serious systemic issue. The global financial system ends the year on the precipice. Meantime, U.S. Bank Credit expanded almost 12% during the year, with Commercial & Industrial loans ballooning almost 21%. With Risk Embracement turning to Risk Aversion, the marketplace called upon the Money Fund Complex to Intermediate Risk. Money Fund assets expanded an unprecedented $729bn, or 30.6%. And as liquidity disappeared for Wall Street-backed mortgages, Fannie and Freddie’s Combined Books of Business inflated an unprecedented $600bn (or so). The Federal Home Loan Banking system ballooned its balance sheet by more than $200bn, in the process becoming Lender of Last resort to some very troubled financial institutions. Global central bankers engaged in unparalleled concerted marketplace interventions and liquidity injections. From the Fed’s Q3 “flow of funds,” total (non-financial and financial) U.S. system Credit growth expanded at an annualized $4.99 TN, sustaining the U.S. Bubble Economy but in an Unsustainable Manner – unsustainable in the quantity and structure of Credit and Risk Intermediation as well as the nature of economic activity. Financial sector debt expanded at an alarming 15.6% annualized pace, with Bank Credit, GSE, agency MBS, and Money Funds all expanding at double-digit rates. Of late, the Wall Street Credit crunch and severe tightening in risky debt markets have instigated recessionary forces. Many housing markets have gone from bad to worse – on the way to much worse. Florida is a mess, while California is an unfolding disaster. Some analysts have begun to recognize that U.S. asset and debt markets have not faced such precarious dynamics since The Great Depression. Meanwhile, collapsing U.S. and international interest-rates fuel myriad global Bubbles and inflationary pressures. In short, 2007 has been a continuation of the unfolding “worst-case-scenario.”
George W. Bush intends to veto a $700bn defense spending bill because it includes a provision that would give Americans the right to sue state sponsors of terrorism. The provision threatened to “imperil” billions of dollars of Iraqi assets and undermine US foreign policy and business interests, the president said on Friday.
Herbert Hoover: “The slogan of progress is changing from the full dinner pail to the full garage.”
Jim Jubak: "A 2008 economic slowdown or recession wouldn't need to be one for the record books in order to disappoint Wall Street. It could simply mark a return to the bad old days, from 1959 through 1983, when recessions lasted 50% longer, were nearly twice as severe and took place about twice as often. A September 2007 report from the Federal Reserve Bank of Dallas summarizes the difference between a recession in the bad old days and now: "On average, the five recessions from 1959 to 1983 were 47 months apart, lingered 12 months and were associated with a 2.17 percent peak-to-trough decline in real gross domestic product. By contrast, the 1990 downturn came after 92 months of expansion, lasted eight months and involved a 1.26 percent decline in GDP. The 2001 slump ended a record 120 months of uninterrupted growth, lasted eight months and entailed a GDP decline of only 0.35 percent."
Farmers in India, the world’s second-biggest wheat grower, may harvest more of the crop following early planting and “good weather” in the main growing areas, lowering overseas purchases. The country may harvest more than 75 million tons of wheat during the March-April harvest, the most since 2000, the nation’s agriculture commissioner said.
Industry analysts are predicting a lackluster end to an already dismal year for automakers, likely the worst in nearly a decade. Holiday discounts failed to bring consumers out of their funk, and December sales are expected to fall around 4 percent, which would bring the full-year total for U.S. auto sales to 16.1 million vehicles, the lowest volume since 1998.
Jack Paar: “Poor people have more fun than rich people, they say; and I notice it's the rich people who keep saying it.”
Robert McHugh: "In both cases, whether we see a Bullish and Bearish breakout, intermediate-term stocks should be rising in a Bull market by the second half of 2008. International Central Bank and U.S. liquidity infusions will make sure of that. The rally will not be economic prosperity-driven, but rather hyperinflation driven as stocks are purchased as a means of defense against a deteriorating dollar, as if they were a tangible asset. The open question as we close 2007 is where are prices going between now and then?"
As much as a half-foot of snow may fall in northern New England today as a wave a low pressure and cold air blows in from the U.S. Midwest and Plains. The storm yesterday dumped 8 inches (20 centimeters) of snow in Farwell, Michigan, said AccuWeather, based in State College, Pennsylvania, on its Web site.
U.S. stocks are poised for their first fourth-quarter decline since 2000.
Aristotle: “Learning is not child's play; we cannot learn without pain."
Former First Republic Bank shareholders sued Merrill Lynch & Co on Friday accusing the Wall Street investment bank and brokerage of hiding billions of dollars of losses related to subprime mortgages while the companies' merger was pending.
Charles Rotblut, senior markets analyst at Zacks.com, said he expects the markets to stay choppy until the fourth-quarter earnings picture becomes clearer.
As of earlier this week, Thomson Financial had pegged earnings to fall 4.5% in the fourth quarter.
On Friday, federal funds futures priced in 98% chance that the central bank will ease the benchmark interest rate by a quarter-point to 4%, according to Action Economics.
Doug Noland: "During the year 2007, it became clear that the Federal Reserve had lost control of inflationary forces. The year ended with Import Prices up 11.4% y-o-y, the Producer Price index up 7.2% y-o-y, and the Consumer Price index up 4.3% y-o-y. Despite a weakened economy and another year of dollar devaluation, the U.S. Current Account Deficit remained in the neighborhood of $800bn. Coupled with huge speculative outflows seeking profits from global inflation, the world was absolutely inundated with dollar liquidity. It was, as well, a year of shattered myths: That astute global central bankers have inflation in check; contemporary finance effectively disburses risk to the marketplace, in the process shielding the banking system from Credit and market risk; “AAA” stands for safety and liquidity; nationwide home prices won’t decline; the Federal Reserve controls marketplace liquidity; commercial paper is safe; CDOs make sense; the financial guarantors face minimal risk. Indeed, the entire bullish notion of contemporary risk modeling, structuring, hedging, and financial guarantees (“Credit insurance”) is now in serious jeopardy. 2007 saw the initial bursting of the Great Credit Bubble. To be sure, the enormous Bubble in Wall Street-backed finance abruptly went from runaway boom to astounding bust. Much of the mortgage origination market collapsed spectacularly. Thirty percent annualized broker/dealer balance sheet growth came to an abrupt halt during this year’s second half. “Private-label” MBS issuance ground to a halt. The booming asset-backed securities and CDO markets faltered badly. The banking system’s off-balance sheet structured “vehicles” collapsed in illiquidity, another factor forcing the major lending institutions to balloon their balance sheets. The global inter-bank lending market seized up. The hedge fund industry waited anxiously for redemption notices. Counter-party risk became a very serious systemic issue. The global financial system ends the year on the precipice. Meantime, U.S. Bank Credit expanded almost 12% during the year, with Commercial & Industrial loans ballooning almost 21%. With Risk Embracement turning to Risk Aversion, the marketplace called upon the Money Fund Complex to Intermediate Risk. Money Fund assets expanded an unprecedented $729bn, or 30.6%. And as liquidity disappeared for Wall Street-backed mortgages, Fannie and Freddie’s Combined Books of Business inflated an unprecedented $600bn (or so). The Federal Home Loan Banking system ballooned its balance sheet by more than $200bn, in the process becoming Lender of Last resort to some very troubled financial institutions. Global central bankers engaged in unparalleled concerted marketplace interventions and liquidity injections. From the Fed’s Q3 “flow of funds,” total (non-financial and financial) U.S. system Credit growth expanded at an annualized $4.99 TN, sustaining the U.S. Bubble Economy but in an Unsustainable Manner – unsustainable in the quantity and structure of Credit and Risk Intermediation as well as the nature of economic activity. Financial sector debt expanded at an alarming 15.6% annualized pace, with Bank Credit, GSE, agency MBS, and Money Funds all expanding at double-digit rates. Of late, the Wall Street Credit crunch and severe tightening in risky debt markets have instigated recessionary forces. Many housing markets have gone from bad to worse – on the way to much worse. Florida is a mess, while California is an unfolding disaster. Some analysts have begun to recognize that U.S. asset and debt markets have not faced such precarious dynamics since The Great Depression. Meanwhile, collapsing U.S. and international interest-rates fuel myriad global Bubbles and inflationary pressures. In short, 2007 has been a continuation of the unfolding “worst-case-scenario.”
George W. Bush intends to veto a $700bn defense spending bill because it includes a provision that would give Americans the right to sue state sponsors of terrorism. The provision threatened to “imperil” billions of dollars of Iraqi assets and undermine US foreign policy and business interests, the president said on Friday.
Herbert Hoover: “The slogan of progress is changing from the full dinner pail to the full garage.”
Jim Jubak: "A 2008 economic slowdown or recession wouldn't need to be one for the record books in order to disappoint Wall Street. It could simply mark a return to the bad old days, from 1959 through 1983, when recessions lasted 50% longer, were nearly twice as severe and took place about twice as often. A September 2007 report from the Federal Reserve Bank of Dallas summarizes the difference between a recession in the bad old days and now: "On average, the five recessions from 1959 to 1983 were 47 months apart, lingered 12 months and were associated with a 2.17 percent peak-to-trough decline in real gross domestic product. By contrast, the 1990 downturn came after 92 months of expansion, lasted eight months and involved a 1.26 percent decline in GDP. The 2001 slump ended a record 120 months of uninterrupted growth, lasted eight months and entailed a GDP decline of only 0.35 percent."
Farmers in India, the world’s second-biggest wheat grower, may harvest more of the crop following early planting and “good weather” in the main growing areas, lowering overseas purchases. The country may harvest more than 75 million tons of wheat during the March-April harvest, the most since 2000, the nation’s agriculture commissioner said.
Industry analysts are predicting a lackluster end to an already dismal year for automakers, likely the worst in nearly a decade. Holiday discounts failed to bring consumers out of their funk, and December sales are expected to fall around 4 percent, which would bring the full-year total for U.S. auto sales to 16.1 million vehicles, the lowest volume since 1998.
Jack Paar: “Poor people have more fun than rich people, they say; and I notice it's the rich people who keep saying it.”
Robert McHugh: "In both cases, whether we see a Bullish and Bearish breakout, intermediate-term stocks should be rising in a Bull market by the second half of 2008. International Central Bank and U.S. liquidity infusions will make sure of that. The rally will not be economic prosperity-driven, but rather hyperinflation driven as stocks are purchased as a means of defense against a deteriorating dollar, as if they were a tangible asset. The open question as we close 2007 is where are prices going between now and then?"
As much as a half-foot of snow may fall in northern New England today as a wave a low pressure and cold air blows in from the U.S. Midwest and Plains. The storm yesterday dumped 8 inches (20 centimeters) of snow in Farwell, Michigan, said AccuWeather, based in State College, Pennsylvania, on its Web site.
U.S. stocks are poised for their first fourth-quarter decline since 2000.
Aristotle: “Learning is not child's play; we cannot learn without pain."
Friday, December 28, 2007
The Last Weekend Of 2007
12/29/07 Last Weekend Of 2007
The Wall Street Journal reported Friday, citing analysts and unnamed executives. Citi could sell 80%-held Student Loan Corp, its North American auto-lending unit, its 24% stake in Brazil credit card operation Redecard and the bank's Japanese consumer finance business, the report said. New Citigroup CEO Vikram Pandit is considering laying off as many as 20,000 employees and shedding business lines, the report continued, citing people familiar with the matter. HSBC may sell its auto-finance business, the report added.
Japanese industrial production dipped 1.6% in November from the previous month, easing for the first time in two months, while inventory levels rose 1.6%, marking its fourth month of gains, preliminary data from the Ministry of Economy, Trade and Industry showed Friday.
ING Group said it's going to sell its reinsurance unit NRG N.V. to Warren Buffett's Berkshire Hathaway Group for approximately 300 million euros ($433 million).
U.K. house prices fell by 0.5% in December, the Nationwide Building Society said Friday. Last month, prices fell by 0.8%.
Japan's benchmark Nikkei 225 traded weaker Friday in the final trading session of year, bringing its year-to-date-performance to minus 11.1%, marking its first annual decline in five years.
A judge ordered Finish Line to complete its $1.5 billion acquisition of Genesco.
Berkshire Hathaway has begun a municipal bond insurance operation for NY State.
Further cuts in U.S. interest rates would have a "harmful effect" on the dollar and the international finance system, a Chinese finance official wrote in a commentary Thursday in an official newspaper. The dollar's fall against many currencies has prompted investors to sell dollar-denominated assets, Hu Xiaolian, director of the State Administration of Foreign Exchange, wrote in the Financial News, a newspaper published by the central bank. "If the (U.S.) federal funds rate continues to fall, this will certainly have a harmful effect on the U.S. dollar exchange rate and the international currency system," Hu wrote.
The U.S. dollar index fell further to 76.26.
According to the an article in the FT, at the end of a year in which the dollar has endured a marked decline against other currencies, an unsettling question is beginning to be voiced: can the troubles of the US currency be confined to the financial world or are they set to undermine Washington’s place on the international stage? “This is the neglected dimension of the dollar’s decline,” says Flynt Leverett, a former senior National Security Council official under President George W. Bush. “What has been said about the fall of the dollar is almost all couched in economic terms. But currency politics is very, very powerful and is part of what has made the US a hegemon for so long, like Britain before it.”
"The severity of the subprime debacle may be only a prologue to the main act, a tragedy on the grand stage in the corporate credit markets," wrote Ted Seides, the director of investments at Protégé Partners, a hedge fund of funds, in Economics and Portfolio Strategy. "Over the past decade, the exponential growth of credit derivatives has created unprecedented amounts of financial leverage on corporate credit," he added. "Similar to the growth of subprime mortgages, the rapid rise of credit products required ideal economic conditions and disconnected the assessors of risk from those bearing it."
Peter Schiff: "The subprime mortgage crisis is merely the tip of a very large iceberg. Beneath the surface lies not only a sea of tenuous loans to prime borrowers, but also an assortment of other liabilities backed by auto loans and credit card debit. Now that home equity extractions, "zero percent auto financing" and "zero interest" credit card rollovers are much harder to come by, Americans must do without the credit lifelines that have previously kept them afloat."
More than 10 North American banks and fund managers have collectively injected $3bn into their money market and cash funds since October to stem losses. Janus, the fund manager, this week became the latest to bail out its money market funds. It put in $109m to buy troubled asset-backed securities from its funds. Half a dozen firms have made similar moves.
Nouriel Roubini: "The latest macro and financial news confirm that the US is headed towards a hard landing – specifically a serious recession - as a vicious circle of worsening real fundamentals is perversely interacting with severely worsening financial fundamentals and a severe liquidity and credit crunch."
According to AMG Data Services, Including ETF activity, Equity funds report net cash inflows totaling $12.645 billion in the week ended 12/26/07 with Domestic funds reporting net inflows of $9.970 billion and Non-domestic funds reporting net inflows of $2.675 billion; Excluding ETF activity, Equity funds report net cash inflows totaling $3.587 billion with Domestic funds reporting net inflows of $2.047 billion and Non-domestic funds reporting net inflows totaling $1.540 billion.
Let's look at the difference in pricing for natural gas between the U.S. market and the one in London. Natural gas here is going for $7.20. By comparison, natural gas for within-day delivery dropped 0.55 pence to 47.8 pence a therm, according to prices from ICAP Plc on Bloomberg at 11:14 a.m. London time. They were earlier today as high as 49 pence, the highest since Dec. 24. The latest price is equivalent to $9.56 a million British thermal units. A therm is 100,000 Btus.
Sales of new U.S. homes fell by a more-than-expected 9% in November to a seasonally adjusted annual rate of 647,000, the Commerce Department reported Friday. Meanwhile, October's sales rate was revised downward, to rise by 711,000, or 1.7%. They were previously estimated to have risen to a seasonally adjusted annual rate of 728,000. In the past year, sales of new U.S. homes are down 34.4% nationwide.
The Chicago purchasing-managers' index rose to 56.6% in December from 52.9% in November, according to media reports.
U.S. natural gas inventories fall 165 bcf last week, the lowest level in more than three months. Natural gas inventories have fallen nearly 550 billion cubic feet since the week ending Nov. 16. Natural-gas futures for February delivery was last up 6.6 cents, or 0.9%, at 7.266 per million British thermal units. Natural gas accounts for more than 20% of the U.S.'s total energy consumption, while petroleum products account for 40%.
Brazil said Friday that starting Jan. 1 it will require all diesel oil to contain 2 percent biodiesel in an effort to grow the market for the renewable, clean burning fuel.
Macy's Inc said it would close nine underperforming stores in Indiana, Ohio, Louisiana, Oklahoma, Utah and Texas. Macy's said the closings would affect 899 employees, who would be offered positions in nearby stores where possible.
Gold for February delivery closed up $10.9, or 1.3%, at $842.7 an ounce on the New York Mercantile Exchange.
According to Bloomberg, Legg Mason Inc. pumped $1.12 billion into two non-U.S. cash funds to prevent losses, the biggest bailout by a money manager tied to asset-backed debt sold by structured investment vehicles. The move, along with an earlier cash infusion, will reduce earnings per share by 15 cents in the quarter ending Dec. 31, the Baltimore-based company said today in a statement. Legg Mason has provided $1.47 billion to support money funds and other cash- management portfolios since November.
The Wall Street Journal reported Friday, citing analysts and unnamed executives. Citi could sell 80%-held Student Loan Corp, its North American auto-lending unit, its 24% stake in Brazil credit card operation Redecard and the bank's Japanese consumer finance business, the report said. New Citigroup CEO Vikram Pandit is considering laying off as many as 20,000 employees and shedding business lines, the report continued, citing people familiar with the matter. HSBC may sell its auto-finance business, the report added.
Japanese industrial production dipped 1.6% in November from the previous month, easing for the first time in two months, while inventory levels rose 1.6%, marking its fourth month of gains, preliminary data from the Ministry of Economy, Trade and Industry showed Friday.
ING Group said it's going to sell its reinsurance unit NRG N.V. to Warren Buffett's Berkshire Hathaway Group for approximately 300 million euros ($433 million).
U.K. house prices fell by 0.5% in December, the Nationwide Building Society said Friday. Last month, prices fell by 0.8%.
Japan's benchmark Nikkei 225 traded weaker Friday in the final trading session of year, bringing its year-to-date-performance to minus 11.1%, marking its first annual decline in five years.
A judge ordered Finish Line to complete its $1.5 billion acquisition of Genesco.
Berkshire Hathaway has begun a municipal bond insurance operation for NY State.
Further cuts in U.S. interest rates would have a "harmful effect" on the dollar and the international finance system, a Chinese finance official wrote in a commentary Thursday in an official newspaper. The dollar's fall against many currencies has prompted investors to sell dollar-denominated assets, Hu Xiaolian, director of the State Administration of Foreign Exchange, wrote in the Financial News, a newspaper published by the central bank. "If the (U.S.) federal funds rate continues to fall, this will certainly have a harmful effect on the U.S. dollar exchange rate and the international currency system," Hu wrote.
The U.S. dollar index fell further to 76.26.
According to the an article in the FT, at the end of a year in which the dollar has endured a marked decline against other currencies, an unsettling question is beginning to be voiced: can the troubles of the US currency be confined to the financial world or are they set to undermine Washington’s place on the international stage? “This is the neglected dimension of the dollar’s decline,” says Flynt Leverett, a former senior National Security Council official under President George W. Bush. “What has been said about the fall of the dollar is almost all couched in economic terms. But currency politics is very, very powerful and is part of what has made the US a hegemon for so long, like Britain before it.”
"The severity of the subprime debacle may be only a prologue to the main act, a tragedy on the grand stage in the corporate credit markets," wrote Ted Seides, the director of investments at Protégé Partners, a hedge fund of funds, in Economics and Portfolio Strategy. "Over the past decade, the exponential growth of credit derivatives has created unprecedented amounts of financial leverage on corporate credit," he added. "Similar to the growth of subprime mortgages, the rapid rise of credit products required ideal economic conditions and disconnected the assessors of risk from those bearing it."
Peter Schiff: "The subprime mortgage crisis is merely the tip of a very large iceberg. Beneath the surface lies not only a sea of tenuous loans to prime borrowers, but also an assortment of other liabilities backed by auto loans and credit card debit. Now that home equity extractions, "zero percent auto financing" and "zero interest" credit card rollovers are much harder to come by, Americans must do without the credit lifelines that have previously kept them afloat."
More than 10 North American banks and fund managers have collectively injected $3bn into their money market and cash funds since October to stem losses. Janus, the fund manager, this week became the latest to bail out its money market funds. It put in $109m to buy troubled asset-backed securities from its funds. Half a dozen firms have made similar moves.
Nouriel Roubini: "The latest macro and financial news confirm that the US is headed towards a hard landing – specifically a serious recession - as a vicious circle of worsening real fundamentals is perversely interacting with severely worsening financial fundamentals and a severe liquidity and credit crunch."
According to AMG Data Services, Including ETF activity, Equity funds report net cash inflows totaling $12.645 billion in the week ended 12/26/07 with Domestic funds reporting net inflows of $9.970 billion and Non-domestic funds reporting net inflows of $2.675 billion; Excluding ETF activity, Equity funds report net cash inflows totaling $3.587 billion with Domestic funds reporting net inflows of $2.047 billion and Non-domestic funds reporting net inflows totaling $1.540 billion.
Let's look at the difference in pricing for natural gas between the U.S. market and the one in London. Natural gas here is going for $7.20. By comparison, natural gas for within-day delivery dropped 0.55 pence to 47.8 pence a therm, according to prices from ICAP Plc on Bloomberg at 11:14 a.m. London time. They were earlier today as high as 49 pence, the highest since Dec. 24. The latest price is equivalent to $9.56 a million British thermal units. A therm is 100,000 Btus.
Sales of new U.S. homes fell by a more-than-expected 9% in November to a seasonally adjusted annual rate of 647,000, the Commerce Department reported Friday. Meanwhile, October's sales rate was revised downward, to rise by 711,000, or 1.7%. They were previously estimated to have risen to a seasonally adjusted annual rate of 728,000. In the past year, sales of new U.S. homes are down 34.4% nationwide.
The Chicago purchasing-managers' index rose to 56.6% in December from 52.9% in November, according to media reports.
U.S. natural gas inventories fall 165 bcf last week, the lowest level in more than three months. Natural gas inventories have fallen nearly 550 billion cubic feet since the week ending Nov. 16. Natural-gas futures for February delivery was last up 6.6 cents, or 0.9%, at 7.266 per million British thermal units. Natural gas accounts for more than 20% of the U.S.'s total energy consumption, while petroleum products account for 40%.
Brazil said Friday that starting Jan. 1 it will require all diesel oil to contain 2 percent biodiesel in an effort to grow the market for the renewable, clean burning fuel.
Macy's Inc said it would close nine underperforming stores in Indiana, Ohio, Louisiana, Oklahoma, Utah and Texas. Macy's said the closings would affect 899 employees, who would be offered positions in nearby stores where possible.
Gold for February delivery closed up $10.9, or 1.3%, at $842.7 an ounce on the New York Mercantile Exchange.
According to Bloomberg, Legg Mason Inc. pumped $1.12 billion into two non-U.S. cash funds to prevent losses, the biggest bailout by a money manager tied to asset-backed debt sold by structured investment vehicles. The move, along with an earlier cash infusion, will reduce earnings per share by 15 cents in the quarter ending Dec. 31, the Baltimore-based company said today in a statement. Legg Mason has provided $1.47 billion to support money funds and other cash- management portfolios since November.
Thursday, December 27, 2007
More Hard Data
12/27/07 More Hard Data
Citigroup may need to cut its dividend by 40% due to CDO-related write-downs of $18.7 billion in the fourth quarter, Goldman Sachs estimated. The broker previously estimated an $11 billion write-down. Merrill Lynch have to take an $11.5 billion write-off, compared to Goldman's earlier estimate of $6 billion, and it now sees J.P. Morgan Chase write-downs of $3.4 billion, up from an earlier estimate of $1.7 billion.
EMC Corp.said that it will acquire Document Sciences Corporation for around $85 million in cash. Document Sciences stockholders will receive $14.75 in cash for each share of common stock, and is expected to be completed in the first quarter of 2008.
New homes construction in Japan fell 27% in November to 84,252 units from a year earlier, declining for the fifth straight month, according to data released by the Ministry of Land, Infrastructure and Transport Thursday.
Japan's economy accounted for less than 10% of nominal global gross domestic product in 2006, the first time it has fallen below the 10% threshold in 24 years, according to reports. Japan's economy contracted 4% in nominal terms to 4.37 trillion yen from a year earlier, accounting for 9.1% of the world gross domestic product in 2006, the Nikkei business daily reported, citing figures released by the Cabinet Office Thursday.
U.S. overall consumer confidence fell last week, according to an ABC News/Washington Post poll released Wednesday.
The consumer comfort index fell 6 points to -23 in the week ended Dec. 23, from -17 a week earlier.
According to the NY Times, a new regulation lets employers establish two classes of retirees, with more benefits for those under 65 and fewer, or none at all, for those older.
The yuan rose the most since China ended a fixed exchange rate to the dollar in 2005 as the central bank sought to curb inflation.
According to Rigzone, the largest energy contract in Iran was signed when the country inked a deal with Malaysia to develop two gas fields, Golshan and Ferdows, in southern Iran, as well as offshore fields.
French natural-gas reserves fell to 75.9 percent full in the week to Dec. 23 as traders pumped the fuel out of underground storage to meet demand.
Michelle Leder: "A quick skim of recent 10-Ds turns up this fascinating exhibit filed last week by BMW Vehicle Lease Trust 2007-1. Because this is a relatively new trust, there’s not enough history to go back a year. But going back one month shows a small, but potentially dangerous trend: at the end of October, there was only 1 loan in this trust that was 90 days or more late. But by the end of November, that had risen to 30. Granted, it’s a small number, but it’s still a 30-fold increase from one month to the next. And it’s presumably in a segment of the economy that’s about as far removed from sub-prime mortgages as you can get."
Richard Daughty: "Central banks believe that death by inflation is preferable to death by deflation. And now you know why I cry myself to sleep muttering "We're freaking doomed! We're freaking doomed!"
The European Central Bank drained 145.64 billion euros from euro-zone money markets on Thursday, within its upper limit of 150 billion euros, aiming to keep short term interest rates in line with benchmark lending rates.
U.S. mortgage applications sank last week to the lowest level since the end of last year despite falling borrowing costs, an industry trade group said Thursday.
The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 7.6 percent in the week ending Dec. 21 to 603.8, its lowest reading since falling to 575.6 in the Dec. 29, 2006 week.
Seasonally adjusted initial jobless claims rose 1,000 to 349,000 in the week ended Dec. 22, the government reported Thursday. The four-week moving average for initial jobless claims fell 1,000 to 342,500, according to the Labor Department. The prior week's initial jobless claims level was revised to 348,000 from an earlier estimate of 346,000. Continuing jobless claims gained 75,000, reaching 2.71 million for the week ended Dec. 15. The four-week moving average for continuing jobless claims rose 13,500 to 2.64 million. Continuing jobless claims and the four-week moving average for those claims both reached their highest levels in more than two years.
A big jump in demand for civilian aircraft pushed durable goods orders up for the first time in four months in November, the Commerce Department reported Thursday. Excluding transportation orders, however, durable goods orders fell by 0.7% in November. New orders for non-defense aircraft and parts shot up by 20.9% in November, the data show. However, new orders for defense aircraft and parts dropped by 20.1% in the same month. Demand for capital goods also softened, suggesting business investment will be a drag on economic growth.
Boeing Co. orders more than tripled in November, to 177 planes, from the prior month. Bookings at the world's second- largest commercial plane maker have averaged 122 a month over the last three months.
Rio Tinto Ltd/Plc on Thursday hit back at rival BHP Billiton's hostile approach, playing up its independent growth prospects amid renewed speculation of a Chinese-backed counter bid. Beijing has sanctioned major state-owned corporates to look into three strategies for mounting counter-bids for Rio, including forming a domestic consortium; local players working in concert with foreign companies; or buying shares on the open market, according to a December 24 report in the South China Morning Post.
There are media reports of the assassination of Pakistani opposition leader Benazir Bhutto. Bhutto was seen as the front-runner to become Pakistan's next prime minister in elections scheduled for next month.
U.S. consumer confidence rose in December due to an increase in short-term expectations, though consumers "remain far from optimistic," the Conference Board reported Thursday. The consumer confidence index rose to 88.6 from a revised reading of 87.8 in November. However, December's reading is below last year's level of 110.0, as consumers have been concerned about higher energy prices and falling home prices.
Crude inventories fell by 3.3 million barrels to 293.6 million barrels in the week ending Dec. 21, U.S. Energy Information Administration reported on Thursday. Gasoline supplies rose by 700,000 barrels in the latest week, while distillate stocks fell by 2.8 million barrels, EIA reported. Crude for February delivery closed up 65 cents, or 0.7%, at $96.62 a barrel on the New York Mercantile Exchange.
The dollar is down 9.9 percent this year to $1.4502 per euro, after weakening 10 percent in 2006. The U.S. dollar index closed down at 76.76. "Americans will certainly find global hegemony a lot more expensive if the dollar falls off its perch," adds Kenneth Rogoff, former chief economist of the International Monetary Fund, in an article published this month. He maintains that the US has been fortunate to be able to use the huge low-interest dollar holdings of the central banks of China and Japan to finance higher return investments elsewhere, "but between the sub-prime US mortgage crisis and the dollar's ongoing decline, America's exorbitant privilege now looks a bit shaky . . . American voters, who are famously loath to increase taxes, might start thinking a lot harder about the real economic costs of their country's superpower status."
The Dow Jones Industrial Average fell 192 points, or 1.4%, at 13,359.61 points at the unofficial 4 p.m. close. The S&P 500 Index dropped 21.36 points, or 1.4%, at 1,476 and the Nasdaq Composite declined 47 points, or 1.8%, at 2,676.
Google Inc. increased its lead in the U.S. Internet search market in November at the expense of both Yahoo Inc. and Microsoft Corp., according to data released Thursday by Nielsen Online. Google's share of the market grew to 57.7% in November from 55.5% in October, according to Nielsen. Google rival Yahoo, meanwhile, saw its share of market dwindle to 17.9% from 18.8%. Microsoft also saw its share of the search market fall, to 12% in November from 13.8% in the previous month, according to Nielsen.
Gold for February delivery ended the session up $2.3, or 0.3%, at $831 .8 an ounce on the New York Mercantile Exchange.
Merrill Lynch & Co plans to announce about 1,600 layoffs after disclosing fourth-quarter write-downs, CNBC reported on Thursday.
More than three million people will have to wait until February to get their tax refunds because of Congress's late fix to the alternative minimum tax, the IRS said Thursday.
Citigroup may need to cut its dividend by 40% due to CDO-related write-downs of $18.7 billion in the fourth quarter, Goldman Sachs estimated. The broker previously estimated an $11 billion write-down. Merrill Lynch have to take an $11.5 billion write-off, compared to Goldman's earlier estimate of $6 billion, and it now sees J.P. Morgan Chase write-downs of $3.4 billion, up from an earlier estimate of $1.7 billion.
EMC Corp.said that it will acquire Document Sciences Corporation for around $85 million in cash. Document Sciences stockholders will receive $14.75 in cash for each share of common stock, and is expected to be completed in the first quarter of 2008.
New homes construction in Japan fell 27% in November to 84,252 units from a year earlier, declining for the fifth straight month, according to data released by the Ministry of Land, Infrastructure and Transport Thursday.
Japan's economy accounted for less than 10% of nominal global gross domestic product in 2006, the first time it has fallen below the 10% threshold in 24 years, according to reports. Japan's economy contracted 4% in nominal terms to 4.37 trillion yen from a year earlier, accounting for 9.1% of the world gross domestic product in 2006, the Nikkei business daily reported, citing figures released by the Cabinet Office Thursday.
U.S. overall consumer confidence fell last week, according to an ABC News/Washington Post poll released Wednesday.
The consumer comfort index fell 6 points to -23 in the week ended Dec. 23, from -17 a week earlier.
According to the NY Times, a new regulation lets employers establish two classes of retirees, with more benefits for those under 65 and fewer, or none at all, for those older.
The yuan rose the most since China ended a fixed exchange rate to the dollar in 2005 as the central bank sought to curb inflation.
According to Rigzone, the largest energy contract in Iran was signed when the country inked a deal with Malaysia to develop two gas fields, Golshan and Ferdows, in southern Iran, as well as offshore fields.
French natural-gas reserves fell to 75.9 percent full in the week to Dec. 23 as traders pumped the fuel out of underground storage to meet demand.
Michelle Leder: "A quick skim of recent 10-Ds turns up this fascinating exhibit filed last week by BMW Vehicle Lease Trust 2007-1. Because this is a relatively new trust, there’s not enough history to go back a year. But going back one month shows a small, but potentially dangerous trend: at the end of October, there was only 1 loan in this trust that was 90 days or more late. But by the end of November, that had risen to 30. Granted, it’s a small number, but it’s still a 30-fold increase from one month to the next. And it’s presumably in a segment of the economy that’s about as far removed from sub-prime mortgages as you can get."
Richard Daughty: "Central banks believe that death by inflation is preferable to death by deflation. And now you know why I cry myself to sleep muttering "We're freaking doomed! We're freaking doomed!"
The European Central Bank drained 145.64 billion euros from euro-zone money markets on Thursday, within its upper limit of 150 billion euros, aiming to keep short term interest rates in line with benchmark lending rates.
U.S. mortgage applications sank last week to the lowest level since the end of last year despite falling borrowing costs, an industry trade group said Thursday.
The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 7.6 percent in the week ending Dec. 21 to 603.8, its lowest reading since falling to 575.6 in the Dec. 29, 2006 week.
Seasonally adjusted initial jobless claims rose 1,000 to 349,000 in the week ended Dec. 22, the government reported Thursday. The four-week moving average for initial jobless claims fell 1,000 to 342,500, according to the Labor Department. The prior week's initial jobless claims level was revised to 348,000 from an earlier estimate of 346,000. Continuing jobless claims gained 75,000, reaching 2.71 million for the week ended Dec. 15. The four-week moving average for continuing jobless claims rose 13,500 to 2.64 million. Continuing jobless claims and the four-week moving average for those claims both reached their highest levels in more than two years.
A big jump in demand for civilian aircraft pushed durable goods orders up for the first time in four months in November, the Commerce Department reported Thursday. Excluding transportation orders, however, durable goods orders fell by 0.7% in November. New orders for non-defense aircraft and parts shot up by 20.9% in November, the data show. However, new orders for defense aircraft and parts dropped by 20.1% in the same month. Demand for capital goods also softened, suggesting business investment will be a drag on economic growth.
Boeing Co. orders more than tripled in November, to 177 planes, from the prior month. Bookings at the world's second- largest commercial plane maker have averaged 122 a month over the last three months.
Rio Tinto Ltd/Plc on Thursday hit back at rival BHP Billiton's hostile approach, playing up its independent growth prospects amid renewed speculation of a Chinese-backed counter bid. Beijing has sanctioned major state-owned corporates to look into three strategies for mounting counter-bids for Rio, including forming a domestic consortium; local players working in concert with foreign companies; or buying shares on the open market, according to a December 24 report in the South China Morning Post.
There are media reports of the assassination of Pakistani opposition leader Benazir Bhutto. Bhutto was seen as the front-runner to become Pakistan's next prime minister in elections scheduled for next month.
U.S. consumer confidence rose in December due to an increase in short-term expectations, though consumers "remain far from optimistic," the Conference Board reported Thursday. The consumer confidence index rose to 88.6 from a revised reading of 87.8 in November. However, December's reading is below last year's level of 110.0, as consumers have been concerned about higher energy prices and falling home prices.
Crude inventories fell by 3.3 million barrels to 293.6 million barrels in the week ending Dec. 21, U.S. Energy Information Administration reported on Thursday. Gasoline supplies rose by 700,000 barrels in the latest week, while distillate stocks fell by 2.8 million barrels, EIA reported. Crude for February delivery closed up 65 cents, or 0.7%, at $96.62 a barrel on the New York Mercantile Exchange.
The dollar is down 9.9 percent this year to $1.4502 per euro, after weakening 10 percent in 2006. The U.S. dollar index closed down at 76.76. "Americans will certainly find global hegemony a lot more expensive if the dollar falls off its perch," adds Kenneth Rogoff, former chief economist of the International Monetary Fund, in an article published this month. He maintains that the US has been fortunate to be able to use the huge low-interest dollar holdings of the central banks of China and Japan to finance higher return investments elsewhere, "but between the sub-prime US mortgage crisis and the dollar's ongoing decline, America's exorbitant privilege now looks a bit shaky . . . American voters, who are famously loath to increase taxes, might start thinking a lot harder about the real economic costs of their country's superpower status."
The Dow Jones Industrial Average fell 192 points, or 1.4%, at 13,359.61 points at the unofficial 4 p.m. close. The S&P 500 Index dropped 21.36 points, or 1.4%, at 1,476 and the Nasdaq Composite declined 47 points, or 1.8%, at 2,676.
Google Inc. increased its lead in the U.S. Internet search market in November at the expense of both Yahoo Inc. and Microsoft Corp., according to data released Thursday by Nielsen Online. Google's share of the market grew to 57.7% in November from 55.5% in October, according to Nielsen. Google rival Yahoo, meanwhile, saw its share of market dwindle to 17.9% from 18.8%. Microsoft also saw its share of the search market fall, to 12% in November from 13.8% in the previous month, according to Nielsen.
Gold for February delivery ended the session up $2.3, or 0.3%, at $831 .8 an ounce on the New York Mercantile Exchange.
Merrill Lynch & Co plans to announce about 1,600 layoffs after disclosing fourth-quarter write-downs, CNBC reported on Thursday.
More than three million people will have to wait until February to get their tax refunds because of Congress's late fix to the alternative minimum tax, the IRS said Thursday.
Wednesday, December 26, 2007
Hard Data
12/27/07 Hard Data
Nouriel Roubini: "The first hard data on the retail sales during the holiday season (going from Black Friday until December 24th) are in: excluding spending on gasoline retail sales were up a mediocre 2.4% relative to a year ago; including gasoline they were up 3.6% on the lowest end of forecasters’ expectations."
Holiday retail spending rose 3.6% from a year earlier, led by luxury goods and electronic-commerce purchases, MasterCard Advisors LLC said on Wednesday. Sales "came in just above the lower end of the range we were expecting, maintaining the slower, modest growth we've been seeing throughout the year," said Michael McNamara, vice president of research and analysis for MasterCard Advisors, in a statement. Apparel lagged and electronics sales rose "a very moderate 2.7%," the firm said. Gasoline prices were 30% to 35% higher than they were a year earlier, while the e-commerce segment may have been boosted by inclement weather, the firm said.
Kansai Electric Power Co. and Sumitomo Corp. will join forces with Kazakhstan's state-owned Kazatomprom to process uranium ore into nuclear fuel for power generation, according to reports. Japanese firm Nuclear Fuel Industries Ltd. will also be involved in the project, which is due to be formally announced in Kazakhstan later Wednesday, the Nikkei business daily reported.
Berkshire Hathaway and Marmon Holdings announced that Berkshire will purchase 60% of Marmon Holdings, a private company owned by trusts benefiting members of the Pritzker Family of Chicago. Berkshire will put up $4.5 bln for the stake and will acquire the remaining 40% through staged acquisitions over a five to six year period, to be based on future earnings. Marmon will make a substantial distribution of cash and assets to shareholders prior to the expected closing in the first quarter of 2008. The Marmon Group is an international association of more than 125 manufacturing and service businesses. Marmon, owned by trusts for the benefit of members of the Pritzker family, was an ailing manufacturing operation in Ohio when it was acquired by Jay and Robert Pritzker in 1953. It has collective revenue of about $7 billion and includes business interests ranging from construction and railroad and intermodal tank cars to specialty pipes, metal fasteners, crane leasing, store fixtures and food-preparation equipment. It employs about 21,000. Marmon has more than tripled its operating income and improved operating margins from 4.9 percent to 12.4 percent in the past five years.
China will scrap import duties on copper, coal and aluminum, and halve tax on oil products from the beginning of next year. Export taxes on semi-finished steel products will be raised to as much as 25 per cent and a 15 per cent export tax will be imposed on some stainless steel, welded pipes and other steel products in an effort to cool investment in the steel sector, the ministry added.
China, the world's second-biggest energy consumer, plans to increase crude oil imports through long-term contracts and cut spot purchases to cushion against price and supply fluctuations.
According to the WSJ, the credit crunch triggered by the downturn in the housing market is creating problems in commercial real estate, driving down prices of office buildings, shopping malls and apartment complexes, and leaving some owners scrambling for cash.
Crude oil rose for a third day in New York on concern shipments from Iraq may be disrupted after the Turkish military attacked bases of Kurdish rebels in northern Iraq.
Sentiment among Japan's small and midsize companies, especially in the housing sector, fell to its most pessimistic level in nearly three years in December, a government-affiliated lender said Wednesday. The sales outlook index, which measures the percentage of companies predicting that sales will improve over the next three months minus those saying it will worsen, stood at 6.4 in December from November's 8.9 reading, according to a business sentiment survey by the Japan Finance Corporation for Small and Medium Enterprise. That's the lowest since January in 2005 when the index had also fallen to 6.4.
According to Bloomberg, Kazuo Mizuno, chief economist at Mitsubishi UFJ Securities, the brokerage arm of Japan's largest bank (Mitsubishi UFJ Financial Group, predicts the dollar may fall 20% against the yen to ¥95/$1 in 2008.
Amazon.com Inc. said Wednesday its 2007 holiday season was its strongest to date, with Nintendo Wii game systems and the "Harry Potter and the Order of the Phoenix" DVD among its top-selling products. The online retailer said it sold about 17 Nintendo Wiis per second when the product was available. The fifth Harry Potter movie led DVD sales, followed by "Planet Earth: The Complete BBC Series" and "Pirates of the Caribbean: At World's End."
Mike Shedlock: "Wal-Mart Stores Inc. and other big-box retailers — buffeted by sagging sales and the housing slump — are pulling the plug on new-store plans in and around Chicago. The pullback is another sign of the darkening outlook for 2008, as retailers turn cautious on expansion."
U.S. home prices fell in October for the 10th consecutive month, declining a record 6.7 percent compared with a year ago, according to the Standard & Poor's/Case-Shiller home price index. "No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement Wednesday. The S&P/Case-Shiller home price index tracks prices of existing single-family homes in 10 metropolitan areas compared with a year earlier. A broader index of 20 metropolitan areas fell 6.1 percent.
DemocracyNow.org: "We speak with a reporter from the Army Times who gives an inside account of how an army unit committed mutiny and refused to carry out orders in Iraq. After an IED attack killed five more members of Charlie 1-26, members of 2nd Platoon gathered for a meeting and determined they could no longer function professionally. Several platoon members were afraid their anger could set loose a massacre."
The Managing Director of the Management Bureau for Iran Electricity Network Mas'oud Hojjat said Iran is ready to commence the export of 600 million kilowatt electricity to Turkey, according to Fars News Agency.
FedEx Corp. said its freight segment will implement a 5.5% general rate increase, effective Jan. 14, and its long-haul less-than-truckload company will implement a similar increase for its general rates.
The dollar dropped as much as 0.6 percent against the euro after gaining 1.6 percent in the past two weeks.
Platinum futures for April delivery rose $11.10, or 0.7 percent, to $1,541.20 an ounce at 9:35 a.m. on the New York Mercantile Exchange, the highest ever.
President Bush on Wednesday signed a $555 billion bill that funds the Iraq war well into next year and keeps government agencies running through September.
Apple Inc. shares on Wednesday hit $200 for the first time in the company's history.
Crude futures for February delivery closed up $1.84, or 2%, at $95.97 a barrel on the New York Mercantile Exchange.
Gold futures for February delivery closed up $13, or 1.6%, at $829.5 an ounce on the New York Mercantile Exchange. The dollar index, which tracks the value of the greenback against a basket of other major currencies, fell for a third day, down 0.6% to 77.14, the lowest level since Dec. 17.
Cerberus Capital Management paid a $100 million termination fee to United Rentals Inc. Wednesday.
Nouriel Roubini: "The first hard data on the retail sales during the holiday season (going from Black Friday until December 24th) are in: excluding spending on gasoline retail sales were up a mediocre 2.4% relative to a year ago; including gasoline they were up 3.6% on the lowest end of forecasters’ expectations."
Holiday retail spending rose 3.6% from a year earlier, led by luxury goods and electronic-commerce purchases, MasterCard Advisors LLC said on Wednesday. Sales "came in just above the lower end of the range we were expecting, maintaining the slower, modest growth we've been seeing throughout the year," said Michael McNamara, vice president of research and analysis for MasterCard Advisors, in a statement. Apparel lagged and electronics sales rose "a very moderate 2.7%," the firm said. Gasoline prices were 30% to 35% higher than they were a year earlier, while the e-commerce segment may have been boosted by inclement weather, the firm said.
Kansai Electric Power Co. and Sumitomo Corp. will join forces with Kazakhstan's state-owned Kazatomprom to process uranium ore into nuclear fuel for power generation, according to reports. Japanese firm Nuclear Fuel Industries Ltd. will also be involved in the project, which is due to be formally announced in Kazakhstan later Wednesday, the Nikkei business daily reported.
Berkshire Hathaway and Marmon Holdings announced that Berkshire will purchase 60% of Marmon Holdings, a private company owned by trusts benefiting members of the Pritzker Family of Chicago. Berkshire will put up $4.5 bln for the stake and will acquire the remaining 40% through staged acquisitions over a five to six year period, to be based on future earnings. Marmon will make a substantial distribution of cash and assets to shareholders prior to the expected closing in the first quarter of 2008. The Marmon Group is an international association of more than 125 manufacturing and service businesses. Marmon, owned by trusts for the benefit of members of the Pritzker family, was an ailing manufacturing operation in Ohio when it was acquired by Jay and Robert Pritzker in 1953. It has collective revenue of about $7 billion and includes business interests ranging from construction and railroad and intermodal tank cars to specialty pipes, metal fasteners, crane leasing, store fixtures and food-preparation equipment. It employs about 21,000. Marmon has more than tripled its operating income and improved operating margins from 4.9 percent to 12.4 percent in the past five years.
China will scrap import duties on copper, coal and aluminum, and halve tax on oil products from the beginning of next year. Export taxes on semi-finished steel products will be raised to as much as 25 per cent and a 15 per cent export tax will be imposed on some stainless steel, welded pipes and other steel products in an effort to cool investment in the steel sector, the ministry added.
China, the world's second-biggest energy consumer, plans to increase crude oil imports through long-term contracts and cut spot purchases to cushion against price and supply fluctuations.
According to the WSJ, the credit crunch triggered by the downturn in the housing market is creating problems in commercial real estate, driving down prices of office buildings, shopping malls and apartment complexes, and leaving some owners scrambling for cash.
Crude oil rose for a third day in New York on concern shipments from Iraq may be disrupted after the Turkish military attacked bases of Kurdish rebels in northern Iraq.
Sentiment among Japan's small and midsize companies, especially in the housing sector, fell to its most pessimistic level in nearly three years in December, a government-affiliated lender said Wednesday. The sales outlook index, which measures the percentage of companies predicting that sales will improve over the next three months minus those saying it will worsen, stood at 6.4 in December from November's 8.9 reading, according to a business sentiment survey by the Japan Finance Corporation for Small and Medium Enterprise. That's the lowest since January in 2005 when the index had also fallen to 6.4.
According to Bloomberg, Kazuo Mizuno, chief economist at Mitsubishi UFJ Securities, the brokerage arm of Japan's largest bank (Mitsubishi UFJ Financial Group, predicts the dollar may fall 20% against the yen to ¥95/$1 in 2008.
Amazon.com Inc. said Wednesday its 2007 holiday season was its strongest to date, with Nintendo Wii game systems and the "Harry Potter and the Order of the Phoenix" DVD among its top-selling products. The online retailer said it sold about 17 Nintendo Wiis per second when the product was available. The fifth Harry Potter movie led DVD sales, followed by "Planet Earth: The Complete BBC Series" and "Pirates of the Caribbean: At World's End."
Mike Shedlock: "Wal-Mart Stores Inc. and other big-box retailers — buffeted by sagging sales and the housing slump — are pulling the plug on new-store plans in and around Chicago. The pullback is another sign of the darkening outlook for 2008, as retailers turn cautious on expansion."
U.S. home prices fell in October for the 10th consecutive month, declining a record 6.7 percent compared with a year ago, according to the Standard & Poor's/Case-Shiller home price index. "No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement Wednesday. The S&P/Case-Shiller home price index tracks prices of existing single-family homes in 10 metropolitan areas compared with a year earlier. A broader index of 20 metropolitan areas fell 6.1 percent.
DemocracyNow.org: "We speak with a reporter from the Army Times who gives an inside account of how an army unit committed mutiny and refused to carry out orders in Iraq. After an IED attack killed five more members of Charlie 1-26, members of 2nd Platoon gathered for a meeting and determined they could no longer function professionally. Several platoon members were afraid their anger could set loose a massacre."
The Managing Director of the Management Bureau for Iran Electricity Network Mas'oud Hojjat said Iran is ready to commence the export of 600 million kilowatt electricity to Turkey, according to Fars News Agency.
FedEx Corp. said its freight segment will implement a 5.5% general rate increase, effective Jan. 14, and its long-haul less-than-truckload company will implement a similar increase for its general rates.
The dollar dropped as much as 0.6 percent against the euro after gaining 1.6 percent in the past two weeks.
Platinum futures for April delivery rose $11.10, or 0.7 percent, to $1,541.20 an ounce at 9:35 a.m. on the New York Mercantile Exchange, the highest ever.
President Bush on Wednesday signed a $555 billion bill that funds the Iraq war well into next year and keeps government agencies running through September.
Apple Inc. shares on Wednesday hit $200 for the first time in the company's history.
Crude futures for February delivery closed up $1.84, or 2%, at $95.97 a barrel on the New York Mercantile Exchange.
Gold futures for February delivery closed up $13, or 1.6%, at $829.5 an ounce on the New York Mercantile Exchange. The dollar index, which tracks the value of the greenback against a basket of other major currencies, fell for a third day, down 0.6% to 77.14, the lowest level since Dec. 17.
Cerberus Capital Management paid a $100 million termination fee to United Rentals Inc. Wednesday.
Tuesday, December 25, 2007
The Day After
12/26/07 The Day After
Post-Christmas sales have become even more important to retailers amid the rising popularity of gift cards, analysts said. Any help to ring in additional sales in a season that's expected to grow at their slowest pace in five years would also be welcome relief, they said.
According to ShopperTrak, Wednesday is expected to rank as the No. 6 holiday shopping day this year, after this past weekend and Black Friday -- the day after Thanksgiving that typically marks the start of the holiday shopping season, retailers' biggest selling period.
Costco Wholesale Corp. has had "pretty good" holiday sales and has kept inventories under control to avoid markdowns, Chief Financial Officer Richard Galanti told The Wall Street Journal. Selling well were more expensive gift packs with healthy and beauty items and those with chocolate and nuts. Also selling well, the executive told the paper, were women's outerwear and DVDs, while jewelry sales lagged.
Confidence among large Japanese companies declined in the three months to December, according to a government survey. An index tracking confidence among large manufacturers came in at 5.2 in the December-ended quarter compared with 7.7 in the preceding quarter, while confidence among large non-manufacturers fell to minus 2.2 from 5.3 in the preceding quarter, according to the Ministry of Finance's Business Outlook Survey.
Copper has risen more than 10% since Dec. 19.
The Treasury awarded $20 billion in 3-month bills at 3.28%, compared with last week's 3.0%. The bid-to-cover -- which measures bids received to bids tendered -- was 2.32, unchanged from last week. The indirect bid, a carefully watched category that includes foreign buyers, was 26.4%, up from 16.0% the week before. The Treasury also awarded $19 billion in 6-month bills at 3.49% compared with 3.28% last week. The indirect bid rose to 37.1% from 30.5% and the bid-to-cover rose to 2.61 from 2.34 last week. The auction "was well-bid, helped by the $2 billion cut in offering size to $39 billion, though light trading conditions limited demand," wrote analysts at Action Economics.
Target Corp warned on Monday that its December same-store sales were below expectations and said it now expects sales at stores open at least a year in the range of down 1 percent to up 1 percent, adjusted for a calendar shift.
Allan Sloan: "Am I really saying that the Fed, which to many people still seems omniscient and omnipotent, has lost much of its mojo? I am. Why should you care? Because if the Fed continues to lose clout, it will be even harder than it is now to rescue the world's financial system when the next disaster strikes the markets. And there's always a next disaster."
"Liquidity doesn't do anything in this situation," says Anna Schwartz, the doyenne of US monetarism and life-time student (with Milton Friedman) of the Great Depression. "It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue," she adds.
Bill Bonner: "Hear that noise? It's not sleigh bells ringing. It's not children singing. No, that's the sound of pumps working night and day. In addition to cutting rates, the Fed and the European Central bank are pushing up and down on their pumps as hard as they can - lending extra money as fast as borrowers will take it. The idea is to replace the liquidity that the markets are destroying…and prevent the free market from working. That is, the feds try to artificially increase the supply of cash and credit…so as to avoid correcting mistakes. As we explained on Friday, it's almost impossible for an economy to correct mistakes when the price of money is going down. Instead, mistakes are typically made worse. A guy who is deeply in debt, for example, finds that the easiest thing to do is to borrow more! Already, the feds have practically sunk the entire economy with too much debt; now they're trying to put more debt into the system.
After previously rebuffing an earlier buyout bid from rival CommScope, Westchester-based Andrew agreed six months ago to a $15-a-share offer from the North Carolina company. Under terms of the agreement, Andrew stockholders would receive $13.50 a share in cash, and an additional $1.50 in either cash or CommScope common stock, or a combination of the two.
On Monday, Commscope said the $1.50-a-share element will be in the form of CommScope stock, and said that based on the formula spelled out in the agreement, Andrew holders will now receive each of their shares $13.50 in cash and 0. 03154 CommScope shares.
Capital infusion comes at a price. In the case of Merrill Lynch, the discount was a stiff 17%.
According to Rigzone, Kazakh Energy Minister Saouat Mynbaiev said the state is poised to double its stake in the giant Kashagan oil field project to around 16% in a bid to settle a dispute with consortium partners over delays and cost overruns.
Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors. The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market.
Spending fell 2.2% for the week through Dec. 22 from a year earlier, Chicago-based ShopperTrak RCT Corp. said.
According to the WSJ, iSuppli Corp has cut its 2008 expectations of global semiconductor sales from 9.3% to 7.5% due to a slowing economy.
According to DSL Reports, "the newest Sprint Connection utility is installed on my notebook. Low and behold, it has GPS capability. An interesting feature, and probably a very useful one as well."
Mike Shedlock: "The Army had been given presidential approval to expand its forces by 74,000 over all by 2010, including the reserve component, to meet the stress of Iraq and Afghanistan and to prepare for future threats...This is not a "support the troops" agenda but rather a "keep more troops in harm's way" agenda. The altered plans are not "to meet the stress of Iraq and Afghanistan and to prepare for future threats" but rather an admission that there are simply no jobs no jobs available for returning troops. Bush would rather waste $70 billion and another 10,000 lives than admit his programs are a complete failures."
Post-Christmas sales have become even more important to retailers amid the rising popularity of gift cards, analysts said. Any help to ring in additional sales in a season that's expected to grow at their slowest pace in five years would also be welcome relief, they said.
According to ShopperTrak, Wednesday is expected to rank as the No. 6 holiday shopping day this year, after this past weekend and Black Friday -- the day after Thanksgiving that typically marks the start of the holiday shopping season, retailers' biggest selling period.
Costco Wholesale Corp. has had "pretty good" holiday sales and has kept inventories under control to avoid markdowns, Chief Financial Officer Richard Galanti told The Wall Street Journal. Selling well were more expensive gift packs with healthy and beauty items and those with chocolate and nuts. Also selling well, the executive told the paper, were women's outerwear and DVDs, while jewelry sales lagged.
Confidence among large Japanese companies declined in the three months to December, according to a government survey. An index tracking confidence among large manufacturers came in at 5.2 in the December-ended quarter compared with 7.7 in the preceding quarter, while confidence among large non-manufacturers fell to minus 2.2 from 5.3 in the preceding quarter, according to the Ministry of Finance's Business Outlook Survey.
Copper has risen more than 10% since Dec. 19.
The Treasury awarded $20 billion in 3-month bills at 3.28%, compared with last week's 3.0%. The bid-to-cover -- which measures bids received to bids tendered -- was 2.32, unchanged from last week. The indirect bid, a carefully watched category that includes foreign buyers, was 26.4%, up from 16.0% the week before. The Treasury also awarded $19 billion in 6-month bills at 3.49% compared with 3.28% last week. The indirect bid rose to 37.1% from 30.5% and the bid-to-cover rose to 2.61 from 2.34 last week. The auction "was well-bid, helped by the $2 billion cut in offering size to $39 billion, though light trading conditions limited demand," wrote analysts at Action Economics.
Target Corp warned on Monday that its December same-store sales were below expectations and said it now expects sales at stores open at least a year in the range of down 1 percent to up 1 percent, adjusted for a calendar shift.
Allan Sloan: "Am I really saying that the Fed, which to many people still seems omniscient and omnipotent, has lost much of its mojo? I am. Why should you care? Because if the Fed continues to lose clout, it will be even harder than it is now to rescue the world's financial system when the next disaster strikes the markets. And there's always a next disaster."
"Liquidity doesn't do anything in this situation," says Anna Schwartz, the doyenne of US monetarism and life-time student (with Milton Friedman) of the Great Depression. "It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue," she adds.
Bill Bonner: "Hear that noise? It's not sleigh bells ringing. It's not children singing. No, that's the sound of pumps working night and day. In addition to cutting rates, the Fed and the European Central bank are pushing up and down on their pumps as hard as they can - lending extra money as fast as borrowers will take it. The idea is to replace the liquidity that the markets are destroying…and prevent the free market from working. That is, the feds try to artificially increase the supply of cash and credit…so as to avoid correcting mistakes. As we explained on Friday, it's almost impossible for an economy to correct mistakes when the price of money is going down. Instead, mistakes are typically made worse. A guy who is deeply in debt, for example, finds that the easiest thing to do is to borrow more! Already, the feds have practically sunk the entire economy with too much debt; now they're trying to put more debt into the system.
After previously rebuffing an earlier buyout bid from rival CommScope, Westchester-based Andrew agreed six months ago to a $15-a-share offer from the North Carolina company. Under terms of the agreement, Andrew stockholders would receive $13.50 a share in cash, and an additional $1.50 in either cash or CommScope common stock, or a combination of the two.
On Monday, Commscope said the $1.50-a-share element will be in the form of CommScope stock, and said that based on the formula spelled out in the agreement, Andrew holders will now receive each of their shares $13.50 in cash and 0. 03154 CommScope shares.
Capital infusion comes at a price. In the case of Merrill Lynch, the discount was a stiff 17%.
According to Rigzone, Kazakh Energy Minister Saouat Mynbaiev said the state is poised to double its stake in the giant Kashagan oil field project to around 16% in a bid to settle a dispute with consortium partners over delays and cost overruns.
Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors. The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market.
Spending fell 2.2% for the week through Dec. 22 from a year earlier, Chicago-based ShopperTrak RCT Corp. said.
According to the WSJ, iSuppli Corp has cut its 2008 expectations of global semiconductor sales from 9.3% to 7.5% due to a slowing economy.
According to DSL Reports, "the newest Sprint Connection utility is installed on my notebook. Low and behold, it has GPS capability. An interesting feature, and probably a very useful one as well."
Mike Shedlock: "The Army had been given presidential approval to expand its forces by 74,000 over all by 2010, including the reserve component, to meet the stress of Iraq and Afghanistan and to prepare for future threats...This is not a "support the troops" agenda but rather a "keep more troops in harm's way" agenda. The altered plans are not "to meet the stress of Iraq and Afghanistan and to prepare for future threats" but rather an admission that there are simply no jobs no jobs available for returning troops. Bush would rather waste $70 billion and another 10,000 lives than admit his programs are a complete failures."
Monday, December 24, 2007
Eroding Credit Card Quality
12/25/07 Eroding Credit Card Quality
Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come. An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears. Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy. "Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now." The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart. At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission. Serious delinquencies also are up sharply: Some of the nation's biggest lenders -- including Advanta, GE Money Bank and HSBC -- reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago. The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors -- similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans. The trend carried into November. As of Friday, all of the trusts that filed reports for the month show increases in both delinquencies and defaults over November 2006, and many show sequential increases from October. Discover accounts 30 days or more delinquent jumped 25,716 from November 2006 and had increased 6,000 between October and November this year. Many economists expect delinquencies and defaults to rise further after the holiday shopping season. Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc., cited mounting mortgage problems that began after this summer's subprime financial shock as one of the culprits, as well as a weakening job market in the Midwest, South and parts of the West, where real-estate markets have been particularly hard hit. "Credit card quality will continue to erode throughout next year," Zandi said.
GE Capital said it agreed to purchase most of Merrill Lynch Capital, Merrill Lynch's wholly-owned middle-market commercial finance business. Financial terms were not disclosed. The acquisition, expected to close in the first quarter of 2008, will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance's base of $260 billion.
Merrill Lynch & Co. will receive a $6.2 billion cash infusion from Singapore's sovereign wealth fund Temasek Holdings Pte. and Davis Selected Advisors LP. Temasek will invest as much as $5 billion and New York- based Davis will buy $1.2 billion of Merrill stock, the brokerage firm said in a statement.
Online shopping revenue is up 19% in the pre-Christmas period of 2007 holiday season, according to ComScore Inc. [v: scor]. The online data monitoring group said online shoppers spent $26.29 billion for the first 51 days of the holiday season, from Nov. 21 -Dec 21, compared to $22.04 billion in the same period last year. The busiest spending day so far this year was Dec. 10, dubbed "Green Monday," when shoppers spent $881 million, ComScore said.
Aggressive discounting paid off for the period's stalwarts -- Costco Wholesale Corp , J.C. Penney Co Inc , Wal-Mart Stores Inc and Barnes & Noble Inc , consumer marketing firm America's Research Group said. Retailers who failed to discount -- such as Macy's Inc , Circuit City Stores Inc and Borders Group Inc -- were the season's worst performers, the survey found.
Not so long ago, Mexico succeeded as a low-cost producer to the auto parts world. But now its niche is threatened by global competitors who can trump it with lower salaries or superior quality and productivity.
MTC Technologies, Inc. has signed a definitive merger agreement to be acquired by BAE Systems, Inc. The transaction is valued at roughly $450 million for a cash price of $24.00 per share.
The New York Times writes that Target is having an especially rough holiday season.
John Hussman: "Currently, the combination of valuations and market action (not to mention recession probability) is one that has historically been associated with negative average returns. That doesn't mean that investors who keep riding the unicycle can't make a few more small bills, but it does mean that repeated risk-taking in conditions like the present has not been rewarding, on average, and has frequently involved significant and abrupt losses...neither the Fed nor the ECB have "injected" material amounts of "liquidity" into the international banking system in recent months. This is not a call for them to do so - to some extent their hands are tied by inflation pressures, currency risks, and profigate government spending (particularly in the U.S.). The problem is that by creating the illusion that they are doing something material - when the problem in the global financial system is not confidence, but solvency - the Fed and the ECB misdirect the attention of investors, provide false hope, and ultimately do a great disservice to investors...At present, the Fed has injected less than $20 billion in total “liquidity” since March – nearly all of which has been withdrawn from the banking system as currency in circulation. Normally, the Fed would have done a “permanent” open market operation by now, to finance this increase in currency demand (which predictably grows by $30-50 billion annually). But by constantly rolling over temporary repos every week or two instead, the Fed can act as if it is “doing more.”
Capgemini shares rose on Monday after a newspaper said Wipro, India's third-biggest software exporter, was expected to bid for the French computer consultancy firm.
United Rentals Inc. said it's terminating a merger agreement with Cerberus Capital Management's acquisition vehicles RAM Holdings Inc. and RAM Acquisition Corp. The equipment rental company said it's also requesting Cerberus to pay it $100 million in termination fee as part of the original merger agreement.
Singapore's inflation rate hit a 25-year high of 4.2% in November from a year earlier, reflecting higher food and housing prices, according to reports.
Will Rogers: “If we ever pass out as a great nation we ought to put on our tombstone 'America died from a delusion that she had moral leadership'.”
Bruce Collins: "Could we experience the horrifying effects of a K-wave depressionary cycle soon? Ian Gordon, a long wave analyst and expert on the Kondratieff effect, believes we are already there.
He writes:
“This is it. The Kondratieff winter is now underway in earnest and nothing can stop it. The huge credit expansion initiated by the Maestro, the past Federal Reserve Chairman, Alan Greenspan, has now reversed. The ensuing credit contraction will be devastating. It will take down creditor and debtor alike and will result in a destructive and frightening deflationary depression.”
“While the crash only took place six months ago, I am convinced we have now passed through the worst, and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger too is safely behind us.” – Herbert Hoover, President of the United States of America, May 1, 1930
“Gentlemen, you have come sixty days too late. The depression is over.” – Herbert Hoover, President of the United States of America, responding to a delegation requesting a public works program (stimulus) to help speed US economic recovery, June 1930
MAXjet Airways PLC said Monday it has filed for Chapter 11 Bankruptcy, blaming rising fuel costs and an increase in competition for business-class travelers for its inability to raise necessary funding. The trans-Atlantic business-class only airline listed just six months ago on AIM, London's alternative market.
Bob Rodriguez, the hugely successful manager of FPA Capitaland FPA New Income, recently announced he put a halt to purchases of stocks and high-yield bonds at both portfolios on Dec. 14. His decision is a reaction to the subprime mortgage-induced credit crunch, which he expects to worsen in coming months. Rodriguez says he'll review his actions weekly, but he doesn't anticipate any change in course until February or March 2008. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.
The British pound hit record lows against the euro on Monday for the second straight day, weighed down by falling home prices and expectations that the Bank of England will keep cutting interest rates.
Charles E. Wilson: "No one should suffer from the great delusion that any form of communism or socialism which promotes the dictatorship of the few instead of the initiative of the millions can produce a happier or more prosperous society."
Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come. An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears. Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy. "Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now." The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart. At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission. Serious delinquencies also are up sharply: Some of the nation's biggest lenders -- including Advanta, GE Money Bank and HSBC -- reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago. The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors -- similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans. The trend carried into November. As of Friday, all of the trusts that filed reports for the month show increases in both delinquencies and defaults over November 2006, and many show sequential increases from October. Discover accounts 30 days or more delinquent jumped 25,716 from November 2006 and had increased 6,000 between October and November this year. Many economists expect delinquencies and defaults to rise further after the holiday shopping season. Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc., cited mounting mortgage problems that began after this summer's subprime financial shock as one of the culprits, as well as a weakening job market in the Midwest, South and parts of the West, where real-estate markets have been particularly hard hit. "Credit card quality will continue to erode throughout next year," Zandi said.
GE Capital said it agreed to purchase most of Merrill Lynch Capital, Merrill Lynch's wholly-owned middle-market commercial finance business. Financial terms were not disclosed. The acquisition, expected to close in the first quarter of 2008, will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance's base of $260 billion.
Merrill Lynch & Co. will receive a $6.2 billion cash infusion from Singapore's sovereign wealth fund Temasek Holdings Pte. and Davis Selected Advisors LP. Temasek will invest as much as $5 billion and New York- based Davis will buy $1.2 billion of Merrill stock, the brokerage firm said in a statement.
Online shopping revenue is up 19% in the pre-Christmas period of 2007 holiday season, according to ComScore Inc. [v: scor]. The online data monitoring group said online shoppers spent $26.29 billion for the first 51 days of the holiday season, from Nov. 21 -Dec 21, compared to $22.04 billion in the same period last year. The busiest spending day so far this year was Dec. 10, dubbed "Green Monday," when shoppers spent $881 million, ComScore said.
Aggressive discounting paid off for the period's stalwarts -- Costco Wholesale Corp , J.C. Penney Co Inc , Wal-Mart Stores Inc and Barnes & Noble Inc , consumer marketing firm America's Research Group said. Retailers who failed to discount -- such as Macy's Inc , Circuit City Stores Inc and Borders Group Inc -- were the season's worst performers, the survey found.
Not so long ago, Mexico succeeded as a low-cost producer to the auto parts world. But now its niche is threatened by global competitors who can trump it with lower salaries or superior quality and productivity.
MTC Technologies, Inc. has signed a definitive merger agreement to be acquired by BAE Systems, Inc. The transaction is valued at roughly $450 million for a cash price of $24.00 per share.
The New York Times writes that Target is having an especially rough holiday season.
John Hussman: "Currently, the combination of valuations and market action (not to mention recession probability) is one that has historically been associated with negative average returns. That doesn't mean that investors who keep riding the unicycle can't make a few more small bills, but it does mean that repeated risk-taking in conditions like the present has not been rewarding, on average, and has frequently involved significant and abrupt losses...neither the Fed nor the ECB have "injected" material amounts of "liquidity" into the international banking system in recent months. This is not a call for them to do so - to some extent their hands are tied by inflation pressures, currency risks, and profigate government spending (particularly in the U.S.). The problem is that by creating the illusion that they are doing something material - when the problem in the global financial system is not confidence, but solvency - the Fed and the ECB misdirect the attention of investors, provide false hope, and ultimately do a great disservice to investors...At present, the Fed has injected less than $20 billion in total “liquidity” since March – nearly all of which has been withdrawn from the banking system as currency in circulation. Normally, the Fed would have done a “permanent” open market operation by now, to finance this increase in currency demand (which predictably grows by $30-50 billion annually). But by constantly rolling over temporary repos every week or two instead, the Fed can act as if it is “doing more.”
Capgemini shares rose on Monday after a newspaper said Wipro, India's third-biggest software exporter, was expected to bid for the French computer consultancy firm.
United Rentals Inc. said it's terminating a merger agreement with Cerberus Capital Management's acquisition vehicles RAM Holdings Inc. and RAM Acquisition Corp. The equipment rental company said it's also requesting Cerberus to pay it $100 million in termination fee as part of the original merger agreement.
Singapore's inflation rate hit a 25-year high of 4.2% in November from a year earlier, reflecting higher food and housing prices, according to reports.
Will Rogers: “If we ever pass out as a great nation we ought to put on our tombstone 'America died from a delusion that she had moral leadership'.”
Bruce Collins: "Could we experience the horrifying effects of a K-wave depressionary cycle soon? Ian Gordon, a long wave analyst and expert on the Kondratieff effect, believes we are already there.
He writes:
“This is it. The Kondratieff winter is now underway in earnest and nothing can stop it. The huge credit expansion initiated by the Maestro, the past Federal Reserve Chairman, Alan Greenspan, has now reversed. The ensuing credit contraction will be devastating. It will take down creditor and debtor alike and will result in a destructive and frightening deflationary depression.”
“While the crash only took place six months ago, I am convinced we have now passed through the worst, and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger too is safely behind us.” – Herbert Hoover, President of the United States of America, May 1, 1930
“Gentlemen, you have come sixty days too late. The depression is over.” – Herbert Hoover, President of the United States of America, responding to a delegation requesting a public works program (stimulus) to help speed US economic recovery, June 1930
MAXjet Airways PLC said Monday it has filed for Chapter 11 Bankruptcy, blaming rising fuel costs and an increase in competition for business-class travelers for its inability to raise necessary funding. The trans-Atlantic business-class only airline listed just six months ago on AIM, London's alternative market.
Bob Rodriguez, the hugely successful manager of FPA Capitaland FPA New Income, recently announced he put a halt to purchases of stocks and high-yield bonds at both portfolios on Dec. 14. His decision is a reaction to the subprime mortgage-induced credit crunch, which he expects to worsen in coming months. Rodriguez says he'll review his actions weekly, but he doesn't anticipate any change in course until February or March 2008. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.
The British pound hit record lows against the euro on Monday for the second straight day, weighed down by falling home prices and expectations that the Bank of England will keep cutting interest rates.
Charles E. Wilson: "No one should suffer from the great delusion that any form of communism or socialism which promotes the dictatorship of the few instead of the initiative of the millions can produce a happier or more prosperous society."
Sunday, December 23, 2007
Cycles
12/24/07 Cycles
Mike Burk: "Since 1928, during the last 5 trading days of the year, the S&P 500 (SPX) has been up 82% of the time with an average gain of 1.11%. During the 3rd year of the Presidential Cycle it has been up 95% of the time. 1987 was the only down year...Next year is the 4th year of the Presidential Cycle. The charts show an average of all years and an average of the 4th year of the Presidential Cycle. Calculations for the charts assume 21 trading days in a month and are calculated by averaging the return of each of the 1st 11 trading days of the month and each of the last 10. When there have been more than 21 trading days some days in the middle of the month have not been counted. When there have been less than 21 trading days some of the days in the middle of the month have been counted twice. All moves, either way, greater than 2% have been reduced to 2% so they do not distort the patterns.
Since 1888 the Dow Jones Industrial Average (DJIA) has been up 70% of the time during the 4th year of the Presidential Cycle with an average gain of 8.3%. Over all years it has been up 64% of the time with an average gain of 7.3%...I expect the major indices to be higher on Friday December 28 than they were on Friday December 21."
Congress passed a temporary fix for the alternative minimum tax last week. With the patch, the AMT will strike about 4.2 million tax returns - roughly the same as last year. Bottom line: If you paid AMT for tax year 2006, you probably will pay it for 2007 unless your income or family circumstances have changed.
The Seattle Times: "Even if you're not in danger of paying the AMT, make sure you don't squander deductions. That's a distinct possibility if you don't think through your bunching strategy. By bunching, a taxpayer pulls some deductions into the current tax year or pushes them into the next. The goal is to consolidate them in the tax year where they will exceed the standard amounts. For 2007 taxes, that's $5,350 for single filers and married individuals filing separately; $7,850 for heads of household; and $10,700 for married couples filing jointly. In 2008, the standard deduction amounts are $5,450 for singles and married taxpayers filing separately; $8,000 for heads of household; and $10,900 for married couples filing a joint return.
The Oil Drum: "Putin wields gas as a weapon. But the reality is that Russia can barely meet its own growing demand."
Mexican authorities announced on Friday that the country's daily minimum wage will get a small increase in 2008, with urban wages to rise about 4 percent to 52.59 pesos, or about US$4.85 (euro3.37) a day, roughly the same as the current rate of inflation. Workers in the Mexican countryside -- where lower wages prevail -- will see minimum wages rise by about the same rate, to between 49.50 and 50.96 pesos, or US$4.57 to US$4.70 (euro3.18 to euro3.27), a day, according to a minimum-wage commission representing the government, labor and industry. The increases will take effect Jan. 1.
24/7WallSt.com: "As a huge consumer of metals, China does not want to see a merger between Rio Tinto (RTP) and BHP Billiton (BHP). The new company might have too much leverage in raising prices. So, China political machine is working overtime to look at ways to lobby against the deal. And, it has brought in investment bankers to see if there are financial options for keeping the two big miners apart. According to The Telegraph, "The political and market-led interventions that China is considering include submissions to the UK and Australian competition authorities, a Chinese-backed white knight bid for Rio and a government-backed stake being acquired in Rio to block BHP's proposal". China's sovereign fund has the capital to put money into US companies, so why no buy a piece of Rio?"
According to the FT, Saudi Arabia plans to establish a sovereign wealth fund that is expected to dwarf Abu Dhabi’s $900bn and become the largest in the world.
Bill Bonner: "The trouble is that the government's solution to one problem is the cause of two more. The feds man the pumps 24/7 to try to keep the consumer economy from drying up. But the extra liquidity drives up consumer prices!"
During the 2006 and 2007 time period, Sprint invested more than $13 billion to enhance its networks. There is a market cap of $39 billion with revenues of $40 billion. The debt structure is not overbearing. Selling at a 52-week low, the stock could be an interesting year end investment.
Venezuelan President Hugo Chavez bolstered his cooperation with Cuba on Saturday by signing energy, farming and finance accords, including a deal to expand of one of his socialist ally's oil refineries. The Venezuelan leader, a strident foe of Washington's "imperialist" policies, is Havana's closest ally and the petroleum deals have helped Cuba's economy stay afloat.
Petraeus says U.S. may draw down Iraq forces during 2008. That will be offset by an increase in troops in Afghanistan.
Marsoft: "Although the market remains extremely strong as the new year approaches, freight rates have dipped a bit over the past month. After peaking in mid-November at $190,000 per day, Cape spot rates fell back to $170,000 per day by the middle of December. Likewise, the Baltic Panamax TC index has also declined over the past month, from $90,000 per day to $75,000 per day. However, rates on our benchmark USG/Japan grain route have held up much better, rising from $118 per tonne, or $80,000 per day, to $123 per tonne, or $85,000 per day. Meanwhile, rates for the smaller bulkers have seen a relatively mild decline over the past month, with Supramax rates dipping from $70,000 per day in mid-November to $63,000 per day by mid-December.
As spot rates have eased over the past month, dry bulk period charter activity has also slowed a bit, and period charter rates have followed suit. One-year time charter rates for a modern Panamax fell back from $78,000 per day in mid-November to $71,000 per day during the first half of December.
The dry bulk market continues to be buoyed by strong trade demand, with Chinese iron ore imports and U.S. grain exports especially high recently. In November, Chinese iron ore imports topped 35 million tonnes for the first time since March, and preliminary estimates show imports from Brazil continuing to grow much faster than from other sources. The latest figures show Brazilian shipments to China soaring to a record-high, up an astounding 75% compared to a year ago!"
Robert Hunter: “At the top of the cycle you write [policies for] everybody, no matter how bad, and at the bottom you cancel everybody, no matter how good. It's a manic-depressive cycle.”
Mike Burk: "Since 1928, during the last 5 trading days of the year, the S&P 500 (SPX) has been up 82% of the time with an average gain of 1.11%. During the 3rd year of the Presidential Cycle it has been up 95% of the time. 1987 was the only down year...Next year is the 4th year of the Presidential Cycle. The charts show an average of all years and an average of the 4th year of the Presidential Cycle. Calculations for the charts assume 21 trading days in a month and are calculated by averaging the return of each of the 1st 11 trading days of the month and each of the last 10. When there have been more than 21 trading days some days in the middle of the month have not been counted. When there have been less than 21 trading days some of the days in the middle of the month have been counted twice. All moves, either way, greater than 2% have been reduced to 2% so they do not distort the patterns.
Since 1888 the Dow Jones Industrial Average (DJIA) has been up 70% of the time during the 4th year of the Presidential Cycle with an average gain of 8.3%. Over all years it has been up 64% of the time with an average gain of 7.3%...I expect the major indices to be higher on Friday December 28 than they were on Friday December 21."
Congress passed a temporary fix for the alternative minimum tax last week. With the patch, the AMT will strike about 4.2 million tax returns - roughly the same as last year. Bottom line: If you paid AMT for tax year 2006, you probably will pay it for 2007 unless your income or family circumstances have changed.
The Seattle Times: "Even if you're not in danger of paying the AMT, make sure you don't squander deductions. That's a distinct possibility if you don't think through your bunching strategy. By bunching, a taxpayer pulls some deductions into the current tax year or pushes them into the next. The goal is to consolidate them in the tax year where they will exceed the standard amounts. For 2007 taxes, that's $5,350 for single filers and married individuals filing separately; $7,850 for heads of household; and $10,700 for married couples filing jointly. In 2008, the standard deduction amounts are $5,450 for singles and married taxpayers filing separately; $8,000 for heads of household; and $10,900 for married couples filing a joint return.
The Oil Drum: "Putin wields gas as a weapon. But the reality is that Russia can barely meet its own growing demand."
Mexican authorities announced on Friday that the country's daily minimum wage will get a small increase in 2008, with urban wages to rise about 4 percent to 52.59 pesos, or about US$4.85 (euro3.37) a day, roughly the same as the current rate of inflation. Workers in the Mexican countryside -- where lower wages prevail -- will see minimum wages rise by about the same rate, to between 49.50 and 50.96 pesos, or US$4.57 to US$4.70 (euro3.18 to euro3.27), a day, according to a minimum-wage commission representing the government, labor and industry. The increases will take effect Jan. 1.
24/7WallSt.com: "As a huge consumer of metals, China does not want to see a merger between Rio Tinto (RTP) and BHP Billiton (BHP). The new company might have too much leverage in raising prices. So, China political machine is working overtime to look at ways to lobby against the deal. And, it has brought in investment bankers to see if there are financial options for keeping the two big miners apart. According to The Telegraph, "The political and market-led interventions that China is considering include submissions to the UK and Australian competition authorities, a Chinese-backed white knight bid for Rio and a government-backed stake being acquired in Rio to block BHP's proposal". China's sovereign fund has the capital to put money into US companies, so why no buy a piece of Rio?"
According to the FT, Saudi Arabia plans to establish a sovereign wealth fund that is expected to dwarf Abu Dhabi’s $900bn and become the largest in the world.
Bill Bonner: "The trouble is that the government's solution to one problem is the cause of two more. The feds man the pumps 24/7 to try to keep the consumer economy from drying up. But the extra liquidity drives up consumer prices!"
During the 2006 and 2007 time period, Sprint invested more than $13 billion to enhance its networks. There is a market cap of $39 billion with revenues of $40 billion. The debt structure is not overbearing. Selling at a 52-week low, the stock could be an interesting year end investment.
Venezuelan President Hugo Chavez bolstered his cooperation with Cuba on Saturday by signing energy, farming and finance accords, including a deal to expand of one of his socialist ally's oil refineries. The Venezuelan leader, a strident foe of Washington's "imperialist" policies, is Havana's closest ally and the petroleum deals have helped Cuba's economy stay afloat.
Petraeus says U.S. may draw down Iraq forces during 2008. That will be offset by an increase in troops in Afghanistan.
Marsoft: "Although the market remains extremely strong as the new year approaches, freight rates have dipped a bit over the past month. After peaking in mid-November at $190,000 per day, Cape spot rates fell back to $170,000 per day by the middle of December. Likewise, the Baltic Panamax TC index has also declined over the past month, from $90,000 per day to $75,000 per day. However, rates on our benchmark USG/Japan grain route have held up much better, rising from $118 per tonne, or $80,000 per day, to $123 per tonne, or $85,000 per day. Meanwhile, rates for the smaller bulkers have seen a relatively mild decline over the past month, with Supramax rates dipping from $70,000 per day in mid-November to $63,000 per day by mid-December.
As spot rates have eased over the past month, dry bulk period charter activity has also slowed a bit, and period charter rates have followed suit. One-year time charter rates for a modern Panamax fell back from $78,000 per day in mid-November to $71,000 per day during the first half of December.
The dry bulk market continues to be buoyed by strong trade demand, with Chinese iron ore imports and U.S. grain exports especially high recently. In November, Chinese iron ore imports topped 35 million tonnes for the first time since March, and preliminary estimates show imports from Brazil continuing to grow much faster than from other sources. The latest figures show Brazilian shipments to China soaring to a record-high, up an astounding 75% compared to a year ago!"
Robert Hunter: “At the top of the cycle you write [policies for] everybody, no matter how bad, and at the bottom you cancel everybody, no matter how good. It's a manic-depressive cycle.”
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