2/18/10 Yield Curve
The number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week, the Labor Department reported Thursday, a sign that labor markets remain very weak. The four-week average of initial claims fell by 1,500 to 467,500, about 20,000 more than at the first of the year. The number of people continuing to claim state unemployment benefits was unchanged in the week ending Feb. 6 at 4.56 million. All told, in raw numbers not seasonally adjusted, 11.8 million people were collecting some type of unemployment benefits in the week of Jan. 30, up 281,000 from the previous week's 11.5 million.
U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil, the Labor Department estimated Thursday. Core prices of finished goods - which exclude food and energy goods - rose 0.3% in January, led by higher prices for light trucks and other capital goods. The 1.4% increase in the producer price index was higher than the 0.9% gain expected by economists surveyed by MarketWatch. The core rate of 0.3% was also higher than the 0.1% gain expected. The producer price index is up 4.6% in the past year, the largest year-over-year gain since the financial crisis began in late 2008. The core PPI is up 1% in the past year.
Walmart Stores Inc. said Thursday its fiscal fourth-quarter profit was $4.6 billion, or $1.22 a share, compared to $3.8 billion, or 97 cents a share, in the year-ago period. On an adjusted basis, the Bentonville, Ark., retailer said it earned $1.17 a share. Analysts polled by FactSet Research were looking for earnings of $1.12 a share, on average. Net sales in the quarter rose 4.6% to $112.8 billion. For 2011, Walmart forecast earnings from continuing operations to be in the range of $3.90 to $4 a share. For the first quarter, earnings from continuing operations are expected to be 81 cents to 85 cents a share. Wall Street is looking for first-quarter earnings of 85 cents a share and 2011 earnings of $3.98 a share. Shares of Walmart slipped nearly 2% premarket to $53.15.
The world's largest retailer acknowledged that its U.S. operations will still grapple with weak sales, predicting same-store sales excluding fuel will be flat, within a range of up 1 percent to down 1 percent in the current first quarter.
"U.S. sales will be more challenging in the first quarter, as Walmart U.S. cycles through strong year-over-year comparisons and deflation," Wal-Mart Chief Executive Mike Duke said. "We remain focused on growing top-line sales, and expect improvement in the United States as the year progresses."
George Ure: "Over three months we've seen finished goods up 3.64% which annualizes to what? Oh, 15.36% annual inflation at the finished goods level based on the latest running three-month numbers. The Producer Price Index for Crude Materials for Further Processing climbed 9.6 percent in January. For the 3-month period ending in January, crude material prices rose 16.1 percent, accelerating from an 8.5-percent increase for the 3 months ended October 2009."
The CIA admits that it hired Iranians in the 1950’s to pose as Communists and stage bombings in Iran in order to turn the country against its democratically-elected president
Thousands of UFOs have been spotted in the last 20 years around the UK, according to newly released documents.
Gold futures fell sharply on Thursday after the International Monetary Fund announced plans to sell 191.3 tons of gold on the open market. The sale, announced late Wednesday, is part of a total of 403.3 metric tons designated for sale last September. Gold futures for April delivery dropped $18.50, or 1.6%, to $1,101.60 an ounce in electronic trading on Globex. "The IMF announcement came in the after-market session and saw gold fall more than $5 an ounce in a matter of minutes, and follow-through offers have been generated overnight, with gold testing below $1,100 an ounce, as a result of the weaker euro/dollar cross," said James Moore, an analyst at TheBullionDesk.com, in a note to clients. The euro was down 0.3% to $1.3563.
Matt Taibbi: “The nation’s six largest banks set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007.” The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?
The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.”
Hewlett-Packard (HPQ) will launch a new keyless tablet computer called Slate to compete with Apple’s iPad (WSJ)
By Robert Powell, MarketWatch
BOSTON (MarketWatch) -- A train wreck waiting to happen. That's the only way to describe the mess that state pension systems are in right now, according to a report published today by the Pew Center on the States. According to Pew, there's a $1 trillion gap between the $3.35 trillion in pension, health care and other retirement benefits states promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay them.
Health insurance premium increases of up to 39% aren't an exception but a worrisome sign of the times, the Obama administration said in a report Thursday.
Proposed premium increases by Anthem Blue Cross for Californians purchasing their own coverage set off a wave of criticism and forced the company last week to announce a postponement. Now, the Health and Human Services Department says similar pressure on premiums is being felt in at least six other states.
"This shocking increase isn't unique," said the report, being presented by Secretary Kathleen Sebelius at a news conference Thursday. "Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue."
With his drive for health care overhaul bogged down, President Barack Obama has seized on the Anthem premium increases as Exhibit A to make his case for sweeping change before a bipartisan White House summit next week. California officials say 700,000 households face increases averaging 25% overall and as high as 39% for some.
The HHS report found that those numbers are in line with increases sought by insurers in other states—at a time of robust profit growth for the companies and a lack of competition in most states.
Manufacturing activity expanded in February for the sixth straight month in the Philadelphia area, according to a monthly survey of manufacturing companies released Thursday by the Federal Reserve Bank of Philadelphia. The Philly Fed index rose to 17.6 in February from 15.2 in January, in line with expectations. Details of the report were strong. The new orders index jumped to 22.7 in February from 3.2 in January. The shipments index rose to 19.7 in February from 11 in January. The employment index rose to 7.4 in February from 6.1 in January.
Leading U.S. economic indicators rose 0.3% in January, the 10th straight monthly gain and further evidence of a continuing spring thaw in the U.S. economy, according to the Conference Board. The index was expected to increase 0.2% based on a survey of economists by MarketWatch. The coincident index edged up 0.2% in January, the fourth gain in the past seven months.
The Energy Department is expected to report a decline of 188 billion to 192 billion cubic feet of natural gas storage inventories for the week ended Feb. 12, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
U.S. natural gas storage levels are expected to fall by 190 billion cubic feet when weekly data from the U.S. Energy Information Administration is released early Thursday, according to a Reuters poll.
In the weekly survey of 23 industry traders and analysts, withdrawal estimates for the week ended Feb. 12 ranged from 150 bcf to 208 bcf.
Stocks fell an adjusted 44 bcf for the same week last year. The five-year average drop for that week is 129 bcf.
Oil and Gas Journal: "The US Department of Energy’s Energy Information Administration may be underestimating natural gas demand with much of the US South and Northeast enveloped in yet another round of cold weather that boosted gas and electricity demand in January through early February, said Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC.
The March natural gas contract climbed 10.4¢ to $5.40/MMbtu Feb. 11 on the New York Mercantile Exchange, “the largest 1-day gain since the beginning of the month,” on “a drop in jobless claims, indicating industrial demand, which accounts for 29% of US [gas] consumption, is likely improving, and cold temperatures across the US likely resulting in higher residential demand,” said analysts at Pritchard Capital Partners LLC in New Orleans.
On the US spot market that same day, gas at Henry Hub, La., gained 3¢ to $5.51/MMbtu. Gas prices continued rising to $5.47/MMbtu in the Feb. 12 session on NYMEX and to $5.55/MMbtu at Henry Hub as continued snowfall buried parts of the Northeastern US and the Mid-Atlantic states.
Meanwhile, EIA reported January heating degree-days in the South Census Region—where 60% of households use electricity as the primary space heating fuel—were 13% higher in January than a year ago. Consequently, residential electricity sales in the South region also increased by about 12% to an average of 2,250 Gw-hr/day, “and a good part of this electricity was generated with natural gas,” Sieminski said.
He noted that EIA estimated gas consumption by the entire US electric power sector jumped by more than 8% in January from the administrations preliminary estimate during that month. EIA’s short-term energy outlook published in the week ended Feb. 12 estimated a new record for gas consumption by the electric power sector for January. “However, the EIA is reluctant to give up on its view that an increase in coal-fired generation capacity and higher natural gas prices through the remainder of the year should reduce the share of natural gas-fired generation in the baseload power mix in 2010.” Sieminski said.
Data indicate a mini-spike in electric utility gas use during January before dropping off in February and March. Similarly, residential use in the EIA forecast is shown lower in this year’s first quarter than the similar period in 2009.
“Could the EIA be underestimating gas demand?” Sieminski asked. “News reports this week show a severe and very unusual winter snowstorm across the South from Dallas, Tex., to Atlanta, Ga. This appears to be the same type of weather pattern that caused the unusual rise in electric utility gas use in January. Other parts of the US are also getting hit hard with cold, windy weather that boosts gas use in home heating. March might also be exceptionally cold across a large section of the central US.”
Natural gas inventories down 190 bcf -- EIA. Still, the report also showed underground storage in the lower 48 states remained 1.3% higher than year-ago levels and 2.7% above the five-year average. EIA expects total natural gas consumption to increase 0.4 percent to 62.5 billion cubic feet per day (Bcf/d) in 2010 and another 0.4 percent in 2011. Current 2010 futures market prices between $5.50 and $6.70 per MMBtu
But "on the energy side, a big rise in crude inventories was offset by a big drop in distillate supplies," Fuentes said.
The Energy Information Administration said U.S. crude stockpiles rose by 3.1 million barrels in the week ended Feb. 12. Analysts polled by Platts had expected a buildup of 1.65 million barrels.
The EIA also said gasoline supplies rose by 1.62 million barrels, more than the 1.5 million barrels forecast in the Platts survey.
However, distillates fell by 2.94 million barrels on the week, far greater than the 1.6 million barrels that analysts had projected.
The difference in yield between Treasury 2- and 10-year notes, known as the yield curve, steepened to a record as reports showed that Philadelphia region manufacturing and U.S. leading indicators rose.
The Treasury Department said it will sell $126 billion in notes and bonds next week: $8 billion in 30-year Treasury Inflation Protected Securities, or TIPS, $44 billion in 2-year debt, $42 billion in 5-year notes and $32 billion in 7-year securities. The sales will be on successive days starting Feb. 22. The producer price index increased more than forecast last month, the Labor Department said.
“The curve will continue to steepen as long as we are in the mindset of short-term rates kept low by the Fed and varying degrees of economic growth and inflation, which is dragging the long end down,” said Kevin Giddis, head of fixed-income sales, trading and research at brokerage firm Morgan Keegan Inc. in Memphis, Tennessee.
The yield curve increased to 2.93 percentage points, beating the record high of 2.90 percentage points set Jan. 11.
The Dow Jones Industrial Average rose 83.66 points, or 0.8%, to 10,392.9. The S&P 500 Index gained 7.24 points, or 0.7%, to 1,106.75. The Nasdaq Composite Index advanced 15.42 points, or 0.7%, to 2,241.71.
Thursday, February 18, 2010
Volume
2/17/10 Volume
New construction of U.S. houses rebounded in January, the Commerce Department estimated Wednesday. Starts rose 2.8% in January to a seasonally adjusted 591,000 annualized units. This was in line with forecasts of economists surveyed by MarketWatch. This is the highest level of starts since July. Starts in December were also revised up to 575,000 from the previous estimate of 557,000. Starts of new single-family homes rose by 1.5% to 484,000 in January, while starts of large apartment units rose 9.2% to 107,000. Building permits, a leading indicator of housing construction, fell 4.9% to a seasonally adjusted annual rate of 621,000.
Led by higher prices for oil and gas, the prices of goods imported into the United States jumped 1.4% in January, the sixth straight increase, the Labor Department estimated Wednesday. Fuel prices rose 5.3% in January, including an 18.8% increase in natural gas prices. Petroleum prices rose 4.8%. Prices of nonfuel imports rose 0.4% for the fifth time in the past six months, led by prices of industrial materials. Prices of imported capital goods and autos fell 0.1%. In the past 12 months, import prices have risen 11.5%. Prices of goods exported from the United States rose 0.8% in January, and are up 3.4% in the past year.
Humana Inc said Wednesday that it intends to reduce its workforce by approximately 1,400 jobs, or 5%, in 2010 by cutting 2,500 positions while adding 1,100 additional jobs in areas of growth such as medical-cost containment capabilities, pharmacy management, and specialty products. The reduction will come primarily from attrition, process efficiencies, outsourcing, and position eliminations.
Walgreen Co., the Deerfield, Ill., drugstore operator, definitively agreed to acquire Duane Reade Holdings Inc., operator of a chain of 257 New-York-area drugstores, from affiliates of Oak Hill Capital Partners. The deal price is nearly $1.08 billion, including assumption of debt. In a Wednesday statement, Walgreen called the deal "a compelling strategic acquisition."
Deere lifted its profit forecast for fiscal 2010 to around $1.3 billion and said it expects equipment sales to rise between 6% and 8%.
Rob Hanna: "Tuesday was a 90% Up Volume day on the NYSE. At the same time volume declined from Friday’s levels and was below normal. It’s rare to see volume decline on a day when breadth is so overwhelmingly positive – especially when the market is in a long-term uptrend. Going back to 1970 I was only able to identify 6 other instances."
Footnoted.org: " Buried deep in the 10-K that the company filed late Friday was an interesting disclosure: Google’s headcount actually shrunk in 2009 for the first time since the company has been public (and most likely for the first time ever, given Google’s growth spurt)."
Nearly 600,000 Canadians were working in jobs supported by the natural gas industry in 2008, providing a substantial impact to the nation's economy, according to a new study released today by IHS Global Insight. The study, titled "The Contributions of the Natural Gas Industry to the Canadian National and Provincial Economies," is unique in that it specifically calculated the number of jobs supported by the natural gas industry, numbers usually found only in combination with oil industry employment figures.
China's move to unload US debt is likely to continue in the long term while the "euro scare" may last a while, legendary investor Jim Rogers told CNBC.com Wednesday.
The latest government forecasts predict cooler weather will dominate the eastern two-thirds of the U.S., with the exception of Maine, until at least March. The lowest temperatures are likely to be in the mid-Atlantic states, according to the U.S. Climate Prediction Center in Camp Springs, Maryland.
The Northeast consumes four-fifths of the nation’s home heating oil, and the fuel rose today partly on speculation the cold will boost demand. Heating oil for March delivery was up 0.12 cent, or 0.06 percent, at $1.9975 a gallon in electronic trading on the New York Mercantile Exchange at 3:04 p.m. Singapore time.
“It is beginning to look quite likely that the extensive snow that currently covers the northern two-thirds of the country will enhance the probability of winter cold lingering well into March,” said Jim Rouiller, a senior energy meteorologist at Planalytics Inc.
. MDA EarthSat, a Rockville, Md. private forecaster, was predicting significantly below-normal temperatures across much of the Midwest, Southeast and South Central region from Feb. 22 to March 3. Temperatures were expected to be as low as eight to 14 degrees below normal in some areas.
The National Weather Service was expecting colder-than-normal temperatures across the eastern two-thirds of the U.S. during that time period. The unusually cold weather was expected to spark substantial demand for natural gas for heating.
"With an arctic source region and deep snowcover to go along with a stormy pattern, the threat of this being colder and more widespread next week and the week after is where this forecast is heading," wrote Joe Bastardi, a forecaster with AccuWeather.com, in a note to clients Wednesday.
Ron Paul: "The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.
But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs. Details of agreements are not Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit."
All ships US and European will be blocked into Iran Sea Port. This will halt all shipments of oil & gas. Minimum 1-3 Months before any oil or gas are allowed into the area. This area counts for 85% of all shipments that go to US and Euro.
The U.S. government ran a budget deficit of $43 billion in January, the Treasury Department reported Wednesday. It was the 16th straight month in which the government posted a deficit, but the number was down from the year-ago number of $63 billion. January's outlays of $248 billion were the second-largest January total on record. Receipts were $205 billion in January.
Several Federal Reserve policymakers want to begin selling securities relatively soon as a way to cut back their massive supply of cash to the financial system, the central bank said Wednesday.
The Federal Reserve should sell its U.S. mortgage-backed securities holdings sooner rather than later as the economic recovery gathers steam in order to extricate itself from fiscal policy, a senior central bank official said.
The Federal Reserve predicts unemployment will stay high over the next two years because recession-scarred Americans are likely to stay cautious making for only a moderate-paced economic recovery.
New construction of U.S. houses rebounded in January, the Commerce Department estimated Wednesday. Starts rose 2.8% in January to a seasonally adjusted 591,000 annualized units. This was in line with forecasts of economists surveyed by MarketWatch. This is the highest level of starts since July. Starts in December were also revised up to 575,000 from the previous estimate of 557,000. Starts of new single-family homes rose by 1.5% to 484,000 in January, while starts of large apartment units rose 9.2% to 107,000. Building permits, a leading indicator of housing construction, fell 4.9% to a seasonally adjusted annual rate of 621,000.
Led by higher prices for oil and gas, the prices of goods imported into the United States jumped 1.4% in January, the sixth straight increase, the Labor Department estimated Wednesday. Fuel prices rose 5.3% in January, including an 18.8% increase in natural gas prices. Petroleum prices rose 4.8%. Prices of nonfuel imports rose 0.4% for the fifth time in the past six months, led by prices of industrial materials. Prices of imported capital goods and autos fell 0.1%. In the past 12 months, import prices have risen 11.5%. Prices of goods exported from the United States rose 0.8% in January, and are up 3.4% in the past year.
Humana Inc said Wednesday that it intends to reduce its workforce by approximately 1,400 jobs, or 5%, in 2010 by cutting 2,500 positions while adding 1,100 additional jobs in areas of growth such as medical-cost containment capabilities, pharmacy management, and specialty products. The reduction will come primarily from attrition, process efficiencies, outsourcing, and position eliminations.
Walgreen Co., the Deerfield, Ill., drugstore operator, definitively agreed to acquire Duane Reade Holdings Inc., operator of a chain of 257 New-York-area drugstores, from affiliates of Oak Hill Capital Partners. The deal price is nearly $1.08 billion, including assumption of debt. In a Wednesday statement, Walgreen called the deal "a compelling strategic acquisition."
Deere lifted its profit forecast for fiscal 2010 to around $1.3 billion and said it expects equipment sales to rise between 6% and 8%.
Rob Hanna: "Tuesday was a 90% Up Volume day on the NYSE. At the same time volume declined from Friday’s levels and was below normal. It’s rare to see volume decline on a day when breadth is so overwhelmingly positive – especially when the market is in a long-term uptrend. Going back to 1970 I was only able to identify 6 other instances."
Footnoted.org: " Buried deep in the 10-K that the company filed late Friday was an interesting disclosure: Google’s headcount actually shrunk in 2009 for the first time since the company has been public (and most likely for the first time ever, given Google’s growth spurt)."
Nearly 600,000 Canadians were working in jobs supported by the natural gas industry in 2008, providing a substantial impact to the nation's economy, according to a new study released today by IHS Global Insight. The study, titled "The Contributions of the Natural Gas Industry to the Canadian National and Provincial Economies," is unique in that it specifically calculated the number of jobs supported by the natural gas industry, numbers usually found only in combination with oil industry employment figures.
China's move to unload US debt is likely to continue in the long term while the "euro scare" may last a while, legendary investor Jim Rogers told CNBC.com Wednesday.
The latest government forecasts predict cooler weather will dominate the eastern two-thirds of the U.S., with the exception of Maine, until at least March. The lowest temperatures are likely to be in the mid-Atlantic states, according to the U.S. Climate Prediction Center in Camp Springs, Maryland.
The Northeast consumes four-fifths of the nation’s home heating oil, and the fuel rose today partly on speculation the cold will boost demand. Heating oil for March delivery was up 0.12 cent, or 0.06 percent, at $1.9975 a gallon in electronic trading on the New York Mercantile Exchange at 3:04 p.m. Singapore time.
“It is beginning to look quite likely that the extensive snow that currently covers the northern two-thirds of the country will enhance the probability of winter cold lingering well into March,” said Jim Rouiller, a senior energy meteorologist at Planalytics Inc.
. MDA EarthSat, a Rockville, Md. private forecaster, was predicting significantly below-normal temperatures across much of the Midwest, Southeast and South Central region from Feb. 22 to March 3. Temperatures were expected to be as low as eight to 14 degrees below normal in some areas.
The National Weather Service was expecting colder-than-normal temperatures across the eastern two-thirds of the U.S. during that time period. The unusually cold weather was expected to spark substantial demand for natural gas for heating.
"With an arctic source region and deep snowcover to go along with a stormy pattern, the threat of this being colder and more widespread next week and the week after is where this forecast is heading," wrote Joe Bastardi, a forecaster with AccuWeather.com, in a note to clients Wednesday.
Ron Paul: "The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.
But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs. Details of agreements are not Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit."
All ships US and European will be blocked into Iran Sea Port. This will halt all shipments of oil & gas. Minimum 1-3 Months before any oil or gas are allowed into the area. This area counts for 85% of all shipments that go to US and Euro.
The U.S. government ran a budget deficit of $43 billion in January, the Treasury Department reported Wednesday. It was the 16th straight month in which the government posted a deficit, but the number was down from the year-ago number of $63 billion. January's outlays of $248 billion were the second-largest January total on record. Receipts were $205 billion in January.
Several Federal Reserve policymakers want to begin selling securities relatively soon as a way to cut back their massive supply of cash to the financial system, the central bank said Wednesday.
The Federal Reserve should sell its U.S. mortgage-backed securities holdings sooner rather than later as the economic recovery gathers steam in order to extricate itself from fiscal policy, a senior central bank official said.
The Federal Reserve predicts unemployment will stay high over the next two years because recession-scarred Americans are likely to stay cautious making for only a moderate-paced economic recovery.
Tuesday, February 16, 2010
General Growth Properties
2/16/10 General Growth Properties
Manufacturing activity in the New York expanded at a faster pace in February, the New York Federal Reserve Bank said Tuesday. The bank's Empire State Manufacturing index rose to 24.9 in February from 15.9 in January. The index had plunged in December but has now rebounded to the highest level since October. The details of the report were mixed. New orders slowed to 8.8 in February from 20.5 in the prior month. Shipments inched lower. However, inventories were flat in February after 17 straight negative monthly readings. Employment was positive for the second straight month.
Simon Property Group Inc Tuesday said it has made an offer to acquire General Growth Properties Inc, the real estate investment trust that filed for bankruptcy last year, in a deal valued at over $10 billion, including about $9 billion in cash. The offer includes a consideration to creditors totaling roughly $7 billion, Simon said. Shareholders of mall operator General Growth would receive more than $9 a share, including $6 a share in cash, Simon said.
Japan plans to introduce around-the-clock commodities trading due to a drop-off in volume, according to a report Tuesday. Total trading volumes at Japan's four domestic commodity exchanges sank by two-thirds in the 2003-2008 period, while overall global commodity trading volumes rose more than threefold, helped by new index-linked commodities instruments, the Nikkei business daily reported. In response, the nation's Ministry of Economy, Trade and Industry has drafted a "revitalization plan" that would, among other things, allow the Tokyo Commodity Exchange to stay open 24 hours during the trading week, the report said.
“If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it. It’s called euthanasia, not a rescue.”
Paul Volcker said on CNN.
Goldman Sachs Group Inc. Chief Economist Jim O’Neill said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy.
“I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”
International demand for long-term U.S. financial assets grew in December at a slower pace than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed.
Net buying of long-term equities, notes and bonds totaled $63.3 billion for the month, compared with net purchases of $126.4 billion in November, the Treasury said in Washington. Including short-term securities such as bills and stock swaps, foreigners purchased a net $60.9 billion in December, compared with net buying of $30.7 billion the previous month.
China cut its holdings of U.S. government debt in December to the lowest level since February 2009 and Japan was a net buyer for the six month in the past seven. As the financial crisis eased, some central banks that poured money into Treasuries have been investing reserves elsewhere, economists said.
In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion.
Peter Terzakian: "Due to its northern latitude, over 40% of natural gas demand in North America is related to fluctuations in the weather, especially over winter. Colder weather means more furnaces get fired up more often. The relationship is very tight and every incremental heating degree-day (HDD) in the United States requires an extra 1.6 billion cubic feet (Bcf) of natural gas consumption.
So it’s heartwarming for natural gas producers to see HDDs rack up an average 225 per week for the first six-weeks of the year, when the five-year average is around 200. As well, with spring around the corner, the average number of degree days in a week declines by a rate of about 25 per week, so the added cold makes a big difference to heating oil and natural gas consumption in the heavily populated regions of the Northeastern US.
Think of HDDs this way: raising the temperature of US households by one degree Fahrenheit, for one day, requires the same amount of natural gas that can be ultimately recovered from one Barnett Shale well (~1.6 Bcf). In other words, Snowmageddon has resulted in extra gas demand that notionally requires the drilling and completely draining the equivalent of 25 Barnett wells a day! That’s an interesting sense of scale; in reality, a Barnett Well is produced out over 20 years, not one day."
U.S. home builders were a bit more confident that the housing market is recovering, according to a monthly survey released Tuesday by the National Association of Home Builders. The NAHB/Wells Fargo housing market index rose two points to 17 in February after falling in December and January. The increase to the highest level since November was in line with expectations of economists surveyed by MarketWatch. Two of the three components of the home builders' index improved in February. The index for current sales rose from 15 to 17, the index for expected sales rose from 26 to 27, and the index for traffic of prospective buyers was steady at 12.
Capital One Financial's U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing.
The Dow Jones Industrial Average gained 169.67 points, or 1.7%, to 10,268.81. The S&P 500 Index rose 19.36 points, or 1.8%, to 1,094.87. The Nasdaq Composite Index climbed 30.66 points, or 1.4%, to 2,214.19.
Crude oil for March delivery finished up $2.88, or 3.9%, at $77.01 a barrel at the New York Mercantile Exchange. Gold for April delivery finished up $29.80, or 2.7%, at $1,119.80 an ounce at the New York Mercantile Exchange.
Ford Motor Co. will lay off about 900 workers as it cuts a production shift at a plant that makes the Mustang, The Associated Press reported Tuesday.
General Growth Properties Inc. said a $10 billion takeover offer from rival Simon Property Group Inc. is too low and it will invite others to make bids as it considers options for emerging from bankruptcy.
Manufacturing activity in the New York expanded at a faster pace in February, the New York Federal Reserve Bank said Tuesday. The bank's Empire State Manufacturing index rose to 24.9 in February from 15.9 in January. The index had plunged in December but has now rebounded to the highest level since October. The details of the report were mixed. New orders slowed to 8.8 in February from 20.5 in the prior month. Shipments inched lower. However, inventories were flat in February after 17 straight negative monthly readings. Employment was positive for the second straight month.
Simon Property Group Inc Tuesday said it has made an offer to acquire General Growth Properties Inc, the real estate investment trust that filed for bankruptcy last year, in a deal valued at over $10 billion, including about $9 billion in cash. The offer includes a consideration to creditors totaling roughly $7 billion, Simon said. Shareholders of mall operator General Growth would receive more than $9 a share, including $6 a share in cash, Simon said.
Japan plans to introduce around-the-clock commodities trading due to a drop-off in volume, according to a report Tuesday. Total trading volumes at Japan's four domestic commodity exchanges sank by two-thirds in the 2003-2008 period, while overall global commodity trading volumes rose more than threefold, helped by new index-linked commodities instruments, the Nikkei business daily reported. In response, the nation's Ministry of Economy, Trade and Industry has drafted a "revitalization plan" that would, among other things, allow the Tokyo Commodity Exchange to stay open 24 hours during the trading week, the report said.
“If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it. It’s called euthanasia, not a rescue.”
Paul Volcker said on CNN.
Goldman Sachs Group Inc. Chief Economist Jim O’Neill said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy.
“I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”
International demand for long-term U.S. financial assets grew in December at a slower pace than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed.
Net buying of long-term equities, notes and bonds totaled $63.3 billion for the month, compared with net purchases of $126.4 billion in November, the Treasury said in Washington. Including short-term securities such as bills and stock swaps, foreigners purchased a net $60.9 billion in December, compared with net buying of $30.7 billion the previous month.
China cut its holdings of U.S. government debt in December to the lowest level since February 2009 and Japan was a net buyer for the six month in the past seven. As the financial crisis eased, some central banks that poured money into Treasuries have been investing reserves elsewhere, economists said.
In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion.
Peter Terzakian: "Due to its northern latitude, over 40% of natural gas demand in North America is related to fluctuations in the weather, especially over winter. Colder weather means more furnaces get fired up more often. The relationship is very tight and every incremental heating degree-day (HDD) in the United States requires an extra 1.6 billion cubic feet (Bcf) of natural gas consumption.
So it’s heartwarming for natural gas producers to see HDDs rack up an average 225 per week for the first six-weeks of the year, when the five-year average is around 200. As well, with spring around the corner, the average number of degree days in a week declines by a rate of about 25 per week, so the added cold makes a big difference to heating oil and natural gas consumption in the heavily populated regions of the Northeastern US.
Think of HDDs this way: raising the temperature of US households by one degree Fahrenheit, for one day, requires the same amount of natural gas that can be ultimately recovered from one Barnett Shale well (~1.6 Bcf). In other words, Snowmageddon has resulted in extra gas demand that notionally requires the drilling and completely draining the equivalent of 25 Barnett wells a day! That’s an interesting sense of scale; in reality, a Barnett Well is produced out over 20 years, not one day."
U.S. home builders were a bit more confident that the housing market is recovering, according to a monthly survey released Tuesday by the National Association of Home Builders. The NAHB/Wells Fargo housing market index rose two points to 17 in February after falling in December and January. The increase to the highest level since November was in line with expectations of economists surveyed by MarketWatch. Two of the three components of the home builders' index improved in February. The index for current sales rose from 15 to 17, the index for expected sales rose from 26 to 27, and the index for traffic of prospective buyers was steady at 12.
Capital One Financial's U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing.
The Dow Jones Industrial Average gained 169.67 points, or 1.7%, to 10,268.81. The S&P 500 Index rose 19.36 points, or 1.8%, to 1,094.87. The Nasdaq Composite Index climbed 30.66 points, or 1.4%, to 2,214.19.
Crude oil for March delivery finished up $2.88, or 3.9%, at $77.01 a barrel at the New York Mercantile Exchange. Gold for April delivery finished up $29.80, or 2.7%, at $1,119.80 an ounce at the New York Mercantile Exchange.
Ford Motor Co. will lay off about 900 workers as it cuts a production shift at a plant that makes the Mustang, The Associated Press reported Tuesday.
General Growth Properties Inc. said a $10 billion takeover offer from rival Simon Property Group Inc. is too low and it will invite others to make bids as it considers options for emerging from bankruptcy.
Monday, February 15, 2010
Greece
2/15/10 Greece
Mike Burk: "Since Monday the secondaries have led the way upward, new highs have picked up a little and new lows have remained low. These are reasons to think last Monday's lows will be the lows for this correction.
I expect the major averages to be higher on Friday February 19 than they were on Friday February 12."
John Mauldin: " Greece basically lied about its finances in order to gain admission to the union. It never complied with the fiscal discipline that was required for entrance.
With the high exchange rate, however, came the consequence of higher labor costs relative to, above all, Germany. While reviewing some economic facts about Greece, I came across the factoid that Greek workers had the second highest level of actual hours worked. But even with that, Greece was running a trade deficit that is currently 12.7% of its GDP.
And with the onset of the current recession, their fiscal deficit went from bad to worse. Their total debt is now €254 billion, and they need to finance another €64 billion this year, €30 billion of it in the next few months.
Bottom line, without some help or a bailout, they simply will not be able to borrow that money. And since a lot of that money is for "rollover" debt, that means a potential for default if they cannot borrow it.
European leaders said today that Greece will not be allowed to fail, hinting of a bailout. But there are a lot of "buts" and conditions.....The dire predicament is the one where Greece cuts its budgets and more or less willingly enters into a rather long and deep recession/depression. The disastrous predicament is where they do not make the cuts and are allowed to default. That means the government is plunged into a situation where it has to cut the entire deficit to what it can get in the form of taxes and fees, immediately. As in right now. And defaulting on the interest on the current bonds wouldn't be enough, although it would help.
Why not just let Greece go under? Part of the argument has to do with moral hazard. If Germany bails out Greece, Ireland, which is actually making such cuts to its budget, can legitimately ask, "Why not us?" And will Portugal be next? And Spain is too big for even Germany to bail out. At almost 20% unemployment, Spain has severe problems. Its banks are in bad shape, with large amounts of overvalued real estate on their books (sound familiar?) and a government fiscal deficit of almost 10%. While Spanish authorities say they can work this out, deficits will remain high.
The fear is one of contagion. Some argue that Greece is only 2.7% of European GDP. But Bear Stearns held less than 2% of US banking assets, and look what happened."
Spanish National Intelligence Agency (CNI) is investigating whether the Spanish economy and the euro have fallen victim to a concerted attack by speculators and foreign media (El Pais)
Greek FinMin unveils tax reform, wage policy, outlawing of cash: "From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards" (Reuters)
Yara International ASA, the largest fertilizer maker, agreed to buy Terra Industries Inc. for $4.1 billion to benefit from lower U.S. fuel costs.
The company will pay $41.10 for each Terra share, raising the cash with a $2.5 billion rights offer, Oslo-based Yara said in a statement today. The price is 24 percent more than Terra’s Feb. 12 close of $33.25 in New York. Yara fell as much as 7.1 percent today in Oslo, the most in almost eight months.
Buying Sioux City, Iowa-based Terra will give Yara six North American plants making nitrogen-based fertilizer. The price of natural-gas, used to produce the crop nutrient, has declined 64 percent in the past two years
April gold climbs $10 to $1,100/oz on Globex..
Mike Burk: "Since Monday the secondaries have led the way upward, new highs have picked up a little and new lows have remained low. These are reasons to think last Monday's lows will be the lows for this correction.
I expect the major averages to be higher on Friday February 19 than they were on Friday February 12."
John Mauldin: " Greece basically lied about its finances in order to gain admission to the union. It never complied with the fiscal discipline that was required for entrance.
With the high exchange rate, however, came the consequence of higher labor costs relative to, above all, Germany. While reviewing some economic facts about Greece, I came across the factoid that Greek workers had the second highest level of actual hours worked. But even with that, Greece was running a trade deficit that is currently 12.7% of its GDP.
And with the onset of the current recession, their fiscal deficit went from bad to worse. Their total debt is now €254 billion, and they need to finance another €64 billion this year, €30 billion of it in the next few months.
Bottom line, without some help or a bailout, they simply will not be able to borrow that money. And since a lot of that money is for "rollover" debt, that means a potential for default if they cannot borrow it.
European leaders said today that Greece will not be allowed to fail, hinting of a bailout. But there are a lot of "buts" and conditions.....The dire predicament is the one where Greece cuts its budgets and more or less willingly enters into a rather long and deep recession/depression. The disastrous predicament is where they do not make the cuts and are allowed to default. That means the government is plunged into a situation where it has to cut the entire deficit to what it can get in the form of taxes and fees, immediately. As in right now. And defaulting on the interest on the current bonds wouldn't be enough, although it would help.
Why not just let Greece go under? Part of the argument has to do with moral hazard. If Germany bails out Greece, Ireland, which is actually making such cuts to its budget, can legitimately ask, "Why not us?" And will Portugal be next? And Spain is too big for even Germany to bail out. At almost 20% unemployment, Spain has severe problems. Its banks are in bad shape, with large amounts of overvalued real estate on their books (sound familiar?) and a government fiscal deficit of almost 10%. While Spanish authorities say they can work this out, deficits will remain high.
The fear is one of contagion. Some argue that Greece is only 2.7% of European GDP. But Bear Stearns held less than 2% of US banking assets, and look what happened."
Spanish National Intelligence Agency (CNI) is investigating whether the Spanish economy and the euro have fallen victim to a concerted attack by speculators and foreign media (El Pais)
Greek FinMin unveils tax reform, wage policy, outlawing of cash: "From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards" (Reuters)
Yara International ASA, the largest fertilizer maker, agreed to buy Terra Industries Inc. for $4.1 billion to benefit from lower U.S. fuel costs.
The company will pay $41.10 for each Terra share, raising the cash with a $2.5 billion rights offer, Oslo-based Yara said in a statement today. The price is 24 percent more than Terra’s Feb. 12 close of $33.25 in New York. Yara fell as much as 7.1 percent today in Oslo, the most in almost eight months.
Buying Sioux City, Iowa-based Terra will give Yara six North American plants making nitrogen-based fertilizer. The price of natural-gas, used to produce the crop nutrient, has declined 64 percent in the past two years
April gold climbs $10 to $1,100/oz on Globex..
Saturday, February 13, 2010
China
2/13/10 China
Doug Noland: "China’s bank loans expanded $202bn – in January. This must be the greatest month of loan growth for a national banking system in the history of mankind. On the back of about $1.3 TN of loan expansion, Chinese home prices were up 9.5% y-o-y. January crude imports were up 33% y-o-y, while copper imports were up 25% y-o-y. January power consumption was up 40% from a year earlier (against a weak comparison). With GDP and real estate prices expanding at around double-digit rates, one would typically expect policymakers to be preparing to slam on the brakes. These are atypical times.
The People’s Bank of China raised bank reserve requirements 50bps today, the second such hike in the past month. This heightened market fears that Chinese authorities are determined to implement real monetary tightening. For an economy experiencing unprecedented “hot money” inflows, bank lending, and “animal spirits”, count me skeptical that marginal changes in reserve requirements will be all that effective in reining in systemic excesses.....Serious financial and economic issues at the “Core” (U.S.) have unleashed Credit systems at the “Periphery” (i.e. China, Brazil, India, Asia, and the “emerging markets”). There is no global monetary anchor, and it’s inflationism as far as the eye can see...I have written my view that China has commenced its “terminal phase” of Credit Bubble excess. There is ample evidence supporting this analysis. Chinese policymakers have begun to respond, and jittery global markets are worried. The risks – domestic and global – of a bursting Chinese Bubble are enormous. Yet when (“terminal”) Bubble risks turn quite high, policymakers tend to turn more timid. I expect this to be the case in China – but I could be wrong. And there is certainly the possibility that even gingerly policy “tightening” could set in motion unintended consequences including faltering asset markets and bursting Bubbles."
Dan Dorfman: "In early March of 44 B.C., a soothsayer warned Julius Caesar about the Ides of March. Unfortunately, Caesar ignored the warning, and we all know the rest of the sad tale.
Harry Dent Jr., a former consultant to Fortune 100 companies and presently publisher of HS Dent Forecast, a monthly investment newsletter in Tampa, Fla., sees a similar kind of fate for the stock market, although he has expanded the time frame of his Ides of March scenario to somewhere between early March and late April.
In brief, Dent sees the stock market--currently benefiting from upward momentum and peppier economic activity--headed for a very brief and pleasant run that could lift the Dow to the 10,700-11,500 range from its current level of about 1,093. But then, he sees the market running into a stone wall, which will be followed by a nasty stock market decline that could drive down the Dow later this year to 3,000-5,000, with his best guess about 3,800.
A forecast of a possible 3,000 Dow this year might strike you as crazy. It does me. But Dent is no whack-o."
Verizon Wireless, the largest U.S. wireless carrier, will include Skype Technologies SA’s Internet- calling software on phones to stave off competition from AT&T Inc., according to two people familiar with the matter.
ZeroHedge: "The January Moody's CMBS delinquency rate hit a record at 5.42%, after posting the largest one month increase (50 bps) in history. While the deplorable state of CMBS is not a secret to anyone following RealPoint's monthly delinquency data, getting confirmation from a procyclical firm such as Moody's should be enough to wake up some of the optimists that even thought "everyone is talking about the commercial real estate" collapse, nothing is being done to actually fix the underlying causes. Anyone recall "contained" Dubai and its freshly record CDS spreads?"
Nationwide, the number of homes heated with oil dropped to 7 percent in 2008 from 32 percent in 1960. Consumption of heating oil for residential customers is about half of what it was 20 years ago, according to Energy Information Administration records.
The percentages of homes heated by gas and electricity, meanwhile, have jumped to 51 percent for gas and 34 percent from electricity.
Even in the Northeast, where 80 percent of all heating oil in the U.S. is used, the number of homes relying on oil has been on the decline for a generation as more gas becomes available in the region.
Doug Noland: "China’s bank loans expanded $202bn – in January. This must be the greatest month of loan growth for a national banking system in the history of mankind. On the back of about $1.3 TN of loan expansion, Chinese home prices were up 9.5% y-o-y. January crude imports were up 33% y-o-y, while copper imports were up 25% y-o-y. January power consumption was up 40% from a year earlier (against a weak comparison). With GDP and real estate prices expanding at around double-digit rates, one would typically expect policymakers to be preparing to slam on the brakes. These are atypical times.
The People’s Bank of China raised bank reserve requirements 50bps today, the second such hike in the past month. This heightened market fears that Chinese authorities are determined to implement real monetary tightening. For an economy experiencing unprecedented “hot money” inflows, bank lending, and “animal spirits”, count me skeptical that marginal changes in reserve requirements will be all that effective in reining in systemic excesses.....Serious financial and economic issues at the “Core” (U.S.) have unleashed Credit systems at the “Periphery” (i.e. China, Brazil, India, Asia, and the “emerging markets”). There is no global monetary anchor, and it’s inflationism as far as the eye can see...I have written my view that China has commenced its “terminal phase” of Credit Bubble excess. There is ample evidence supporting this analysis. Chinese policymakers have begun to respond, and jittery global markets are worried. The risks – domestic and global – of a bursting Chinese Bubble are enormous. Yet when (“terminal”) Bubble risks turn quite high, policymakers tend to turn more timid. I expect this to be the case in China – but I could be wrong. And there is certainly the possibility that even gingerly policy “tightening” could set in motion unintended consequences including faltering asset markets and bursting Bubbles."
Dan Dorfman: "In early March of 44 B.C., a soothsayer warned Julius Caesar about the Ides of March. Unfortunately, Caesar ignored the warning, and we all know the rest of the sad tale.
Harry Dent Jr., a former consultant to Fortune 100 companies and presently publisher of HS Dent Forecast, a monthly investment newsletter in Tampa, Fla., sees a similar kind of fate for the stock market, although he has expanded the time frame of his Ides of March scenario to somewhere between early March and late April.
In brief, Dent sees the stock market--currently benefiting from upward momentum and peppier economic activity--headed for a very brief and pleasant run that could lift the Dow to the 10,700-11,500 range from its current level of about 1,093. But then, he sees the market running into a stone wall, which will be followed by a nasty stock market decline that could drive down the Dow later this year to 3,000-5,000, with his best guess about 3,800.
A forecast of a possible 3,000 Dow this year might strike you as crazy. It does me. But Dent is no whack-o."
Verizon Wireless, the largest U.S. wireless carrier, will include Skype Technologies SA’s Internet- calling software on phones to stave off competition from AT&T Inc., according to two people familiar with the matter.
ZeroHedge: "The January Moody's CMBS delinquency rate hit a record at 5.42%, after posting the largest one month increase (50 bps) in history. While the deplorable state of CMBS is not a secret to anyone following RealPoint's monthly delinquency data, getting confirmation from a procyclical firm such as Moody's should be enough to wake up some of the optimists that even thought "everyone is talking about the commercial real estate" collapse, nothing is being done to actually fix the underlying causes. Anyone recall "contained" Dubai and its freshly record CDS spreads?"
Nationwide, the number of homes heated with oil dropped to 7 percent in 2008 from 32 percent in 1960. Consumption of heating oil for residential customers is about half of what it was 20 years ago, according to Energy Information Administration records.
The percentages of homes heated by gas and electricity, meanwhile, have jumped to 51 percent for gas and 34 percent from electricity.
Even in the Northeast, where 80 percent of all heating oil in the U.S. is used, the number of homes relying on oil has been on the decline for a generation as more gas becomes available in the region.
Friday, February 12, 2010
China
2/12/10 China
The dollar remained higher on Friday, extending gains against the Japanese yen, after a report showed U.S. retail sales rose 0.5% in January, more than economists expected and reversing a revised 0.1% decline in December. Excluding autos, sales rose 0.6%. The report is not adjusted for price changes!
The European economy grew 0.1% in the fourth quarter, according to government data released today.
The People's Bank of China said on Friday that it will raise the reserve requirement ratio for banks, according to the Wall Street Journal.
The reserve ratio will now increase by half a percentage point from Feb. 25, following a similar increase earlier this year.
After the increase is implemented, major banks will have to keep 16.5% of their deposits on reserve, according to the Journal. The move is seen as an attempt to control lending and prevent a housing bubble in China.
Puru Saxena: " America is funding a large portion of its newly issued debt by direct purchases from the Federal Reserve. In other words, as private-sector demand for US Treasuries wanes, Mr. Bernanke is creating new money so that Mr. Obama's government can bail out insolvent financial institutions. Strangely, the American establishment is quite content to pledge the economic fate of its future generations in order to protect the bondholders of dubious 'too big to fail' corporations. Hmm, talk about change."
NY Times: "With 14.8 million Americans unemployed, the proposal put forth in the Senate to respond to joblessness is so puny as to be meaningless."
Video game sales plunge 13% in January.
Activision lays off about 200 employees, shuts down Santa Monica Luxoflux studio.
Debt problems in foreign countries are now also a problem for US investors, Pimco's Mohamed El-Erian told CNBC.
CME is raising margin requirements for gold, silver and palladium.
The Energy Department on Thursday is expected to report a draw of 177 billion to 181 billion cubic feet of natural gas storage inventories for the week ended Feb. 5, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Working gas in storage was 2,215 Bcf as of Friday, February 5, 2010, according to EIA estimates. This represents a net decline of 191 Bcf from the previous week. Stocks were 172 Bcf higher than last year at this time and 114 Bcf above the 5-year average of 2,101 Bcf. In the East Region, stocks were 1 Bcf above the 5-year average following net withdrawals of 116 Bcf. Stocks in the Producing Region were 54 Bcf above the 5-year average of 682 Bcf after a net withdrawal of 60 Bcf. Stocks in the West Region were 60 Bcf above the 5-year average after a net drawdown of 15 Bcf. At 2,215 Bcf, total working gas is within the 5-year historical range.
American consumers were more pessimitic about the path of the economy in February, according to media reports of a survey released Friday by the University of Michigan and Reuters. The UMich index fell to 73.7 in February from 74.4 in January. Consumers were more upbeat about currrent economic conditions, with the current index rising from 81.1 in January to 84.1, the highest since March 2008. However, attitudes about the near-term deteriorated, with the expectations index falling to 66.9 in February from 70.1 in January. Expectations had risen three months in a row. Economists surveyed by MarketWatch were expecting the UMich index to rise to about 76.0.
Inventories at U.S. businesses fell 0.2% in December, below expectations and slower than the 0.9% increase in sales, the Commerce Department said Friday. Economists had been expecting the nation's inventories to be flat in December, according to a survey conducted by MarketWatch. The inventory-to-sales ratio, an indication of demand, fell to 1.26 in December from 1.27 in the prior month. This is the lowest level since November 2007.
An independent director committee of Alcon said Friday that the company's strong earnings reinforce its belief that Novartis' proposal is "grossly" inadequate. Alcon late Thursday reported that its fourth-quarter profit rose to $1.51 a share from $1.41 a share in the same quarter last year. Revenue increased to $1.72 billion from $1.5 billion. "We hope these results inspire Novartis to reconsider their proposal and their attempt to force their offer on Alcon's minority shareholders, many of whom are Alcon employees," Thomas Plaskett, chairman of the committee, said in a statement. Novartis had recently exercised an option to buy 52% stake in Alcon for $28.1 billion, or $180 a share, from Nestle (NSRGY) and is trying to buy the remaining shares of Alcon that it doesn't already own.
The federal government's debt limit will rise to $14.3 trillion from $12.4 trillion under a law enacted Friday by President Barack Obama. The law also puts in place "pay-as-you-go" rules requiring that increases in spending be offset with cuts in federal outlays. The House sent the bill to Obama earlier this month, following Senate approval in late January.
The Dow Jones Industrial Average fell 45.05 points, or 0.4%, to 10,099.14, leaving the blue chips up 0.9% from the week-ago close. The S&P 500 Index declined 2.96 points, or 0.3%, to 1,075.51, leaving it up 0.9% for the week. The Nasdaq Composite Index added 6.12 points, or 0.3%, to 2,183.53, giving it a 2% weekly gain.
The dollar remained higher on Friday, extending gains against the Japanese yen, after a report showed U.S. retail sales rose 0.5% in January, more than economists expected and reversing a revised 0.1% decline in December. Excluding autos, sales rose 0.6%. The report is not adjusted for price changes!
The European economy grew 0.1% in the fourth quarter, according to government data released today.
The People's Bank of China said on Friday that it will raise the reserve requirement ratio for banks, according to the Wall Street Journal.
The reserve ratio will now increase by half a percentage point from Feb. 25, following a similar increase earlier this year.
After the increase is implemented, major banks will have to keep 16.5% of their deposits on reserve, according to the Journal. The move is seen as an attempt to control lending and prevent a housing bubble in China.
Puru Saxena: " America is funding a large portion of its newly issued debt by direct purchases from the Federal Reserve. In other words, as private-sector demand for US Treasuries wanes, Mr. Bernanke is creating new money so that Mr. Obama's government can bail out insolvent financial institutions. Strangely, the American establishment is quite content to pledge the economic fate of its future generations in order to protect the bondholders of dubious 'too big to fail' corporations. Hmm, talk about change."
NY Times: "With 14.8 million Americans unemployed, the proposal put forth in the Senate to respond to joblessness is so puny as to be meaningless."
Video game sales plunge 13% in January.
Activision lays off about 200 employees, shuts down Santa Monica Luxoflux studio.
Debt problems in foreign countries are now also a problem for US investors, Pimco's Mohamed El-Erian told CNBC.
CME is raising margin requirements for gold, silver and palladium.
The Energy Department on Thursday is expected to report a draw of 177 billion to 181 billion cubic feet of natural gas storage inventories for the week ended Feb. 5, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Working gas in storage was 2,215 Bcf as of Friday, February 5, 2010, according to EIA estimates. This represents a net decline of 191 Bcf from the previous week. Stocks were 172 Bcf higher than last year at this time and 114 Bcf above the 5-year average of 2,101 Bcf. In the East Region, stocks were 1 Bcf above the 5-year average following net withdrawals of 116 Bcf. Stocks in the Producing Region were 54 Bcf above the 5-year average of 682 Bcf after a net withdrawal of 60 Bcf. Stocks in the West Region were 60 Bcf above the 5-year average after a net drawdown of 15 Bcf. At 2,215 Bcf, total working gas is within the 5-year historical range.
American consumers were more pessimitic about the path of the economy in February, according to media reports of a survey released Friday by the University of Michigan and Reuters. The UMich index fell to 73.7 in February from 74.4 in January. Consumers were more upbeat about currrent economic conditions, with the current index rising from 81.1 in January to 84.1, the highest since March 2008. However, attitudes about the near-term deteriorated, with the expectations index falling to 66.9 in February from 70.1 in January. Expectations had risen three months in a row. Economists surveyed by MarketWatch were expecting the UMich index to rise to about 76.0.
Inventories at U.S. businesses fell 0.2% in December, below expectations and slower than the 0.9% increase in sales, the Commerce Department said Friday. Economists had been expecting the nation's inventories to be flat in December, according to a survey conducted by MarketWatch. The inventory-to-sales ratio, an indication of demand, fell to 1.26 in December from 1.27 in the prior month. This is the lowest level since November 2007.
An independent director committee of Alcon said Friday that the company's strong earnings reinforce its belief that Novartis' proposal is "grossly" inadequate. Alcon late Thursday reported that its fourth-quarter profit rose to $1.51 a share from $1.41 a share in the same quarter last year. Revenue increased to $1.72 billion from $1.5 billion. "We hope these results inspire Novartis to reconsider their proposal and their attempt to force their offer on Alcon's minority shareholders, many of whom are Alcon employees," Thomas Plaskett, chairman of the committee, said in a statement. Novartis had recently exercised an option to buy 52% stake in Alcon for $28.1 billion, or $180 a share, from Nestle (NSRGY) and is trying to buy the remaining shares of Alcon that it doesn't already own.
The federal government's debt limit will rise to $14.3 trillion from $12.4 trillion under a law enacted Friday by President Barack Obama. The law also puts in place "pay-as-you-go" rules requiring that increases in spending be offset with cuts in federal outlays. The House sent the bill to Obama earlier this month, following Senate approval in late January.
The Dow Jones Industrial Average fell 45.05 points, or 0.4%, to 10,099.14, leaving the blue chips up 0.9% from the week-ago close. The S&P 500 Index declined 2.96 points, or 0.3%, to 1,075.51, leaving it up 0.9% for the week. The Nasdaq Composite Index added 6.12 points, or 0.3%, to 2,183.53, giving it a 2% weekly gain.
Thursday, February 11, 2010
Foreclosures
2/11/10 Foreclosures
First-time claims for state unemployment benefits fell by the largest amount since July. The number of initial claims in the week ending Feb. 6 fell 43,000 to 440,000. This was a sharper drop than expected. The consensus forecast of Wall Street economists was for claims to drop to 460,000. Claims are now at their lowest level since Jan. 2. Claims had spiked in January, reversing a downward trend. Labor Department officials had pinned the increase on administrative backlogs in several states. With today's report, the official said the backlogs had been "washed out."
The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 30, unchanged from the prior week's unrevised rate of 3.5 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 30 was 4,538,000, a decrease of 79,000 from the preceding week's revised level of 4,617,000. The 4-week moving average was 4,603,500, a decrease of 17,750 from the preceding week's revised average of 4,621,250.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.322 million.
There seems to be no end to the foreclosures in the nation. With the modification program failing to rescue home owners, a total of 315,716 U.S. homes received a filing in January this year, thus exceeding 300,000 for the 11th month in a row.
Though the foreclosures are up 15 percent compared to the same period a year earlier, they are down 10 percent compared to the foreclosures reported in December.
As per the report released by California-based RealtyTrac, one in every 409 households received a foreclosure filing last month.
Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will come to the end of their terms. Almost half of those are now under water, the result of a drop of more than 40% in commercial property values since 2007.
Euro-zone countries will provide "determined and coordinated action if needed" to preserve stability, European Council President Van Rompuy said, but he gave few details of how that would be provided and no indication that direct aid to Greece was imminent.
China's central bank says risks to price stability have risen, and warns it will strictly control loans to new investment projects. PBOC's Q4 monetary policy report, released this morning, gave the clearest sign yet it is beginning to scale back some of its extraordinary stimulus policies.
Economic Disconnect: "Does the United States Have a Debt Chandrasekhar Limit?
The Chandrasekhar Limit is defined as:
"For main-sequence stars with a mass below approximately 8 solar masses, the mass of this core will remain below the Chandrasekhar limit, and they will eventually lose mass (as planetary nebulae) until only the core, which becomes a white dwarf, remains. Stars with higher mass will develop a degenerate core whose mass will grow until it exceeds the limit. At this point the star will explode in a core-collapse supernova, leaving behind either a neutron star or a black hole."
Arthur Laffer, former head of the Office of Management and Budget, has decided that President Obama’s 2011 budget “is the perfect plan for catastrophe.”
The US Northeast began to dig out after two blizzards in a week brought the region to a standstill with record snowfalls, creating a multimillion-dollar mess for cash-strapped cities and states.
Another storm is predicted for Monday in Washington, which will likely cause additional groans from budget officials—and those weary of winter.
Millions of “pre-retirees” aged between 55 and 64 are being unrealistic about the size of their private pensions and living in a state of denial about their finances, experts say.
In a CNBC interview on Feb. 10, Marc Faber went out on a limb saying ALL governments will eventually default, including the United States. From all indications, this is a fairly plausible scenario.
Each month the NFIB tallies small-business optimism, or pessimism, which has been the dominant emotion of late. At 89.3 in January, the index is up 8.3 points from its March low, yet it’s languished under 90 for a record seven quarters. The only other time the index plumbed those depths, and for one quarter only, was during the 1980-1982 back-to-back recessions. The news from the nation’s growth engine is getting less bad, but it’s still far from good.
Ohio-based power company FirstEnergy Corp plans to buy Pennsylvania's Allegheny Energy Inc in an all-stock deal worth $4.7 billion that would create one of the nation's largest utilities.
The combined company would have a generation capacity of 24,000 megawatts and serve more than 6.1 million customers, the companies said on Thursday.
The International Energy Agency on Thursday revised up by 170,000 barrels a day its forecast for global oil demand for 2010, saying that more robust economic growth projections are partly offset by a higher price assumption and persistently weak OECD oil demand. Global oil demand is estimated at 86.5 million barrels a day in 2010, or 1.8% higher than 2009 levels, the IEA said in its monthly report. This growth in demand will come entirely from emerging, non-OECD economies.
The Dow Jones Industrial Average rose 105.81 points, or 1.1%, to 10,144.19. The S&P 500 Index added 10.34 points, or 1%, to 1,078.47. The Nasdaq Composite Index climbed 29.54 points, or 1.4%, to 2,177.41.
There is a EU meeting of finance ministers next Tuesday and Wednesday. There, they will likely come out with more formal language and elaborate on what type of aid will be forthcoming for Greece.
New Jersey Governor Chris Christie on Thursday declared a "fiscal emergency," allowing him to reserve or freeze state spending as part of his plan to tackle one of the largest 2011 deficits among U.S. states.
The Treasury Department sold $16 billion in 30-year bonds on Thursday at a yield of 4.720%, a little higher than traders expected. Bidders offered to buy 2.36 times the amount of debt being sold, compared to an average of 2.24 times at the last four sales. Indirect bidders, a group of investors that includes foreign central banks, bought 28.5%, compared to an average of 39.8% of the last four sales. Direct bidders, which include domestic money managers, purchased another a record 24.1%, versus 10.4% on average. Treasuries remained lower, under pressure before the auction amid easing anxiety about the European Union's willingness to aid Greece if necessary. Yields on 10-year notes rose 5 basis points to 3.75%.
First-time claims for state unemployment benefits fell by the largest amount since July. The number of initial claims in the week ending Feb. 6 fell 43,000 to 440,000. This was a sharper drop than expected. The consensus forecast of Wall Street economists was for claims to drop to 460,000. Claims are now at their lowest level since Jan. 2. Claims had spiked in January, reversing a downward trend. Labor Department officials had pinned the increase on administrative backlogs in several states. With today's report, the official said the backlogs had been "washed out."
The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 30, unchanged from the prior week's unrevised rate of 3.5 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 30 was 4,538,000, a decrease of 79,000 from the preceding week's revised level of 4,617,000. The 4-week moving average was 4,603,500, a decrease of 17,750 from the preceding week's revised average of 4,621,250.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.322 million.
There seems to be no end to the foreclosures in the nation. With the modification program failing to rescue home owners, a total of 315,716 U.S. homes received a filing in January this year, thus exceeding 300,000 for the 11th month in a row.
Though the foreclosures are up 15 percent compared to the same period a year earlier, they are down 10 percent compared to the foreclosures reported in December.
As per the report released by California-based RealtyTrac, one in every 409 households received a foreclosure filing last month.
Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will come to the end of their terms. Almost half of those are now under water, the result of a drop of more than 40% in commercial property values since 2007.
Euro-zone countries will provide "determined and coordinated action if needed" to preserve stability, European Council President Van Rompuy said, but he gave few details of how that would be provided and no indication that direct aid to Greece was imminent.
China's central bank says risks to price stability have risen, and warns it will strictly control loans to new investment projects. PBOC's Q4 monetary policy report, released this morning, gave the clearest sign yet it is beginning to scale back some of its extraordinary stimulus policies.
Economic Disconnect: "Does the United States Have a Debt Chandrasekhar Limit?
The Chandrasekhar Limit is defined as:
"For main-sequence stars with a mass below approximately 8 solar masses, the mass of this core will remain below the Chandrasekhar limit, and they will eventually lose mass (as planetary nebulae) until only the core, which becomes a white dwarf, remains. Stars with higher mass will develop a degenerate core whose mass will grow until it exceeds the limit. At this point the star will explode in a core-collapse supernova, leaving behind either a neutron star or a black hole."
Arthur Laffer, former head of the Office of Management and Budget, has decided that President Obama’s 2011 budget “is the perfect plan for catastrophe.”
The US Northeast began to dig out after two blizzards in a week brought the region to a standstill with record snowfalls, creating a multimillion-dollar mess for cash-strapped cities and states.
Another storm is predicted for Monday in Washington, which will likely cause additional groans from budget officials—and those weary of winter.
Millions of “pre-retirees” aged between 55 and 64 are being unrealistic about the size of their private pensions and living in a state of denial about their finances, experts say.
In a CNBC interview on Feb. 10, Marc Faber went out on a limb saying ALL governments will eventually default, including the United States. From all indications, this is a fairly plausible scenario.
Each month the NFIB tallies small-business optimism, or pessimism, which has been the dominant emotion of late. At 89.3 in January, the index is up 8.3 points from its March low, yet it’s languished under 90 for a record seven quarters. The only other time the index plumbed those depths, and for one quarter only, was during the 1980-1982 back-to-back recessions. The news from the nation’s growth engine is getting less bad, but it’s still far from good.
Ohio-based power company FirstEnergy Corp plans to buy Pennsylvania's Allegheny Energy Inc in an all-stock deal worth $4.7 billion that would create one of the nation's largest utilities.
The combined company would have a generation capacity of 24,000 megawatts and serve more than 6.1 million customers, the companies said on Thursday.
The International Energy Agency on Thursday revised up by 170,000 barrels a day its forecast for global oil demand for 2010, saying that more robust economic growth projections are partly offset by a higher price assumption and persistently weak OECD oil demand. Global oil demand is estimated at 86.5 million barrels a day in 2010, or 1.8% higher than 2009 levels, the IEA said in its monthly report. This growth in demand will come entirely from emerging, non-OECD economies.
The Dow Jones Industrial Average rose 105.81 points, or 1.1%, to 10,144.19. The S&P 500 Index added 10.34 points, or 1%, to 1,078.47. The Nasdaq Composite Index climbed 29.54 points, or 1.4%, to 2,177.41.
There is a EU meeting of finance ministers next Tuesday and Wednesday. There, they will likely come out with more formal language and elaborate on what type of aid will be forthcoming for Greece.
New Jersey Governor Chris Christie on Thursday declared a "fiscal emergency," allowing him to reserve or freeze state spending as part of his plan to tackle one of the largest 2011 deficits among U.S. states.
The Treasury Department sold $16 billion in 30-year bonds on Thursday at a yield of 4.720%, a little higher than traders expected. Bidders offered to buy 2.36 times the amount of debt being sold, compared to an average of 2.24 times at the last four sales. Indirect bidders, a group of investors that includes foreign central banks, bought 28.5%, compared to an average of 39.8% of the last four sales. Direct bidders, which include domestic money managers, purchased another a record 24.1%, versus 10.4% on average. Treasuries remained lower, under pressure before the auction amid easing anxiety about the European Union's willingness to aid Greece if necessary. Yields on 10-year notes rose 5 basis points to 3.75%.
Wednesday, February 10, 2010
Hyperinflationary Great Depression
2/10/10 Hyperinflationary Great Depression
The U.S. trade deficit widened to $40.2 billion in December, the Commerce Department reported Wednesday. Economists surveyed by MarketWatch were looking for the gap to widen to $37.7 billion. Imports increased $8.4 billion to $189.2 billion, led by higher imports of petroleum, autos, and capital goods. Exports rose $4.6 billion to $142.7 billion, led by higher exports of capital goods and industrial materials. For all of 2009, the deficit shrank to $380.7 billion, $315.3 billion less than the 2008 deficit of $695.9 bilion.
Flight cancellations and delays occurred across the East Coast Wednesday as a second blizzard in a week dropped snow from Washington, D.C., to Long Island, N.Y. Around New York City -- which is expected to get 12 to 18 inches of snow -- many carriers have already canceled flights in anticipation of difficult traveling conditions, The Port Authority of New York and new Jersey said. Flightstats.com, which tracks airline departures, reported significant delays at the airports for Atlanta, Raleigh, Philadelphia, and Boston.
Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.
OPEC expects the world will need more of its crude oil this year than previously forecast, as the organization lowered its outlook for production of natural gas liquids.
China's exports rose 21% in 2009.
Germany along with EU plans to offer Greece, other members loan guarantees.
U.S. weekly oil inventory and demand data and the natural gas storage report for the week ended Feb. 5 will be released on Friday due to the storm-related shutdown of government offices in Washington D.C. this week, the Energy Information Administration said Tuesday.
The Weekly Petroleum Status Report, regularly published at 10:30 a.m. ET Wednesday, will be released at 11 a.m. ET Friday. Earlier, the American Petroleum Institute, a trade group, said it would release its weekly oil inventory data for the same period as scheduled, at 4:30 p.m. ET Tuesday.
The Weekly Natural Gas Storage Report, regularly released at 10:30 a.m. ET Thursday, will be released at 10:30 a.m. ET Friday.
EIA's Short-Term Energy Outlook for February, which had been scheduled for release earlier Tuesday, is scheduled for release around noon on Wednesday.
John Williams: "The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression.
“Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment.
“The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar.”
Apple may pay as little as $219.35 for the tablet's parts, says iSuppli. That leaves room to cut the price of a device that analysts say may be too expensive.
The Federal Reserve may raise the discount rate “before long” as part of the “normalization” of Fed lending, a move that won’t signal any change in the outlook for monetary policy, Chairman Ben S. Bernanke said.
Bernanke repeated the Federal Open Market Committee statement that low rates are warranted “for an extended period” in testimony prepared for the House Financial Services Committee. The Fed may also temporarily replace the federal funds rate as a policy guide with interest it pays on banks’ deposits should fed funds become a “less reliable indicator than usual,” Bernanke said.
One of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter, a trend that poses a serious threat to the U.S. housing market's recovery, real estate website Zillow.com said on Wednesday.
Container lines will have ninefold the amount of shipping capacity operating at "extra-slow" speeds in March compared with June 2009, as they seek to cut fuel costs and absorb idle capacity, according to AXSMarine. So-called extra-slow shipping capacity was 46,000 twenty-foot containers in June 2009 and will be 406,000 next month. China Cosco Holding Co. and Nippon Yusen K.K. are among the companies that have lowered container-ship speeds to improve engine efficiency. A 10% pace reduction can pare fuel consumption by as much as 30%, according to Det Norske Veritas, which assesses seaworthiness of vessels. Slower ships may not be enough to restore "meaningful" profits this year because new vessels are being delivered, said Jay Ryu, an analyst at Mirae Asset Securities Co. in Hong Kong. About 10% of the current container fleet is now idle and another 742 ships are on order, equal to about 35% of existing fleet capacity, according to AXSMarine.
According to a report by Barclays Capital, 73 large U.S. banks have exposure of $82 billion to Ireland, $68 billion to Spain, $18 billion to Greece and $8 billion to Portugal.
Up and down throughout the session, the Dow Jones Industrial Average fell 20.26 points to 10,038.38. The S&P 500 Index declined 2.39 points to 1,068.13, while the Nasdaq Composite Index lost 3 points to 2,147.87.
The U.S. trade deficit widened to $40.2 billion in December, the Commerce Department reported Wednesday. Economists surveyed by MarketWatch were looking for the gap to widen to $37.7 billion. Imports increased $8.4 billion to $189.2 billion, led by higher imports of petroleum, autos, and capital goods. Exports rose $4.6 billion to $142.7 billion, led by higher exports of capital goods and industrial materials. For all of 2009, the deficit shrank to $380.7 billion, $315.3 billion less than the 2008 deficit of $695.9 bilion.
Flight cancellations and delays occurred across the East Coast Wednesday as a second blizzard in a week dropped snow from Washington, D.C., to Long Island, N.Y. Around New York City -- which is expected to get 12 to 18 inches of snow -- many carriers have already canceled flights in anticipation of difficult traveling conditions, The Port Authority of New York and new Jersey said. Flightstats.com, which tracks airline departures, reported significant delays at the airports for Atlanta, Raleigh, Philadelphia, and Boston.
Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.
OPEC expects the world will need more of its crude oil this year than previously forecast, as the organization lowered its outlook for production of natural gas liquids.
China's exports rose 21% in 2009.
Germany along with EU plans to offer Greece, other members loan guarantees.
U.S. weekly oil inventory and demand data and the natural gas storage report for the week ended Feb. 5 will be released on Friday due to the storm-related shutdown of government offices in Washington D.C. this week, the Energy Information Administration said Tuesday.
The Weekly Petroleum Status Report, regularly published at 10:30 a.m. ET Wednesday, will be released at 11 a.m. ET Friday. Earlier, the American Petroleum Institute, a trade group, said it would release its weekly oil inventory data for the same period as scheduled, at 4:30 p.m. ET Tuesday.
The Weekly Natural Gas Storage Report, regularly released at 10:30 a.m. ET Thursday, will be released at 10:30 a.m. ET Friday.
EIA's Short-Term Energy Outlook for February, which had been scheduled for release earlier Tuesday, is scheduled for release around noon on Wednesday.
John Williams: "The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression.
“Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment.
“The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar.”
Apple may pay as little as $219.35 for the tablet's parts, says iSuppli. That leaves room to cut the price of a device that analysts say may be too expensive.
The Federal Reserve may raise the discount rate “before long” as part of the “normalization” of Fed lending, a move that won’t signal any change in the outlook for monetary policy, Chairman Ben S. Bernanke said.
Bernanke repeated the Federal Open Market Committee statement that low rates are warranted “for an extended period” in testimony prepared for the House Financial Services Committee. The Fed may also temporarily replace the federal funds rate as a policy guide with interest it pays on banks’ deposits should fed funds become a “less reliable indicator than usual,” Bernanke said.
One of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter, a trend that poses a serious threat to the U.S. housing market's recovery, real estate website Zillow.com said on Wednesday.
Container lines will have ninefold the amount of shipping capacity operating at "extra-slow" speeds in March compared with June 2009, as they seek to cut fuel costs and absorb idle capacity, according to AXSMarine. So-called extra-slow shipping capacity was 46,000 twenty-foot containers in June 2009 and will be 406,000 next month. China Cosco Holding Co. and Nippon Yusen K.K. are among the companies that have lowered container-ship speeds to improve engine efficiency. A 10% pace reduction can pare fuel consumption by as much as 30%, according to Det Norske Veritas, which assesses seaworthiness of vessels. Slower ships may not be enough to restore "meaningful" profits this year because new vessels are being delivered, said Jay Ryu, an analyst at Mirae Asset Securities Co. in Hong Kong. About 10% of the current container fleet is now idle and another 742 ships are on order, equal to about 35% of existing fleet capacity, according to AXSMarine.
According to a report by Barclays Capital, 73 large U.S. banks have exposure of $82 billion to Ireland, $68 billion to Spain, $18 billion to Greece and $8 billion to Portugal.
Up and down throughout the session, the Dow Jones Industrial Average fell 20.26 points to 10,038.38. The S&P 500 Index declined 2.39 points to 1,068.13, while the Nasdaq Composite Index lost 3 points to 2,147.87.
Tuesday, February 09, 2010
Greece
2/9/10 Greece
Same-store U.K. retail sales fell 0.7% in January from the same month last year, while total annual sales growth of 1.2% was the weakest January performance in 15 years, the British Retail Consortium reported Tuesday.
According to Retrevo, which tracks consumer electronics trends, a new study it conducted “indicates a failure to convince any new buyers to consider the iPad. Not only did Apple fail to convince new buyers, it may have lost many potential buyers who now say they don’t think they need an Apple tablet computer.”
ECB's Trichet sparks rumors of an imminent Greece bailout by abruptly leaving a summit in Sydney today, a day earlier than planned. An ECB spokesman says the travel change was purely due to logistics "because there was some concern that he would not catch a connecting flight and therefore miss the EU summit" this Thursday.
Iran says it has begun enriching uranium to a higher level, defying international efforts to curb its nuclear activity. Iranian state media reports the process started at Iran's Natanz facility Tuesday in the presence of International Atomic Energy Agency.
China widened its lead over the U.S. as the world's biggest auto market in January, with passenger car sales more than doubling to 1.32 million vehicles, an industry group reported today.
Iran anniversary 'punch' will stun West: Khamenei "The Iranian nation, with its unity and God's grace, will punch the arrogance (Western powers) on the 22nd of Bahman (February 11) in a way that will leave them stunned," Khamenei, who is also Iran's commander-in-chief, told a gathering of air force personnel.
The euro may fall toward a 15-month low against the dollar after forming a so-called dead cross, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo.
The European currency’s 50-day moving average, currently at $1.4324, dropped below its 200-day moving average of $1.4351 today, creating a dead-cross pattern. The euro slid 11.9 percent in less than two months after the last such cross occurred, dropping from $1.3998 on Sept. 10, 2008, to $1.2330 on Oct. 28, 2008.
“The dead cross is significant for the euro as it’s a rare development, signaling a long-term bearish trend,” said Soma in a Bloomberg News interview. “The target would likely be the October 2008 low.”
Last summer, our guest Gary Shilling of A. Gary Shilling & Co. predicted that stocks would fall 30%. That hasn't happened yet, but the extraordinary bull run that made idiots out of many of Wall Street's greatest gurus last year has now finally reversed, and Gary is sticking by his bearish guns.
At Dow 10,000, Gary says, stocks are still priced to reflect a strong economic recovery throughout 2010 and 2011. And that's not going to happen. Consumers still account for more than 70% of the spending in the U.S. economy, and consumers are retrenching. The value of their assets has plummeted, so they're finally saving again. They're unemployed. They're tapped out. Put all that together, and consumer spending will continue to be weak, and the overall economy will only grow 2% a year.
When the market finally realizes that its dream of a v-shaped recovery is too optimistic, stocks will go lower--perhaps much lower. In fact, Gary thinks there's a 40%-50% chance they'll crash right through the bear-market lows set last spring.
So what's an investor to do?
Buy Treasury bonds, Gary says. Contrary to the concerns of they hyper-inflation crowd, the world is awash in excess capacity. We have too much production capacity, too many houses, too much labor. Overcapacity leads to deflation, not inflation. So today's 4.5% long-term Treasury yield will go to 3%, making bondholders 25% in the process.
The total number of open jobs in the United States ticked higher in December to a seasonally adjusted 2.50 million, the Labor Department reported Tuesday. Net employment fell by 165,000 in December from November, with hiring falling 1.3% to 4.07 million and separations from jobs declining 0.8% to 4.24 million. The number of workers who quit their jobs voluntarily dropped 0.8% to 1.76 million in December, while layoffs increased 3.4% to 2.08 million. Compared with a year earlier, job openings fell 22.5%, separations declined 14.5%, and hiring fell 9.6%. With unemployment at 15.3 million in December there were 6.1 job openings for every person looking for a job.
U.S. wholesale inventories unexpectedly fell 0.8 percent in December, while sales rose 0.8 percent, pushing the inventory-to-sales ratio down to it lowest level in a 1-1/2 years. The inventories-to-sales ratio, which measures how long it would take to sell stocks at the current sales pace, plummeted to 1.12 months' worth, the leanest since June 2008, the Commerce Department said on Tuesday.
According to Schroders research, the UK policymakers need to be careful in how much attention they pay to bond investor concerns elsewhere. The UK needs to raise around £220 billion ($343 billion) this year and over £550 billion over the next three years, adding that “the task of the Debt Management Office is daunting.”According to Schroders research, the UK policymakers need to be careful in how much attention they pay to bond investor concerns elsewhere. The UK needs to raise around £220 billion ($343 billion) this year and over £550 billion over the next three years, adding that “the task of the Debt Management Office is daunting.”
Crude oil inventories rose 7.195 million barrels in the week ended Feb. 5, the American Petroleum Institute reported late Tuesday. Analysts polled by Platts estimated a 2-million-barrel increase. Gasoline stocks rose 1.552 million barrels, slightly topping a 1-million-barrel gain anticipated by analysts. Distillate stocks fell 1.53 million barrels versus forecasts of a drop of 1.75 million barrels. The refinery utilization rate was 77%, down slightly from 78% in the prior week. Crude oil for March delivery slipped to $73.73 a barrel in electronic trade from its floor settlement of $73.75 a barrel. Oil had ended the floor session 2.5% higher on expectations for a German bailout of Greece.
Up the most since Jan. 4, the Dow Jones Industrial Average rose 150.25 points, or 1.5%, to 10,058.64. The S&P 500 Index climbed 13.78 points, or 1.3%, to 1,070.52. The Nasdaq Composite Index gained 24.82 points, or 1.2%, to 2,150.87.
Same-store U.K. retail sales fell 0.7% in January from the same month last year, while total annual sales growth of 1.2% was the weakest January performance in 15 years, the British Retail Consortium reported Tuesday.
According to Retrevo, which tracks consumer electronics trends, a new study it conducted “indicates a failure to convince any new buyers to consider the iPad. Not only did Apple fail to convince new buyers, it may have lost many potential buyers who now say they don’t think they need an Apple tablet computer.”
ECB's Trichet sparks rumors of an imminent Greece bailout by abruptly leaving a summit in Sydney today, a day earlier than planned. An ECB spokesman says the travel change was purely due to logistics "because there was some concern that he would not catch a connecting flight and therefore miss the EU summit" this Thursday.
Iran says it has begun enriching uranium to a higher level, defying international efforts to curb its nuclear activity. Iranian state media reports the process started at Iran's Natanz facility Tuesday in the presence of International Atomic Energy Agency.
China widened its lead over the U.S. as the world's biggest auto market in January, with passenger car sales more than doubling to 1.32 million vehicles, an industry group reported today.
Iran anniversary 'punch' will stun West: Khamenei "The Iranian nation, with its unity and God's grace, will punch the arrogance (Western powers) on the 22nd of Bahman (February 11) in a way that will leave them stunned," Khamenei, who is also Iran's commander-in-chief, told a gathering of air force personnel.
The euro may fall toward a 15-month low against the dollar after forming a so-called dead cross, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo.
The European currency’s 50-day moving average, currently at $1.4324, dropped below its 200-day moving average of $1.4351 today, creating a dead-cross pattern. The euro slid 11.9 percent in less than two months after the last such cross occurred, dropping from $1.3998 on Sept. 10, 2008, to $1.2330 on Oct. 28, 2008.
“The dead cross is significant for the euro as it’s a rare development, signaling a long-term bearish trend,” said Soma in a Bloomberg News interview. “The target would likely be the October 2008 low.”
Last summer, our guest Gary Shilling of A. Gary Shilling & Co. predicted that stocks would fall 30%. That hasn't happened yet, but the extraordinary bull run that made idiots out of many of Wall Street's greatest gurus last year has now finally reversed, and Gary is sticking by his bearish guns.
At Dow 10,000, Gary says, stocks are still priced to reflect a strong economic recovery throughout 2010 and 2011. And that's not going to happen. Consumers still account for more than 70% of the spending in the U.S. economy, and consumers are retrenching. The value of their assets has plummeted, so they're finally saving again. They're unemployed. They're tapped out. Put all that together, and consumer spending will continue to be weak, and the overall economy will only grow 2% a year.
When the market finally realizes that its dream of a v-shaped recovery is too optimistic, stocks will go lower--perhaps much lower. In fact, Gary thinks there's a 40%-50% chance they'll crash right through the bear-market lows set last spring.
So what's an investor to do?
Buy Treasury bonds, Gary says. Contrary to the concerns of they hyper-inflation crowd, the world is awash in excess capacity. We have too much production capacity, too many houses, too much labor. Overcapacity leads to deflation, not inflation. So today's 4.5% long-term Treasury yield will go to 3%, making bondholders 25% in the process.
The total number of open jobs in the United States ticked higher in December to a seasonally adjusted 2.50 million, the Labor Department reported Tuesday. Net employment fell by 165,000 in December from November, with hiring falling 1.3% to 4.07 million and separations from jobs declining 0.8% to 4.24 million. The number of workers who quit their jobs voluntarily dropped 0.8% to 1.76 million in December, while layoffs increased 3.4% to 2.08 million. Compared with a year earlier, job openings fell 22.5%, separations declined 14.5%, and hiring fell 9.6%. With unemployment at 15.3 million in December there were 6.1 job openings for every person looking for a job.
U.S. wholesale inventories unexpectedly fell 0.8 percent in December, while sales rose 0.8 percent, pushing the inventory-to-sales ratio down to it lowest level in a 1-1/2 years. The inventories-to-sales ratio, which measures how long it would take to sell stocks at the current sales pace, plummeted to 1.12 months' worth, the leanest since June 2008, the Commerce Department said on Tuesday.
According to Schroders research, the UK policymakers need to be careful in how much attention they pay to bond investor concerns elsewhere. The UK needs to raise around £220 billion ($343 billion) this year and over £550 billion over the next three years, adding that “the task of the Debt Management Office is daunting.”According to Schroders research, the UK policymakers need to be careful in how much attention they pay to bond investor concerns elsewhere. The UK needs to raise around £220 billion ($343 billion) this year and over £550 billion over the next three years, adding that “the task of the Debt Management Office is daunting.”
Crude oil inventories rose 7.195 million barrels in the week ended Feb. 5, the American Petroleum Institute reported late Tuesday. Analysts polled by Platts estimated a 2-million-barrel increase. Gasoline stocks rose 1.552 million barrels, slightly topping a 1-million-barrel gain anticipated by analysts. Distillate stocks fell 1.53 million barrels versus forecasts of a drop of 1.75 million barrels. The refinery utilization rate was 77%, down slightly from 78% in the prior week. Crude oil for March delivery slipped to $73.73 a barrel in electronic trade from its floor settlement of $73.75 a barrel. Oil had ended the floor session 2.5% higher on expectations for a German bailout of Greece.
Up the most since Jan. 4, the Dow Jones Industrial Average rose 150.25 points, or 1.5%, to 10,058.64. The S&P 500 Index climbed 13.78 points, or 1.3%, to 1,070.52. The Nasdaq Composite Index gained 24.82 points, or 1.2%, to 2,150.87.
Monday, February 08, 2010
Weather
2/8/10 Weather
Reports say that the snowstorm was the worst to hit Washington since 1922, when the snow collapsed the roof of the Knickerbocker movie theater, killing 98 people.
AccuWeather is reporting that this week, "a new major winter storm ... will threaten the Southern Plains [and] could spread snow to the Great Lakes and Northeast. Most of the eastern two-thirds of the nation will have to endure brutal cold following the storm."
Washington, D.C., airports remained closed early Monday as crews removed a record amount of snow from over the weekend that paralyzed the nation's capital. According to Accuweather, the Blizzard of 2010 dumped some 32.4 inches of snow at Washington-Dulles Airport and 17.8 inches at Reagan National. The snowfall broke many records, and brought the winter's total snowfall in Washington, D.C., to 44.9 inches.
Mike Burk: "The market is extremely oversold, but the January highs were confirmed by most indicators and there has been nothing to suggest the recent decline has been anything but a routine pull back in a bull market.
I expect the major averages to be higher on Friday February 12 than they were on Friday February 5."
John Hussman: "Suffice it to say that I am hopeful for a stabilization of the job market, but that I suspect that last month's dip in the unemployment rate was an anomaly. Given what remains a difficult credit outlook, I suspect that we have observed a lull rather than a reversal, and that we'll most likely see an 11-12% unemployment peak before a sustained downturn is observed."
Calafia Beach: "It is very likely that the budget is seriously over-estimating federal revenues. It is very likely that the budget is seriously underestimating federal spending.
And from these conclusions, it follows that Obama's budget very likely underestimates the federal budget deficit by an order of magnitude."
The Dow Jones Industrial Average fell 103.84 points, or 1%, to 9,908.39. The S&P 500 ) lost 9.45 points, or 0.9%, to 1,056.74. The Nasdaq Composite sank 15.07 points, or 0.7%, to 2,126.05.
ZeroHedge: "Even as China is days away from yet another hike in reserve requirements to control "excess liquidity", the nation is preparing for cold war with the US. An independent survey of Chinese-language media for The Sunday Times has found army and navy officers predicting a military showdown and political leaders calling for China to sell more arms to America’s foes. The trigger for their fury was Obama’s decision to sell $6.4 billion (£4 billion) worth of weapons to Taiwan, the thriving democratic island that has ruled itself since 1949. “We should retaliate with an eye for an eye and sell arms to Iran, North Korea, Syria, Cuba and Venezuela,” declared Liu Menxiong, a member of the Chinese people’s political consultative conference. War pulled America out of the First Great Depression. It is only fitting that war will be the result of the Second one. The only problem is this one won't be won by America."
Jim Ritterbusch, president of the energy-advisory firm Ritterbusch & Associates, wrote in a note to clients on Monday that the forecasted cold spell could bring gas stockpiles down to near last year's levels by the end of the heating season.
The cold weather and its potential impact on storage levels "has been a bullish dynamic" for the market, Ritterbusch wrote.
Gold ends up 1.3% at $1,066.20 an ounce.
More than half of U.S. voters who describe themselves as independents disapprove of President Barack Obama’s job performance for the first time since he took office in January 2009, according to a poll released today.
The Marist Poll found that 57 percent of independent voters don’t approve of Obama’s job performance, up from 44 percent in a Dec. 8 survey. Twenty-nine percent of independents approve, down from 41 percent, and 14 percent said they were unsure.
“If attracting independents and bipartisanship are the aim, then the president clearly has a lot of ground to cover in year two,” said Lee M. Miringoff, the director of Poughkeepsie, New York-based Marist College’s Marist Institute of Public Opinion, in a statement.
$488 million in shares was sold in the past week in 192 documents transactions, while just $8 million was bought in 38 deals. Notable dispositions included Bill Gates selling $85 million worth of MSFT, Roger Pensky dumping over $100 million, and Juniper Chairman Scott Kriens selling $12.5 million worth of JNPR stock. Also, after announcing a major trimming in his GOOG portfolio, Sergey Brin sold some "pocketchange" worth of Google stock worth $7.6 million. Source: FinViz
Reports say that the snowstorm was the worst to hit Washington since 1922, when the snow collapsed the roof of the Knickerbocker movie theater, killing 98 people.
AccuWeather is reporting that this week, "a new major winter storm ... will threaten the Southern Plains [and] could spread snow to the Great Lakes and Northeast. Most of the eastern two-thirds of the nation will have to endure brutal cold following the storm."
Washington, D.C., airports remained closed early Monday as crews removed a record amount of snow from over the weekend that paralyzed the nation's capital. According to Accuweather, the Blizzard of 2010 dumped some 32.4 inches of snow at Washington-Dulles Airport and 17.8 inches at Reagan National. The snowfall broke many records, and brought the winter's total snowfall in Washington, D.C., to 44.9 inches.
Mike Burk: "The market is extremely oversold, but the January highs were confirmed by most indicators and there has been nothing to suggest the recent decline has been anything but a routine pull back in a bull market.
I expect the major averages to be higher on Friday February 12 than they were on Friday February 5."
John Hussman: "Suffice it to say that I am hopeful for a stabilization of the job market, but that I suspect that last month's dip in the unemployment rate was an anomaly. Given what remains a difficult credit outlook, I suspect that we have observed a lull rather than a reversal, and that we'll most likely see an 11-12% unemployment peak before a sustained downturn is observed."
Calafia Beach: "It is very likely that the budget is seriously over-estimating federal revenues. It is very likely that the budget is seriously underestimating federal spending.
And from these conclusions, it follows that Obama's budget very likely underestimates the federal budget deficit by an order of magnitude."
The Dow Jones Industrial Average fell 103.84 points, or 1%, to 9,908.39. The S&P 500 ) lost 9.45 points, or 0.9%, to 1,056.74. The Nasdaq Composite sank 15.07 points, or 0.7%, to 2,126.05.
ZeroHedge: "Even as China is days away from yet another hike in reserve requirements to control "excess liquidity", the nation is preparing for cold war with the US. An independent survey of Chinese-language media for The Sunday Times has found army and navy officers predicting a military showdown and political leaders calling for China to sell more arms to America’s foes. The trigger for their fury was Obama’s decision to sell $6.4 billion (£4 billion) worth of weapons to Taiwan, the thriving democratic island that has ruled itself since 1949. “We should retaliate with an eye for an eye and sell arms to Iran, North Korea, Syria, Cuba and Venezuela,” declared Liu Menxiong, a member of the Chinese people’s political consultative conference. War pulled America out of the First Great Depression. It is only fitting that war will be the result of the Second one. The only problem is this one won't be won by America."
Jim Ritterbusch, president of the energy-advisory firm Ritterbusch & Associates, wrote in a note to clients on Monday that the forecasted cold spell could bring gas stockpiles down to near last year's levels by the end of the heating season.
The cold weather and its potential impact on storage levels "has been a bullish dynamic" for the market, Ritterbusch wrote.
Gold ends up 1.3% at $1,066.20 an ounce.
More than half of U.S. voters who describe themselves as independents disapprove of President Barack Obama’s job performance for the first time since he took office in January 2009, according to a poll released today.
The Marist Poll found that 57 percent of independent voters don’t approve of Obama’s job performance, up from 44 percent in a Dec. 8 survey. Twenty-nine percent of independents approve, down from 41 percent, and 14 percent said they were unsure.
“If attracting independents and bipartisanship are the aim, then the president clearly has a lot of ground to cover in year two,” said Lee M. Miringoff, the director of Poughkeepsie, New York-based Marist College’s Marist Institute of Public Opinion, in a statement.
$488 million in shares was sold in the past week in 192 documents transactions, while just $8 million was bought in 38 deals. Notable dispositions included Bill Gates selling $85 million worth of MSFT, Roger Pensky dumping over $100 million, and Juniper Chairman Scott Kriens selling $12.5 million worth of JNPR stock. Also, after announcing a major trimming in his GOOG portfolio, Sergey Brin sold some "pocketchange" worth of Google stock worth $7.6 million. Source: FinViz
Saturday, February 06, 2010
Risk Premiums
2/6/10 Risk Premiums
“The cost of insuring against U.S. and U.K. debt defaults may rise in the same way as it has for so-called European peripheral nations including Greece and Portugal, Deutsche Bank AG said. ‘The problems currently faced by peripheral Europe could be a dress rehearsal for what the U.S. and U.K. may face further down the road,’ Jim Reid, a strategist at Deutsche Bank in London, wrote…”
Doug Noland: "The stock market has been under pressure – and that’s not so helpful for already fragile confidence. Yet, how much of an offset is provided by declining Treasury and mortgage-backed yields? How much benefit will the stronger dollar provide in the way of lower energy and import costs? Notably, there has been so far only limited widening of U.S. risk premiums. Is this an indication of U.S. system resiliency - or complacency? ....Junk spreads have barely budged from January lows (487bps) and remain significantly below the high of 1,300 recorded last March. Investment grade spreads are also less than half of the levels from last spring. And while they have widened marginally, emerging market debt spreads are not far off 15-month lows. Brazil and Mexico can still borrow for 10 years at not much over 5%. For the most part, financial conditions remain loose."
David Rosenberg: "The level of employment today, at 129.5 million, is the exact same level it was in 1999. And, during this 11-year span of Japanese-like labour market stagnation, the working-age population has risen 29 million. Contemplate that for a moment; fully 29 million people competing for the same number of jobs that existed more than a decade ago. That sounds like pretty deflationary stuff from our standpoint. "
ZeroHedge: JPM ramped the market's close on Friday. "JPM's ETF desk singlehandedly manages to push market higher. It is unknown if this is for prop positions (yes Senator Corker, we know it when we see it), or flow (JPM is RenTec's. and many other quant funds' Prime Dealer) is unknown. What is known is that JPM indicates every single SPY offer was lifted by its sage trader."
Cold weather will cover the U.S. from the Rockies to the East Coast between now and Feb. 19, MDA Federal Inc.’s EarthSat Energy Weather said. Two feet (60 centimeters) of snow may fall in the Washington region. About 52 percent of U.S. households use gas for heating.
“Gas is mostly up on the weather,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “You’ve got a region that uses a lot of gas with a snow cap, so that will keep things a little cooler, which enhances the demand picture for natural gas.”
Natural gas for March delivery rose 9.9 cents, or 1.8 percent, to settle at $5.515 per million British thermal units at 2:36 p.m. on the New York Mercantile Exchange. Prices advanced 7.5 percent this week.
Southern New Jersey and Delaware have been placed under a blizzard warning. In New Jersey, 67 percent of households rely on natural gas for heating, according to the Energy Department. About 65 percent of households in Washington heat with gas.
“The cost of insuring against U.S. and U.K. debt defaults may rise in the same way as it has for so-called European peripheral nations including Greece and Portugal, Deutsche Bank AG said. ‘The problems currently faced by peripheral Europe could be a dress rehearsal for what the U.S. and U.K. may face further down the road,’ Jim Reid, a strategist at Deutsche Bank in London, wrote…”
Doug Noland: "The stock market has been under pressure – and that’s not so helpful for already fragile confidence. Yet, how much of an offset is provided by declining Treasury and mortgage-backed yields? How much benefit will the stronger dollar provide in the way of lower energy and import costs? Notably, there has been so far only limited widening of U.S. risk premiums. Is this an indication of U.S. system resiliency - or complacency? ....Junk spreads have barely budged from January lows (487bps) and remain significantly below the high of 1,300 recorded last March. Investment grade spreads are also less than half of the levels from last spring. And while they have widened marginally, emerging market debt spreads are not far off 15-month lows. Brazil and Mexico can still borrow for 10 years at not much over 5%. For the most part, financial conditions remain loose."
David Rosenberg: "The level of employment today, at 129.5 million, is the exact same level it was in 1999. And, during this 11-year span of Japanese-like labour market stagnation, the working-age population has risen 29 million. Contemplate that for a moment; fully 29 million people competing for the same number of jobs that existed more than a decade ago. That sounds like pretty deflationary stuff from our standpoint. "
ZeroHedge: JPM ramped the market's close on Friday. "JPM's ETF desk singlehandedly manages to push market higher. It is unknown if this is for prop positions (yes Senator Corker, we know it when we see it), or flow (JPM is RenTec's. and many other quant funds' Prime Dealer) is unknown. What is known is that JPM indicates every single SPY offer was lifted by its sage trader."
Cold weather will cover the U.S. from the Rockies to the East Coast between now and Feb. 19, MDA Federal Inc.’s EarthSat Energy Weather said. Two feet (60 centimeters) of snow may fall in the Washington region. About 52 percent of U.S. households use gas for heating.
“Gas is mostly up on the weather,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “You’ve got a region that uses a lot of gas with a snow cap, so that will keep things a little cooler, which enhances the demand picture for natural gas.”
Natural gas for March delivery rose 9.9 cents, or 1.8 percent, to settle at $5.515 per million British thermal units at 2:36 p.m. on the New York Mercantile Exchange. Prices advanced 7.5 percent this week.
Southern New Jersey and Delaware have been placed under a blizzard warning. In New Jersey, 67 percent of households rely on natural gas for heating, according to the Energy Department. About 65 percent of households in Washington heat with gas.
Friday, February 05, 2010
Freeloaders
2/5/10 Freeloaders
The number of U.S. homes listed for sale rose in January compared to December after 18 consecutive months of decline, according to data released on Thursday by real estate brokerage ZipRealty. The increase in listings from a survey of Multiple Listing Services can be attributed to the extension and expansion of U.S. home buyer tax credits, which is prompting sellers to list their homes sooner rather than wait for spring, the peak home buying season, according to Emeryville, California-based ZipRealty.
The growing sovereign debt problems in Europe will continue to keep markets under pressure, Bill Gross, co-CIO and founder of Pimco, told CNBC Thursday.
“The magnitude is not the same as the subprime crisis, but to a certain extent, they're similar,” Gross said in a live interview.
The unemployment rate fell in January to 9.7% from 10% in December, the Labor Department said Friday. Nonfarm payrolls contracted by 20,000 in January. Economists surveyed by MarketWatch had expected a 25,000 gain and for the unemployment rate to remain steady at 10.0%. Under the revisions released today, job losses since the start of the recession in December 2007 totaled 8.4 million. The Labor Department said the economy shed 150,000 jobs in December, compared to 85,000 previously reported, but November was revised to a gain of 64,000, up from 4,000. A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of 'discouraged job seekers' rose to 1.1 million in January from 734,000 a year ago.
Last month, the services sector added 40,000 jobs after shedding 96,000 positions. The figure included a rise in federal government employment, partly as a result of the hiring of staff for the 2010 Census. Temporary help employment rose 52,000, maintaining a rising trend seen in the past month.
Manufacturing payrolls rose 11,000 last month, the first gain since January 2007, after dropping 23,000 in December. But the construction sector, continued to struggle, losing 75,000 jobs, likely because of unusually cold weather. Construction payrolls fell 32,000 in December.
In another sign of labor market improvement, the average workweek unexpectedly rose to 33.3 hours, the highest level in a year, from 33.2 hours in December. Total average hourly earnings increased $18.89 from $18.84 in December. Manufacturing overtime rose to 3.5 hours, the highest since September 2008. The Census Bureau hired 9,000 temporary workers in January as part of the decennial census, and now employs 24,000 temporary workers.
The Employment-Population ratio ticked up slightly to 58.4% in January, after plunging since the start of the recession. This is about the same level as in 1983.
The January Birth/Death adjustment was for -427K from +25K in December.
The Labor Force Participation Rate increased slightly to 64.7% (the percentage of the working age population in the labor force). This is at the level of the early 80s.
ZeroHedge: "Yet a number that avoids some of the constant fudging by the BLS, the Non-Seasonally Adjusted number, hit a new recent record: instead of 9.7%, this number was 10.6%, a 0.9% increase from December!
The same can be seen in the U-6 data. NSA U-6 is now at a record 18%, even as the seasonally adjusted number declined to 16.5%."
European policymakers scrambled on Friday to reassure markets on the stability of their 16-nation currency bloc as investors shed euro assets for a second day on fears about debt-laden member states like Greece and Portugal.
European Central Bank Governing Council member Ewald Nowotny tried to play down a sharp fall in the euro, which hit its lowest level against the dollar since May 2009, and called talk of a euro zone breakup "absurd."
Greek Prime Minister George Papandreou, on a visit to India, promised to "credibly apply" an austerity program designed to bring his country's yawning debt and deficit levels under control.
Markets also focused on Portugal, where parliament was due to vote on a regional financing bill that is seen as a crucial test of the government's ability to curb spending.
Alongside Greece and Spain, Portugal is one of a handful of euro bloc countries that face intense pressure to get their public finances in order and calm markets worried about the risks of a sovereign default.
Analysts are no longer discounting the possibility that a smaller member of the bloc such as Greece could be pushed out, though most believe monetary union will survive.
"The market is closely watching each country's ability to pay its debts," said Erkki Liikanen, who sits on the ECB council with Nowotny. "If the faith is lost, rates will go up significantly."
Airgas Inc. said Friday that it received an unsolicited bid from Air Products & Chemicals Inc., offering to buy the company for $60 a share. Airgas said its board will review the proposal and advised its shareholders to take no action at this time. Shares of Airgas were up about 42% in premarket trade Friday on news of the proposed deal.
China announced anti-dumping duties of up to 105.4 percent Friday on imports of U.S. chicken products, adding to trade strains with Washington.
The case comes amid mutual accusations of protectionism by Beijing and Washington which both say will hurt efforts to end the global economic downturn.
A preliminary investigation concluded U.S. exports were being sold at improperly low prices that harmed Chinese competitors, the Commerce Ministry said. It said importers must post a bond until a final decision is reached.
Credit markets were slammed as the cost to insure investment-grade corporate bonds saw their biggest increase in more than two years.
Undoing the carry trade can be dangerous to one's economic viability. Free rides are for only a short distance. It is a lesson that carries out the freeloaders.
"We think that it's substantially different this time, based upon the fact that instead of levering we're delevering and instead of deregulating we're regulating," Bill Gross said. "Both of those conditions in combination produce a very weak economy, very slow growth and ultimately have effects on asset markets that depend on asset appreciation.""The growth has been really based on a check not only by the US government but many sovereign governments," he said. "The minute that check disappears the private market is standing very lonesome and on its own legs."
Los Angeles Mayor Antonio Villaraigosa ordered officials Thursday to eliminate 1,000 city jobs and begin planning employee layoffs, one day after the City Council failed to do so amid a deepening budget crisis.
Disturbed by the council's inability to make a dent in a $212-million shortfall, Villaraigosa sent a letter to department heads saying he was accelerating the effort to shift as many employees as possible to vacant positions not paid by the city's general fund and would impose layoffs where necessary. Police officers would not be affected.
"If you think I'm not going to move ahead, you don't know me well," Villaraigosa told reporters during a late afternoon news conference. "I don't do this because I want to. I do this because I must."
1st American State Bank of Minnesota in Hancock, Minn., became the 16th bank of the year to fail, according to the Federal Deposit Insurance Corp. Friday. Community Development Bank of Ogema, Minn., is set to assume the bank's $16.3 million in deposits. Community Development will also purchase the bank's $18.2 million in assets. The bank is also Minnesota's third bank failure of the year.
Reversing course after a near 200-point drop earlier, the Dow Jones Industrial Average added 10.05 points, or 0.1%, to 10,012.23, leaving the blue chips with a 0.6% weekly loss. The S&P 500 Index gained 3.08 points, or 0.3%, to 1,066.19, down 0.7% for the week. The Nasdaq Composite Index rose 15.69 points, or 0.7%, to 2,141.12, leaving it off 0.3% from the week-ago close.
Outstanding debts held by consumers fell for a record 11th month in a row in December, led by falling balances on their credit cards, the Federal Reserve reported Friday. Outstanding debts - not including mortgage debt - fell a seasonally adjusted $1.73 billion, or an annual rate of 0.8%, in December after a record $21.8 billion decline in November. The decline was much less than the $9 billion forecast by economists surveyed by MarketWatch. For all of 2009, consumer debt dropped by 4% from $2.56 trillion at the end of 2008 to $2.46 trillion. It was only the second annual decline since 1945 and the first since 1991, when debts fell 1.3%.
The number of U.S. homes listed for sale rose in January compared to December after 18 consecutive months of decline, according to data released on Thursday by real estate brokerage ZipRealty. The increase in listings from a survey of Multiple Listing Services can be attributed to the extension and expansion of U.S. home buyer tax credits, which is prompting sellers to list their homes sooner rather than wait for spring, the peak home buying season, according to Emeryville, California-based ZipRealty.
The growing sovereign debt problems in Europe will continue to keep markets under pressure, Bill Gross, co-CIO and founder of Pimco, told CNBC Thursday.
“The magnitude is not the same as the subprime crisis, but to a certain extent, they're similar,” Gross said in a live interview.
The unemployment rate fell in January to 9.7% from 10% in December, the Labor Department said Friday. Nonfarm payrolls contracted by 20,000 in January. Economists surveyed by MarketWatch had expected a 25,000 gain and for the unemployment rate to remain steady at 10.0%. Under the revisions released today, job losses since the start of the recession in December 2007 totaled 8.4 million. The Labor Department said the economy shed 150,000 jobs in December, compared to 85,000 previously reported, but November was revised to a gain of 64,000, up from 4,000. A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of 'discouraged job seekers' rose to 1.1 million in January from 734,000 a year ago.
Last month, the services sector added 40,000 jobs after shedding 96,000 positions. The figure included a rise in federal government employment, partly as a result of the hiring of staff for the 2010 Census. Temporary help employment rose 52,000, maintaining a rising trend seen in the past month.
Manufacturing payrolls rose 11,000 last month, the first gain since January 2007, after dropping 23,000 in December. But the construction sector, continued to struggle, losing 75,000 jobs, likely because of unusually cold weather. Construction payrolls fell 32,000 in December.
In another sign of labor market improvement, the average workweek unexpectedly rose to 33.3 hours, the highest level in a year, from 33.2 hours in December. Total average hourly earnings increased $18.89 from $18.84 in December. Manufacturing overtime rose to 3.5 hours, the highest since September 2008. The Census Bureau hired 9,000 temporary workers in January as part of the decennial census, and now employs 24,000 temporary workers.
The Employment-Population ratio ticked up slightly to 58.4% in January, after plunging since the start of the recession. This is about the same level as in 1983.
The January Birth/Death adjustment was for -427K from +25K in December.
The Labor Force Participation Rate increased slightly to 64.7% (the percentage of the working age population in the labor force). This is at the level of the early 80s.
ZeroHedge: "Yet a number that avoids some of the constant fudging by the BLS, the Non-Seasonally Adjusted number, hit a new recent record: instead of 9.7%, this number was 10.6%, a 0.9% increase from December!
The same can be seen in the U-6 data. NSA U-6 is now at a record 18%, even as the seasonally adjusted number declined to 16.5%."
European policymakers scrambled on Friday to reassure markets on the stability of their 16-nation currency bloc as investors shed euro assets for a second day on fears about debt-laden member states like Greece and Portugal.
European Central Bank Governing Council member Ewald Nowotny tried to play down a sharp fall in the euro, which hit its lowest level against the dollar since May 2009, and called talk of a euro zone breakup "absurd."
Greek Prime Minister George Papandreou, on a visit to India, promised to "credibly apply" an austerity program designed to bring his country's yawning debt and deficit levels under control.
Markets also focused on Portugal, where parliament was due to vote on a regional financing bill that is seen as a crucial test of the government's ability to curb spending.
Alongside Greece and Spain, Portugal is one of a handful of euro bloc countries that face intense pressure to get their public finances in order and calm markets worried about the risks of a sovereign default.
Analysts are no longer discounting the possibility that a smaller member of the bloc such as Greece could be pushed out, though most believe monetary union will survive.
"The market is closely watching each country's ability to pay its debts," said Erkki Liikanen, who sits on the ECB council with Nowotny. "If the faith is lost, rates will go up significantly."
Airgas Inc. said Friday that it received an unsolicited bid from Air Products & Chemicals Inc., offering to buy the company for $60 a share. Airgas said its board will review the proposal and advised its shareholders to take no action at this time. Shares of Airgas were up about 42% in premarket trade Friday on news of the proposed deal.
China announced anti-dumping duties of up to 105.4 percent Friday on imports of U.S. chicken products, adding to trade strains with Washington.
The case comes amid mutual accusations of protectionism by Beijing and Washington which both say will hurt efforts to end the global economic downturn.
A preliminary investigation concluded U.S. exports were being sold at improperly low prices that harmed Chinese competitors, the Commerce Ministry said. It said importers must post a bond until a final decision is reached.
Credit markets were slammed as the cost to insure investment-grade corporate bonds saw their biggest increase in more than two years.
Undoing the carry trade can be dangerous to one's economic viability. Free rides are for only a short distance. It is a lesson that carries out the freeloaders.
"We think that it's substantially different this time, based upon the fact that instead of levering we're delevering and instead of deregulating we're regulating," Bill Gross said. "Both of those conditions in combination produce a very weak economy, very slow growth and ultimately have effects on asset markets that depend on asset appreciation.""The growth has been really based on a check not only by the US government but many sovereign governments," he said. "The minute that check disappears the private market is standing very lonesome and on its own legs."
Los Angeles Mayor Antonio Villaraigosa ordered officials Thursday to eliminate 1,000 city jobs and begin planning employee layoffs, one day after the City Council failed to do so amid a deepening budget crisis.
Disturbed by the council's inability to make a dent in a $212-million shortfall, Villaraigosa sent a letter to department heads saying he was accelerating the effort to shift as many employees as possible to vacant positions not paid by the city's general fund and would impose layoffs where necessary. Police officers would not be affected.
"If you think I'm not going to move ahead, you don't know me well," Villaraigosa told reporters during a late afternoon news conference. "I don't do this because I want to. I do this because I must."
1st American State Bank of Minnesota in Hancock, Minn., became the 16th bank of the year to fail, according to the Federal Deposit Insurance Corp. Friday. Community Development Bank of Ogema, Minn., is set to assume the bank's $16.3 million in deposits. Community Development will also purchase the bank's $18.2 million in assets. The bank is also Minnesota's third bank failure of the year.
Reversing course after a near 200-point drop earlier, the Dow Jones Industrial Average added 10.05 points, or 0.1%, to 10,012.23, leaving the blue chips with a 0.6% weekly loss. The S&P 500 Index gained 3.08 points, or 0.3%, to 1,066.19, down 0.7% for the week. The Nasdaq Composite Index rose 15.69 points, or 0.7%, to 2,141.12, leaving it off 0.3% from the week-ago close.
Outstanding debts held by consumers fell for a record 11th month in a row in December, led by falling balances on their credit cards, the Federal Reserve reported Friday. Outstanding debts - not including mortgage debt - fell a seasonally adjusted $1.73 billion, or an annual rate of 0.8%, in December after a record $21.8 billion decline in November. The decline was much less than the $9 billion forecast by economists surveyed by MarketWatch. For all of 2009, consumer debt dropped by 4% from $2.56 trillion at the end of 2008 to $2.46 trillion. It was only the second annual decline since 1945 and the first since 1991, when debts fell 1.3%.
Thursday, February 04, 2010
Job Losses
2/4/10 Job Losses
Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.
It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”
First-time claims for state unemployment benefits rose to the highest level since mid-December, the Labor Department reported Thursday. The number of initial claims in the week ending Jan. 30 rose 8,000 to 480,000. The consensus forecast of Wall Street economists was for claims to drop to 455,000. Claims in the previous week were revised to a decrease of 7,000 to 472,000 compared with the initial estimate of a decrease of 8,000 to 470,000. The four-week average of initial claims rose 11,750 to 468,750. A Labor Department official said there were no special factors behind the increase. Meanwhile, the number of Americans receiving state jobless benefits rose a slight 2,000 to 4.60 million in the week ending Jan 23. The four-week moving average of continuing claims fell 51,250 to 4.62 million. Overall, 11.53 million Americans received federal and state unemployment benefits on an unadjusted basis in the week ended Jan. 16, the latest period for which the data is available. This is up from 11.48 million in the prior week.
Productivity of the U.S. nonfarm business sector slowed a bit in the fourth quarter as hours worked increased for the first quarter since the second quarter of 2007, the Labor Department estimated Thursday. The productivity of the U.S. nonfarm business sector rose at an annual rate of 6.2% after a 7.2% gain in the third quarter. Output rose 7.2% in the final three months of the year and hours worked increased 1.0%. Economists were expecting productivity to rise 7.3% in the fourth quarter. Unit labor costs - a key inflationary signal - fell at an annual rate of 4.4% in the fourth quarter. Real hourly compensation fell 1.9%. For the year, productivity rose at a 2.9% rate, the fastest pace since 2003. Both hours worked and output declined by record rates in 2009. Unit labor costs fell 0.9%, the biggest drop since 2002.
Nouriel Roubini, the New York University professor who predicted the credit crisis, expects the dollar to weaken against Asian and “commodity” currencies such as the Brazilian real over the next two or three years.
“I see anemic recovery of economic growth in the U.S.,” and “the U.S. current account is still very large,” Roubini, a founder of Roubini Global Economics, said at a conference in Moscow today. “In the next two or three years, the dollar has to weaken further on a trade-weighted basis.”
International Monetary Fund Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick said this week the recovery is “fragile.”
January is the least important month of the year on retailers’ calendar as stores use the month to clear out winter merchandise and bring in spring merchandise. So analysts say they’ll be studying sales patterns more closely in the coming months to discern shoppers’ financial health. January did offer clues about shoppers’ focus on fat discounts. For the holiday season, stores ordered so conservatively that they ended December with relatively little extra inventory — and less than usual to mark down in January. As a result, some stores pushed up deliveries of spring items from jumpsuits to sandals, but bargains were all that most consumers wanted.
Bloomberg reports that 824,000 jobs will disappear Feb. 5 due to downward
revisions. Job losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it's expected that the Labor Department's new estimate will be a loss of 8 million jobs.
Boeing and Airbus expect demand for new orders to remain depressed until 2012 as a record drop in air travel prompts companies to pare growth.
Platts analyst expect the EIA to report a drawdown of between 121 and 125 billion cubic feet from natural gas storage for the week ended Jan. 29.
Martin King, analyst at FirstEnergy Capital, told Platts that temperatures had began cooling off last week in key gas-consuming regions, "which bolstered demand mid-week".
U.S. natural gas supplies down 115 bcf - EIA.
Orders for U.S.-made manufactured goods increased 1% in December, led by strong demand for machinery, metals, petroleum and military planes, the Commerce Department reported Thursday. Economists were looking for a 0.6% gain. Orders for durable goods rose 1%, significantly higher than the 0.3% gain estimated a week ago. Orders for nondurable goods also rose 1%, largely due to higher prices for petroleum. Shipments of core capital equipment rose 2.1% in December. Shipments of all factory goods increased 1.9%, while inventories fell 0.1%. November's orders were revised down to 1% from 1.1% earlier.
The Dow Jones Industrial Average sank 268.37 points, or 2.6%, to 10,002.18, its worst daily loss since April 20, 2009. The Dow had lapsed under 10,000 just ahead of the close, its first lapse under that level since early November. The S&P 500 Index fell 34.17 points, or 3.1%, to 1,063.11. The Nasdaq Composite Index declined 65.48 points, or 3%, to 2,125.43.
The U.S. government's borrowing limit would rise by $1.9 trillion to $14.3 trillion under legislation approved in the House on Thursday. Lawmakers also approved a budget-control mechanism known as "pay-go" before sending the bill to President Barack Obama for signature. The vote was 233-187. The Senate approved the borrowing increase and pay-go rules in a tight vote last week.
Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.
It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”
First-time claims for state unemployment benefits rose to the highest level since mid-December, the Labor Department reported Thursday. The number of initial claims in the week ending Jan. 30 rose 8,000 to 480,000. The consensus forecast of Wall Street economists was for claims to drop to 455,000. Claims in the previous week were revised to a decrease of 7,000 to 472,000 compared with the initial estimate of a decrease of 8,000 to 470,000. The four-week average of initial claims rose 11,750 to 468,750. A Labor Department official said there were no special factors behind the increase. Meanwhile, the number of Americans receiving state jobless benefits rose a slight 2,000 to 4.60 million in the week ending Jan 23. The four-week moving average of continuing claims fell 51,250 to 4.62 million. Overall, 11.53 million Americans received federal and state unemployment benefits on an unadjusted basis in the week ended Jan. 16, the latest period for which the data is available. This is up from 11.48 million in the prior week.
Productivity of the U.S. nonfarm business sector slowed a bit in the fourth quarter as hours worked increased for the first quarter since the second quarter of 2007, the Labor Department estimated Thursday. The productivity of the U.S. nonfarm business sector rose at an annual rate of 6.2% after a 7.2% gain in the third quarter. Output rose 7.2% in the final three months of the year and hours worked increased 1.0%. Economists were expecting productivity to rise 7.3% in the fourth quarter. Unit labor costs - a key inflationary signal - fell at an annual rate of 4.4% in the fourth quarter. Real hourly compensation fell 1.9%. For the year, productivity rose at a 2.9% rate, the fastest pace since 2003. Both hours worked and output declined by record rates in 2009. Unit labor costs fell 0.9%, the biggest drop since 2002.
Nouriel Roubini, the New York University professor who predicted the credit crisis, expects the dollar to weaken against Asian and “commodity” currencies such as the Brazilian real over the next two or three years.
“I see anemic recovery of economic growth in the U.S.,” and “the U.S. current account is still very large,” Roubini, a founder of Roubini Global Economics, said at a conference in Moscow today. “In the next two or three years, the dollar has to weaken further on a trade-weighted basis.”
International Monetary Fund Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick said this week the recovery is “fragile.”
January is the least important month of the year on retailers’ calendar as stores use the month to clear out winter merchandise and bring in spring merchandise. So analysts say they’ll be studying sales patterns more closely in the coming months to discern shoppers’ financial health. January did offer clues about shoppers’ focus on fat discounts. For the holiday season, stores ordered so conservatively that they ended December with relatively little extra inventory — and less than usual to mark down in January. As a result, some stores pushed up deliveries of spring items from jumpsuits to sandals, but bargains were all that most consumers wanted.
Bloomberg reports that 824,000 jobs will disappear Feb. 5 due to downward
revisions. Job losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it's expected that the Labor Department's new estimate will be a loss of 8 million jobs.
Boeing and Airbus expect demand for new orders to remain depressed until 2012 as a record drop in air travel prompts companies to pare growth.
Platts analyst expect the EIA to report a drawdown of between 121 and 125 billion cubic feet from natural gas storage for the week ended Jan. 29.
Martin King, analyst at FirstEnergy Capital, told Platts that temperatures had began cooling off last week in key gas-consuming regions, "which bolstered demand mid-week".
U.S. natural gas supplies down 115 bcf - EIA.
Orders for U.S.-made manufactured goods increased 1% in December, led by strong demand for machinery, metals, petroleum and military planes, the Commerce Department reported Thursday. Economists were looking for a 0.6% gain. Orders for durable goods rose 1%, significantly higher than the 0.3% gain estimated a week ago. Orders for nondurable goods also rose 1%, largely due to higher prices for petroleum. Shipments of core capital equipment rose 2.1% in December. Shipments of all factory goods increased 1.9%, while inventories fell 0.1%. November's orders were revised down to 1% from 1.1% earlier.
The Dow Jones Industrial Average sank 268.37 points, or 2.6%, to 10,002.18, its worst daily loss since April 20, 2009. The Dow had lapsed under 10,000 just ahead of the close, its first lapse under that level since early November. The S&P 500 Index fell 34.17 points, or 3.1%, to 1,063.11. The Nasdaq Composite Index declined 65.48 points, or 3%, to 2,125.43.
The U.S. government's borrowing limit would rise by $1.9 trillion to $14.3 trillion under legislation approved in the House on Thursday. Lawmakers also approved a budget-control mechanism known as "pay-go" before sending the bill to President Barack Obama for signature. The vote was 233-187. The Senate approved the borrowing increase and pay-go rules in a tight vote last week.
Wednesday, February 03, 2010
ADP
2/3/10 ADP
Private-sector firms in the U.S. eliminated 22,000 jobs in January, the 24th decline in a row, according to the ADP employment report released Wednesday. It was the fewest jobs lost since 22,000 jobs were added in January 2008. In December, a revised 61,000 jobs were lost, compared with the 84,000 originally reported, ADP said. The ADP jobs data come two days before the Bureau of Labor Statistics releases its estimate of January nonfarm payrolls. Economists surveyed by MarketWatch are looking for payrolls to rise 20,000 in the BLS survey
The US could lose its Aaa bond rating at Moody’s (CNBC).
The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that "the era of big government is over" and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force.
Most of the increases are on the civilian side, which will grow by 153,000 workers, to 1.43 million people, in fiscal 2010.
According to a study from the nation's largest food bank operator, the number of Americans in need of food aid has jumped 46 percent in three years, including a 50 percent jump in the number of children needing food assistance, and a 64 percent increase in hunger in senior citizens' homes.
The study, Hunger in America 2010, found that 37 million people, or roughly one in eight US residents, received food aid in 2009. That's a 46 percent jump from a similar survey carried out in 2006.
A major Chinese bank has raised mortgage rates in one of the first signs of how the government's lending clampdown is rippling through the economy and could tame turbo-charged growth but spook investors. Bank of China's decision to roll back mortgage discounts came after banks throughout the country aggressively called in loans in the second half of January to fall into line with the government's directive to slow lending.
Redbook reported year over year gains of 0.8% and month over month sales of -1.5%. The year over year gains were the lowest since October. Weekly sales reported by ICSC were also weak. Year over year sales were up 0.4% while weekly gains came in at just 0.1%.
The Treasury Department said Wednesday it expects to hit the government's debt ceiling by the end of February, putting pressure on Congress to raise the limit from its current level of $12.4 trillion.
Treasury said it is working closely with Congress to raise the ceiling. The Senate has approved legislation to increase it by $1.9 trillion to $14.3 trillion, but the House has yet to pass the measure. A ceiling that high would equal about $45,000 for every American.
"Judging from market valuations, I sense quite a gap between consensus market expectations and key political and economic realities, especially in the U.S. If the gap isn’t bridged by the validation of the more optimistic expectations, investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes, including stocks." - Mohamed El-Erian
David Walker: "Let's put it this way: Spending last year was about $3.5 trillion. The deficit was $1.42 trillion, which means that revenues were about $2.1 trillion. So $2.1 trillion is equal to their annual income.
The total national debt right now is $12.3 trillion. So we owe five to six times more than we make every year. But that's not the big deal.
In addition to that, there is another $45 trillion to $50 trillion in unfunded obligations that are off the balance sheet, which I think you ought to count. Medicare is the biggest part of it by far, and Social Security is a large part, too. So in reality, we owe between 25 and 30 times what we make every year."
On Feb. 6, 400 homes will be auctioned off in Phoenix.
Russia and Britain said Wednesday that they would welcome Iran's readiness to accept a proposal aimed at ending the standoff over its nuclear program as a "positive sign.
The ISM Services Index for January came in at 50.5, which is essentially in-line with the 51.0 that was expected and up slightly from the 50.1 that was posted in the previous reading.
Crude inventories rose by 2.3 million barrels, or 0.7 percent, to 329 million barrels, which is 6.1 percent below year-ago levels, according to the Energy Department's Energy Information Administration's weekly report.
Analysts expected a drop of 1 million barrels for the week ended Jan. 29, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline inventories fell by 1.3 million barrels, or 0.6 percent, to 228.1 million barrels. That missed analysts' expectations and was 5 percent above year-ago levels.
AccuWeather: "The next storm taking aim at the mid-Atlantic for the end of the week will be a big one, perhaps on par with the storm before Christmas. However, this storm will be much more extensive, stretching from the central and northern Plains to the Atlantic Coast. This somewhat warmer, wetter snowstorm will deliver back breaking snow to some locations and blizzard conditions to others. A nightmare for ground and air travel is in the making into the weekend. An invasion of frigid air during and following this storm could set the stage for more troublesome snow and ice as February progresses."
Wal-Mart Stores Inc Chief Executive Mike Duke said in an employee memo Wednesday that the company plans to cut about 300 home-office jobs in Northwest Arkansas, primarily in the corporate support areas. The move came after the company said last month it would cut more than 11,000 jobs at Sam's Club and outsource its product sampling and demonstration among other restructuring moves.
. Retreating after its best two-day advance since early November, the Dow Jones Industrial Average fell 26.3 points to 10,270.55. The S&P 500 Index declined 6.04 points to 1,097.28. Up for a third consecutive session, the Nasdaq Composite Index added nearly 1 point to 2,190.91.
Private-sector firms in the U.S. eliminated 22,000 jobs in January, the 24th decline in a row, according to the ADP employment report released Wednesday. It was the fewest jobs lost since 22,000 jobs were added in January 2008. In December, a revised 61,000 jobs were lost, compared with the 84,000 originally reported, ADP said. The ADP jobs data come two days before the Bureau of Labor Statistics releases its estimate of January nonfarm payrolls. Economists surveyed by MarketWatch are looking for payrolls to rise 20,000 in the BLS survey
The US could lose its Aaa bond rating at Moody’s (CNBC).
The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that "the era of big government is over" and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force.
Most of the increases are on the civilian side, which will grow by 153,000 workers, to 1.43 million people, in fiscal 2010.
According to a study from the nation's largest food bank operator, the number of Americans in need of food aid has jumped 46 percent in three years, including a 50 percent jump in the number of children needing food assistance, and a 64 percent increase in hunger in senior citizens' homes.
The study, Hunger in America 2010, found that 37 million people, or roughly one in eight US residents, received food aid in 2009. That's a 46 percent jump from a similar survey carried out in 2006.
A major Chinese bank has raised mortgage rates in one of the first signs of how the government's lending clampdown is rippling through the economy and could tame turbo-charged growth but spook investors. Bank of China's decision to roll back mortgage discounts came after banks throughout the country aggressively called in loans in the second half of January to fall into line with the government's directive to slow lending.
Redbook reported year over year gains of 0.8% and month over month sales of -1.5%. The year over year gains were the lowest since October. Weekly sales reported by ICSC were also weak. Year over year sales were up 0.4% while weekly gains came in at just 0.1%.
The Treasury Department said Wednesday it expects to hit the government's debt ceiling by the end of February, putting pressure on Congress to raise the limit from its current level of $12.4 trillion.
Treasury said it is working closely with Congress to raise the ceiling. The Senate has approved legislation to increase it by $1.9 trillion to $14.3 trillion, but the House has yet to pass the measure. A ceiling that high would equal about $45,000 for every American.
"Judging from market valuations, I sense quite a gap between consensus market expectations and key political and economic realities, especially in the U.S. If the gap isn’t bridged by the validation of the more optimistic expectations, investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes, including stocks." - Mohamed El-Erian
David Walker: "Let's put it this way: Spending last year was about $3.5 trillion. The deficit was $1.42 trillion, which means that revenues were about $2.1 trillion. So $2.1 trillion is equal to their annual income.
The total national debt right now is $12.3 trillion. So we owe five to six times more than we make every year. But that's not the big deal.
In addition to that, there is another $45 trillion to $50 trillion in unfunded obligations that are off the balance sheet, which I think you ought to count. Medicare is the biggest part of it by far, and Social Security is a large part, too. So in reality, we owe between 25 and 30 times what we make every year."
On Feb. 6, 400 homes will be auctioned off in Phoenix.
Russia and Britain said Wednesday that they would welcome Iran's readiness to accept a proposal aimed at ending the standoff over its nuclear program as a "positive sign.
The ISM Services Index for January came in at 50.5, which is essentially in-line with the 51.0 that was expected and up slightly from the 50.1 that was posted in the previous reading.
Crude inventories rose by 2.3 million barrels, or 0.7 percent, to 329 million barrels, which is 6.1 percent below year-ago levels, according to the Energy Department's Energy Information Administration's weekly report.
Analysts expected a drop of 1 million barrels for the week ended Jan. 29, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline inventories fell by 1.3 million barrels, or 0.6 percent, to 228.1 million barrels. That missed analysts' expectations and was 5 percent above year-ago levels.
AccuWeather: "The next storm taking aim at the mid-Atlantic for the end of the week will be a big one, perhaps on par with the storm before Christmas. However, this storm will be much more extensive, stretching from the central and northern Plains to the Atlantic Coast. This somewhat warmer, wetter snowstorm will deliver back breaking snow to some locations and blizzard conditions to others. A nightmare for ground and air travel is in the making into the weekend. An invasion of frigid air during and following this storm could set the stage for more troublesome snow and ice as February progresses."
Wal-Mart Stores Inc Chief Executive Mike Duke said in an employee memo Wednesday that the company plans to cut about 300 home-office jobs in Northwest Arkansas, primarily in the corporate support areas. The move came after the company said last month it would cut more than 11,000 jobs at Sam's Club and outsource its product sampling and demonstration among other restructuring moves.
. Retreating after its best two-day advance since early November, the Dow Jones Industrial Average fell 26.3 points to 10,270.55. The S&P 500 Index declined 6.04 points to 1,097.28. Up for a third consecutive session, the Nasdaq Composite Index added nearly 1 point to 2,190.91.
Tuesday, February 02, 2010
States
2/2/10 States
ZeroHedge: "As ProPublica indicates, there are now 26 states which have depleted their trust funds, among these are the usual suspects including California, Michigan, New York, Pennsylvania and Ohio, which now rely exclusively on borrowings from the Federal government to prevent the cessation of insurance payments to recently unemployed workers. Currently all states collectively posses $10.7 billion in trust fund assets(with the bulk held by less impacted states such as Washington ($2.6 billion), Louisiana ($1.1 billion) and Oregon ($1.1 billion). On the other hand, 26 states currently rely exclusively on the Federal Government, and have borrowed a combined $30 billion through December to fund payments. ProPublica estimates that another 8 states will be insolvent within 6 months, as their trust funds also approach 0."
Spending by U.S. consumers increased in December for a third consecutive month, signaling the biggest part of the economy will contribute more to growth in coming months.
The 0.2 percent increase in purchases was less than anticipated and followed a 0.7 percent gain in November that was larger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.4 percent, exceeding expectations.
Don't expect to see much apartment construction in the Inland Empire any time soon. As everyone knows, a glut of foreclosed homes has flooded much of Riverside and San Bernardino counties, and those homes compete with apartments for tenants, according to a new report by real estate brokerage Marcus & Millichap.
That's especially true in outlying areas such as Palm Springs, Perris and southwest Riverside County, the report said.
Waning demand and competition from foreclosed houses should drive Inland Empire vacancy up slightly to almost 10% this year. That's a much slower rise, however, from the jump of 2.4 percentage points last year.
Asking rents are forecast to fall 3.7% to an average of $969 a month, while actual rents should fall 5.6% to $895.
Those dreary numbers for landlords will result in the completion of just 520 new apartments this year, down from 1,260 units last year, Marcus & Millichap said.
Buyers returned to the market for U.S. preowned homes in December after a federal tax credit was reinstated, according to a survey of real estate agents released Tuesday by the National Association of Realtors. The pending home sales index rose 1% in December after plunging 16.4% in November, with buyers reacting first to the expiration and then to the return of the tax credit, NAR data showed. The index is up 10.9% compared with December 2008. The gain in the pending sales index portends a similar gain in existing home sales for January, which will be reported in three weeks. In December, existing home sales fell 16.7%.
Treasury Secretary Timothy Geithner said the U.S. can't make deep and immediate budget cuts.
U.S. housing vacancy rates remained near all-time highs in the fourth quarter, the Commerce Department reported Tuesday. For rental housing, the vacancy rate fell to 10.6% in the fourth quarter from a record 11.1% in the third quarter. For homes typically occupied by the owner, the vacancy rate rose to 2.7% from 2.6%. The home ownership rate fell to 67.2% from 67.6%, the lowest ownership rate since early 2000. Before the housing bubble burst, the rental vacancy rate had never been above 9%, and the ownership vacancy rate had never been above 2%. The data show 2.1 million vacant housing units for sale and 4.5 million units for rent, an over supply that has depressed prices and rents.
Crude oil for March delivery finished up $2.80, or 3.6%, at $77.23 a barrel at the New York Mercantile Exchange. Gold for April finished up $13, or 1.2%, at $1,118 an ounce at the New York Mercantile Exchange.
The Dow Jones Industrial Average gained 111.32 points to close at 10,296.85. The S&P 500 Index rose 14.12 points to 1,103.31. The Nasdaq Composite Index climbed 18.86 points to 2,190.06.
ZeroHedge: "As ProPublica indicates, there are now 26 states which have depleted their trust funds, among these are the usual suspects including California, Michigan, New York, Pennsylvania and Ohio, which now rely exclusively on borrowings from the Federal government to prevent the cessation of insurance payments to recently unemployed workers. Currently all states collectively posses $10.7 billion in trust fund assets(with the bulk held by less impacted states such as Washington ($2.6 billion), Louisiana ($1.1 billion) and Oregon ($1.1 billion). On the other hand, 26 states currently rely exclusively on the Federal Government, and have borrowed a combined $30 billion through December to fund payments. ProPublica estimates that another 8 states will be insolvent within 6 months, as their trust funds also approach 0."
Spending by U.S. consumers increased in December for a third consecutive month, signaling the biggest part of the economy will contribute more to growth in coming months.
The 0.2 percent increase in purchases was less than anticipated and followed a 0.7 percent gain in November that was larger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.4 percent, exceeding expectations.
Don't expect to see much apartment construction in the Inland Empire any time soon. As everyone knows, a glut of foreclosed homes has flooded much of Riverside and San Bernardino counties, and those homes compete with apartments for tenants, according to a new report by real estate brokerage Marcus & Millichap.
That's especially true in outlying areas such as Palm Springs, Perris and southwest Riverside County, the report said.
Waning demand and competition from foreclosed houses should drive Inland Empire vacancy up slightly to almost 10% this year. That's a much slower rise, however, from the jump of 2.4 percentage points last year.
Asking rents are forecast to fall 3.7% to an average of $969 a month, while actual rents should fall 5.6% to $895.
Those dreary numbers for landlords will result in the completion of just 520 new apartments this year, down from 1,260 units last year, Marcus & Millichap said.
Buyers returned to the market for U.S. preowned homes in December after a federal tax credit was reinstated, according to a survey of real estate agents released Tuesday by the National Association of Realtors. The pending home sales index rose 1% in December after plunging 16.4% in November, with buyers reacting first to the expiration and then to the return of the tax credit, NAR data showed. The index is up 10.9% compared with December 2008. The gain in the pending sales index portends a similar gain in existing home sales for January, which will be reported in three weeks. In December, existing home sales fell 16.7%.
Treasury Secretary Timothy Geithner said the U.S. can't make deep and immediate budget cuts.
U.S. housing vacancy rates remained near all-time highs in the fourth quarter, the Commerce Department reported Tuesday. For rental housing, the vacancy rate fell to 10.6% in the fourth quarter from a record 11.1% in the third quarter. For homes typically occupied by the owner, the vacancy rate rose to 2.7% from 2.6%. The home ownership rate fell to 67.2% from 67.6%, the lowest ownership rate since early 2000. Before the housing bubble burst, the rental vacancy rate had never been above 9%, and the ownership vacancy rate had never been above 2%. The data show 2.1 million vacant housing units for sale and 4.5 million units for rent, an over supply that has depressed prices and rents.
Crude oil for March delivery finished up $2.80, or 3.6%, at $77.23 a barrel at the New York Mercantile Exchange. Gold for April finished up $13, or 1.2%, at $1,118 an ounce at the New York Mercantile Exchange.
The Dow Jones Industrial Average gained 111.32 points to close at 10,296.85. The S&P 500 Index rose 14.12 points to 1,103.31. The Nasdaq Composite Index climbed 18.86 points to 2,190.06.
Monday, February 01, 2010
Greece and the U.S.
2/1/10 Greece and the U.S.
Americans increased their spending in December at the slowest pace since September, allowing their savings rate to drift to the highest level since June, the Commerce Department estimated Monday. Real consumer spending (that is, adjusted for inflation) rose a seasonally adjusted 0.1% in December after a 0.4% gain in November. Meanwhile, real after-tax incomes rose a seasonally adjusted 0.3% in December, boosted by transfer payments, small-business profits, income from investments, and a small gain in wages. With incomes rising faster than spending, the personal savings rate rose to 4.8% of disposable incomes, the highest since June.
Exxon Mobil Corp. said Monday its fourth-quarter net income fell 23% to $6.05 billion, or $1.27 a share, from $7.82 billion, or $1.54 a share in the year-ago period. Revenue rose to $89.8 billion from $84.7 billion. Wall Street analysts expected earnings of $1.17 a share for the oil giant, according to a survey by FactSet Research. Capital and exploration spending rose 21% to $8.3 billion. Oil-equivalent production increased about 2%. Excluding the impacts of entitlement volumes, quotas and divestments, production rose more than 3%.
As refineries from New Jersey to New Mexico close at the fastest pace in three decades, traders in Singapore are profiting from a new plant on India’s west coast and a ship heading for Florida filled with jet fuel from Taiwan.
The so-called refinery crack spread in Singapore, representing the value of fuels minus the cost of crude oil, may climb 50 percent to as much as $4.50 a barrel this year, according to a Bloomberg News survey of five analysts. U.S. refinery margins will drop 35 percent by December, futures contracts on the New York
John Hussman: "Presently, stocks remain richly valued on the basis of normalized earnings, book values, dividends, revenues and other metrics. Investors now rely on the renewed attainment of bubble valuations in order to achieve acceptable returns.
If you keep one thing in mind during the current earnings season, it should be that operating earnings significantly overestimate what Warren Buffett would refer to as "owner earnings" - the actual amounts that are paid out or retained for the benefit of shareholders. Again, stocks are nothing but a claim to the long-term stream of cash flows that will actually be delivered to investors over time. Everything else is hype, smoke and mirrors."
President Barack Obama proposes a $3.8 trillion fiscal 2011 budget today that calls for $100 billion in additional stimulus spending and projects this year’s deficit will hit a record $1.6 trillion.This is almost 11% of the GDP.
Foreign central banks' UST holdings at the Fed declined for the first time in over two years.
The ISM factory index jumped to 58.4% in January from 54.9% in December. This is well above expectations. The consensus forecast of estimates collected by MarketWatch was for the index to rise to 56.0%.
Spending on U.S. construction projects fell at a seasonally adjusted rate of 1.2% in December, the fifth decline in the past six months and the lowest rate since August 2003, the Commerce Department estimated Monday. For all of 2009, total construction spending fell 12.4% to $939.1 billion from $1.07 trillion in 2008. It was the largest decline on record, dating to 1964. The 1.2% decline in December was much worse than the 0.4% drop expected by economists surveyed by MarketWatch. November's outlays were revised down to a 1.2% drop from the 0.6% decline earlier reported. Private residential outlays fell 2.8%, private nonresidential outlays rose 0.2%, and public outlays fell 1.2%.
Wells Fargo & Co., unlike its three biggest competitors, is so convinced interest rates will rise that it sacrificed as much as $1 billion last year cutting back on fixed-income investments.
The nation’s fourth-largest bank, whose biggest shareholder is Warren Buffett’s Berkshire Hathaway Inc., reduced investments in mostly fixed-income securities by $34 billion in 2009’s second half, company filings show. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. boosted their holdings by an average of $35.5 billion.
By scaling back on the so-called carry trade, in which banks borrow in overnight lending markets at rates near zero and invest in higher-yielding securities, San Francisco-based Wells Fargo aims to protect against losses when rates rise. The three other lenders increased investments on the theory that profit will outpace any future losses.
“The bias is for higher rates,” Chief Executive Officer John Stumpf, 56, said on the company’s fourth-quarter earnings call. “We’re willing to wait for that to happen. We think that’s the better trade.”
Ried Thunberg’s survey shows most money managers are bearish on Treasuries. The company’s index measuring the market outlook through June fell to 42 for the seven days ended Jan. 29 from 43 the week before. A figure less than 50 shows investors expect prices to fall. The company, in Jersey City, New Jersey, interviewed 26 fund managers controlling $1.42 trillion.
The Dow Jones Industrial Average rose 118.20, or 1.2% to close at 10,185.53, its biggest point and percentage gain since Jan. 4. The S&P 500 gained 1.4 percent and the tech-heavy Nasdaq added 1.1 percent.
Americans increased their spending in December at the slowest pace since September, allowing their savings rate to drift to the highest level since June, the Commerce Department estimated Monday. Real consumer spending (that is, adjusted for inflation) rose a seasonally adjusted 0.1% in December after a 0.4% gain in November. Meanwhile, real after-tax incomes rose a seasonally adjusted 0.3% in December, boosted by transfer payments, small-business profits, income from investments, and a small gain in wages. With incomes rising faster than spending, the personal savings rate rose to 4.8% of disposable incomes, the highest since June.
Exxon Mobil Corp. said Monday its fourth-quarter net income fell 23% to $6.05 billion, or $1.27 a share, from $7.82 billion, or $1.54 a share in the year-ago period. Revenue rose to $89.8 billion from $84.7 billion. Wall Street analysts expected earnings of $1.17 a share for the oil giant, according to a survey by FactSet Research. Capital and exploration spending rose 21% to $8.3 billion. Oil-equivalent production increased about 2%. Excluding the impacts of entitlement volumes, quotas and divestments, production rose more than 3%.
As refineries from New Jersey to New Mexico close at the fastest pace in three decades, traders in Singapore are profiting from a new plant on India’s west coast and a ship heading for Florida filled with jet fuel from Taiwan.
The so-called refinery crack spread in Singapore, representing the value of fuels minus the cost of crude oil, may climb 50 percent to as much as $4.50 a barrel this year, according to a Bloomberg News survey of five analysts. U.S. refinery margins will drop 35 percent by December, futures contracts on the New York
John Hussman: "Presently, stocks remain richly valued on the basis of normalized earnings, book values, dividends, revenues and other metrics. Investors now rely on the renewed attainment of bubble valuations in order to achieve acceptable returns.
If you keep one thing in mind during the current earnings season, it should be that operating earnings significantly overestimate what Warren Buffett would refer to as "owner earnings" - the actual amounts that are paid out or retained for the benefit of shareholders. Again, stocks are nothing but a claim to the long-term stream of cash flows that will actually be delivered to investors over time. Everything else is hype, smoke and mirrors."
President Barack Obama proposes a $3.8 trillion fiscal 2011 budget today that calls for $100 billion in additional stimulus spending and projects this year’s deficit will hit a record $1.6 trillion.This is almost 11% of the GDP.
Foreign central banks' UST holdings at the Fed declined for the first time in over two years.
The ISM factory index jumped to 58.4% in January from 54.9% in December. This is well above expectations. The consensus forecast of estimates collected by MarketWatch was for the index to rise to 56.0%.
Spending on U.S. construction projects fell at a seasonally adjusted rate of 1.2% in December, the fifth decline in the past six months and the lowest rate since August 2003, the Commerce Department estimated Monday. For all of 2009, total construction spending fell 12.4% to $939.1 billion from $1.07 trillion in 2008. It was the largest decline on record, dating to 1964. The 1.2% decline in December was much worse than the 0.4% drop expected by economists surveyed by MarketWatch. November's outlays were revised down to a 1.2% drop from the 0.6% decline earlier reported. Private residential outlays fell 2.8%, private nonresidential outlays rose 0.2%, and public outlays fell 1.2%.
Wells Fargo & Co., unlike its three biggest competitors, is so convinced interest rates will rise that it sacrificed as much as $1 billion last year cutting back on fixed-income investments.
The nation’s fourth-largest bank, whose biggest shareholder is Warren Buffett’s Berkshire Hathaway Inc., reduced investments in mostly fixed-income securities by $34 billion in 2009’s second half, company filings show. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. boosted their holdings by an average of $35.5 billion.
By scaling back on the so-called carry trade, in which banks borrow in overnight lending markets at rates near zero and invest in higher-yielding securities, San Francisco-based Wells Fargo aims to protect against losses when rates rise. The three other lenders increased investments on the theory that profit will outpace any future losses.
“The bias is for higher rates,” Chief Executive Officer John Stumpf, 56, said on the company’s fourth-quarter earnings call. “We’re willing to wait for that to happen. We think that’s the better trade.”
Ried Thunberg’s survey shows most money managers are bearish on Treasuries. The company’s index measuring the market outlook through June fell to 42 for the seven days ended Jan. 29 from 43 the week before. A figure less than 50 shows investors expect prices to fall. The company, in Jersey City, New Jersey, interviewed 26 fund managers controlling $1.42 trillion.
The Dow Jones Industrial Average rose 118.20, or 1.2% to close at 10,185.53, its biggest point and percentage gain since Jan. 4. The S&P 500 gained 1.4 percent and the tech-heavy Nasdaq added 1.1 percent.
Sunday, January 31, 2010
Bang
1/31/10 Bang
This Time is Different (Carmen M. Reinhart and Kenneth Rogoff): "Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence-especially in cases in which large short-term debts need to be rolled over continuously-is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!-confidence collapses, lenders disappear, and a crisis hits."
Private equity firms have financed the purchase of 100,000 units of rent-regulated housing across New York City since 2005, according to the Association for Neighborhood and Housing Development, a coalition of nonprofit housing groups in New York. These owners account for almost 10 percent of the city’s rent-regulated housing.
Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development says that harassment is central to rental real estate investments backed by private equity firms because the onerous debt they have taken on requires significantly higher revenue than can be generated in rent-regulated buildings.
And, he argues, even if these properties go into bankruptcy, the pattern of harassment may continue. Distressed-debt investors interested in buying them may continue trying to force out tenants, he said.
John Mauldin: "And if you look at consumer spending in the data, you find that it actually declined in the 4th quarter, both annually and from the previous quarter. "Domestic demand" declined from 2.3% in the third quarter to only 1.7% in the fourth quarter. Part of that is clearly the absence of "Cash for Clunkers," but even so that is not a sign of economic strength.
Second, as my friend David Rosenberg pointed out, imports fell over the 4th quarter. Usually in a heavy inventory-rebuilding cycle, imports rise because a portion of the materials businesses need to build their own products comes from foreign sources. Thus the drop in imports is most unusual. Falling imports, which is a sign of economic retrenching, also increases the statistical GDP number.
Third, I have seen no analysis (yet) on the impact of the stimulus spending, but it was 90% of the growth in the third quarter, or a little less than 2%....In the fourth quarter, aggregate private hours worked contracted at a 0.5% annual rate and what we can tell you is that such a decline in labor input has never before, scanning over 50 years of data, coincided with a GDP headline this good.
"Normally, GDP growth is 1.7% when hours worked is this weak, and that is exactly the trend that was depicted this week in the release of the Chicago Fed's National Activity Index, which was widely ignored. On the flip side, when we have in the past seen GDP growth come in at or near a 5.7% annual rate, what is typical is that hours worked grows at a 3.7% rate. No matter how you slice it, the GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker - a few grains won't do."
Greece is running a budget deficit of 12.5%. How does that compare with the U.S.?
Mike Burk: "The sell off of the last 2 weeks has the market, by many measures, the most oversold it has been since the rally began last March. At this time there is no evidence of a developing top so the market is likely to recover, at least, to its previous highs.
I expect the major averages to be higher on Friday February 5 than they were on Friday January 29.
Last weeks positive forecast was a miss."
This Time is Different (Carmen M. Reinhart and Kenneth Rogoff): "Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence-especially in cases in which large short-term debts need to be rolled over continuously-is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang!-confidence collapses, lenders disappear, and a crisis hits."
Private equity firms have financed the purchase of 100,000 units of rent-regulated housing across New York City since 2005, according to the Association for Neighborhood and Housing Development, a coalition of nonprofit housing groups in New York. These owners account for almost 10 percent of the city’s rent-regulated housing.
Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development says that harassment is central to rental real estate investments backed by private equity firms because the onerous debt they have taken on requires significantly higher revenue than can be generated in rent-regulated buildings.
And, he argues, even if these properties go into bankruptcy, the pattern of harassment may continue. Distressed-debt investors interested in buying them may continue trying to force out tenants, he said.
John Mauldin: "And if you look at consumer spending in the data, you find that it actually declined in the 4th quarter, both annually and from the previous quarter. "Domestic demand" declined from 2.3% in the third quarter to only 1.7% in the fourth quarter. Part of that is clearly the absence of "Cash for Clunkers," but even so that is not a sign of economic strength.
Second, as my friend David Rosenberg pointed out, imports fell over the 4th quarter. Usually in a heavy inventory-rebuilding cycle, imports rise because a portion of the materials businesses need to build their own products comes from foreign sources. Thus the drop in imports is most unusual. Falling imports, which is a sign of economic retrenching, also increases the statistical GDP number.
Third, I have seen no analysis (yet) on the impact of the stimulus spending, but it was 90% of the growth in the third quarter, or a little less than 2%....In the fourth quarter, aggregate private hours worked contracted at a 0.5% annual rate and what we can tell you is that such a decline in labor input has never before, scanning over 50 years of data, coincided with a GDP headline this good.
"Normally, GDP growth is 1.7% when hours worked is this weak, and that is exactly the trend that was depicted this week in the release of the Chicago Fed's National Activity Index, which was widely ignored. On the flip side, when we have in the past seen GDP growth come in at or near a 5.7% annual rate, what is typical is that hours worked grows at a 3.7% rate. No matter how you slice it, the GDP number today represented not just a rare but an unprecedented event, and as such, we are willing to treat the report with an entire saltshaker - a few grains won't do."
Greece is running a budget deficit of 12.5%. How does that compare with the U.S.?
Mike Burk: "The sell off of the last 2 weeks has the market, by many measures, the most oversold it has been since the rally began last March. At this time there is no evidence of a developing top so the market is likely to recover, at least, to its previous highs.
I expect the major averages to be higher on Friday February 5 than they were on Friday January 29.
Last weeks positive forecast was a miss."
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