11/11/06 Veteran's Day
Mark Twain: "In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot."
India's industrial production rose 11.4 percent in September, boosting growth for the first half of the fiscal year to 10.9 percent, the government said Friday in a report that indicated momentum is building in the economy.
China's Commerce Ministry said exports this year are expected to total $960 billion this year, with imports rising to $810 billion, the official Xinhua News Agency said. It is easy to see how the size of this trade surplus can lead to A $1 trillion foreign exchange surplus.
I urge all of you to read the article in The Journal Record on Helmerich and Payne
http://www.kfor.com/Global/story.asp?S=5...
Richard Benson: "Back in 2000, when homes were worth $11.4 trillion, there were only $4.8 trillion in mortgages against them. In the second quarter of 2006, that mortgage debt increased to a whopping $9.3 trillion. Increases in consumer borrowing pushes up economic spending and corporate profits and is far more powerful than wage or salary increases. To put it simply, when a dollar is borrowed, the full amount can be spent; when a dollar is earned, taxes need to be paid so depending on your tax rate, you’re left with about $.60 - $.80 cents. Surprisingly, even with the increases in housing prices over the last few years, the percentage of equity in homes has actually fallen from 58 percent in 2000, to 54 percent today."
The new standard deduction for married couples filing a joint income tax return will rise $400 to $10,700 next year after inflation adjustments that the Internal Revenue Service announced Thursday.The IRS said the deduction for singles and married individuals filing separately will go up $200 to $5,350 and for heads of household up $300 to $7,850. The changes will affect 2007 returns, filed by most taxpayers in 2008. Among other inflation adjustments, the value of each personal and dependency exemption, available to most taxpayers, will increase $100 from the 2006 level of $3,300.
Bill Gates warned against the rush to new Web-based software services, likening the frenzy to the days of the 1990s Internet bubble. Asked to name the next YouTube, the free video exchange Web site that is being acquired by Google for $1.65 billion, Gates said that he was cautious. "There are a hundred YouTube sites out there," Gates said during an interview with a group of journalists in Brussels before a speech to European lawmakers. "You never know. It's very complicated in terms of what are the business models for these sites."
Strengthening expectations of more eurozone interest rate increases helped send yields on 10-year eurozone government bonds briefly below yields on two-year paper on Thursday for the first time in more than six years.
From Eathfiles.com:“If no action is taken to reduce emissions, the concentration of greenhouse gases in the atmosphere could reach double its pre-industrial level as early as 2035."
- Sir Nicholas Stern, British Economist, November 10, 2006,
Report to British Prime Minister and Chancellor of Exchequer
According to the WSJ, Some Democrats are signaling a willingness to conduct tough oversight of Bush policies and to reopen lingering controversies -- particularly over pre-Iraq intelligence -- the Republican-led Congress largely ignored.
Surging demand and lower OPEC production may start to deflate world fuel stockpiles that have been filling at the fastest rate in 15 years, the International Energy Agency said on Friday.
Sudden revaluation of the Chinese yuan or renminbi could lead to massive bankruptcies and layoffs in the manufacturing sector, Chinese central banker Zhou Xiaochuan said Friday.
December crude closed at $59.59 a barrel, down $1.57, or 2.6%, for Friday's session, but up 45 cents, or 0.8%, for the week. December natural gas lost 16.1 cents, or 2%, to close at $7.794 per million British thermal units Friday. The contract was down 9 cents for the week.
December gold closed at $630.10 an ounce Friday, down $6.70, or 1.1%, for the session, but up 90 cents, or 0.1%, for the week. December silver added 6.5 cents to close at $13.115 an ounce, and gained 3.8% for the week. December copper dropped 22.05 cents, or 6.7%, to end at $3.0885 a pound for the day, down 7% from last Friday's close.
The National Association of Realtors said Friday in their 2007 outlook that existing-home sales will probably fall 0.6% to 6.43 million next year after sinking 8.6% this year, said David Lereah, chief economist for the industry group. New-home sales will probably fall 8.7% next year to 975,000 after plunging about 17% this year. Housing starts will probably fall about 12% next year to 1.63 million next year after falling 11% this year, he said.
John Stuart Mill: ""War is an ugly thing, but not the ugliest of things. The decayed and degraded state of moral and patriotic feeling, which thinks that nothing is worth war, is much worse. The person who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself."
Saturday, November 11, 2006
Thursday, November 09, 2006
Further Developments
11/10/06 Further Developments
Dana Corp. will close eight plants in North America -- in addition to eight plants it already plans to close. It plans to modify or reject certain labor contracts in bankruptcy court. It plans to “eliminate any company obligation to provide post-retirement health care benefits for all current and future Dana retirees.
The Energy Department said natural-gas inventories fell 7 billion cubic feet for the week ended Nov. 3, marking the second-weekly decline of the heating season.
December crude climbed $1.33, or 2.2%, to close at a two-week high of $61.16 a barrel Thursday. "Surplus stocks narrowed for the third-straight week to stand 12.5 [million barrels] above year-ago levels, which means the supply cushion is slowly eroding," said Michael Fitzpatrick, an analyst at Fimat USA December natural gas climbed 13.2 cents, or 1.7%, to end at $7.955 per million British thermal units, its highest price since late October.
U.S. Nov. UMich consumer sentiment 92.3 vs. 93.6 in Oct.
Inventories at U.S. wholesalers rose to their highest level in relation to sales in more than a year in September, the Commerce Department reported Wednesday. Sales at wholesalers fell 1.2% in September, the first decline since last December and biggest drop in three years, while inventories increased 0.8%. The inventory-to-sales ratio rose to 1.18 in September, the highest since August 2005.
The Labor Department reported a 2% decline in import prices for October, the largest decline in three years. Import prices excluding petroleum fell 0.6% in October. Import prices excluding all fuels fell 0.1% in October, the first monthly decline since November 2005.
The Commerce Department reported the lowest trade gap since April for the month of September. The deficit narrowed by 6.8% in September to $64.3 billion-- the decline due mostly to lower oil prices. The trade gap is still astounding from a size standpoint.
Margaret Mead: "Having two bathrooms ruined the capacity to cooperate."
Delta Air Lines Inc. on Thursday said it plans to recall an additional 1,000 flight attendants in 2007.
Poe Fratt, a drilling-services analyst with A.G. Edwards & Sons in St. Louis:
"A drilling rig can have a life of 20 to 25 years, But right now it costs $12 million to refurbish a new rig and $15 million or more to build a new one, and the build time is up to nine months and lead times are getting longer and longer. So it's hard to see how we're ever going to get back to 4,530 rigs." I have suggested the purchase of Helmerich and Payne several times. Yes the stock has risen 3 points to $25; however, this is a quality company with highly experienced and competent management. In my view, the shares are selling at a ridiculously low valuation based on cash flow projections for their current fiscal year.
The price indexes for imports from Japan and China also decreased in
October, declining 0.3 percent and 0.1 percent, respectively. The October drop
in import prices from Japan was the third decline in the past four months and
the index decreased 1.7 percent for the year ended in October. The fall in
prices from China followed a 0.2 percent decline in September and the index
was down 1.3 percent over the past 12 months.
In contrast, prices for imports from the European Union increased 0.2
percent in October as a 0.4 percent advance in manufactured articles prices
more than offset a 5.5 percent decline in prices for nonmanufactured articles.
Import prices from the European Union rose 4.7 percent for the October 2005-
2006 period.
Meritage Homes Corp. CEO Steven Hilton said the company could see between $15 million and $30 million of charges in its fiscal fourth quarter related to land options and real-estate write-downs, based on recent analysis. The CEO said the home builder has taken about $16 million in charges the last two quarters. "Clearly it's a much different [housing] market than a year ago," Hilton said. He said demand has softened, home inventories are rising and taking longer to sell, incentives are up and profit margins are down.
Toll Brothers Inc.CEO Robert Toll said Thursday the company is seeing record cancellations now in part because its backlog stretched out beyond 12 months during the boom years when the company was selling a high volume of homes. As a result, speculative buyers are now walking away and giving up their deposit as the home comes to completion.
Bayer AG division Bayer HealthCare said Thursday it will realign its global pharmaceutical research and development organization, cutting up to 800 U.S jobs in the process. The actions follow Germany-based Bayer's acquisition of Schering AG in June. Bayer said it expects to lay off 600 workers, mainly research positions, as well as an additional 200 employees within the overall organization. Under the realignment, research programs and activities will be consolidated into three major sites: Berlin and Wuppertal, Germany, and Berkeley, Calif. Research sites in West Haven, Conn., and Richmond, Calif., will close.
December gold climbed $18.50, or 3%, to end at $636.80 an ounce Thursday, the contract's highest closing level since early September. December silver rose 50 cents to end at $13.05 an ounce, also a two-month high. Within the last 30 days Goldcorp has rallied 40% and Eldorado Gold close to 30%.
Zhou Xiaochuan, governor of the People's Bank of China, said at a conference in Frankfurt that China has concrete plans to diversify its reserves and is considering lots of instruments, said Ashraf Laidi of CMC Markets in New York.
Forbes on Microsoft's Zune: "All considered, we could be looking at the biggest consumer electronics flop in recent history here. This is like "Microsoft Bob," only more embarrassing."
Dwight D. Eisenhower: "Only strength can cooperate. Weakness can only beg."
Dana Corp. will close eight plants in North America -- in addition to eight plants it already plans to close. It plans to modify or reject certain labor contracts in bankruptcy court. It plans to “eliminate any company obligation to provide post-retirement health care benefits for all current and future Dana retirees.
The Energy Department said natural-gas inventories fell 7 billion cubic feet for the week ended Nov. 3, marking the second-weekly decline of the heating season.
December crude climbed $1.33, or 2.2%, to close at a two-week high of $61.16 a barrel Thursday. "Surplus stocks narrowed for the third-straight week to stand 12.5 [million barrels] above year-ago levels, which means the supply cushion is slowly eroding," said Michael Fitzpatrick, an analyst at Fimat USA December natural gas climbed 13.2 cents, or 1.7%, to end at $7.955 per million British thermal units, its highest price since late October.
U.S. Nov. UMich consumer sentiment 92.3 vs. 93.6 in Oct.
Inventories at U.S. wholesalers rose to their highest level in relation to sales in more than a year in September, the Commerce Department reported Wednesday. Sales at wholesalers fell 1.2% in September, the first decline since last December and biggest drop in three years, while inventories increased 0.8%. The inventory-to-sales ratio rose to 1.18 in September, the highest since August 2005.
The Labor Department reported a 2% decline in import prices for October, the largest decline in three years. Import prices excluding petroleum fell 0.6% in October. Import prices excluding all fuels fell 0.1% in October, the first monthly decline since November 2005.
The Commerce Department reported the lowest trade gap since April for the month of September. The deficit narrowed by 6.8% in September to $64.3 billion-- the decline due mostly to lower oil prices. The trade gap is still astounding from a size standpoint.
Margaret Mead: "Having two bathrooms ruined the capacity to cooperate."
Delta Air Lines Inc. on Thursday said it plans to recall an additional 1,000 flight attendants in 2007.
Poe Fratt, a drilling-services analyst with A.G. Edwards & Sons in St. Louis:
"A drilling rig can have a life of 20 to 25 years, But right now it costs $12 million to refurbish a new rig and $15 million or more to build a new one, and the build time is up to nine months and lead times are getting longer and longer. So it's hard to see how we're ever going to get back to 4,530 rigs." I have suggested the purchase of Helmerich and Payne several times. Yes the stock has risen 3 points to $25; however, this is a quality company with highly experienced and competent management. In my view, the shares are selling at a ridiculously low valuation based on cash flow projections for their current fiscal year.
The price indexes for imports from Japan and China also decreased in
October, declining 0.3 percent and 0.1 percent, respectively. The October drop
in import prices from Japan was the third decline in the past four months and
the index decreased 1.7 percent for the year ended in October. The fall in
prices from China followed a 0.2 percent decline in September and the index
was down 1.3 percent over the past 12 months.
In contrast, prices for imports from the European Union increased 0.2
percent in October as a 0.4 percent advance in manufactured articles prices
more than offset a 5.5 percent decline in prices for nonmanufactured articles.
Import prices from the European Union rose 4.7 percent for the October 2005-
2006 period.
Meritage Homes Corp. CEO Steven Hilton said the company could see between $15 million and $30 million of charges in its fiscal fourth quarter related to land options and real-estate write-downs, based on recent analysis. The CEO said the home builder has taken about $16 million in charges the last two quarters. "Clearly it's a much different [housing] market than a year ago," Hilton said. He said demand has softened, home inventories are rising and taking longer to sell, incentives are up and profit margins are down.
Toll Brothers Inc.CEO Robert Toll said Thursday the company is seeing record cancellations now in part because its backlog stretched out beyond 12 months during the boom years when the company was selling a high volume of homes. As a result, speculative buyers are now walking away and giving up their deposit as the home comes to completion.
Bayer AG division Bayer HealthCare said Thursday it will realign its global pharmaceutical research and development organization, cutting up to 800 U.S jobs in the process. The actions follow Germany-based Bayer's acquisition of Schering AG in June. Bayer said it expects to lay off 600 workers, mainly research positions, as well as an additional 200 employees within the overall organization. Under the realignment, research programs and activities will be consolidated into three major sites: Berlin and Wuppertal, Germany, and Berkeley, Calif. Research sites in West Haven, Conn., and Richmond, Calif., will close.
December gold climbed $18.50, or 3%, to end at $636.80 an ounce Thursday, the contract's highest closing level since early September. December silver rose 50 cents to end at $13.05 an ounce, also a two-month high. Within the last 30 days Goldcorp has rallied 40% and Eldorado Gold close to 30%.
Zhou Xiaochuan, governor of the People's Bank of China, said at a conference in Frankfurt that China has concrete plans to diversify its reserves and is considering lots of instruments, said Ashraf Laidi of CMC Markets in New York.
Forbes on Microsoft's Zune: "All considered, we could be looking at the biggest consumer electronics flop in recent history here. This is like "Microsoft Bob," only more embarrassing."
Dwight D. Eisenhower: "Only strength can cooperate. Weakness can only beg."
Wednesday, November 08, 2006
The Election
11/9/06 The Election
Barry Ritholtz: "Now we'll find out if some of the more experienced than I market watchers (Jeff Saut, Bill King, John Succo, J) have been right about who/what's been driving the stock market futures for political purposes. Indeed, its now in their interest to let markets slide as a rebuke to the Dems. Negative futures and market dips have been bought in the past; I suspect that pattern may not continue."
The American Petroleum Institute said crude supplies fell 866,000 barrels for the week ended Nov. 3. The Energy Department had reported a rise of 400,000 barrels. Motor gasoline supplies were up 1.3 million barrels, the API said -- contrary to the 600,000-barrel fall reported by the government. Distillate stocks declined by 2.1 million barrels, the API said. The Energy Department had reported a fall of 2.7 million barrels.
Centex Corp. CEO Tim Eller stated it normally takes about two and a half years from the peak to the trough. "So we still have further to go" since most experts place the top of the housing boom in July 2005, the CEO said. "In hindsight, we didn't take our foot off the gas pedal soon enough," he added.
I keep asking myself who is in charge of the executive branch of our government. Is it Bush 41 or Bush 43? A Bush 41 pick, Rumsfeld, has been replaced with another Bush 41 pick-- former CIA head Gates. It will be interesting to see whether Cheney, a Bush 41 choice, steps down for health reasons and Jim Baker, a Bush 41 confidant, takes his place. That only would leave Bush 43 to be replaced.
JFK: "The margin is narrow, but the responsibility is clear."
Vista will be "widely available" on Jan. 30, 2007. Microsoft's Office 2007 suite of software products will be available later this month. How many bugs will be in both of those products when finally released?
December gold fell $9.40 to end at $618.30 an ounce. December copper dropped 12.1 cents, or 3.6%, to close at $3.2445 a pound and December silver lost 12.5 cents to end at $12.55 an ounce.
Billionaires Eli Broad and Ronald Burkle have submitted a bid to acquire Tribune Co., according to a media reports Wednesday. Financial terms of the offer weren't available, the Associated Press reported, citing sources. Chicago-based Tribune publishes the Los Angeles Times, the Chicago Tribune, Newsday in New York and owns the WGN television station in Chicago, among other holdings.
Fortress Investment Group LLC filed plans with the Securities and Exchange Commission late Wednesday for what would be the first initial public offering of shares by a hedge fund firm in the U.S. Fortress, which oversees $26 billion in private-equity, hedge funds and other alternative investment vehicles, said a share sale will help it retain talent, access capital more efficiently to expand its busienss and give it a currency for future acquisitions.
The Dow Jones Industrial Average set a new record high close on Wednesday.
December crude rose 90 cents to end at $59.83. December natural gas closed up 6.8 cents at $7.823 per million British thermal units.
Franklin P. Adams: "Elections are won by men and women chiefly because most people vote against somebody rather than for somebody."
Barry Ritholtz: "Now we'll find out if some of the more experienced than I market watchers (Jeff Saut, Bill King, John Succo, J) have been right about who/what's been driving the stock market futures for political purposes. Indeed, its now in their interest to let markets slide as a rebuke to the Dems. Negative futures and market dips have been bought in the past; I suspect that pattern may not continue."
The American Petroleum Institute said crude supplies fell 866,000 barrels for the week ended Nov. 3. The Energy Department had reported a rise of 400,000 barrels. Motor gasoline supplies were up 1.3 million barrels, the API said -- contrary to the 600,000-barrel fall reported by the government. Distillate stocks declined by 2.1 million barrels, the API said. The Energy Department had reported a fall of 2.7 million barrels.
Centex Corp. CEO Tim Eller stated it normally takes about two and a half years from the peak to the trough. "So we still have further to go" since most experts place the top of the housing boom in July 2005, the CEO said. "In hindsight, we didn't take our foot off the gas pedal soon enough," he added.
I keep asking myself who is in charge of the executive branch of our government. Is it Bush 41 or Bush 43? A Bush 41 pick, Rumsfeld, has been replaced with another Bush 41 pick-- former CIA head Gates. It will be interesting to see whether Cheney, a Bush 41 choice, steps down for health reasons and Jim Baker, a Bush 41 confidant, takes his place. That only would leave Bush 43 to be replaced.
JFK: "The margin is narrow, but the responsibility is clear."
Vista will be "widely available" on Jan. 30, 2007. Microsoft's Office 2007 suite of software products will be available later this month. How many bugs will be in both of those products when finally released?
December gold fell $9.40 to end at $618.30 an ounce. December copper dropped 12.1 cents, or 3.6%, to close at $3.2445 a pound and December silver lost 12.5 cents to end at $12.55 an ounce.
Billionaires Eli Broad and Ronald Burkle have submitted a bid to acquire Tribune Co., according to a media reports Wednesday. Financial terms of the offer weren't available, the Associated Press reported, citing sources. Chicago-based Tribune publishes the Los Angeles Times, the Chicago Tribune, Newsday in New York and owns the WGN television station in Chicago, among other holdings.
Fortress Investment Group LLC filed plans with the Securities and Exchange Commission late Wednesday for what would be the first initial public offering of shares by a hedge fund firm in the U.S. Fortress, which oversees $26 billion in private-equity, hedge funds and other alternative investment vehicles, said a share sale will help it retain talent, access capital more efficiently to expand its busienss and give it a currency for future acquisitions.
The Dow Jones Industrial Average set a new record high close on Wednesday.
December crude rose 90 cents to end at $59.83. December natural gas closed up 6.8 cents at $7.823 per million British thermal units.
Franklin P. Adams: "Elections are won by men and women chiefly because most people vote against somebody rather than for somebody."
Monday, November 06, 2006
Disconnects
11/7/06 Disconnects
John Hussman: "Analysts may turn out to be correct in forecasting continued earnings growth. It's just that the people running those companies seem to disagree."
The U.S. economy should bounce back from the weak third quarter and average "somewhat below" a 3% real GDP rate over the next year, said Michael Moscow, the president of the Chicago Federal Reserve Bank on Monday.
OSI Restaurant Partners Inc., operator of Outback Steakhouse, Carrabba's Italian Grill and Bonefish Grill, on Monday said it agreed to be acquired by an investor group comprised of Bain Capital Partners, Catterton Partners and company founders Chris Sullivan, Robert Basham and J. Timothy Gannon for $40 a share in cash.
Swift Transportation said it has received a buoyout offer from its largest shareholder Jerry Moyes, offering $29 a share for all outstanding shares.
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today positive results from two Phase 2B trials evaluating bremelanotide for the treatment of male erectile dysfunction (ED). The two Phase 2B clinical trials were double-blind, placebo-controlled, parallel dose trials that included a one month run-in period and a three-month treatment period.
Dr. King Jolly, Executive Vice President of Research & Development for King, stated, "Together with our colleagues at Palatin, we are pleased with the data from these two trials, which demonstrate the potential effectiveness of bremelanotide as a treatment option for patients with ED. Accordingly, we look forward to further assessing the data from these two trials and our other Phase 2 investigations as we move forward with our development plan."
"The trial met its objectives and I feel confident we can develop a scientifically rigorous Phase 3 clinical program incorporating doses that have both adequate efficacy and acceptable tolerability to discuss with the FDA at an upcoming end-of-Phase 2 meeting," said Dr. Trevor Hallam, Executive Vice President, Research and Development of Palatin.
I do not know what investors expected but the stock traded down from $2.75 to $1.85, and then back to $2.29. Some were concerned with certain side effects; however, attention should be centered on the size of the dosage. There is a definite disconnect between the drop in the stock price and the presentation of the facts of the trials filed with the SEC.
George Ure: "The President of the United States recently went on TV and told the American people that the Federal budget deficit, last year, was about $249 billion. What he said was… er… misleading.
The fact is that, last year, the Federal Government had to borrow, not $249 billion to make ends meet, but $620 billion. THAT is the difference between the National Debt, as it stood at the beginning of the year, and the National Debt, as it stood at the end of that same year.
The reason the President could get away with his "misleading assertion" is that the other $380 billion was "off-budget". Yes, the money was spent, but no budget documents recorded it. So the BUDGET deficit was $249 billion, but the ACTUAL deficit was ore than twice as big."
Joseph Stalin: “The people who cast the votes don't decide an election, the people who count the votes do.”
According to the Financial Times, "Investment banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of reported “panic selling” in the US and European credit derivatives market last week.
This heavy selling has driven the cost of insuring debt against default in the market for credit default swaps to record low levels – signalling either that investors are extraordinarily optimistic about the outlook for corporate debt, or that prices are so distorted that they are no longer being paid for the risks they are taking on."
Four Seasons Hotels Inc. said on Monday it had received a management-led buyout offer valued at $3.7 billion or $82 a share in cash.
The offer is led by a group which includes Four Seasons controlling shareholder Isadore Sharp and Triples Holdings Limited, Kingdom Hotels International, a company owned by a trust created by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, and Bill Gates' Cascade Investment LLC.
Abbott Laboratories Inc. said on Monday it will acquire Kos Pharmaceuticals Inc. for $3.7 billion to boost its presence in the lucrative cholesterol-treatment market.
The agreement provides for Abbott to acquire Kos for $78 per share in cash.
December gold fell $1.30 to close at $627.90 an ounce. December silver closed 12.5 cents higher at $12.76 and December copper finished at $3.337 a pound, up 1.45 cents.
Kinross Gold Corp. has agreed to acquire Bema Gold Corp. in a $3.1 billion deal, the companies said Monday. Under the terms of the deal, each Bema common share will be exchanged for 0.441 of a Kinross common share. After the deal closes, 61% of the combined company will be owned by existing Kinross shareholders and 39% by existing Bema shareholders.
China says its foreign exchange reserves have reached $1 trillion. The reserves have been growing at the rate of $18 billion per month.
December crude rose 88 cents to close at $60.02 a barrel. December natural gas dropped 39.4 cents, or 5%, to end at $7.49 per million British thermal units.
I have been asked frequently about the disconnect between the most BLS numbers on nonfarm payrolls, the increasing number of self-employed people, and the rising amount of employment taxes collected by the government. First, if someone works part-time for himself/herself, and also has a full-time job, there would be double counting to consider the self-employment. Secondly, more taxes are being received as higher income levels place folks under the AMT umbrella. (The Congress has not ko'd the AMT. That is criminal in my view.) Thirdly, fewer people are able to take advantage of itemized deductions, and this can lead to paying higher taxes. No one knows for certain how many real self-emplyed people there are- those working full-time. Many accept cash as payment and don't report. Lastly, rather than being concerned with the number, just know predicting employment with constant monthly revisions is simply a futile exercise.
JFK: "Don't buy a single vote more than necessary."
John Hussman: "Analysts may turn out to be correct in forecasting continued earnings growth. It's just that the people running those companies seem to disagree."
The U.S. economy should bounce back from the weak third quarter and average "somewhat below" a 3% real GDP rate over the next year, said Michael Moscow, the president of the Chicago Federal Reserve Bank on Monday.
OSI Restaurant Partners Inc., operator of Outback Steakhouse, Carrabba's Italian Grill and Bonefish Grill, on Monday said it agreed to be acquired by an investor group comprised of Bain Capital Partners, Catterton Partners and company founders Chris Sullivan, Robert Basham and J. Timothy Gannon for $40 a share in cash.
Swift Transportation said it has received a buoyout offer from its largest shareholder Jerry Moyes, offering $29 a share for all outstanding shares.
Palatin Technologies, Inc. and King Pharmaceuticals, Inc. announced today positive results from two Phase 2B trials evaluating bremelanotide for the treatment of male erectile dysfunction (ED). The two Phase 2B clinical trials were double-blind, placebo-controlled, parallel dose trials that included a one month run-in period and a three-month treatment period.
Dr. King Jolly, Executive Vice President of Research & Development for King, stated, "Together with our colleagues at Palatin, we are pleased with the data from these two trials, which demonstrate the potential effectiveness of bremelanotide as a treatment option for patients with ED. Accordingly, we look forward to further assessing the data from these two trials and our other Phase 2 investigations as we move forward with our development plan."
"The trial met its objectives and I feel confident we can develop a scientifically rigorous Phase 3 clinical program incorporating doses that have both adequate efficacy and acceptable tolerability to discuss with the FDA at an upcoming end-of-Phase 2 meeting," said Dr. Trevor Hallam, Executive Vice President, Research and Development of Palatin.
I do not know what investors expected but the stock traded down from $2.75 to $1.85, and then back to $2.29. Some were concerned with certain side effects; however, attention should be centered on the size of the dosage. There is a definite disconnect between the drop in the stock price and the presentation of the facts of the trials filed with the SEC.
George Ure: "The President of the United States recently went on TV and told the American people that the Federal budget deficit, last year, was about $249 billion. What he said was… er… misleading.
The fact is that, last year, the Federal Government had to borrow, not $249 billion to make ends meet, but $620 billion. THAT is the difference between the National Debt, as it stood at the beginning of the year, and the National Debt, as it stood at the end of that same year.
The reason the President could get away with his "misleading assertion" is that the other $380 billion was "off-budget". Yes, the money was spent, but no budget documents recorded it. So the BUDGET deficit was $249 billion, but the ACTUAL deficit was ore than twice as big."
Joseph Stalin: “The people who cast the votes don't decide an election, the people who count the votes do.”
According to the Financial Times, "Investment banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of reported “panic selling” in the US and European credit derivatives market last week.
This heavy selling has driven the cost of insuring debt against default in the market for credit default swaps to record low levels – signalling either that investors are extraordinarily optimistic about the outlook for corporate debt, or that prices are so distorted that they are no longer being paid for the risks they are taking on."
Four Seasons Hotels Inc. said on Monday it had received a management-led buyout offer valued at $3.7 billion or $82 a share in cash.
The offer is led by a group which includes Four Seasons controlling shareholder Isadore Sharp and Triples Holdings Limited, Kingdom Hotels International, a company owned by a trust created by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, and Bill Gates' Cascade Investment LLC.
Abbott Laboratories Inc. said on Monday it will acquire Kos Pharmaceuticals Inc. for $3.7 billion to boost its presence in the lucrative cholesterol-treatment market.
The agreement provides for Abbott to acquire Kos for $78 per share in cash.
December gold fell $1.30 to close at $627.90 an ounce. December silver closed 12.5 cents higher at $12.76 and December copper finished at $3.337 a pound, up 1.45 cents.
Kinross Gold Corp. has agreed to acquire Bema Gold Corp. in a $3.1 billion deal, the companies said Monday. Under the terms of the deal, each Bema common share will be exchanged for 0.441 of a Kinross common share. After the deal closes, 61% of the combined company will be owned by existing Kinross shareholders and 39% by existing Bema shareholders.
China says its foreign exchange reserves have reached $1 trillion. The reserves have been growing at the rate of $18 billion per month.
December crude rose 88 cents to close at $60.02 a barrel. December natural gas dropped 39.4 cents, or 5%, to end at $7.49 per million British thermal units.
I have been asked frequently about the disconnect between the most BLS numbers on nonfarm payrolls, the increasing number of self-employed people, and the rising amount of employment taxes collected by the government. First, if someone works part-time for himself/herself, and also has a full-time job, there would be double counting to consider the self-employment. Secondly, more taxes are being received as higher income levels place folks under the AMT umbrella. (The Congress has not ko'd the AMT. That is criminal in my view.) Thirdly, fewer people are able to take advantage of itemized deductions, and this can lead to paying higher taxes. No one knows for certain how many real self-emplyed people there are- those working full-time. Many accept cash as payment and don't report. Lastly, rather than being concerned with the number, just know predicting employment with constant monthly revisions is simply a futile exercise.
JFK: "Don't buy a single vote more than necessary."
Sunday, November 05, 2006
More Opinions
11/6/06 More Opinions
Mike Burk: "Last week the rally of the past few months ended going into what seasonally has been the strongest week of the year. I think it is likely that weakness will continue for another week or two. I expect the major indices to be lower on Friday November 10 than they were on Friday November 3."
Brett Steenbarger: "Interestingly, margin debt is below the levels recorded in May, despite the market's recent rise. Year over year, we're up about 9% in margin debt, down from the 2006 peak of over 24%. It is hard to believe this bull swing will have legs if it continues to fail to attract speculative interest. If history is a guide, it will take a significant year-over-year drop in margin debt to usher in a cyclical market bottom."
Doug Noland: "Unlike the 30% to 40% annual earnings growth that many companies were enjoying during the previous tech-centric debt Bubble, today's much more dispersed Credit boom fosters near double-digit revenue growth and greater earnings inflation virtually throughout the entire business sector. There is today little angst related to equities gross overvaluation that we saw in 1999/2000. In fact, the general nature of today's profits inflation is taken as confirmation of the soundness of the underlying U.S. economy, while increasingly confident bullish analysts trumpet today's undervalued equities market."
The world economies, such as China, continue to devour the supplies of nickel, zinc, and copper. As their astounding foreign exchange balances mushroom, attention is turned to other commodities --- gold, silver, and oil. Make no mistake. The long term trend is to purchase more commodities to offset the growing soft currency holdings.
John Mauldin: " The housing price futures market, based upon the Case-Shiller Housing Price Index, suggests a decline of 7.6% from June 2006 to August 2007. As the inventory of homes for sale grows, and as prices drop, watch that number go lower."
Brett Steenbarger: "You may find that just one or two patterns in one or two markets at one or two time frames account for a large part of your success. Don't try to tweak what isn't working: figure out ways to capitalize on your core success in related markets, with steadily increased size. Build upon what you do well; don't try to remake yourself based on preconceived notions."
Three days before midterm elections, the numbers haven't changed much according to the November 2-3, 2006Newsweek Poll. If the election were held today, 54 percent of likely voterswould vote for the Democratic candidate in their district, versus 38percent who would vote for the Republican. Ninety percent of Republicanlikely voters say they would support the Republican candidate; 95 percentof Democrats would support the Democratic candidate. But amongindependents, 51 percent would vote for the Democrat, compared to 26percent who would vote for the Republican. A majority of Americans, 53 percent, say that they would most like tosee the Democrats win enough seats on Tuesday to take over Congress,according to the latest Newsweek Poll; 32 percent would most like to seethe Republicans keep control.IMS Health reported that $23 billion worth of drugs willgo "off patent" this year based on the annual sales of the products.Another $16 billion worth move out of the patented category next year.
Energy analysts around the globe provide the view that oil prices are now hostage to whether there is any chaos in the world. It is a huge mistake to overlook supply and demand. Politics play a part in the trend, but it does not alter long-term supply concerns and the increasing cost to develop reserves.
The Energy Information Administration (EIA) recently predicted that world consumption of natural gas alone will rise by 91% to 182 trillion cubic feet in less than twenty-five years."
Comstock Partners: "After all, when, in its lengthy history, has the Fed ever successfully engineered a soft landing except for 1995? In our view the next few months should clearly indicate that we are headed for a hard landing, resulting in a severe setback for a stock market that is discounting a benign soft landing."
Bill Gross: "On average, total assets in the US have grown by only 1.4% over nominal GDP for the past 37 years... And note that the 1.4% average is mostly the last 25 years, which was a period of disinflation. We are at an end of that period. We should expect lower than 1.4% in the coming years."
I am far from a pundit when it comes to politics. I do believe Democrats will gain control of the House and become the majority for Governors. I believe they will have a net gain of 3 Senate seats and be three short of gaining a majority.
On Sunday Mr Cheney also said that he would "probably not" agree to appear before Congress to be questioned on the conduct of the Iraq war even if a Democratic-controlled house issued subpoenas requiring him and Mr Bush to do so. When you cast your vote on Tuesday, I suggest you vote against anyone running on the party line that is above the law!
Mike Burk: "Last week the rally of the past few months ended going into what seasonally has been the strongest week of the year. I think it is likely that weakness will continue for another week or two. I expect the major indices to be lower on Friday November 10 than they were on Friday November 3."
Brett Steenbarger: "Interestingly, margin debt is below the levels recorded in May, despite the market's recent rise. Year over year, we're up about 9% in margin debt, down from the 2006 peak of over 24%. It is hard to believe this bull swing will have legs if it continues to fail to attract speculative interest. If history is a guide, it will take a significant year-over-year drop in margin debt to usher in a cyclical market bottom."
Doug Noland: "Unlike the 30% to 40% annual earnings growth that many companies were enjoying during the previous tech-centric debt Bubble, today's much more dispersed Credit boom fosters near double-digit revenue growth and greater earnings inflation virtually throughout the entire business sector. There is today little angst related to equities gross overvaluation that we saw in 1999/2000. In fact, the general nature of today's profits inflation is taken as confirmation of the soundness of the underlying U.S. economy, while increasingly confident bullish analysts trumpet today's undervalued equities market."
The world economies, such as China, continue to devour the supplies of nickel, zinc, and copper. As their astounding foreign exchange balances mushroom, attention is turned to other commodities --- gold, silver, and oil. Make no mistake. The long term trend is to purchase more commodities to offset the growing soft currency holdings.
John Mauldin: " The housing price futures market, based upon the Case-Shiller Housing Price Index, suggests a decline of 7.6% from June 2006 to August 2007. As the inventory of homes for sale grows, and as prices drop, watch that number go lower."
Brett Steenbarger: "You may find that just one or two patterns in one or two markets at one or two time frames account for a large part of your success. Don't try to tweak what isn't working: figure out ways to capitalize on your core success in related markets, with steadily increased size. Build upon what you do well; don't try to remake yourself based on preconceived notions."
Three days before midterm elections, the numbers haven't changed much according to the November 2-3, 2006Newsweek Poll. If the election were held today, 54 percent of likely voterswould vote for the Democratic candidate in their district, versus 38percent who would vote for the Republican. Ninety percent of Republicanlikely voters say they would support the Republican candidate; 95 percentof Democrats would support the Democratic candidate. But amongindependents, 51 percent would vote for the Democrat, compared to 26percent who would vote for the Republican. A majority of Americans, 53 percent, say that they would most like tosee the Democrats win enough seats on Tuesday to take over Congress,according to the latest Newsweek Poll; 32 percent would most like to seethe Republicans keep control.IMS Health reported that $23 billion worth of drugs willgo "off patent" this year based on the annual sales of the products.Another $16 billion worth move out of the patented category next year.
Energy analysts around the globe provide the view that oil prices are now hostage to whether there is any chaos in the world. It is a huge mistake to overlook supply and demand. Politics play a part in the trend, but it does not alter long-term supply concerns and the increasing cost to develop reserves.
The Energy Information Administration (EIA) recently predicted that world consumption of natural gas alone will rise by 91% to 182 trillion cubic feet in less than twenty-five years."
Comstock Partners: "After all, when, in its lengthy history, has the Fed ever successfully engineered a soft landing except for 1995? In our view the next few months should clearly indicate that we are headed for a hard landing, resulting in a severe setback for a stock market that is discounting a benign soft landing."
Bill Gross: "On average, total assets in the US have grown by only 1.4% over nominal GDP for the past 37 years... And note that the 1.4% average is mostly the last 25 years, which was a period of disinflation. We are at an end of that period. We should expect lower than 1.4% in the coming years."
I am far from a pundit when it comes to politics. I do believe Democrats will gain control of the House and become the majority for Governors. I believe they will have a net gain of 3 Senate seats and be three short of gaining a majority.
On Sunday Mr Cheney also said that he would "probably not" agree to appear before Congress to be questioned on the conduct of the Iraq war even if a Democratic-controlled house issued subpoenas requiring him and Mr Bush to do so. When you cast your vote on Tuesday, I suggest you vote against anyone running on the party line that is above the law!
Saturday, November 04, 2006
Opinions Galore
11/5/06 Opinions Galore
Nouriel Roubini: "Since last July I have been predicting that the US will enter into a recession in 2007. By now it is clear that several sectors of the economy are already in a recession, that Q4 growth will be lower than Q3 growth and that a formal recession (two or more consecutive quarters of negative growth) will very likely start by Q1 or at the latest Q2 of 2007."
Bill Bonner: "It now takes about 20 ounces of gold to buy the Dow. In 1980, it only took one ounce. And now the total value of U.S. financial assets is 33 times the value of the entire world’s gold above ground. In 1980, U.S. financial assets were only a bit more than three times the value of the world’s gold."
Americans are expected to spend about $38.4 billion this year on their pets, up 35 percent from 2001, according to the American Pet Products Manufacturers Association.
Bill Bonner: "We are still not sure that the great bull market in U.S. residential real estate has come to an end. What we are sure of, on the other hand, is that it isn’t at the beginning. The great housing bubble may be dead, but it already has a certain corpse-like stink to it. The relatives are gathered in the parlor. The silver has already been packed up. The local priest is already on the scene, administering last rites. True, we still don’t know exactly how the story will turn out. But it is time to begin preparing the obituary."
There are 20 stocks in the Dow Jones Transportation Index. All 20 closed lower this past week. Yet, that's only part of the story. Please notice the closing Tick for each day last week. The Tick is the closing sale, for example, on the NYSE and represents the net difference between the last sale on all companies traded on the exchange- subtracting the minus ticks from the plus ticks, and they were plus 600 on several days last week. There remains plenty of optimism around.
India’s Sensex equities index gained 1.7% to a new record high, increasing 2006 gains to 39.7%. China’s Shanghai Composite index surged 3.3%, increasing y-t-d gains to 60.7%.
Bloomberg reported “The United Arab Emirates, the second largest Arab economy, may reduce its holdings of dollars by almost half in an effort to reduce its dependence on the weakening U.S. currency, the country’s central bank governor said.” The UAE has been adding to its gold holdings.
Doug Noland points out that, in the third quarter of 2006, 89% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan balances, Freddie Mac said… That’s up from 88% in the second quarter, and is the highest share since the second quarter of 1990.
Doug Noland: "Following by a few days Otmar Issing’s warning about global liquidity excess, come pointed comments from the Bank of China: ‘Global economic imbalances are a concern for every country in the world because it leads to worldwide excessive liquidity, low long-term interest rates as well as price hikes in resources and other assets… Adjustments to world economic imbalances (particularly disorderly adjustments) may increase the fluctuation in the world’s major currencies, which will cause a slowdown in US economic growth and price adjustment of US assets, and this in turn may impact China’s export and economic growth.’"
With polls showing evangelical voters deserting the GOP and indicating a sizable defeat for the Republican
Party in the November 7 elections, Richard Viguerie, Chairman of
ConservativeHQ.com, stated that the GOP has alienated its base.
"It appears that very few Republican seats in Congress are safe. That's
what happens when the Party abandons conservative principles," Viguerie
said.
He said that the Bush Administration and GOP members in Congress have
instituted a massive expansion of government, including a pork barrel
spending spree, that far exceeds anything the Democrats ever did. Viguerie
added that President Bush's embrace of amnesty for illegal aliens, nation
building abroad, and mere lip service on social issues have disturbed much
of the Republican Party's base.
"How could these guys think they could trash conservative principles
and still maintain the allegiance of the grassroots,"
Viguerie asked.
Cheney's Speech in Colorado on Saturday. Notice the fear
tactics: "If the Democrats take control of the House, Charlie
Rangel will be chairman of the Ways and Means Committee. He would be in a
position to block any legislation coming out of the committee. And if
there's no tax legislation renewing the cuts, every tax rate will go back
up to its old level, the marriage penalty will return, and the death tax
will come back to life. The child credit, also, will drop back down from
$1,000 per child to $500 per child. In other words, take the number of
dependent children you receive the tax credit for; multiply it by $500 --
and that's the additional amount you'll be sending to Washington if we get
a Congress that lets the Bush tax cuts expire." The Dems
have no intention to bring back the marriage penalty, for
example.
Nouriel Roubini: "Since last July I have been predicting that the US will enter into a recession in 2007. By now it is clear that several sectors of the economy are already in a recession, that Q4 growth will be lower than Q3 growth and that a formal recession (two or more consecutive quarters of negative growth) will very likely start by Q1 or at the latest Q2 of 2007."
Bill Bonner: "It now takes about 20 ounces of gold to buy the Dow. In 1980, it only took one ounce. And now the total value of U.S. financial assets is 33 times the value of the entire world’s gold above ground. In 1980, U.S. financial assets were only a bit more than three times the value of the world’s gold."
Americans are expected to spend about $38.4 billion this year on their pets, up 35 percent from 2001, according to the American Pet Products Manufacturers Association.
Bill Bonner: "We are still not sure that the great bull market in U.S. residential real estate has come to an end. What we are sure of, on the other hand, is that it isn’t at the beginning. The great housing bubble may be dead, but it already has a certain corpse-like stink to it. The relatives are gathered in the parlor. The silver has already been packed up. The local priest is already on the scene, administering last rites. True, we still don’t know exactly how the story will turn out. But it is time to begin preparing the obituary."
There are 20 stocks in the Dow Jones Transportation Index. All 20 closed lower this past week. Yet, that's only part of the story. Please notice the closing Tick for each day last week. The Tick is the closing sale, for example, on the NYSE and represents the net difference between the last sale on all companies traded on the exchange- subtracting the minus ticks from the plus ticks, and they were plus 600 on several days last week. There remains plenty of optimism around.
India’s Sensex equities index gained 1.7% to a new record high, increasing 2006 gains to 39.7%. China’s Shanghai Composite index surged 3.3%, increasing y-t-d gains to 60.7%.
Bloomberg reported “The United Arab Emirates, the second largest Arab economy, may reduce its holdings of dollars by almost half in an effort to reduce its dependence on the weakening U.S. currency, the country’s central bank governor said.” The UAE has been adding to its gold holdings.
Doug Noland points out that, in the third quarter of 2006, 89% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan balances, Freddie Mac said… That’s up from 88% in the second quarter, and is the highest share since the second quarter of 1990.
Doug Noland: "Following by a few days Otmar Issing’s warning about global liquidity excess, come pointed comments from the Bank of China: ‘Global economic imbalances are a concern for every country in the world because it leads to worldwide excessive liquidity, low long-term interest rates as well as price hikes in resources and other assets… Adjustments to world economic imbalances (particularly disorderly adjustments) may increase the fluctuation in the world’s major currencies, which will cause a slowdown in US economic growth and price adjustment of US assets, and this in turn may impact China’s export and economic growth.’"
With polls showing evangelical voters deserting the GOP and indicating a sizable defeat for the Republican
Party in the November 7 elections, Richard Viguerie, Chairman of
ConservativeHQ.com, stated that the GOP has alienated its base.
"It appears that very few Republican seats in Congress are safe. That's
what happens when the Party abandons conservative principles," Viguerie
said.
He said that the Bush Administration and GOP members in Congress have
instituted a massive expansion of government, including a pork barrel
spending spree, that far exceeds anything the Democrats ever did. Viguerie
added that President Bush's embrace of amnesty for illegal aliens, nation
building abroad, and mere lip service on social issues have disturbed much
of the Republican Party's base.
"How could these guys think they could trash conservative principles
and still maintain the allegiance of the grassroots,"
Viguerie asked.
Cheney's Speech in Colorado on Saturday. Notice the fear
tactics: "If the Democrats take control of the House, Charlie
Rangel will be chairman of the Ways and Means Committee. He would be in a
position to block any legislation coming out of the committee. And if
there's no tax legislation renewing the cuts, every tax rate will go back
up to its old level, the marriage penalty will return, and the death tax
will come back to life. The child credit, also, will drop back down from
$1,000 per child to $500 per child. In other words, take the number of
dependent children you receive the tax credit for; multiply it by $500 --
and that's the additional amount you'll be sending to Washington if we get
a Congress that lets the Bush tax cuts expire." The Dems
have no intention to bring back the marriage penalty, for
example.
Friday, November 03, 2006
The Real Skinny
11/4/06 The Real Skinny
While all the news focused on the nonfarm payrolls and the revisions for August and September, the real story was unfolding. ExxonMobil and Chevron traded at 52-week highs. That's right, and that's despite crude having declined $10 a barrel, gasoline prices having dropped by about 65 cents a gallon, and the U.S. Oil Fund cascading down $20 a share from its $72 peak and being only 1 1/2 points from a 52-week low made earlier in the week. Your homework for the weekend is to explain this dichotomy. I realize you may watch the Breeders' Cup races today, and that leaves Sunday for the homework. You'll be doing yourself a favor by figuring out the answer.
As for the nonfarm payrolls, I stopped projecting the monthly figures about one year ago. It was quite obvious they had become nothing more than a government plaything. Each month was revised a couple of times and that made the original announcement completely meaningless -- except to traders who decided to transform themselves into the wazoo bird, which goes in ever decreasing circles until he goes up his own ---hole.
January platinum closed at $1,209.40 an ounce Friday, up $45.20 for the session, and up 12% for the week. December gold rose $1.40 to close at $629.20 an ounce, up 4.7% for the week. December silver closed at $12.635 an ounce, down 1.5 cents for the day, but up 4.6% for the week.
The U.S. Embassy in Nigeria has warned that within days, a militant group may atack up to 20 oil facilities, Dow Jones said.
Average hourly earnings in October increased 6 cents, or 0.4% to $16.91. Earnings are up 3.9% in the past year. The average workweek rose by six minutes to 33.9 hours.
The ISM nonmanufacturing index rose to 57.1% from 52.9% in September. New orders slipped to 56.5% from 57.2%. The employment index inched lower to 51.0% from 53.6%. The price index slipped to 51.9% from 56.7% in the previous month.
Caterpillar estimated 2006 earnings at $5.05-$5.30 a share and 2007 earnings at $5.18-$5.70 a share. The First Call estimates are for $5.21 a share and $5.63 a share for 2006 and 2007, respectively.
Gottschalks Inc. said a board panel will review strategic alternatives for the the Fresno, Calif., retailer, including, among others, a share buyback, a joint venture, or a sale of the company. Gottschalk's operates 61 department stores and five specialty apparel stores in California, Washington, Alaska, Oregon, Idaho and Nevada.
Whole Foods forecast that same-store sales will grow 6 to 8 percent in fiscal 2007, which began in late September. The company blamed the slower growth ahead on competitive pressures, saying it had reached an inevitable period of slowdown after recent robust growth. The stock declined 14+ points to a new 52-week low. My best idea today is to sell the January 2007 puts with a strike price of $37.50 for 45 cents.
I have been waiting for over two years for the stock to have a break like it had on Friday.
The yield on the benchmark 10-year note rose about 12 basis points, or 0.12 percentage point, to 4.72 percent It's the biggest jump in yield since July 1, 2005.
China's central bank ordered lenders to set aside more money as reserves for the third time this year to curtail a credit-fueled investment boom that spurred economic growth by 10.4 percent in the third quarter. Banks must set aside 9 percent of deposits as reserves starting Nov. 15, up from 8.5 percent.
Chinese stocks rose to a five-year high on Friday. In currency trading, the yuan hit a fresh high against the U.S. dollar, trading at 7.8708.
The market for offshore rigs is "going to be particularly strong past ... 2011," Transocean Inc. chief executive Bob Long said.
December crude closed at $59.14 a barrel, up $1.26 for the session but finished the week with a loss of 2.7%. December natural gas gained 7 cents to close at $7.884 per million British thermal units Friday, up 0.7% for the week.
Mark Twain: "Whenever you find that you are on the side of the majority, it is time to reform."
While all the news focused on the nonfarm payrolls and the revisions for August and September, the real story was unfolding. ExxonMobil and Chevron traded at 52-week highs. That's right, and that's despite crude having declined $10 a barrel, gasoline prices having dropped by about 65 cents a gallon, and the U.S. Oil Fund cascading down $20 a share from its $72 peak and being only 1 1/2 points from a 52-week low made earlier in the week. Your homework for the weekend is to explain this dichotomy. I realize you may watch the Breeders' Cup races today, and that leaves Sunday for the homework. You'll be doing yourself a favor by figuring out the answer.
As for the nonfarm payrolls, I stopped projecting the monthly figures about one year ago. It was quite obvious they had become nothing more than a government plaything. Each month was revised a couple of times and that made the original announcement completely meaningless -- except to traders who decided to transform themselves into the wazoo bird, which goes in ever decreasing circles until he goes up his own ---hole.
January platinum closed at $1,209.40 an ounce Friday, up $45.20 for the session, and up 12% for the week. December gold rose $1.40 to close at $629.20 an ounce, up 4.7% for the week. December silver closed at $12.635 an ounce, down 1.5 cents for the day, but up 4.6% for the week.
The U.S. Embassy in Nigeria has warned that within days, a militant group may atack up to 20 oil facilities, Dow Jones said.
Average hourly earnings in October increased 6 cents, or 0.4% to $16.91. Earnings are up 3.9% in the past year. The average workweek rose by six minutes to 33.9 hours.
The ISM nonmanufacturing index rose to 57.1% from 52.9% in September. New orders slipped to 56.5% from 57.2%. The employment index inched lower to 51.0% from 53.6%. The price index slipped to 51.9% from 56.7% in the previous month.
Caterpillar estimated 2006 earnings at $5.05-$5.30 a share and 2007 earnings at $5.18-$5.70 a share. The First Call estimates are for $5.21 a share and $5.63 a share for 2006 and 2007, respectively.
Gottschalks Inc. said a board panel will review strategic alternatives for the the Fresno, Calif., retailer, including, among others, a share buyback, a joint venture, or a sale of the company. Gottschalk's operates 61 department stores and five specialty apparel stores in California, Washington, Alaska, Oregon, Idaho and Nevada.
Whole Foods forecast that same-store sales will grow 6 to 8 percent in fiscal 2007, which began in late September. The company blamed the slower growth ahead on competitive pressures, saying it had reached an inevitable period of slowdown after recent robust growth. The stock declined 14+ points to a new 52-week low. My best idea today is to sell the January 2007 puts with a strike price of $37.50 for 45 cents.
I have been waiting for over two years for the stock to have a break like it had on Friday.
The yield on the benchmark 10-year note rose about 12 basis points, or 0.12 percentage point, to 4.72 percent It's the biggest jump in yield since July 1, 2005.
China's central bank ordered lenders to set aside more money as reserves for the third time this year to curtail a credit-fueled investment boom that spurred economic growth by 10.4 percent in the third quarter. Banks must set aside 9 percent of deposits as reserves starting Nov. 15, up from 8.5 percent.
Chinese stocks rose to a five-year high on Friday. In currency trading, the yuan hit a fresh high against the U.S. dollar, trading at 7.8708.
The market for offshore rigs is "going to be particularly strong past ... 2011," Transocean Inc. chief executive Bob Long said.
December crude closed at $59.14 a barrel, up $1.26 for the session but finished the week with a loss of 2.7%. December natural gas gained 7 cents to close at $7.884 per million British thermal units Friday, up 0.7% for the week.
Mark Twain: "Whenever you find that you are on the side of the majority, it is time to reform."
Thursday, November 02, 2006
Dicey
11/3/06 Getting Dicey
Labor costs in the third quarter increased 3.8%; productivity was flat, and that contrast will keep inflation watchers up late at night. Over the past year, productivity increased 1.3%, the slowest growth since 1997. Unit labor costs are up 5.3% in the past year, the fastest increase in 16 years. Real hourly compensation rose 0.7% in the third quarter, and is up 3.2% in the past year.
Wal-Mart expects their November same-store sales to be flat, and that is a big surprise considering Target is projecting a 4 to 7 percent gain in the same period.
European Central Bank President Jean-Claude Trichet hinted at a December rate hike.
Tribune told prospective suitors it is ready to weigh offers to sell off parts of itself after receiving lower-than-expected bids for the whole firm.
The Financial Times reported between 2000 and 2005, the US economy grew by 12 per cent in real terms. Millions of middle-class Americans, however, are seeing their pay stagnate. We have been discussing this very point for the past several years. It was only a matter of time until productivity took it on the chin, and moving forward, margins will come under pressure.
Taking out transportation orders, factory orders fell by 2.4% in September. Nondurable goods orders, however, rose by 4.6% in September.
The Energy Department said natural-gas inventories fell 9 billion cubic feet for the week ended Oct. 27, marking the first decline of the heating season.
Dave Anderson: "We believe that it requires long-term natural gas prices in excess of $7.00 per mcf in order to generate meaningful returns on most drilling programs in the U.S. This is based on finding and development costs, operating costs, etc., that we won't get into right now. That is later. For now, just be wary of anyone who relies on storage numbers to predict the future."
Doug Wakefield: "In January of 1959, the first date in this data series, the money supply stood at $292 billion. By February of 2006, it had grown 3,419 percent to $10,276 billion. Since 2000 the money supply has grown 55 percent and it has grown by $764 billion in the last twelve months."
Richard Daughty: "The banks are so massively over-leveraged that they have a measly $40 billion lousy bucks as reserves against $5.5 trillion in savings...And with a gigantic $6 trillion dollars in the loans and leases portfolio of the banks, these "assets" only have to decline by a trifling a 1% in price to wipe out their entire reserves! Hahaha! This is the level of absolute, ruinous insanity that reigns in the banks!"
Nouriel Roubini: "The probability of a recession next year is now as high as I expected it to be before - i.e. at least 70% and possibly higher - and Q4 growth is now strongly likely to be sharply lower than Q3. The soft-landing scenario and optimism is now melting by the day being squashed by a mounting range of evidence and indicators all signaling further economic weakness. The hard landing scenario with a 2007 recession is now becoming more and more likely and, increasingly, being accepted by a larger number of analysts and commentators on Wall Street. So, as predicted by me as early as last July, we are on our way to a sharp and ugly recession in 2007. The burden of proving the growing unlikely soft landing scenario is now in the camp of the perma bulls."
Mutual funds invested primarily in U.S. stocks posted net outflows of $2.58 billion for the week ended Nov. 1, swinging to negative flows after they gathered $599 million the previous week, according to TrimTabs Investment Research.
December natural gas rose 10.2 cents to end at $7.814 per million British thermal units. December crude fell 83 cents to close at $57.88 a barrel.
December gold climbed $8.50 to close at $627.80. December silver added 17.5 cents to end at $12.65 an ounce. December copper closed at $3.2915 a pound, up 5.05 cents after losing 3% on Wednesday.
Corn prices soared to a 10-year high in Chicago. This follows wheat rising to record levels. Food prices are on the rise. Make no mistake about it.
In 1994, fewer than 5 percent of mortgage originations were in the subprime market. But by 2005, about 20 percent of new mortgage loans were subprime, Bernanke said.
The Monster index was unchanged at 172 in October. The index peaked at 173 in August. It was at 143 a year ago.
"Our view over the next 12 months is you could see a downside for gold of $20-$35, but on the upside you could very well see $700 gold in 12 months," Newmont Mining Corp. President Pierre Lassonde said.
Oliver Wendell Holmes: "The mind, once expanded to the dimensions of larger ideas, never returns to its original size."
Labor costs in the third quarter increased 3.8%; productivity was flat, and that contrast will keep inflation watchers up late at night. Over the past year, productivity increased 1.3%, the slowest growth since 1997. Unit labor costs are up 5.3% in the past year, the fastest increase in 16 years. Real hourly compensation rose 0.7% in the third quarter, and is up 3.2% in the past year.
Wal-Mart expects their November same-store sales to be flat, and that is a big surprise considering Target is projecting a 4 to 7 percent gain in the same period.
European Central Bank President Jean-Claude Trichet hinted at a December rate hike.
Tribune told prospective suitors it is ready to weigh offers to sell off parts of itself after receiving lower-than-expected bids for the whole firm.
The Financial Times reported between 2000 and 2005, the US economy grew by 12 per cent in real terms. Millions of middle-class Americans, however, are seeing their pay stagnate. We have been discussing this very point for the past several years. It was only a matter of time until productivity took it on the chin, and moving forward, margins will come under pressure.
Taking out transportation orders, factory orders fell by 2.4% in September. Nondurable goods orders, however, rose by 4.6% in September.
The Energy Department said natural-gas inventories fell 9 billion cubic feet for the week ended Oct. 27, marking the first decline of the heating season.
Dave Anderson: "We believe that it requires long-term natural gas prices in excess of $7.00 per mcf in order to generate meaningful returns on most drilling programs in the U.S. This is based on finding and development costs, operating costs, etc., that we won't get into right now. That is later. For now, just be wary of anyone who relies on storage numbers to predict the future."
Doug Wakefield: "In January of 1959, the first date in this data series, the money supply stood at $292 billion. By February of 2006, it had grown 3,419 percent to $10,276 billion. Since 2000 the money supply has grown 55 percent and it has grown by $764 billion in the last twelve months."
Richard Daughty: "The banks are so massively over-leveraged that they have a measly $40 billion lousy bucks as reserves against $5.5 trillion in savings...And with a gigantic $6 trillion dollars in the loans and leases portfolio of the banks, these "assets" only have to decline by a trifling a 1% in price to wipe out their entire reserves! Hahaha! This is the level of absolute, ruinous insanity that reigns in the banks!"
Nouriel Roubini: "The probability of a recession next year is now as high as I expected it to be before - i.e. at least 70% and possibly higher - and Q4 growth is now strongly likely to be sharply lower than Q3. The soft-landing scenario and optimism is now melting by the day being squashed by a mounting range of evidence and indicators all signaling further economic weakness. The hard landing scenario with a 2007 recession is now becoming more and more likely and, increasingly, being accepted by a larger number of analysts and commentators on Wall Street. So, as predicted by me as early as last July, we are on our way to a sharp and ugly recession in 2007. The burden of proving the growing unlikely soft landing scenario is now in the camp of the perma bulls."
Mutual funds invested primarily in U.S. stocks posted net outflows of $2.58 billion for the week ended Nov. 1, swinging to negative flows after they gathered $599 million the previous week, according to TrimTabs Investment Research.
December natural gas rose 10.2 cents to end at $7.814 per million British thermal units. December crude fell 83 cents to close at $57.88 a barrel.
December gold climbed $8.50 to close at $627.80. December silver added 17.5 cents to end at $12.65 an ounce. December copper closed at $3.2915 a pound, up 5.05 cents after losing 3% on Wednesday.
Corn prices soared to a 10-year high in Chicago. This follows wheat rising to record levels. Food prices are on the rise. Make no mistake about it.
In 1994, fewer than 5 percent of mortgage originations were in the subprime market. But by 2005, about 20 percent of new mortgage loans were subprime, Bernanke said.
The Monster index was unchanged at 172 in October. The index peaked at 173 in August. It was at 143 a year ago.
"Our view over the next 12 months is you could see a downside for gold of $20-$35, but on the upside you could very well see $700 gold in 12 months," Newmont Mining Corp. President Pierre Lassonde said.
Oliver Wendell Holmes: "The mind, once expanded to the dimensions of larger ideas, never returns to its original size."
Several Thoughts
11/2/06 Several Thoughts
Mike Shedlock: "I notice that almost no one is talking about the yield curve, the one set of numbers that someone can and should believe. The yield curve is what it is, and it is quite inverted, signaling a recession. Forget Goldilocks. The next recession will be an extremely hard affair, led by a falloff in consumer spending, rising unemployment, and a continued slowdown in housing."
John Hussman: "Investors are eager to overlook the fact that stocks have lagged risk-free Treasury bill returns over the past 8 years, and are instead focused on the gains achieved during the current bull market. Yet even over the most recent 2.8 years since early 2004, the major indices have outperformed Treasury bills by only about 5% annually. Now, 5% annually, retained over the full market cycle, is a respectable margin over risk-free rates. But here the 5% margin has applied to a bull-market-only portion of this cycle, where bull-market-only gains have historically outpaced T-bill yields by upward of 20% annualized, on average. Worse, with stocks strenuously overbought and trading at rich multiples on record profit margins, there's a very slim potential for investors to retain that 5% margin they've earned above T-bill yields during the past few years."
The Institute for Supply Management said its ISM index fell to 51.2% in October from 52.9% in September. This is the lowest level since June 2003. The consensus forecast was for the index to rise to 53.2%. The employment index rose to 50.8% from 49.4%. The price index fell sharply to 47.0% from 61.0%.
Outlays on U.S. construction projects fell 0.3% in September, led by drops in spending on private residential construction and federal building projects, the government said Wednesday. Private residential construction spending fell 1.1% in September after declining by 1.6% in August, according to the Commerce Department. Spending on federal construction projects dropped by 1.5% in September. Total construction spending was revised to neither rise nor fall in August.
The pending home sales index fell 1.1% in September after a 4.7% increase in August. The index is down 13.6% in the past year, in line with declines in sales. "The present level of home sales is relatively high in historic terms, and we can expect generally minor movements around this level," said David Lereah, chief economist for the realtors' group. "We don't expect to see any changes of note until early next year when we're likely to see a modest lift to home sales."
The Energy Department said crude supplies rose 2 million barrels to 334.3 million for the week ended Oct. 27. Motor gasoline supplies fell 2.8 million barrels to 204.6 million. Distillate inventories stocks fell for a fourth-straight week, down 2.7 million barrels to total 141.3 million barrels.
Nouriel Roubini: "The reality is that the corporate emperor has no clothes or it is at least half naked: earnings growth is rapidly slowing down and it will fall further in Q4 and 2007 as the economy spins into a hard and ugly recession. And, as I have analyzed before, in an a typical recession the S&P500 falls by an average of 28%. So, the end of the sucker rally is getting closer. The recent bombardment of bad macro news on Q4 in the last two weeks has definitely broken the momentum of US equities in the last week; the myth of a Q4 growth rebound - after a dismal Q3 -is now rapidly fizzling away. Wait for a few more indicators and the sucker rally will melt faster than you can watch it."
Panda Ethanol Inc. announced thatit intends to build a 100 million gallon-per-year ethanol plant near thecity of Muleshoe in Bailey County, Texas. When finished, the facility willannually refine approximately 38 million bushels of corn into aclean-burning, renewable fuel for the nation's transportation needs. Theethanol produced by the plant will displace approximately 2.6 millionbarrels of imported oil a year.The Muleshoe facility will generate the steam used in the ethanolmanufacturing process by gasifying more than 1 billion pounds of cattlemanure a year. Once complete, it will be one of the most fuel efficientethanol refineries in the nation and equal in size to Panda's Herefordfacility, currently under construction, which will be the largestbiomass-fueled ethanol plant in the United
States.The Muleshoe facility is the sixth 100 million gallon ethanol projectannounced by Panda, and the fourth to be powered by cattle manure. Thecompany has received air permits for three of its six announced ethanolprojects.
CVS Corp. on Wednesday agreed to acquire pharmacy benefits manager Caremark Rx Inc. for $20.8 billion to expand its prescription benefits and mail-order business.CVS will exchange 1.67 of its shares for each Caremark share. The 10-year Treasury note rose 10/32 to 102-14/32 with a yield of 4.563%, its weakest closing level in five weeks and down from 4.608% at Tuesday's close. December natural gas climbed 17.8 cents to close at $7.712 per million BTUs.December unleaded gasoline climbed 3.57 cents, or 2.5%, to end at
$1.463 a gallon. December crude finished little changed, down 2 cents at $58.71 a barrel.
December gold climbed $12.50 to close at $619.30 an ounce in New York. December silver added 20.5 cents, or 1.7%, to end at $12.475 an ounce, but December copper lost 10.45 cents, or 3.1%, to finish the day at $3.241 a pound.
Mike Shedlock: "I notice that almost no one is talking about the yield curve, the one set of numbers that someone can and should believe. The yield curve is what it is, and it is quite inverted, signaling a recession. Forget Goldilocks. The next recession will be an extremely hard affair, led by a falloff in consumer spending, rising unemployment, and a continued slowdown in housing."
John Hussman: "Investors are eager to overlook the fact that stocks have lagged risk-free Treasury bill returns over the past 8 years, and are instead focused on the gains achieved during the current bull market. Yet even over the most recent 2.8 years since early 2004, the major indices have outperformed Treasury bills by only about 5% annually. Now, 5% annually, retained over the full market cycle, is a respectable margin over risk-free rates. But here the 5% margin has applied to a bull-market-only portion of this cycle, where bull-market-only gains have historically outpaced T-bill yields by upward of 20% annualized, on average. Worse, with stocks strenuously overbought and trading at rich multiples on record profit margins, there's a very slim potential for investors to retain that 5% margin they've earned above T-bill yields during the past few years."
The Institute for Supply Management said its ISM index fell to 51.2% in October from 52.9% in September. This is the lowest level since June 2003. The consensus forecast was for the index to rise to 53.2%. The employment index rose to 50.8% from 49.4%. The price index fell sharply to 47.0% from 61.0%.
Outlays on U.S. construction projects fell 0.3% in September, led by drops in spending on private residential construction and federal building projects, the government said Wednesday. Private residential construction spending fell 1.1% in September after declining by 1.6% in August, according to the Commerce Department. Spending on federal construction projects dropped by 1.5% in September. Total construction spending was revised to neither rise nor fall in August.
The pending home sales index fell 1.1% in September after a 4.7% increase in August. The index is down 13.6% in the past year, in line with declines in sales. "The present level of home sales is relatively high in historic terms, and we can expect generally minor movements around this level," said David Lereah, chief economist for the realtors' group. "We don't expect to see any changes of note until early next year when we're likely to see a modest lift to home sales."
The Energy Department said crude supplies rose 2 million barrels to 334.3 million for the week ended Oct. 27. Motor gasoline supplies fell 2.8 million barrels to 204.6 million. Distillate inventories stocks fell for a fourth-straight week, down 2.7 million barrels to total 141.3 million barrels.
Nouriel Roubini: "The reality is that the corporate emperor has no clothes or it is at least half naked: earnings growth is rapidly slowing down and it will fall further in Q4 and 2007 as the economy spins into a hard and ugly recession. And, as I have analyzed before, in an a typical recession the S&P500 falls by an average of 28%. So, the end of the sucker rally is getting closer. The recent bombardment of bad macro news on Q4 in the last two weeks has definitely broken the momentum of US equities in the last week; the myth of a Q4 growth rebound - after a dismal Q3 -is now rapidly fizzling away. Wait for a few more indicators and the sucker rally will melt faster than you can watch it."
Panda Ethanol Inc. announced thatit intends to build a 100 million gallon-per-year ethanol plant near thecity of Muleshoe in Bailey County, Texas. When finished, the facility willannually refine approximately 38 million bushels of corn into aclean-burning, renewable fuel for the nation's transportation needs. Theethanol produced by the plant will displace approximately 2.6 millionbarrels of imported oil a year.The Muleshoe facility will generate the steam used in the ethanolmanufacturing process by gasifying more than 1 billion pounds of cattlemanure a year. Once complete, it will be one of the most fuel efficientethanol refineries in the nation and equal in size to Panda's Herefordfacility, currently under construction, which will be the largestbiomass-fueled ethanol plant in the United
States.The Muleshoe facility is the sixth 100 million gallon ethanol projectannounced by Panda, and the fourth to be powered by cattle manure. Thecompany has received air permits for three of its six announced ethanolprojects.
CVS Corp. on Wednesday agreed to acquire pharmacy benefits manager Caremark Rx Inc. for $20.8 billion to expand its prescription benefits and mail-order business.CVS will exchange 1.67 of its shares for each Caremark share. The 10-year Treasury note rose 10/32 to 102-14/32 with a yield of 4.563%, its weakest closing level in five weeks and down from 4.608% at Tuesday's close. December natural gas climbed 17.8 cents to close at $7.712 per million BTUs.December unleaded gasoline climbed 3.57 cents, or 2.5%, to end at
$1.463 a gallon. December crude finished little changed, down 2 cents at $58.71 a barrel.
December gold climbed $12.50 to close at $619.30 an ounce in New York. December silver added 20.5 cents, or 1.7%, to end at $12.475 an ounce, but December copper lost 10.45 cents, or 3.1%, to finish the day at $3.241 a pound.
Monday, October 30, 2006
Orderly Adjustment
10/31/06 Orderly Adjustment
Pilgrim's Pride said it will reduce weekly chicken processing by 5%
year over year, or approximately 1.3 million head per week, by January 2007
as part of its continuing effort to better balance supply and demand amid
declining chicken prices and sharply higher costs for corn.
The reduction will begin with eggs set as of October 30, 2006, and will
take effect with weekly processing beginning January 1, 2007. The Company
said it intends that the reduction will remain in effect until average
industry margins return to more normalized levels.
"The U.S. chicken industry is subject to volatility and there are a
number of factors impacting near-term market conditions. Although industry
dynamics improved in the spring and early summer of 2006, market conditions
have weakened over the past few months, as evidenced by a decrease in
prices for boneless breast meat and leg quarters, as well as a sharp
increase over the past two months in the price of corn," said O.B. Goolsby
Jr., Pilgrim's Pride president and chief executive officer.
What implications might this have for the company's efforts to acquire Gold Kist?
Over one hundred of our fighting men and women have been killed in Iraq this month.
Bush says "we are winning the war." The voters will have their say on November 7.
The year-on-year rate of non food and energy inflation registered a strong 2.4 percent increase in September. What would the real inflation rate be with food and energy? Clearly the rate would exceed your monthly income gains. Maybe that's why Lacker of the Richmond Fed finds inflation "discomforting."
Goodyear Tire & Rubber Co. said on Monday that it plans to close a plant in Tyler, Texas, three weeks after workers at the factory and 15 other facilities went on strike in part because of the tire maker's plan to shut down the plant. The move will eliminate about 1,100 jobs and is part of Goodyear's strategy to end some of its private label tire business.
Real disposable incomes - after taxes and after adjusting for inflation - rose 0.8%, the most since last September. Consumer spending increased 0.1% in nominal terms, but rose 0.4% when adjusted for falling prices.
Rep. Ron Paul: “Once we accept that the federal government needs $2.7 trillion from us - and more each year - the only question left is from whom it will be collected.”
Gazprom delayed the start of production at its giant Shtokman offshore natural gas field in the Arctic by two years, to 2013, Interfax said Sunday.
The company had planned to produce its first liquefied natural gas, or LNG, at the field in July 2011, deputy CEO Alexander Ananenkov said in Ufa on Sunday, Interfax reported.
Richard Daughty relates "last night, Japanese Finance Minister Omi said that Japan would ‘welcome Russia’s decision to raise yen exposure in their currency reserves’”...Australia’s “Treasurer Peter Costello has called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments and ensure an orderly adjustment.”
Nouriel Roubini: "The first estimate of US Q3 GDP growth came out at a dismal 1.6% but, as reported by Bloomberg, the actual correct figure would have been 0.9% if the production of motor vehicles in Q3 had been measured correctly."
December gold climbed $6.40, or 1.1%, to close at $607.40 an ounce, the contract's loftiest closing level since Sept. 28. Meanwhile, crude closed down 4% at $58.36. December natural gas closed at a more than two-week low of $7.416 per million British thermal units, down 41.1 cents, or 5.3%.
An survey of homeowners conducted for Wells Fargo & Co., the San Francisco-based bank, found that about one in seven respondents had an adjustable-rate mortgage, or ARM. The study found that nearly 80 percent of homeowners with ARMs said they were "somewhat" concerned, "very" concerned or "extremely" concerned about rate increases.
Paul McCulley: "The FOMC's revealed bias is to nurture an increase in the unemployment rate with sustained below-trend growth, so as to pull inflation back down towards target."
Ford plans to cut North American output by up to 12% in the first half of 2007.
Pilgrim's Pride said it will reduce weekly chicken processing by 5%
year over year, or approximately 1.3 million head per week, by January 2007
as part of its continuing effort to better balance supply and demand amid
declining chicken prices and sharply higher costs for corn.
The reduction will begin with eggs set as of October 30, 2006, and will
take effect with weekly processing beginning January 1, 2007. The Company
said it intends that the reduction will remain in effect until average
industry margins return to more normalized levels.
"The U.S. chicken industry is subject to volatility and there are a
number of factors impacting near-term market conditions. Although industry
dynamics improved in the spring and early summer of 2006, market conditions
have weakened over the past few months, as evidenced by a decrease in
prices for boneless breast meat and leg quarters, as well as a sharp
increase over the past two months in the price of corn," said O.B. Goolsby
Jr., Pilgrim's Pride president and chief executive officer.
What implications might this have for the company's efforts to acquire Gold Kist?
Over one hundred of our fighting men and women have been killed in Iraq this month.
Bush says "we are winning the war." The voters will have their say on November 7.
The year-on-year rate of non food and energy inflation registered a strong 2.4 percent increase in September. What would the real inflation rate be with food and energy? Clearly the rate would exceed your monthly income gains. Maybe that's why Lacker of the Richmond Fed finds inflation "discomforting."
Goodyear Tire & Rubber Co. said on Monday that it plans to close a plant in Tyler, Texas, three weeks after workers at the factory and 15 other facilities went on strike in part because of the tire maker's plan to shut down the plant. The move will eliminate about 1,100 jobs and is part of Goodyear's strategy to end some of its private label tire business.
Real disposable incomes - after taxes and after adjusting for inflation - rose 0.8%, the most since last September. Consumer spending increased 0.1% in nominal terms, but rose 0.4% when adjusted for falling prices.
Rep. Ron Paul: “Once we accept that the federal government needs $2.7 trillion from us - and more each year - the only question left is from whom it will be collected.”
Gazprom delayed the start of production at its giant Shtokman offshore natural gas field in the Arctic by two years, to 2013, Interfax said Sunday.
The company had planned to produce its first liquefied natural gas, or LNG, at the field in July 2011, deputy CEO Alexander Ananenkov said in Ufa on Sunday, Interfax reported.
Richard Daughty relates "last night, Japanese Finance Minister Omi said that Japan would ‘welcome Russia’s decision to raise yen exposure in their currency reserves’”...Australia’s “Treasurer Peter Costello has called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments and ensure an orderly adjustment.”
Nouriel Roubini: "The first estimate of US Q3 GDP growth came out at a dismal 1.6% but, as reported by Bloomberg, the actual correct figure would have been 0.9% if the production of motor vehicles in Q3 had been measured correctly."
December gold climbed $6.40, or 1.1%, to close at $607.40 an ounce, the contract's loftiest closing level since Sept. 28. Meanwhile, crude closed down 4% at $58.36. December natural gas closed at a more than two-week low of $7.416 per million British thermal units, down 41.1 cents, or 5.3%.
An survey of homeowners conducted for Wells Fargo & Co., the San Francisco-based bank, found that about one in seven respondents had an adjustable-rate mortgage, or ARM. The study found that nearly 80 percent of homeowners with ARMs said they were "somewhat" concerned, "very" concerned or "extremely" concerned about rate increases.
Paul McCulley: "The FOMC's revealed bias is to nurture an increase in the unemployment rate with sustained below-trend growth, so as to pull inflation back down towards target."
Ford plans to cut North American output by up to 12% in the first half of 2007.
Saturday, October 28, 2006
Turning Back The Clock
10/29/06 Turning Back The Clock
I keep a history clock in my brain. It contains all types of thoughts and facts. It helps me to think clearly. Some might suggest I think differently.
Let's turn to thinking about today's stock market. I could care less that the vast majority of investor sentiment is optimistic. That and a buck+ will get you on the bus. I do care that 250 to 260 million shares of stock changes hands on the NYSE in the last 30 minutes of the trading day. I do care that the closing tick number lately has many times been 1000+. Yet, those machinations don't impress the specialists and the floor traders who are not buying on balance and frequently have been selling on balance into strength. That is some of the smart money in my book. I pay attention to the VIX which has trouble getting above 11. I also keep in my mind that the fiscal year end for many mutual funds and hedge funds is Oct. 31.
With more demand for calling buying, it is clearly in your best interest, in my view, to sell some out of the money calls against your holdings. A timeframe with the January 2007 option series is a good starting point. Should the calls get exercised, your profit won't be subject to tax until April 2008. Better you have the money than the government piss it away in Iraq and Afghanistan or on pork programs.
Are you keeping an eye on the insider selling figures? You're buying while insiders are selling. Dumb! To make matters worse, corporations are out buying their stock while the CEOs of many of those corporations are selling their own shares. The directors sit there and look the other way. Meanwhile, you are paying their director fees.
Robert McHugh: "Since August 25th, 1999, the Dow Industrials have formed their most significant tops within one week of a consecutive series of Fibonacci weeks from that date. What is so fascinating here, is the next top is scheduled for the week of November 17th, 2006 +/1 one week, shortly after the coming U.S. elections."
Bob Hoye: "Through the SEC, the Fed controls margin requirements and a recent announcement was described by the deputy director of the SEC as "a very significant change". Remember that this is essentially the same Fed and SEC that argued that no increases were needed during the late 1990s' tech mania. Now they are talking about lowering margin requirements for institutions on stocks, options, and futures. Now ranging from 25% to 50%, the proposal is to drop them to 15%." In my view, lowering margin requirements will be the last nail in the coffin. Should that occur, I suggest hedging your entire portfolio.
Bloomberg: "China's foreign-exchange reserves may double by 2010 should the government not control growth of foreign direct investment, said He Fan, senior economist at the Chinese Academy of Social Science. Holdings may reach $2 trillion, after they surged to $988 billion at the end of September, 28.5 percent higher than a year ago..."
Doug Noland: "It's not only the resurgent corporate debt Bubble that has me recalling 1999/2000. It was no coincidence that NASDAQ went parabolic about the time deterioration in underlying fundamentals was gathering pace. A spectacular short squeeze, flight into perceived safer corporate bonds, and liquidity creating securities/derivatives leveraging were prominent aspects of that period's Monetary Disorder. Today, an extraordinary confluence of factors including the housing downturn, economic vulnerability, destabilizing Credit excesses being "recycled" back to U.S. securities markets, and a major shift of speculation into riskier Credits is fueling a corporate debt Bubble with a present scope and future consequences that greatly exceed anything from 1999. The tech Bubble was only a warm-up... Dr. Issing is absolutely correct: "... Excessive liquidity world-wide is fueling asset prices and is something which has to be taken seriously by central banks." Tonight I've focused on U.S. Credit system dynamics. But our massive Current Account Deficits have as well spurred lending, liquidity and speculative excess around the world. Our degraded currency has certainly unleashed systemic global Credit inflation, with profligate domestic Credit systems no longer disciplined by the (dollar-anchored) global marketplace. It's more aptly described as "Global Wildcat Finance," with Credit and asset inflation readily condoned by a speculating community that has come to wield incredible power and influence."
Every week I get suggestions for changes in my daily format of ideas. I appreciate everyone's suggestions. Readers fail to comprehend that the daily writings are intended first and foremost for me and for me alone. I want to think smart and optimize my risk/reward opportuities. I do not look for praise from others. If I can make you a more successful investor, that's wonderful. I do not want anyone writing about me and I surely am not interested in being interviewed. Those days are in the history books.
I keep a history clock in my brain. It contains all types of thoughts and facts. It helps me to think clearly. Some might suggest I think differently.
Let's turn to thinking about today's stock market. I could care less that the vast majority of investor sentiment is optimistic. That and a buck+ will get you on the bus. I do care that 250 to 260 million shares of stock changes hands on the NYSE in the last 30 minutes of the trading day. I do care that the closing tick number lately has many times been 1000+. Yet, those machinations don't impress the specialists and the floor traders who are not buying on balance and frequently have been selling on balance into strength. That is some of the smart money in my book. I pay attention to the VIX which has trouble getting above 11. I also keep in my mind that the fiscal year end for many mutual funds and hedge funds is Oct. 31.
With more demand for calling buying, it is clearly in your best interest, in my view, to sell some out of the money calls against your holdings. A timeframe with the January 2007 option series is a good starting point. Should the calls get exercised, your profit won't be subject to tax until April 2008. Better you have the money than the government piss it away in Iraq and Afghanistan or on pork programs.
Are you keeping an eye on the insider selling figures? You're buying while insiders are selling. Dumb! To make matters worse, corporations are out buying their stock while the CEOs of many of those corporations are selling their own shares. The directors sit there and look the other way. Meanwhile, you are paying their director fees.
Robert McHugh: "Since August 25th, 1999, the Dow Industrials have formed their most significant tops within one week of a consecutive series of Fibonacci weeks from that date. What is so fascinating here, is the next top is scheduled for the week of November 17th, 2006 +/1 one week, shortly after the coming U.S. elections."
Bob Hoye: "Through the SEC, the Fed controls margin requirements and a recent announcement was described by the deputy director of the SEC as "a very significant change". Remember that this is essentially the same Fed and SEC that argued that no increases were needed during the late 1990s' tech mania. Now they are talking about lowering margin requirements for institutions on stocks, options, and futures. Now ranging from 25% to 50%, the proposal is to drop them to 15%." In my view, lowering margin requirements will be the last nail in the coffin. Should that occur, I suggest hedging your entire portfolio.
Bloomberg: "China's foreign-exchange reserves may double by 2010 should the government not control growth of foreign direct investment, said He Fan, senior economist at the Chinese Academy of Social Science. Holdings may reach $2 trillion, after they surged to $988 billion at the end of September, 28.5 percent higher than a year ago..."
Doug Noland: "It's not only the resurgent corporate debt Bubble that has me recalling 1999/2000. It was no coincidence that NASDAQ went parabolic about the time deterioration in underlying fundamentals was gathering pace. A spectacular short squeeze, flight into perceived safer corporate bonds, and liquidity creating securities/derivatives leveraging were prominent aspects of that period's Monetary Disorder. Today, an extraordinary confluence of factors including the housing downturn, economic vulnerability, destabilizing Credit excesses being "recycled" back to U.S. securities markets, and a major shift of speculation into riskier Credits is fueling a corporate debt Bubble with a present scope and future consequences that greatly exceed anything from 1999. The tech Bubble was only a warm-up... Dr. Issing is absolutely correct: "... Excessive liquidity world-wide is fueling asset prices and is something which has to be taken seriously by central banks." Tonight I've focused on U.S. Credit system dynamics. But our massive Current Account Deficits have as well spurred lending, liquidity and speculative excess around the world. Our degraded currency has certainly unleashed systemic global Credit inflation, with profligate domestic Credit systems no longer disciplined by the (dollar-anchored) global marketplace. It's more aptly described as "Global Wildcat Finance," with Credit and asset inflation readily condoned by a speculating community that has come to wield incredible power and influence."
Every week I get suggestions for changes in my daily format of ideas. I appreciate everyone's suggestions. Readers fail to comprehend that the daily writings are intended first and foremost for me and for me alone. I want to think smart and optimize my risk/reward opportuities. I do not look for praise from others. If I can make you a more successful investor, that's wonderful. I do not want anyone writing about me and I surely am not interested in being interviewed. Those days are in the history books.
Friday's Reports
10/28/06 Friday Reports
UMICH OCTOBER CONSUMER SENTIMENT 93.6 VS. 85.4: REPORTS. The current conditions index rose to 107.3 in late October from 106.1 earlier in the month. This is up from 96.6 in September and is the highest since April. The expectations index rose to 84.8 in late October from 83.4 previously. The index is up from 78.2 in September. It's the highest since July 2005.
Third quarter GDP rose a slim 1.6%. Meanwhile, core consumer prices increased at a 2.3% rate in the quarter, raising the year-over-year increase to 2.4% from 2.2% in the second quarter. A weakening housing sector and a drop in business inventories pulled GDP down in the quarter. Real final sales increased 1.7% annualized, down from 2.1% in the second quarter.
Chevron Corp. reported third-quarter earnings of $5.02 billion, or $2.29 a share, up from a year-ago profit of $3.59 billion, or $1.64 a share. Total revenue, including the contribution from equity affiliates and other income, reached $54.21 billion in the latest three months, down slightly from a year-ago equivalent total of $54.46 billion.
Ingersoll-Rand Co. said its third-quarter net income fell 4% to $243.8 million, or 76 cents a share, from $254.2 million, or 75 cents a share, in the year-earlier period, when there were 20 million more shares outstanding. Revenue rose 6% in the three months ended Sept. 30 to $2.77 billion from $2.62 billion. Ingersoll-Rand forecast a 3% rise in fourth-quarter revenue and earnings of 70 cents to 75 cents a share, making its full-year forecast $3.16 to $3.21 a share.
World leaders need to resolve massive imbalances in international trade to avoid the risk of global financial market and economic instability, former U.S. Treasury Secretary Lawrence Summers said on Thursday. "These imbalances have had people crying 'Wolf' for several years. They stand as a real risk," Summers said in a speech.
John Crudele: "Stocks have been moving steadily upward since July, when Paulson took over the Plunge Protection Team (and the Treasury). And one of the reasons could be that - as I mentioned back then - there is less risk in stocks if the government is providing a safety net. Less risk, that is, until something bad happens." It would be interesting to know why Paulson feels a need to have the Plunge Protection Team now meet every six weeks. Is there
a huge problem on the horizon?
U.K. inflation will accelerate to the fastest pace in at least nine years this quarter, requiring two interest-rate increases to bring it back down to target, the National Institute for Economic and Social Research said.
Rigzone reported " EnCana Oil & Gas, the third-largest producer of natural gas in the Barnett Shale last year, Wednesday became the first producer to announce a cutback in drilling because of rising expenses.
EnCana, which is based in Alberta, said it will pull four of its 12 rigs out of Barnett Shale production because of high costs. In 2005, EnCana produced 35 billion cubic feet of natural gas in the Barnett Shale, about 8 percent of the field's total production. It trailed only Devon Energy and XTO Energy among Barnett Shale producers.
"Rigs are costing between $20,000 and $22,000 per day," said Randy Eresman, EnCana's chief executive. "We think it is prudent for our shareholders to reduce our costs."
November natural gas fell 34.4 cents, or 4.6%, to close at $7.153 per million British thermal units. December crude climbed 39 cents to close at $60.75 a barrel, up 2.4% for the week.
December gold closed at $601 an ounce Friday, up $1.20 for the session and up 0.8% for the week.
The AP-AOL News telephone poll of 2,000 adults, 970 of whom are likely voters, conducted by Ipsos from Oct. 20-25, revealed 56 percent of likely voters said they would vote to send a Democrat to the House and 37 percent said they would vote Republican — a 19-point difference. Democrats had a 10-point edge in early October. However, this does not mean the Democrats will take control of the Senate.
Kean of NJ could win, so could George Allen of Virginia, and others.
Even though the Dow had a bad day, the VIX barely managed a small gain. There is so little fear of even a 10% correction.
UMICH OCTOBER CONSUMER SENTIMENT 93.6 VS. 85.4: REPORTS. The current conditions index rose to 107.3 in late October from 106.1 earlier in the month. This is up from 96.6 in September and is the highest since April. The expectations index rose to 84.8 in late October from 83.4 previously. The index is up from 78.2 in September. It's the highest since July 2005.
Third quarter GDP rose a slim 1.6%. Meanwhile, core consumer prices increased at a 2.3% rate in the quarter, raising the year-over-year increase to 2.4% from 2.2% in the second quarter. A weakening housing sector and a drop in business inventories pulled GDP down in the quarter. Real final sales increased 1.7% annualized, down from 2.1% in the second quarter.
Chevron Corp. reported third-quarter earnings of $5.02 billion, or $2.29 a share, up from a year-ago profit of $3.59 billion, or $1.64 a share. Total revenue, including the contribution from equity affiliates and other income, reached $54.21 billion in the latest three months, down slightly from a year-ago equivalent total of $54.46 billion.
Ingersoll-Rand Co. said its third-quarter net income fell 4% to $243.8 million, or 76 cents a share, from $254.2 million, or 75 cents a share, in the year-earlier period, when there were 20 million more shares outstanding. Revenue rose 6% in the three months ended Sept. 30 to $2.77 billion from $2.62 billion. Ingersoll-Rand forecast a 3% rise in fourth-quarter revenue and earnings of 70 cents to 75 cents a share, making its full-year forecast $3.16 to $3.21 a share.
World leaders need to resolve massive imbalances in international trade to avoid the risk of global financial market and economic instability, former U.S. Treasury Secretary Lawrence Summers said on Thursday. "These imbalances have had people crying 'Wolf' for several years. They stand as a real risk," Summers said in a speech.
John Crudele: "Stocks have been moving steadily upward since July, when Paulson took over the Plunge Protection Team (and the Treasury). And one of the reasons could be that - as I mentioned back then - there is less risk in stocks if the government is providing a safety net. Less risk, that is, until something bad happens." It would be interesting to know why Paulson feels a need to have the Plunge Protection Team now meet every six weeks. Is there
a huge problem on the horizon?
U.K. inflation will accelerate to the fastest pace in at least nine years this quarter, requiring two interest-rate increases to bring it back down to target, the National Institute for Economic and Social Research said.
Rigzone reported " EnCana Oil & Gas, the third-largest producer of natural gas in the Barnett Shale last year, Wednesday became the first producer to announce a cutback in drilling because of rising expenses.
EnCana, which is based in Alberta, said it will pull four of its 12 rigs out of Barnett Shale production because of high costs. In 2005, EnCana produced 35 billion cubic feet of natural gas in the Barnett Shale, about 8 percent of the field's total production. It trailed only Devon Energy and XTO Energy among Barnett Shale producers.
"Rigs are costing between $20,000 and $22,000 per day," said Randy Eresman, EnCana's chief executive. "We think it is prudent for our shareholders to reduce our costs."
November natural gas fell 34.4 cents, or 4.6%, to close at $7.153 per million British thermal units. December crude climbed 39 cents to close at $60.75 a barrel, up 2.4% for the week.
December gold closed at $601 an ounce Friday, up $1.20 for the session and up 0.8% for the week.
The AP-AOL News telephone poll of 2,000 adults, 970 of whom are likely voters, conducted by Ipsos from Oct. 20-25, revealed 56 percent of likely voters said they would vote to send a Democrat to the House and 37 percent said they would vote Republican — a 19-point difference. Democrats had a 10-point edge in early October. However, this does not mean the Democrats will take control of the Senate.
Kean of NJ could win, so could George Allen of Virginia, and others.
Even though the Dow had a bad day, the VIX barely managed a small gain. There is so little fear of even a 10% correction.
Thursday, October 26, 2006
Results
10/27/06 Results
Officials at Microsoft said they expect second-quarter revenue between $11.8 billion and $12.4 billion and diluted earnings per share of between 22 and 24 cents per share.
The next quarter will be affected by deferral of $1.5 billion in revenue related to the software maker's Vista guarantee program announced on Tuesday. In an effort not to slow down personal computer sales over the holidays, Microsoft said it will offer coupons that will allow computer buyers to upgrade to its upcoming Vista operating system for free or at a big discount when it becomes available to consumers after the first of the year.
General Motors was downgraded two notches to sell from buy at Merrill Lynch, citing disappointment over third-quarter operating results in North America and valuation.
December crude fell $1.04 to close at $60.34 a barrel.
The 10-year benchmark note closed up 10/32 at 101-6/32 with a yield of 4.717%, down from 4.769% in late trade on Wednesday.
For 2007, Lockheed Martin sees per-share earnings of $5.60 to $5.80, on revenue of $41 billion to $42 billion.
December gold climbed $9 to close at $599.80 an ounce Thursday. December silver added 35 cents, or 2.9%, to close at $12.24 an ounce. December copper closed down 0.45 cent at $3.40 a pound.
Demand was weaker than normal for the Treasury's auction of $14 billion in 5-year notes on Thursday. The notes were sold at a high yield of 4.694%.
Richard Dugas, CEO of Pulte Homes Inc, said although some evidence points to flattening inventory and stabilization in some regions, management will wait for the trends to continue and to broaden before concluding the housing market has hit bottom. "Given our expectations that market conditions will remain challenges for the foreseeable future, we continue to throttle back, consistent with operating a slow demand environment," the CEO said. During the call, Pulte management said it cut just under 800 employees in the third quarter, and about 1,400 positions during the first nine months of 2006.
The policy of many emerging market governments, including China, to accumulate large official reserves, is distorting market signals and adding to the considerable degree of uncertainty the Fed faces about the longer-term outlook for the U.S. economy, said Timothy Geithner, the president of the New York Fed bank on Thursday. "And the forces that have produced this constellation of capital flows and market conditions will evolve in ways we cannot anticipate," he said.
The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It's the second consecutive decline in inventories.
The volume of help-wanted advertising in major U.S. newspapers held steady in September, the Conference Board said Thursday. The help-wanted index stood at 30 in September. A year ago, the index was 37.
The dollar slid to a three-week low versus the euro.
Demand for U.S.-made durable goods soared 7.8% in September. The increase was almost entirely due to a jump in orders booked by Boeing.
Exxon Mobil Corp. reported third-quarter earnings of $10.49 billion, or $1.77 per share, up from a year-ago profit of $9.92 billion, or $1.58 per share. Excluding items in the year-ago period, the Dow component earned $8.3 billion, or $1.32 a share. Revenue slipped in the latest three months to $99.59 billion from $100.72 billion in the same period a year earlier.
Shares in Industrial & Commercial Bank of China , which raised US$19 billion in the world's largest IPO, rose as much as 18 percent in their Hong Kong debut on Friday.
"We're beginning to see some move from the dollar to the euro, both from the private sector ... but also from monetary authorities and central banks," Greenspan told a conference sponsored by the Commercial Finance Association. Actually, this move has been going on for some time. Greenspan must have been in a cocoon.
Chuck Butler: "Yesterday, I was reading a report from the Sydney Morning Herald that quoted Australian Treasurer, Peter Costello, calling for an “orderly withdrawal from the U.S. dollar by Asia's Central Banks.” WOW! Costello also said, “the strategy had changed, and Central Bankers were now looking for alternative investments.” Butler when on to point out that Gabor Steingart, who heads Der Spiegel’s Berlin office and was chosen as “The Economic Writer of the Year” in 2004, stated “These days, the dollar is making a lot of people uncomfortable. One morning many dollar-owners will wake up and look at the facts about the U.S. economy without their rose-colored glasses - just as private investors woke up one day and took an unflinching look at the New Economy, only to see companies whose market value couldn't be justified by even the most dramatic of profit increases. Some of the revenue forecasts that had been issued far exceeded the total value of the market. The NASDAQ presented the spectacle of a stock market whose added value increased by 1,000 percent in just a few years, when the nominal growth of the U.S. economy during the same period was only 25 percent."
Officials at Microsoft said they expect second-quarter revenue between $11.8 billion and $12.4 billion and diluted earnings per share of between 22 and 24 cents per share.
The next quarter will be affected by deferral of $1.5 billion in revenue related to the software maker's Vista guarantee program announced on Tuesday. In an effort not to slow down personal computer sales over the holidays, Microsoft said it will offer coupons that will allow computer buyers to upgrade to its upcoming Vista operating system for free or at a big discount when it becomes available to consumers after the first of the year.
General Motors was downgraded two notches to sell from buy at Merrill Lynch, citing disappointment over third-quarter operating results in North America and valuation.
December crude fell $1.04 to close at $60.34 a barrel.
The 10-year benchmark note closed up 10/32 at 101-6/32 with a yield of 4.717%, down from 4.769% in late trade on Wednesday.
For 2007, Lockheed Martin sees per-share earnings of $5.60 to $5.80, on revenue of $41 billion to $42 billion.
December gold climbed $9 to close at $599.80 an ounce Thursday. December silver added 35 cents, or 2.9%, to close at $12.24 an ounce. December copper closed down 0.45 cent at $3.40 a pound.
Demand was weaker than normal for the Treasury's auction of $14 billion in 5-year notes on Thursday. The notes were sold at a high yield of 4.694%.
Richard Dugas, CEO of Pulte Homes Inc, said although some evidence points to flattening inventory and stabilization in some regions, management will wait for the trends to continue and to broaden before concluding the housing market has hit bottom. "Given our expectations that market conditions will remain challenges for the foreseeable future, we continue to throttle back, consistent with operating a slow demand environment," the CEO said. During the call, Pulte management said it cut just under 800 employees in the third quarter, and about 1,400 positions during the first nine months of 2006.
The policy of many emerging market governments, including China, to accumulate large official reserves, is distorting market signals and adding to the considerable degree of uncertainty the Fed faces about the longer-term outlook for the U.S. economy, said Timothy Geithner, the president of the New York Fed bank on Thursday. "And the forces that have produced this constellation of capital flows and market conditions will evolve in ways we cannot anticipate," he said.
The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It's the second consecutive decline in inventories.
The volume of help-wanted advertising in major U.S. newspapers held steady in September, the Conference Board said Thursday. The help-wanted index stood at 30 in September. A year ago, the index was 37.
The dollar slid to a three-week low versus the euro.
Demand for U.S.-made durable goods soared 7.8% in September. The increase was almost entirely due to a jump in orders booked by Boeing.
Exxon Mobil Corp. reported third-quarter earnings of $10.49 billion, or $1.77 per share, up from a year-ago profit of $9.92 billion, or $1.58 per share. Excluding items in the year-ago period, the Dow component earned $8.3 billion, or $1.32 a share. Revenue slipped in the latest three months to $99.59 billion from $100.72 billion in the same period a year earlier.
Shares in Industrial & Commercial Bank of China , which raised US$19 billion in the world's largest IPO, rose as much as 18 percent in their Hong Kong debut on Friday.
"We're beginning to see some move from the dollar to the euro, both from the private sector ... but also from monetary authorities and central banks," Greenspan told a conference sponsored by the Commercial Finance Association. Actually, this move has been going on for some time. Greenspan must have been in a cocoon.
Chuck Butler: "Yesterday, I was reading a report from the Sydney Morning Herald that quoted Australian Treasurer, Peter Costello, calling for an “orderly withdrawal from the U.S. dollar by Asia's Central Banks.” WOW! Costello also said, “the strategy had changed, and Central Bankers were now looking for alternative investments.” Butler when on to point out that Gabor Steingart, who heads Der Spiegel’s Berlin office and was chosen as “The Economic Writer of the Year” in 2004, stated “These days, the dollar is making a lot of people uncomfortable. One morning many dollar-owners will wake up and look at the facts about the U.S. economy without their rose-colored glasses - just as private investors woke up one day and took an unflinching look at the New Economy, only to see companies whose market value couldn't be justified by even the most dramatic of profit increases. Some of the revenue forecasts that had been issued far exceeded the total value of the market. The NASDAQ presented the spectacle of a stock market whose added value increased by 1,000 percent in just a few years, when the nominal growth of the U.S. economy during the same period was only 25 percent."
Wednesday, October 25, 2006
For Real
10/26/06 For Real
"Saudi Arabia has already informed its customers in Asia and North America of its plan to cut 380,000 bpd from the beginning of November," a senior OPEC delegate said. "Other OPEC producers will cut their designated volumes from their actual production regardless of how it is being estimated."
Centex Corp. CEO Tim Eller: "Buyers are either waiting on the sidelines for conditions to improve or canceling their purchase all together, believing they will be unable to sell their existing home for their expected price."
Sales of U.S. existing homes fell for the sixth month in a row in September as median sales prices fell for the second straight month, the National Association of Realtors said Wednesday. Inventories of unsold homes fell for the second straight month, a sign that the market is correcting, said Laurence Yun, a senior economist for the realtors group.
It was back in July that Yankee Candle was exploring alternatives. The stock was selling for $24+. I looked at it and thought a sale price of $28 might be possible. So much for my analysis. The company reached an agreement at $34.75.
U.S. crude supplies fell by 3.3 million barrels in the week ended Oct. 20, the Department of Energy said Wednesday. Motor gasoline supplies fell by 2.8 million barrels and distillate fuel supplies fell by 1.4 million barrels. Separate data from the American Petroleum Institute showed crude supplies down by 3.7 million barrels, gasoline supplies down by 2.3 million barrels and distillates down by 588,000 barrels. Futures prices rallied with crude for December delivery up just over $2 at $61.40 a barrel after the data were released.
Altria owns 88+% of Kraft and will finalize its plans to distribute Kraft shares at their Jan. 31 board meeting.
Pulte Homes Inc. reported third-quarter net earnings of $190.2 million, or 74 cents a share, compared with $395.4 million, or $1.50 a share, during the year-ago period. The backlog as of Sept. 30 was valued at $5.8 billion, compared with a value of $8 billion last year. The company said it continues to expect that business conditions will remain difficult for at least the near term, and that additional charges are possible if conditions erode further.
Meritage Homes said that more cancellations have caused the percentage of unsold homes in inventory to more than double from historic levels, and it has had "to shrink" its employee base in certain markets.
Gold for December delivery closed up $3.20 at $590.80 an ounce. Silver futures added 4 cents to $11.89 an ounce, platinum was up $5.90 at $1,069 an ounce and palladium rose 10 cents to $323.10 an ounce. Copper fell 1.35 cents to $3.4045 a pound.
"Saudi Arabia has already informed its customers in Asia and North America of its plan to cut 380,000 bpd from the beginning of November," a senior OPEC delegate said. "Other OPEC producers will cut their designated volumes from their actual production regardless of how it is being estimated."
Centex Corp. CEO Tim Eller: "Buyers are either waiting on the sidelines for conditions to improve or canceling their purchase all together, believing they will be unable to sell their existing home for their expected price."
Sales of U.S. existing homes fell for the sixth month in a row in September as median sales prices fell for the second straight month, the National Association of Realtors said Wednesday. Inventories of unsold homes fell for the second straight month, a sign that the market is correcting, said Laurence Yun, a senior economist for the realtors group.
It was back in July that Yankee Candle was exploring alternatives. The stock was selling for $24+. I looked at it and thought a sale price of $28 might be possible. So much for my analysis. The company reached an agreement at $34.75.
U.S. crude supplies fell by 3.3 million barrels in the week ended Oct. 20, the Department of Energy said Wednesday. Motor gasoline supplies fell by 2.8 million barrels and distillate fuel supplies fell by 1.4 million barrels. Separate data from the American Petroleum Institute showed crude supplies down by 3.7 million barrels, gasoline supplies down by 2.3 million barrels and distillates down by 588,000 barrels. Futures prices rallied with crude for December delivery up just over $2 at $61.40 a barrel after the data were released.
Altria owns 88+% of Kraft and will finalize its plans to distribute Kraft shares at their Jan. 31 board meeting.
Pulte Homes Inc. reported third-quarter net earnings of $190.2 million, or 74 cents a share, compared with $395.4 million, or $1.50 a share, during the year-ago period. The backlog as of Sept. 30 was valued at $5.8 billion, compared with a value of $8 billion last year. The company said it continues to expect that business conditions will remain difficult for at least the near term, and that additional charges are possible if conditions erode further.
Meritage Homes said that more cancellations have caused the percentage of unsold homes in inventory to more than double from historic levels, and it has had "to shrink" its employee base in certain markets.
Gold for December delivery closed up $3.20 at $590.80 an ounce. Silver futures added 4 cents to $11.89 an ounce, platinum was up $5.90 at $1,069 an ounce and palladium rose 10 cents to $323.10 an ounce. Copper fell 1.35 cents to $3.4045 a pound.
Tuesday, October 24, 2006
More On Housing
10/25/06 More On Housing
According to Moody’s, the percentage of home loans
that are late on their payments for more than 60 days
rose to 7.23% in July from 5.9% the year before.
That’s the fastest rate of increase since 1998, says
Moody’s.
Freddie Mac, which buys mortgages and packages them
into mortgage-backed securities, expects sales of new
and existing homes to drop 9.4% in 2006 after five
consecutive years of increases, says Bloomberg.
December crude climbed 54 cents to close at $59.35 a barrel Tuesday. November natural gas gained 21 cents to end the session at $7.091 per million British thermal units. November unleaded gasoline added 6.45 cents, or 4.4%, to close at $1.536 a gallon and November heating oil rose 2.62 cents to end at $1.6952 a gallon.
December gold climbed $4.70 to close at $587.60 an ounce Tuesday. December silver recovered from a low of $11.35 an ounce to close at $11.85, up 18 cents for the day. December copper, however, continued lower to end at $3.418 a pound, down 3.3 cents. Gold stocks did not follow in the path of a rising gold price.
Bombardier said on Tuesday that it was planning to cut about 1,330 jobs, including management positions, at its facilities in the Montreal area and at its plants in Belfast, Northern Ireland, during the next nine months from a total workforce in the aerospace division of 26,900. The overall workforce has remained at a similar level since January 2004.
Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.
According to Moody’s, the percentage of home loans
that are late on their payments for more than 60 days
rose to 7.23% in July from 5.9% the year before.
That’s the fastest rate of increase since 1998, says
Moody’s.
Freddie Mac, which buys mortgages and packages them
into mortgage-backed securities, expects sales of new
and existing homes to drop 9.4% in 2006 after five
consecutive years of increases, says Bloomberg.
December crude climbed 54 cents to close at $59.35 a barrel Tuesday. November natural gas gained 21 cents to end the session at $7.091 per million British thermal units. November unleaded gasoline added 6.45 cents, or 4.4%, to close at $1.536 a gallon and November heating oil rose 2.62 cents to end at $1.6952 a gallon.
December gold climbed $4.70 to close at $587.60 an ounce Tuesday. December silver recovered from a low of $11.35 an ounce to close at $11.85, up 18 cents for the day. December copper, however, continued lower to end at $3.418 a pound, down 3.3 cents. Gold stocks did not follow in the path of a rising gold price.
Bombardier said on Tuesday that it was planning to cut about 1,330 jobs, including management positions, at its facilities in the Montreal area and at its plants in Belfast, Northern Ireland, during the next nine months from a total workforce in the aerospace division of 26,900. The overall workforce has remained at a similar level since January 2004.
Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.
Monday, October 23, 2006
Some Surprises
10/24/06 Some Surprises
December gold fell $13.50 to close at $582.90 an ounce and December silver lost 29.5 cents to end at $11.67 an ounce Monday. Those are the weakest closing levels for the contracts since Oct. 12. December copper fell by 1.1 cents to close at $3.451 a pound.
November natural gas fell 26.1 cents, or 3.6%, to $6.98 per million British thermal units in afternoon trading, reversing course after touching a nearly six-week high of $7.36. December crude lost 78 cents to trade at $58.55 a barrel.
Quite a surprise to see Wal-Mart spike from 49 to 52 in one day. Quite a surprise to see GM trading above 35.
John Hussman: "I personally don't trust this market at all, but with the Fund well hedged against the impact of substantial market losses, prevailing market action compels us to give a carefully limited benefit of the doubt to the investors passing out the Dow 12,000 party hats. The hedges, however, are essential."
From Richard Daughty: Richard Russell’s Dow Theory Letter says, “At times...the stock market is unclear about what lies ahead, and this is one of those times. I say that because the D-J Industrial Average and the D-J Transportation Average are at extreme odds. They just don't agree at all. The Industrials are saying that the situation is probably OK. The Transports are saying, ‘Don't you believe it, there's something very wrong going on.’”
While the price of gold bounces in a $35 an ounce range, gold stocks are beginning to find their footing.
The Mozilla Foundation will release the Firefox 2.0 browser on Tuesday, Mozilla Foundation officials confirmed Monday.
In recent weeks Iranian nuclear experts had started up a second pilot enrichment facility, diplomats in Vienna told The Associated Press Monday on condition of anonymity because they were not authorized to divulge the information to media.
The Motley Fool: "I believe that the larger worldwide perspective involves an ongoing need to replace and develop crude oil reserves. It's a need that clearly was important to Schlumberger's most recent quarter. It also renders a number of other service industry participants worth monitoring, including Halliburton, Baker Hughes and BJ Services."
Daniel Patrick Moynihan: "Everyone is entitled to his own opinion, but not his own facts."
December gold fell $13.50 to close at $582.90 an ounce and December silver lost 29.5 cents to end at $11.67 an ounce Monday. Those are the weakest closing levels for the contracts since Oct. 12. December copper fell by 1.1 cents to close at $3.451 a pound.
November natural gas fell 26.1 cents, or 3.6%, to $6.98 per million British thermal units in afternoon trading, reversing course after touching a nearly six-week high of $7.36. December crude lost 78 cents to trade at $58.55 a barrel.
Quite a surprise to see Wal-Mart spike from 49 to 52 in one day. Quite a surprise to see GM trading above 35.
John Hussman: "I personally don't trust this market at all, but with the Fund well hedged against the impact of substantial market losses, prevailing market action compels us to give a carefully limited benefit of the doubt to the investors passing out the Dow 12,000 party hats. The hedges, however, are essential."
From Richard Daughty: Richard Russell’s Dow Theory Letter says, “At times...the stock market is unclear about what lies ahead, and this is one of those times. I say that because the D-J Industrial Average and the D-J Transportation Average are at extreme odds. They just don't agree at all. The Industrials are saying that the situation is probably OK. The Transports are saying, ‘Don't you believe it, there's something very wrong going on.’”
While the price of gold bounces in a $35 an ounce range, gold stocks are beginning to find their footing.
The Mozilla Foundation will release the Firefox 2.0 browser on Tuesday, Mozilla Foundation officials confirmed Monday.
In recent weeks Iranian nuclear experts had started up a second pilot enrichment facility, diplomats in Vienna told The Associated Press Monday on condition of anonymity because they were not authorized to divulge the information to media.
The Motley Fool: "I believe that the larger worldwide perspective involves an ongoing need to replace and develop crude oil reserves. It's a need that clearly was important to Schlumberger's most recent quarter. It also renders a number of other service industry participants worth monitoring, including Halliburton, Baker Hughes and BJ Services."
Daniel Patrick Moynihan: "Everyone is entitled to his own opinion, but not his own facts."
Interest Rates
10/23/06 Interest Rates
"We are getting growth that is very close to potential, and that is the important point for monetary policy,'' says John B. Taylor, a Stanford University economist who was Treasury undersecretary for international affairs from 2001 to 2005. ``There will be increased tightening'' if the ``core'' inflation rate -- which excludes food and energy costs -- ``remains in the 2.5 percent range,'' he says. The economy will grow 2.5 percent over the second half of 2006, accelerating to a 2.9 percent rate by the third quarter of 2007, according to the median estimate in a Bloomberg survey. While a 25 percent decline in oil prices since July will reduce the overall rate of inflation, core measures may remain above the Fed's comfort zone. ``There's no reason to expect any rapid decline in core inflation from an economy that grows in a 2.5 percent range,'' says Allen Sinai, president of Decision Economics Inc. in New York. ``The Federal Reserve will make that conclusion."
There has been a significant momentum change in the U.S. treasury bond market. In recent weeks, the yield on the 5-year has risen from 4.50% to 4.82%. This yield remains very low on an historical basis-- especially if GDP grows 2 to 3 percent over the next several quarters. With that growth and 8 to 10 percent growth in China and India, demand for commodities will grow and there is a potential that prices could move much higher over the next eight to ten months. Such an event is not priced into current interest rates nor is it priced into the outlook for equities.
"We are getting growth that is very close to potential, and that is the important point for monetary policy,'' says John B. Taylor, a Stanford University economist who was Treasury undersecretary for international affairs from 2001 to 2005. ``There will be increased tightening'' if the ``core'' inflation rate -- which excludes food and energy costs -- ``remains in the 2.5 percent range,'' he says. The economy will grow 2.5 percent over the second half of 2006, accelerating to a 2.9 percent rate by the third quarter of 2007, according to the median estimate in a Bloomberg survey. While a 25 percent decline in oil prices since July will reduce the overall rate of inflation, core measures may remain above the Fed's comfort zone. ``There's no reason to expect any rapid decline in core inflation from an economy that grows in a 2.5 percent range,'' says Allen Sinai, president of Decision Economics Inc. in New York. ``The Federal Reserve will make that conclusion."
There has been a significant momentum change in the U.S. treasury bond market. In recent weeks, the yield on the 5-year has risen from 4.50% to 4.82%. This yield remains very low on an historical basis-- especially if GDP grows 2 to 3 percent over the next several quarters. With that growth and 8 to 10 percent growth in China and India, demand for commodities will grow and there is a potential that prices could move much higher over the next eight to ten months. Such an event is not priced into current interest rates nor is it priced into the outlook for equities.
Saturday, October 21, 2006
99 44/100%
10/21/06 99 44/100%
John Mauldin: "Much of the recent rise in the Dow 30 has been from less than ten of the components. Caterpillar has counted for 500 points by itself since the low. Richard Russell notes that the Dow Transports are not confirming a new bull.
Where are the new highs on the other indexes? Given the inverted yield curve, the continued problems in the critical housing markets and the rest of the forward looking themes I have discussed over the past few months, I still believe we are going to get to buy this market at much lower prices and better valuations."
Friday was not a prosperous day for Caterpillar shareowners. The 15% earnings increase was overwhelmed by the lowered management forecast going forward. You'd think the company had been in a terrible accident as the stock got creamed and closed at $59, a sharp drop from $70. It didn't help that it was option expiration day.
Barron's: "The Republicans will keep control of Congress, though just barely. So says our highly reliable seat-by-seat analysis of local political funding." Hopefully this forecast is as accurate as Alan Abelson's on-going forecasts that the market is coming to an end. In other words, 99 44/100 pure (BS).
A great deal was made of crude closing at $56.82. One should note that this price was for the November contract that ceased trading at the end of trading Friday. The December contract is trading about $2 a barrel higher and will be the contract for trading on Monday.
Not much was said about Schlumberger's 85% increase in earnings for the third quarter on a sales gain of 34%. The reason might be that the company is not named Google and investors have shunned the oil service stocks over the past 4 months. It was not too long ago that Schlumberger was trading at an all-time high. Now the all-time highs belong to the Dow Jones Utility Average.
Natural gas rose 28% in price this past week. In addition, zinc prices hit a record high.
In 2007 53 million Americans on Social Security will receive benefits with an increase of 3.3%, down from a rise of 4.1% in 2006. That means inflation was tamer in 2006. Sure it was!
Year to date the Dow has risen 12%, China 54%, Russia 44%, India 35%, and Mexico 30%.
The 10-year U.S. treasury bond is yielding 4.79%. Mexico's 10-year government bond has a yield of 5.79%. Pretty soon we can merge the governments and not miss a beat.
Did you notice the 6.5 earthquake offshore Peru?
How many more deaths will it take for Americans to acknowledge that there is a civil war in Iraq? When will there be a bumper sticker saying "a vote for Republicans is a vote for Iraqi civil war?"
Doug Noland: "With Global Credit conditions underpinning employment and income - while stoking systemwide liquidity over-abundance – I’ll continue to approach the unfolding housing bust with analytical caution. The housing grizzly goes on a rampage with the breakdown of the Mortgage Finance and Credit Bubbles. In the meantime, I am willing to predict escalating Monetary Disorder and resulting wild marketplace instability and divergences in housing, securities, and commodities prices – a backdrop poised to confound the Fed and limit their flexibility for responding to deepening housing troubles."
OPEC's plan to cut crude production by 1.2 million barrels a day won't affect the services industry, Schlumberger Ltd. Chief Executive Andrew Gould said Friday.
"OPEC is defending the price, but I don't think there is a huge danger of a price collapse," he said. "We don't need $65 oil for our customers' spending plans to be maintained," he said. "They will maintain them at a much lower price."
Gould said the task of replenishing reserves in the face of soaring demand will keep services companies busy. And demand shows no sign of slowing. The CEO of BJ Services has told me the same thing. I believe BJ Services offers the best risk/reward of any S&P 500 company.
New York-based Ripplewood Holdings LLC is preparing a likely bid for Delphi Corp., according to a published report in Saturday's Wall Street Journal. Ripplewood, a buyout firm, has looked at the possibility of taking over all or part of the bankrupt auto-parts maker, the Journal reported.
President Bush: "Another reason for the recent increase in attacks is that the
terrorists are trying to influence public opinion here in the United
States. They have a sophisticated propaganda strategy. They know they
cannot defeat us in the battle, so they conduct high-profile attacks,
hoping that the images of violence will demoralize our country and force us
to retreat." Tell that to the families whose loved ones come home in body bags.
John Mauldin: "Much of the recent rise in the Dow 30 has been from less than ten of the components. Caterpillar has counted for 500 points by itself since the low. Richard Russell notes that the Dow Transports are not confirming a new bull.
Where are the new highs on the other indexes? Given the inverted yield curve, the continued problems in the critical housing markets and the rest of the forward looking themes I have discussed over the past few months, I still believe we are going to get to buy this market at much lower prices and better valuations."
Friday was not a prosperous day for Caterpillar shareowners. The 15% earnings increase was overwhelmed by the lowered management forecast going forward. You'd think the company had been in a terrible accident as the stock got creamed and closed at $59, a sharp drop from $70. It didn't help that it was option expiration day.
Barron's: "The Republicans will keep control of Congress, though just barely. So says our highly reliable seat-by-seat analysis of local political funding." Hopefully this forecast is as accurate as Alan Abelson's on-going forecasts that the market is coming to an end. In other words, 99 44/100 pure (BS).
A great deal was made of crude closing at $56.82. One should note that this price was for the November contract that ceased trading at the end of trading Friday. The December contract is trading about $2 a barrel higher and will be the contract for trading on Monday.
Not much was said about Schlumberger's 85% increase in earnings for the third quarter on a sales gain of 34%. The reason might be that the company is not named Google and investors have shunned the oil service stocks over the past 4 months. It was not too long ago that Schlumberger was trading at an all-time high. Now the all-time highs belong to the Dow Jones Utility Average.
Natural gas rose 28% in price this past week. In addition, zinc prices hit a record high.
In 2007 53 million Americans on Social Security will receive benefits with an increase of 3.3%, down from a rise of 4.1% in 2006. That means inflation was tamer in 2006. Sure it was!
Year to date the Dow has risen 12%, China 54%, Russia 44%, India 35%, and Mexico 30%.
The 10-year U.S. treasury bond is yielding 4.79%. Mexico's 10-year government bond has a yield of 5.79%. Pretty soon we can merge the governments and not miss a beat.
Did you notice the 6.5 earthquake offshore Peru?
How many more deaths will it take for Americans to acknowledge that there is a civil war in Iraq? When will there be a bumper sticker saying "a vote for Republicans is a vote for Iraqi civil war?"
Doug Noland: "With Global Credit conditions underpinning employment and income - while stoking systemwide liquidity over-abundance – I’ll continue to approach the unfolding housing bust with analytical caution. The housing grizzly goes on a rampage with the breakdown of the Mortgage Finance and Credit Bubbles. In the meantime, I am willing to predict escalating Monetary Disorder and resulting wild marketplace instability and divergences in housing, securities, and commodities prices – a backdrop poised to confound the Fed and limit their flexibility for responding to deepening housing troubles."
OPEC's plan to cut crude production by 1.2 million barrels a day won't affect the services industry, Schlumberger Ltd. Chief Executive Andrew Gould said Friday.
"OPEC is defending the price, but I don't think there is a huge danger of a price collapse," he said. "We don't need $65 oil for our customers' spending plans to be maintained," he said. "They will maintain them at a much lower price."
Gould said the task of replenishing reserves in the face of soaring demand will keep services companies busy. And demand shows no sign of slowing. The CEO of BJ Services has told me the same thing. I believe BJ Services offers the best risk/reward of any S&P 500 company.
New York-based Ripplewood Holdings LLC is preparing a likely bid for Delphi Corp., according to a published report in Saturday's Wall Street Journal. Ripplewood, a buyout firm, has looked at the possibility of taking over all or part of the bankrupt auto-parts maker, the Journal reported.
President Bush: "Another reason for the recent increase in attacks is that the
terrorists are trying to influence public opinion here in the United
States. They have a sophisticated propaganda strategy. They know they
cannot defeat us in the battle, so they conduct high-profile attacks,
hoping that the images of violence will demoralize our country and force us
to retreat." Tell that to the families whose loved ones come home in body bags.
Thursday, October 19, 2006
Another Option Expiration Day
10/20/06 Another Option Expiration Day
Google reported it nearly doubled its net income in the third quarter to $733.4 million, or $2.36 a share, compared with $381.2 million, or $1.32 a share in the year-ago period. Revenue rose 70 percent to $2.69 billion from $1.58 billion last year. Not including payments Google makes to acquire Internet traffic, sales rose 79 percent to $1.86 billion. Outside the U.S., sales made up 44 percent of the company's total revenue, compared with 39 percent last year. In addition, Google said, it added 1,436 employees during the period to bring its work force to 9,378 full time employees.
Excluding items, Google said, it would have had income of $812 million, or $2.62 a share. Analysts had expected the company to show a profit of $760.1 million, excluding items, or $2.41 a share.
Median weekly earnings of the nation’s 108.2 million full-time wage and
salary workers were $675 in the third quarter of 2006, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 4.0
percent higher than a year earlier, compared with a gain of 3.3 percent in
the Consumer Price Index for All Urban Consumers (CPI-U) over the same
period. Women who usually worked full time had median earnings of $599 per
week, or 80.0 percent of the $749 median for men. The female-to-male earnings ratios were higher among Hispanics or Latinos (87.3 percent), Asians (84.9 percent), and blacks (83.8 percent) than among whites (79.6 percent).
Real average weekly earnings rose by 1.0 percent from August to September
after seasonal adjustment, according to preliminary data released by the
Bureau of Labor Statistics of the U.S. Department of Labor. This increase
stemmed from a 0.2 percent rise in average hourly earnings and a 0.7 percent
decline in the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W). Average weekly hours were unchanged. Average weekly earnings rose by 4.0 percent, seasonally adjusted, from September 2005 to September 2006. After deflation by the CPI-W, average weekly earnings increased by 2.2 percent. Before adjustment for seasonal change and inflation, average weekly earnings were $571.89 in September 2006, compared with $549.86 a year earlier.
Cerberus Capital Management LP said on Thursday that former Treasury Secretary John Snow has joined the $16.5 billion hedge fund firm as chairman. I hope Snow does a better job than he did as CEO of a railroad.
Broadcom Corp. late Thursday forecasted a lower sales target for the fourth quarter than it had previously estimated.
Crude for November delivery rose 1.9% to $58.72 a barrel. Natural gas rose 3.6% to $7.06 per million British thermal units.
December gold rose $9.90 to close at $602.50 an ounce in New York. December silver climbed 34 cents, or 2.9%, to end at $12.16 an ounce and December copper tacked on 1.35 cents to close at $3.5095 a pound.
The Philly Fed index fell 0.7 in October, vs. the average economist forecast compiled by MarketWatch of a rise of 7.8%.
NBC Universal to cut 700 jobs and AOL to cut 1300 jobs.
The index of leading economic indicators rose 0.1% in September after falling in July and August. The index has dropped in five of the past eight months, and is down 0.9% in the past six months.
OPEC has decided to cut production by 1.2 million barrels a day, the United Arab Emirates' oil minister said Friday.
Bonner and Wiggin: "The baby born when the empire began in 1913 came into the world with nothing. But he owed nothing. Now, he comes into the world owing his share of 37 trillion; that's about $128,560 with his name on it. Is he richer? Is he better off? What would the dead say? That doesn't include his share of Federal obligations and commitments that he'll have to pay, which could add $100,000 more."
Google reported it nearly doubled its net income in the third quarter to $733.4 million, or $2.36 a share, compared with $381.2 million, or $1.32 a share in the year-ago period. Revenue rose 70 percent to $2.69 billion from $1.58 billion last year. Not including payments Google makes to acquire Internet traffic, sales rose 79 percent to $1.86 billion. Outside the U.S., sales made up 44 percent of the company's total revenue, compared with 39 percent last year. In addition, Google said, it added 1,436 employees during the period to bring its work force to 9,378 full time employees.
Excluding items, Google said, it would have had income of $812 million, or $2.62 a share. Analysts had expected the company to show a profit of $760.1 million, excluding items, or $2.41 a share.
Median weekly earnings of the nation’s 108.2 million full-time wage and
salary workers were $675 in the third quarter of 2006, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. This was 4.0
percent higher than a year earlier, compared with a gain of 3.3 percent in
the Consumer Price Index for All Urban Consumers (CPI-U) over the same
period. Women who usually worked full time had median earnings of $599 per
week, or 80.0 percent of the $749 median for men. The female-to-male earnings ratios were higher among Hispanics or Latinos (87.3 percent), Asians (84.9 percent), and blacks (83.8 percent) than among whites (79.6 percent).
Real average weekly earnings rose by 1.0 percent from August to September
after seasonal adjustment, according to preliminary data released by the
Bureau of Labor Statistics of the U.S. Department of Labor. This increase
stemmed from a 0.2 percent rise in average hourly earnings and a 0.7 percent
decline in the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W). Average weekly hours were unchanged. Average weekly earnings rose by 4.0 percent, seasonally adjusted, from September 2005 to September 2006. After deflation by the CPI-W, average weekly earnings increased by 2.2 percent. Before adjustment for seasonal change and inflation, average weekly earnings were $571.89 in September 2006, compared with $549.86 a year earlier.
Cerberus Capital Management LP said on Thursday that former Treasury Secretary John Snow has joined the $16.5 billion hedge fund firm as chairman. I hope Snow does a better job than he did as CEO of a railroad.
Broadcom Corp. late Thursday forecasted a lower sales target for the fourth quarter than it had previously estimated.
Crude for November delivery rose 1.9% to $58.72 a barrel. Natural gas rose 3.6% to $7.06 per million British thermal units.
December gold rose $9.90 to close at $602.50 an ounce in New York. December silver climbed 34 cents, or 2.9%, to end at $12.16 an ounce and December copper tacked on 1.35 cents to close at $3.5095 a pound.
The Philly Fed index fell 0.7 in October, vs. the average economist forecast compiled by MarketWatch of a rise of 7.8%.
NBC Universal to cut 700 jobs and AOL to cut 1300 jobs.
The index of leading economic indicators rose 0.1% in September after falling in July and August. The index has dropped in five of the past eight months, and is down 0.9% in the past six months.
OPEC has decided to cut production by 1.2 million barrels a day, the United Arab Emirates' oil minister said Friday.
Bonner and Wiggin: "The baby born when the empire began in 1913 came into the world with nothing. But he owed nothing. Now, he comes into the world owing his share of 37 trillion; that's about $128,560 with his name on it. Is he richer? Is he better off? What would the dead say? That doesn't include his share of Federal obligations and commitments that he'll have to pay, which could add $100,000 more."
Wednesday, October 18, 2006
The Real Deal
10/19/06 The Real Deal
Core consumer price inflation was rising at the fastest rate in four years in September, the Cleveland Federal Reserve Bank said Wednesday. The median consumer price index, an alternative way of measuring core inflation that does not automatically exclude food and energy prices, rose 0.3% in September, or a 3.6% annual pace, the Cleveland Fed said. Over the past year, the median CPI is up 3.5%, the biggest gain since the summer of 2002. By contrast, the Labor Department's core CPI, which excludes food and energy prices, is up 2.9% in the past year, the most in 10 years.
I believe the annual rate of 3.6% is understated; however, my opinion is not significant. The Cleveland Fed's is. With that inflation rate the Fed cannot stay on a pause mode.
Rates will need to be increased. Otherwise, the credibility of the Fed is nullified. Rising inflation and rising rates are a high colonic for equities. That combo will flush out complacency and bring back risk. You don't need to believe me. Listen to Cramer. He says fortunes are being made. That maybe so. It's an other thing to keep the fortunes.
Edward Hasbrouck: "The USA Department of Homeland Security (DHS) has proposed that airlines cruise lines, and operators of all other ships and planes -- including charter flights, air taxis, fishing vessels, etc. -- be required to get individual permission (”clearance”) from the DHS for each passenger on all flights or ocean voyages to, from, or via the USA. Unless the answer is “Yes” -- if the answer is “no” or “maybe”, or if the DHS doesn’t answer at all -- the airline wouldn’t be allowed to give you a boarding pass, or let you or your luggage on the plane."
According to DataQuick, existing single-family home prices fell 8.2% in the month of Sept. in Sonoma County, 6.5% in Napa County, and 3.3% in Marin County. When they raid the whorehouse, they take all the girls.
Richard Daughty: "Mogambo sez: I love the way that gold, silver and oil are falling into my trap! If I hadn't spent all my money at Patty's Palace of Pizza and Porn, I'd buy more. I only hope you don't make the same mistake."
November crude fell $1.28 to close at $57.65 a barrel. Meanwhile, November natural gas rallied 36.5 cents to close at a five-week high of $6.807 per million British thermal units. Tomorrow is the OPEC meeting. They will be bring their prayer shawls.
Mark Twain: "Facts are stubborn things, but statistics are more pliable."
Core consumer price inflation was rising at the fastest rate in four years in September, the Cleveland Federal Reserve Bank said Wednesday. The median consumer price index, an alternative way of measuring core inflation that does not automatically exclude food and energy prices, rose 0.3% in September, or a 3.6% annual pace, the Cleveland Fed said. Over the past year, the median CPI is up 3.5%, the biggest gain since the summer of 2002. By contrast, the Labor Department's core CPI, which excludes food and energy prices, is up 2.9% in the past year, the most in 10 years.
I believe the annual rate of 3.6% is understated; however, my opinion is not significant. The Cleveland Fed's is. With that inflation rate the Fed cannot stay on a pause mode.
Rates will need to be increased. Otherwise, the credibility of the Fed is nullified. Rising inflation and rising rates are a high colonic for equities. That combo will flush out complacency and bring back risk. You don't need to believe me. Listen to Cramer. He says fortunes are being made. That maybe so. It's an other thing to keep the fortunes.
Edward Hasbrouck: "The USA Department of Homeland Security (DHS) has proposed that airlines cruise lines, and operators of all other ships and planes -- including charter flights, air taxis, fishing vessels, etc. -- be required to get individual permission (”clearance”) from the DHS for each passenger on all flights or ocean voyages to, from, or via the USA. Unless the answer is “Yes” -- if the answer is “no” or “maybe”, or if the DHS doesn’t answer at all -- the airline wouldn’t be allowed to give you a boarding pass, or let you or your luggage on the plane."
According to DataQuick, existing single-family home prices fell 8.2% in the month of Sept. in Sonoma County, 6.5% in Napa County, and 3.3% in Marin County. When they raid the whorehouse, they take all the girls.
Richard Daughty: "Mogambo sez: I love the way that gold, silver and oil are falling into my trap! If I hadn't spent all my money at Patty's Palace of Pizza and Porn, I'd buy more. I only hope you don't make the same mistake."
November crude fell $1.28 to close at $57.65 a barrel. Meanwhile, November natural gas rallied 36.5 cents to close at a five-week high of $6.807 per million British thermal units. Tomorrow is the OPEC meeting. They will be bring their prayer shawls.
Mark Twain: "Facts are stubborn things, but statistics are more pliable."
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