5/6/07 Berkshire Hathaway Annual Meeting Day
Warren Buffett's Berkshire Hathaway Inc. said on Friday first-quarter profit rose 12 percent as earnings from insurance underwriting soared. Profit from insurance underwriting rose 82 percent to $601 million. Investment income from insurance rose 6 percent to $748 million, while profit in non-insurance businesses rose 16 percent to $894 million. Insurance premiums more than doubled to $13.51 billion, including about $7.1 billion from the Equitas reinsurance agreement that took effect on March 30.
As many as 20 million chickens currently on U.S. farms in several states may have been fed contaminated feed, the U.S. Agriculture Department said on Friday.
In the March 12 issue of Archives of Internal Medicine and carried out by researchers at the University of California, San Francisco, and the San Francisco Veterans Affairs Medical Center, 31 percent of more than 100,000 veterans studied were diagnosed with mental or psychological problems. Post-traumatic stress disorder was the most common condition reported, affecting 13 percent of all Iraq or Afghanistan veterans who sought VA services, according to the study.
Pelosi questioned whether it was ethical to send troops into war "under a false pretense without a strategy for success," without proper equipment and training and without "demanding accountability from the Iraqi government while we dishonored our commitment to our veterans here at home."
"In the elections, when the American people were calling for a new direction, the one place where they called for it in the clearest possible way was in the war in Iraq," Pelosi (D-Calif.) told an audience estimated at about 2,000 people.
"They wanted the war to wind down," Pelosi said. "Instead, the president has escalated it. He has a tin ear in terms of listening to the people and a blind eye as to what is going on in Iraq."
General Pace and other senior officers acknowledge that the deployment schedule is putting a strain on U.S. troops, particularly combat soldiers and marines. Last month, the Defense Department announced it would lengthen the tours of duty for soldiers serving in Iraq and Afghanistan from 12 months to 15 months, with 12 months of vacation and training between deployments. The marines spend seven months at a time in combat, with six months at home.
Former Clinton Administration defense department official Michelle Flournoy says the operational tempo has already left U.S. ground forces in a precarious position.
"We're already at the point today where we do not have a reserve of ground forces that is adequate to respond to the full range of contingencies that we might face elsewhere in the world," she said.
Flournoy, who is now an analyst at the Center for a New American Security, also worries that during their time at home, troops are only training to return to Iraq or Afghanistan and fight an insurgency, sacrificing training on other basic and potentially essential military skills.
"The training is so focused on the tasks that are being conducted in Iraq that a lot of the other war-fighting tasks may be neglected. And I'll give you an example. You can find members of artillery units in both the army and the Marine Corps who've never fired artillery because every tour they've gone on since their enlistments has been in Iraq and they've been focused on counterinsurgency," she said.
John Mauldin: "Dennis Gartman called my attention to an IMF report showing the growth of foreign exchange reserves held by the various nations reporting to the IMF. They have grown from a "mere" $2 trillion in 2000 until they are now over $5 trillion and rising. The report suggests that this does not include 40% of the "reserves" which are not accounted for, so the number is much higher.This is going to unleash a large amount of capital back into the markets. Countries, in one sense, are just like families. They hopefully save money. The first savings are generally in very liquid investments in case there is an emergency. But over time, as savings grow, they start to invest in less liquid investments and soon in long-term investments."
Adam Hamilton: "The HUI/Gold Ratio is as simple as it sounds, it is calculated by merely dividing the daily close of the HUI unhedged gold-stock index by the daily close in the price of gold. When this resulting ratio is graphed over time, it vividly illustrates the ever-shifting relative strength of the gold stocks versus gold. As their bulls mature, one is stronger and then the other, back and forth. They are engaging in a great secular tug-o-war...The bottom line is the HUI/Gold Ratio is approaching its long-term support. In this bull to date, each time this has happened the HUI has soared heavenwards soon after in a mighty new upleg. With gold's fundamentals still awesome, and gold driving this gold-stock bull, the odds favor the HUI soon outperforming gold again and surging higher to drive up the HGR as it has done in the past. The HGR drift of the past year has been a trying one psychologically, but it has built the perfect foundation for a new upleg to launch. Not only is HUI sentiment still pretty pessimistic today, the contrarian time to buy, but it has built a new higher technical base from which to launch its assault on new highs. On top of all this it is technically due to start outperforming gold again in a cycle sense."
The Hamas leader, Khaled Mashaal, said Israel is planning a military operation against the Palestinians. ''We in Hamas are also preparing ourselves for battle, and we expect hot months,'' he said. He urged all Palestinian groups to ''seriously prepare themselves for battle.''
Brett Steenbarger: "My doubts about the lasting power of the recent rally are growing. Friday saw new bull highs in the Dow and S&P 500 averages, but only 49 S&P 500 stocks made 52-week highs on Friday, down from over 80 on 4/25. We had 45 new highs among the S&P 600 stocks, down from over 70 on 4/25. Amazingly, only 8 NASDAQ 100 issues made new highs on Friday, and only 6 of the Dow 30 issues. The 347 new highs among NYSE issues were also down from almost 450 on 4/25. The rally is narrowing, which suggests to me that we might enter a consolidation mode in the very near future."
Paccar agreed to buy Truck Center Hauser, an independent truck rental and leasing company in Germany.Terms of the deal, expected to close late this month, were not disclosed. Truck Center Hauser, headquartered near Frankfurt, has a fleet of 1,200 trucks and 1,800 trailers and about 3,000 customers throughout Germany, Paccar said in a statement.
Doug Noland: " From Bank of International Settlement data, we know that the total notional value of global derivative positions ended 1998 at $80.3 TN – comprised of $18.0 TN Foreign Exchange; $50.0 TN Interest Rate; $1.5 TN Equity-Linked; $415bn Commodities; and $10.4 TN “Other”. Credit derivatives didn’t even have their own category. By the end of 2006, Total derivative positions had ballooned to $370 TN, with $38 TN Foreign Exchange; $262 TN Interest Rate; $6.8 TN Equity-Linked; $6.4 TN Commodities; $36 TN “Unallocated”; and $20.4 TN Credit Default Swaps (up more than 3-fold in 2 yrs)...I’ll venture a prediction that hedge fund de-leveraging will pale in comparison to the widespread tumult that will likely engulf currency, securitization, and derivatives markets – in risk intermediation generally. The derivatives markets are poised to falter into absolute liquidity nightmares, and this will not be a hedge fund-like de-leveraging issue easily resolved with aggressive rate cuts. And the longer current destabilizing flows are allowed to run roughshod – distorting prices, risk perceptions, and economic structures in the process - the more arduous the unavoidable adjustment period. That’s just the way it works."
In March, 54 percent of U.S. Internet searches were performed with Google. Microsoft and Yahoo! had a combined 32 percent. Some analysts suggest
the Internet-advertising pie will hit $31.4 billion globally this year, up 28 percent.
According to Bloomberg, “India will become the world’s fifth-biggest consumer market by 2025, surpassing Germany, as incomes almost triple and assuming the South Asian nation’s economic growth rate ‘holds steady,’ McKinsey & Co. said.”
The Financial Times reported Brazil on Friday overrode the patent on a pivotal HIV medicine, becoming the second emerging economy aggressively to challenge the pharmaceutical industry in seeking a sharp reduction in drug costs. President Luiz Inácio Lula da Silva on Friday signed a “compulsory licence” for Efavirenz, Merck’s HIV drug, allowing the government to purchase from rival generic suppliers under provisions permitted by World Trade Organisation rules.
Sears Holdings Corp. Chairman Edward S. Lampert sounded a cautious note for U.S. retailers a day after the company warned of unexpected weakness during the first quarter.
I haven't a clue as to the possible winner in the Kentucky Derby. It appears wide open to me. As such, I'll go with a long shot, Cowtown Cat. Maybe I'll get lucky.
Saturday, May 05, 2007
Friday, May 04, 2007
The Mating Game
5/5/07 The Mating Game
The New York Post reported Friday morning that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday. A deal between Microsoft and Yahoo would up the combined companies' share of the search advertising market to 27% against Google's 65%, the Post reported.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of match up and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere. It's important to remember the rumors of a deal took place on Friday, the favorite rumor mill day.
It was late in the afternoon that the WSJ reported talks between Microsoft Corp. and Yahoo Inc. over a possible combination are no longer active. The Wall Street Journal reported on its Web site that in recent months the two companies discussed a possible merger, but that the discussions are no longer active. The two companies may still explore other ways of cooperating, the Journal reported.
The damage already had occurred. A total of 245 million shares traded in Yahoo at $33 for most of the day or $8 billion worth of shares. In after hours the stock closed below $31. In my view, a company would have to be crazy to pay $50 billion of shareholder money for Yahoo.
Mark Twain: "There are two times in a man's life when he should not speculate: when he can't afford it and when he can."
The U.S. Labor Department said non-farm payrolls grew by 88,000 in April, while the unemployment rate ticked up to 4.5% from 4.4%. Average hourly earnings increased 4 cents, or 0.2% to $17.25. Earnings are up 3.7% in the past year. The average workweek fell to 33.8 hours from 33.9 in March.
The retail price for a gallon of regular unleaded climbed to $3.012 Friday, edging closer to the record $3.057 seen on Sept. 5, 2005, according AAA's Daily Fuel Gauge Report.
Henry Ford: "Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services."
Iran's Foreign Minister Manouchehr Mottaki blamed the American presence in Iraq for sectarian violence there, the BBC reported Friday.
John Moody: "The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor."
Wells Fargo & Company said Friday it would pay $1.5 billion in stock to buy 1,800-employee Greater Bay Bancorp. Assuming a Wells Fargo measurement price between $32.175 and $39.325, the total value of the transaction would be approximately $1.5 billion, based on Greater Bay Bancorp's shares on a fully diluted basis.
The Reserve Bank of Australia Friday forecast declining inflation over the short term, but warned consumer prices will likely nudge in into the higher end of its target range in 2008 as the economy continues to run near full capacity. Core inflation will ease to 2.5% "or lower" by the end of the year, the central bank said in its quarterly statement released Friday. The inflation forecast falls short of the RBA's previous forecast of 2.75% for the year. The RBA said the reasons for the revision were sharper-than-expected declines in food and fuel prices. The RBA also said core inflation peaked at 3% in mid-2006 and has since been on a slow decline. The RBA forecast underlying inflation will rebound to 2.75% in 2008 and 2009.
News and financial data provider Reuters said it had received a takeover approach from an unidentified bidder, sending its shares up almost a third, with Canadian publisher Thomson widely touted as the suitor. Canada's Globe and Mail newspaper reported on its website on Friday that Thomson was in talks to buy London-based Reuters, citing sources close to both companies.
Clear Channel Communications, the largest U.S. radio station operator, said on Thursday it received a new merger proposal from a private equity group, but its board voted against it.
A group led by Royal Bank of Scotland Group Plc and ABN Amro Holding NV are increasing talks about a possible takeover of the largest Dutch bank, as obstacles mount to Barclays Plc's $90 billion offer.
According to WTRG, the U.S. rotary rig count was down 22 rigs to 1,747 for the week of April 27, 2007 and is 8.6 percent higher than last year.The number of rotary rigs drilling for oil is down 9 at 283. The number of rigs targeting oil is 29 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.2% percent of total drilling activity. Rigs directed toward natural gas were down 13 at 1,460. The number of rigs currently drilling for gas is 107 greater than last year's level of 1,353. Year-over-year oil exploration in the US is up 11.4 percent. Gas exploration is up 7.9 percent. The weekly average of crude oil spot prices is 8.3% percent lower than last year and natural gas spot prices are 4.5 percent higher.
We have been having a spectacular rally in equities, and one I did not believe was possible. In the meantime, David Tice predicts the Dow will fall "at least 50%" from these levels, and he says the market is only months away from beginning a sharp decline. "I think this is a topping pattern," he says. "We think it's probably three to six months away from a significant decline." He calls the latest rally "a crack-up boom. At the tail end of credit excess it just gets crazier and crazier. It sucks people in, and it's an extremely dangerous scenario." Anything is possible. Just look at the Warriors knocking off the Mavs.
Brookfield Homes said that market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. However, the company said its housing margins remain above industry average, and it hasn't had significant inventory impairments to date as it builds homes on land it entitled and developed.
Zman: "While current Lower 48 production is up only slightly relative to 2006’s storm impacted volumes Canadian exports to the U.S. are more than likely to decline more than LNG imports will increase. For this and many more little things like: spiralling service costs, increased demand for natural gas from the fertilizer and ethanol industries, low snowpack which reduce hydro electricity generation and thus increases demand for gas for power etc,) I don’t see natural gas trading on average much above or below current levels of $7.50 to $8 this summer. Put a hurricane aimed at the Gulf in the picture and we see $9 within a day, then things get down to storm path and production impact."
Time Warner Inc. Chairman and Chief Executive Richard Parsons said several private equity firms have approached him about selling AOL although the company remains focused on its new strategy.
From the Financial Times: "When an adviser presented Sheikh Mohammed bin Rashid al-Maktoum three years ago with a scheme to build one of the world’s biggest towers, Dubai’s ruler demanded to know what else was being planned around the world. The adviser returned with a list of the tallest buildings, with Taiwan’s Taipei 101 reaching higher than the proposed Dubai tower.“The sheikh asked me: ‘Why is it taller – are people there smarter than you?’” says Mohammed Alabbar, the official and head of property giant Emaar. “That’s why I made sure our project was the tallest by far.”
I'm quite sure most of you will have a busy weekend. Some will watch the Kentucky Derby and some might have other items of interest. When you have a free moment, how about pondering on the following: why do we have a the least inverted yield curve since September of last year? Coming to the right conclusion could prove very profitable for your portfolio for the next few months.
Favored Rags to Riches won the 133rd running of the Kentucky Oaks Friday, besting 13 other three-year-olds in the $500,000-added Grade 1 race that is the filly counterpart to Saturday's Kentucky Derby.
Peter Schiff: "Measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum...In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose. If the actual productive economies decide to decouple the dead weight, the train would actually move much faster."
June gold closed at $689.70 an ounce. July silver rose 2 cents to close at $13.53 an ounce. July copper closed at a contract high of $3.7585 a pound, up 3.2 cents for the day, and up 6.5% for the week as traders continued to worry about a mining labor strike in Peru.
U.K. media group Pearson said after the London market closed Friday that it has agreed to buy Reed Elsevier's Harcourt Assessment and Harcourt Education divisions for $950 million in cash.
Daily Reckoning: "The Dow goes up, up, up - it's been up in 20 of the last 22 sessions, something that hasn't happened since just before the Great Crash of '29. But the gains in the Dow are peanuts compared to what you could get overseas."
Marc Faber: "However, illiquidity among the US household sector, along with the reluctance of the Fed to cut rates right away, combined with the requirements for enormous capital investments for infrastructure in emerging and developed economies, could lead to some tightening of liquidity around the world. Therefore, I expect a more meaningful setback in asset prices and would certainly defer the purchase of financial assets. In particular, I am concerned by the inability of financial stocks to rally convincingly from their March 2007 lows, since financials are usually leading the market up and down.
In my opinion, there is an ongoing deterioration in the US stock market. In the summer of 2005, the homebuilders peaked out. Last year, it was the turn of the sub-prime lenders to top out. And early this year, financial shares, including brokers, made their highs. The economy is likely to follow this slow stock market erosion and gradually deteriorate, with disappointing corporate profits to follow... However, it should be clear that in the long run the purchasing power of the US dollar will continue to decline against sound currencies such as precious metals. Therefore, I continue recommending the accumulation of gold and silver."
Corporate tax payments are up about 15%, slower growth than in the previous three years. Individual income taxes are up 17.5%, while payroll taxes are up 5.5%. Non-withheld individual taxes are up about 14%, CBO said.
Crude closed down $1.26 at $61.93 and natural gas dropped a penny to $7.94.
The New York Post reported Friday morning that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday. A deal between Microsoft and Yahoo would up the combined companies' share of the search advertising market to 27% against Google's 65%, the Post reported.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of match up and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere. It's important to remember the rumors of a deal took place on Friday, the favorite rumor mill day.
It was late in the afternoon that the WSJ reported talks between Microsoft Corp. and Yahoo Inc. over a possible combination are no longer active. The Wall Street Journal reported on its Web site that in recent months the two companies discussed a possible merger, but that the discussions are no longer active. The two companies may still explore other ways of cooperating, the Journal reported.
The damage already had occurred. A total of 245 million shares traded in Yahoo at $33 for most of the day or $8 billion worth of shares. In after hours the stock closed below $31. In my view, a company would have to be crazy to pay $50 billion of shareholder money for Yahoo.
Mark Twain: "There are two times in a man's life when he should not speculate: when he can't afford it and when he can."
The U.S. Labor Department said non-farm payrolls grew by 88,000 in April, while the unemployment rate ticked up to 4.5% from 4.4%. Average hourly earnings increased 4 cents, or 0.2% to $17.25. Earnings are up 3.7% in the past year. The average workweek fell to 33.8 hours from 33.9 in March.
The retail price for a gallon of regular unleaded climbed to $3.012 Friday, edging closer to the record $3.057 seen on Sept. 5, 2005, according AAA's Daily Fuel Gauge Report.
Henry Ford: "Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services."
Iran's Foreign Minister Manouchehr Mottaki blamed the American presence in Iraq for sectarian violence there, the BBC reported Friday.
John Moody: "The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor."
Wells Fargo & Company said Friday it would pay $1.5 billion in stock to buy 1,800-employee Greater Bay Bancorp. Assuming a Wells Fargo measurement price between $32.175 and $39.325, the total value of the transaction would be approximately $1.5 billion, based on Greater Bay Bancorp's shares on a fully diluted basis.
The Reserve Bank of Australia Friday forecast declining inflation over the short term, but warned consumer prices will likely nudge in into the higher end of its target range in 2008 as the economy continues to run near full capacity. Core inflation will ease to 2.5% "or lower" by the end of the year, the central bank said in its quarterly statement released Friday. The inflation forecast falls short of the RBA's previous forecast of 2.75% for the year. The RBA said the reasons for the revision were sharper-than-expected declines in food and fuel prices. The RBA also said core inflation peaked at 3% in mid-2006 and has since been on a slow decline. The RBA forecast underlying inflation will rebound to 2.75% in 2008 and 2009.
News and financial data provider Reuters said it had received a takeover approach from an unidentified bidder, sending its shares up almost a third, with Canadian publisher Thomson widely touted as the suitor. Canada's Globe and Mail newspaper reported on its website on Friday that Thomson was in talks to buy London-based Reuters, citing sources close to both companies.
Clear Channel Communications, the largest U.S. radio station operator, said on Thursday it received a new merger proposal from a private equity group, but its board voted against it.
A group led by Royal Bank of Scotland Group Plc and ABN Amro Holding NV are increasing talks about a possible takeover of the largest Dutch bank, as obstacles mount to Barclays Plc's $90 billion offer.
According to WTRG, the U.S. rotary rig count was down 22 rigs to 1,747 for the week of April 27, 2007 and is 8.6 percent higher than last year.The number of rotary rigs drilling for oil is down 9 at 283. The number of rigs targeting oil is 29 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.2% percent of total drilling activity. Rigs directed toward natural gas were down 13 at 1,460. The number of rigs currently drilling for gas is 107 greater than last year's level of 1,353. Year-over-year oil exploration in the US is up 11.4 percent. Gas exploration is up 7.9 percent. The weekly average of crude oil spot prices is 8.3% percent lower than last year and natural gas spot prices are 4.5 percent higher.
We have been having a spectacular rally in equities, and one I did not believe was possible. In the meantime, David Tice predicts the Dow will fall "at least 50%" from these levels, and he says the market is only months away from beginning a sharp decline. "I think this is a topping pattern," he says. "We think it's probably three to six months away from a significant decline." He calls the latest rally "a crack-up boom. At the tail end of credit excess it just gets crazier and crazier. It sucks people in, and it's an extremely dangerous scenario." Anything is possible. Just look at the Warriors knocking off the Mavs.
Brookfield Homes said that market conditions remain challenging, and demand has weakened in recent weeks as a result of mortgage illiquidity in the marketplace. However, the company said its housing margins remain above industry average, and it hasn't had significant inventory impairments to date as it builds homes on land it entitled and developed.
Zman: "While current Lower 48 production is up only slightly relative to 2006’s storm impacted volumes Canadian exports to the U.S. are more than likely to decline more than LNG imports will increase. For this and many more little things like: spiralling service costs, increased demand for natural gas from the fertilizer and ethanol industries, low snowpack which reduce hydro electricity generation and thus increases demand for gas for power etc,) I don’t see natural gas trading on average much above or below current levels of $7.50 to $8 this summer. Put a hurricane aimed at the Gulf in the picture and we see $9 within a day, then things get down to storm path and production impact."
Time Warner Inc. Chairman and Chief Executive Richard Parsons said several private equity firms have approached him about selling AOL although the company remains focused on its new strategy.
From the Financial Times: "When an adviser presented Sheikh Mohammed bin Rashid al-Maktoum three years ago with a scheme to build one of the world’s biggest towers, Dubai’s ruler demanded to know what else was being planned around the world. The adviser returned with a list of the tallest buildings, with Taiwan’s Taipei 101 reaching higher than the proposed Dubai tower.“The sheikh asked me: ‘Why is it taller – are people there smarter than you?’” says Mohammed Alabbar, the official and head of property giant Emaar. “That’s why I made sure our project was the tallest by far.”
I'm quite sure most of you will have a busy weekend. Some will watch the Kentucky Derby and some might have other items of interest. When you have a free moment, how about pondering on the following: why do we have a the least inverted yield curve since September of last year? Coming to the right conclusion could prove very profitable for your portfolio for the next few months.
Favored Rags to Riches won the 133rd running of the Kentucky Oaks Friday, besting 13 other three-year-olds in the $500,000-added Grade 1 race that is the filly counterpart to Saturday's Kentucky Derby.
Peter Schiff: "Measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum...In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose. If the actual productive economies decide to decouple the dead weight, the train would actually move much faster."
June gold closed at $689.70 an ounce. July silver rose 2 cents to close at $13.53 an ounce. July copper closed at a contract high of $3.7585 a pound, up 3.2 cents for the day, and up 6.5% for the week as traders continued to worry about a mining labor strike in Peru.
U.K. media group Pearson said after the London market closed Friday that it has agreed to buy Reed Elsevier's Harcourt Assessment and Harcourt Education divisions for $950 million in cash.
Daily Reckoning: "The Dow goes up, up, up - it's been up in 20 of the last 22 sessions, something that hasn't happened since just before the Great Crash of '29. But the gains in the Dow are peanuts compared to what you could get overseas."
Marc Faber: "However, illiquidity among the US household sector, along with the reluctance of the Fed to cut rates right away, combined with the requirements for enormous capital investments for infrastructure in emerging and developed economies, could lead to some tightening of liquidity around the world. Therefore, I expect a more meaningful setback in asset prices and would certainly defer the purchase of financial assets. In particular, I am concerned by the inability of financial stocks to rally convincingly from their March 2007 lows, since financials are usually leading the market up and down.
In my opinion, there is an ongoing deterioration in the US stock market. In the summer of 2005, the homebuilders peaked out. Last year, it was the turn of the sub-prime lenders to top out. And early this year, financial shares, including brokers, made their highs. The economy is likely to follow this slow stock market erosion and gradually deteriorate, with disappointing corporate profits to follow... However, it should be clear that in the long run the purchasing power of the US dollar will continue to decline against sound currencies such as precious metals. Therefore, I continue recommending the accumulation of gold and silver."
Corporate tax payments are up about 15%, slower growth than in the previous three years. Individual income taxes are up 17.5%, while payroll taxes are up 5.5%. Non-withheld individual taxes are up about 14%, CBO said.
Crude closed down $1.26 at $61.93 and natural gas dropped a penny to $7.94.
Thursday, May 03, 2007
More Government Numbers
5/4/07 More Government Numbers
First-time claims for state unemployment benefits fell to their lowest level since early January, the Labor Department reported Thursday. The number of initial claims in the week ending April 28 fell 21,000 to 305,000. The four-week average of initial claims fell 4,500 to 328,750. Meanwhile, the number of Americans receiving state jobless benefits fell 93,000 to 2.50 million in the week ending April 21. The four-week moving average of continuing claims rose 1,500 to 2.53 million.
Productivity of the U.S. non-farm business sector rose at a 1.7% annual rate in the first quarter, the Labor Department estimated Thursday. Unit labor costs rose at an annual rate of 0.6% in the first quarter. Real hourly compensation fell 1.5% in the first quarter. Compared with the same quarter a year ago, productivity was up 1.1%, compared with a 1.6% gain in the fourth quarter. Unit labor costs rose 1.3% over the past year, down from a 3.4% rate in the fourth quarter.
Talbots Inc. said it expects to post a profit in a range of 7 cents to 11 cents a share, down from its prior forecast of 36 cents to 43 cents a share. The company said it was cautious for the future, given its April sales trends.
Coeur d'Alene Mines Corp. agreed to merge with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. in a deal valued at roughly $1.1 billion. The transaction calls for Coeur to acquire all the shares of Bolnisi as well as all of the shares of Palmarejo not already owned by Bolnisi in what is largely a stock swap. Coeur d'Alene said it expects to issue a total of 271.3 million new shares in the deal. It will also make nominal cash payments of below a penny per share to holders of Bolnisi and Palmarejo stock.
General Motors Corp. reported first-quarter earnings of $62 million, or 11 cents a share, down from a year-ago profit of $602 million, or $1.06 a share. The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding items, the Dow component posted adjusted earnings of $94 million, or 17 cents a share, in the latest quarter. Revenue slid in the latest three months to $43.91 billion from $52.38 billion in the same period a year earlier. Housing finance related losses at GMAC more than offset a gain in its automotive operations.
Noble Energy Inc. said its first-quarter net profit fell to $211.8 million, or $1.22 a share, from $226.1 million, or $1.26 a share. Revenue edged up to $667 million from $646.3 million. Excluding the effects of deferred compensation, adjusted net income was $1.28 a share.
Drilling company Patterson-UTI Energy Inc. said its first-quarter net profit fell to $116 million, or 73 cents a share, from $159 million, or 91 cents a share. Revenue for the quarter fell to $547 million from $598 million. The company said customers had reduced their drilling activity in the quarter after warm winter weather led to high levels of natural gas in storage and lower prices. The company said it's recently seen a modest increase in its rig count in the U.S. and continues to believe that increased drilling activity will be required to avoid a shortfall of natural gas.
The board of directors of Dow Jones Co. decided to take no action on a $5 billion unsolicited takeover bid from News Corp. In a statement issued late Wednesday, the company said owners of shares constituting 52% of its outstanding voting power have indicated they are opposed to the bid from media mogul Rupert Murdoch.
The yen declined to a record low against the euro.
China’s property developers invested 22% more in projects last year, citing the Chinese Academy of Social Sciences.
There are concerns escalating violence in Nigeria could disrupt supplies from the world's eighth largest oil exporter.
The Baltic Dry Index has risen 41% this year.
Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It's the first time since September that layoffs rose on a year-over-year comparison.
Seeking Alpha: "As the dollar weakens on the development of emerging markets, a trend that should continue, American firms selling products overseas benefit by gaining market share as their products become cheaper to foreigners. That market share gain is an economic value add and should not be discounted as a fluctuating inconsequential circumstance."
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first- quarter profit on a surge in revenue from refining crude and making chemicals.
Zman: "Gasoline stocks now stand at 4.7% below year ago levels. Taken together with demand that year to date has run 1.9% higher than last year, the days supply metric has fallen to 20.8 (or just above where it was at the end of last summer)."
Reuters reports that Microsoft has purchased mobile ad company ScreenTonic to increase its footprint in the business of marketing to handsets.
Russian metals giant Norilsk Nickel said on Thursday it was launching an all-cash C$5.3bn ($4.8bn) bid for Canada’s LionOre, trumping an offer from London-listed Xstrata.
Norilsk, which produces one-fifth of the world’s nickel output, said it was offering to purchase all of LionOre’s shares at a price of C$21.50, a premium of 22.9 per cent over LionOre’s March 23 closing price.
Some trades for your consideration. They involve selling Jan 08 puts in three stocks each for 40 cents a put. The strike price on Vulcan Materials is $70 (price now $116), the strike price on Cummins is $52.50 (price now $91), and the strike price on Sallie Mae is $35 (price now $54).
Celgene said quarterly earnings more than tripled but sales of its most important product, cancer drug Revlimid, were smaller than expected.
OfficeMax reported earnings that fell well short of Wall Street's expectations.
The year's second $1 billion IPO awaits Friday from Interactive Brokers Group Inc. (IBKR). The deal was priced at $30.01.
Natural-gas inventories rose by 87 billion cubic feet for the week ended April 27, the Energy Department said Thursday. Total stocks now stand at 1.651 trillion cubic feet, down 245 billion cubic feet from the year-ago level, but 266 billion cubic feet above the five-year average, the government data said.
The ISM non-manufacturing index rose to 56% in April from 52.4% in March. Economists were expecting the index to rise to 53.3%. The prices-paid index rose to 63.5% in April from 63.3% in March.
Statoil ASA and Norsk Hydro have received clearance from the European Commission for the planned merger of their oil and gas activities.
In Thursday morning trading, stocks moved higher sending the S&P 500 across the 1500 mark for the first time since September 2000.
A Dutch judge halted the sale of LaSalle National Bank to Bank of America. The court said that ABN Amro was not allowed to sell any of its subsidiaries without consulting shareholders first.
Intel's CEO said profit growth will outpace revenue growth in 2007 and 2008.
The Andersons expects 2007 earnings of $2.35 to $2.60 a share. Analysts are looking for a per-share profit of $2.71.
Gold for June delivery closed up $9.30 at $684.40 an ounce on the New York Mercantile Exchange. July silver closed up 17.5 cents at $13.51 an ounce, July platinum gained $11.70 at $1,310.80 an ounce and June palladium rose $1.55 at $376.50 an ounce. July copper gained 8.2 cents at $3.7265 a pound.
he U.S. government said it would suspend oil purchases for the strategic Strategic Petroleum Reserve and Belgian oil workers tentatively agreed on a new contract, likely avoiding a strike.
Venezuela is not considering a cash payment to compensate foreign oil companies for their nationalized assets, the oil minister said early Thursday.
Sears Holdings Corp. expects first-quarter earnings of $1.30 to $1.53 a share, and net income of between $200 million and $235 million. Analysts polled by Thomson Financial are currently forecasting first-quarter earnings of $1.46 a share. The Hoffman Estates, Ill.-based retailer also said that Kmart same-store sales were down 4.7% for the first 12 weeks of the 13-week first quarter, primarily due to lower transaction volumes across most businesses. Sears domestic comparable-store sales declined by 2.4%, primarily reflecting a reduction in home appliances sales.
Chesapeake Energy Corp.'s first-quarter net income fell to $232 million, or 50 cents a share, from $604 million, or $1.44, a year ago. Revenue for the three months ended March 31 fell to $1.58 billion from $1.94 billion. The quarterly results included an unrealized mark-to-market loss of $193 million from the company's oil, gas and interest rate hedging program. Excluding the hedging loss, income from ongoing operations was $425 million, or 87 cents a share.
Nabors Industries posted a profit of $262.2 million, or 92 cents a share, up from $256.8 million, or 79 cents a share, a year ago. Sales came in at $1.30 billion, up from $1.18 billion last year. Analysts polled by Thomson Financial had expected a profit of 84 cents a share on sales of $1.25 billion. Earnings benefited from a share-count reduction as well as a lower tax rate, the oil equipment maker said. Chairman and CEO Gene Isenberg said he is looking for a "lower but strong level of income" in the second quarter.
Callaway Golf said it now expects 2007 pro forma per-share earnings of 72 cents to 82 cents on revenue of $1.045 billion to $1.065 billion. The company had previously estimated pro forma per-share earnings of 66 cents to 76 cents on revenue of $1.035 billion to $1.055 billion.
Starbucks backed its its full-year 2007 per-share profit forcast of 87 cents to 89 cents.
June crude fell 49 cents to close at $63.19 a barrel Thursday. June natural gas climbed 21.7 cents, or 2.8%, to close at $7.947 per million British thermal units after touching $8 during the session.
First-time claims for state unemployment benefits fell to their lowest level since early January, the Labor Department reported Thursday. The number of initial claims in the week ending April 28 fell 21,000 to 305,000. The four-week average of initial claims fell 4,500 to 328,750. Meanwhile, the number of Americans receiving state jobless benefits fell 93,000 to 2.50 million in the week ending April 21. The four-week moving average of continuing claims rose 1,500 to 2.53 million.
Productivity of the U.S. non-farm business sector rose at a 1.7% annual rate in the first quarter, the Labor Department estimated Thursday. Unit labor costs rose at an annual rate of 0.6% in the first quarter. Real hourly compensation fell 1.5% in the first quarter. Compared with the same quarter a year ago, productivity was up 1.1%, compared with a 1.6% gain in the fourth quarter. Unit labor costs rose 1.3% over the past year, down from a 3.4% rate in the fourth quarter.
Talbots Inc. said it expects to post a profit in a range of 7 cents to 11 cents a share, down from its prior forecast of 36 cents to 43 cents a share. The company said it was cautious for the future, given its April sales trends.
Coeur d'Alene Mines Corp. agreed to merge with Bolnisi Gold NL and Palmarejo Silver and Gold Corp. in a deal valued at roughly $1.1 billion. The transaction calls for Coeur to acquire all the shares of Bolnisi as well as all of the shares of Palmarejo not already owned by Bolnisi in what is largely a stock swap. Coeur d'Alene said it expects to issue a total of 271.3 million new shares in the deal. It will also make nominal cash payments of below a penny per share to holders of Bolnisi and Palmarejo stock.
General Motors Corp. reported first-quarter earnings of $62 million, or 11 cents a share, down from a year-ago profit of $602 million, or $1.06 a share. The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding items, the Dow component posted adjusted earnings of $94 million, or 17 cents a share, in the latest quarter. Revenue slid in the latest three months to $43.91 billion from $52.38 billion in the same period a year earlier. Housing finance related losses at GMAC more than offset a gain in its automotive operations.
Noble Energy Inc. said its first-quarter net profit fell to $211.8 million, or $1.22 a share, from $226.1 million, or $1.26 a share. Revenue edged up to $667 million from $646.3 million. Excluding the effects of deferred compensation, adjusted net income was $1.28 a share.
Drilling company Patterson-UTI Energy Inc. said its first-quarter net profit fell to $116 million, or 73 cents a share, from $159 million, or 91 cents a share. Revenue for the quarter fell to $547 million from $598 million. The company said customers had reduced their drilling activity in the quarter after warm winter weather led to high levels of natural gas in storage and lower prices. The company said it's recently seen a modest increase in its rig count in the U.S. and continues to believe that increased drilling activity will be required to avoid a shortfall of natural gas.
The board of directors of Dow Jones Co. decided to take no action on a $5 billion unsolicited takeover bid from News Corp. In a statement issued late Wednesday, the company said owners of shares constituting 52% of its outstanding voting power have indicated they are opposed to the bid from media mogul Rupert Murdoch.
The yen declined to a record low against the euro.
China’s property developers invested 22% more in projects last year, citing the Chinese Academy of Social Sciences.
There are concerns escalating violence in Nigeria could disrupt supplies from the world's eighth largest oil exporter.
The Baltic Dry Index has risen 41% this year.
Job reduction announcements by major U.S. corporations soared by 44% to 70,672 in April after falling to an eight-month low in March, according to a monthly report released Wednesday by outplacement firm Challenger Gray & Christmas.
Layoff plans were up 18% compared with April 2006. It's the first time since September that layoffs rose on a year-over-year comparison.
Seeking Alpha: "As the dollar weakens on the development of emerging markets, a trend that should continue, American firms selling products overseas benefit by gaining market share as their products become cheaper to foreigners. That market share gain is an economic value add and should not be discounted as a fluctuating inconsequential circumstance."
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first- quarter profit on a surge in revenue from refining crude and making chemicals.
Zman: "Gasoline stocks now stand at 4.7% below year ago levels. Taken together with demand that year to date has run 1.9% higher than last year, the days supply metric has fallen to 20.8 (or just above where it was at the end of last summer)."
Reuters reports that Microsoft has purchased mobile ad company ScreenTonic to increase its footprint in the business of marketing to handsets.
Russian metals giant Norilsk Nickel said on Thursday it was launching an all-cash C$5.3bn ($4.8bn) bid for Canada’s LionOre, trumping an offer from London-listed Xstrata.
Norilsk, which produces one-fifth of the world’s nickel output, said it was offering to purchase all of LionOre’s shares at a price of C$21.50, a premium of 22.9 per cent over LionOre’s March 23 closing price.
Some trades for your consideration. They involve selling Jan 08 puts in three stocks each for 40 cents a put. The strike price on Vulcan Materials is $70 (price now $116), the strike price on Cummins is $52.50 (price now $91), and the strike price on Sallie Mae is $35 (price now $54).
Celgene said quarterly earnings more than tripled but sales of its most important product, cancer drug Revlimid, were smaller than expected.
OfficeMax reported earnings that fell well short of Wall Street's expectations.
The year's second $1 billion IPO awaits Friday from Interactive Brokers Group Inc. (IBKR). The deal was priced at $30.01.
Natural-gas inventories rose by 87 billion cubic feet for the week ended April 27, the Energy Department said Thursday. Total stocks now stand at 1.651 trillion cubic feet, down 245 billion cubic feet from the year-ago level, but 266 billion cubic feet above the five-year average, the government data said.
The ISM non-manufacturing index rose to 56% in April from 52.4% in March. Economists were expecting the index to rise to 53.3%. The prices-paid index rose to 63.5% in April from 63.3% in March.
Statoil ASA and Norsk Hydro have received clearance from the European Commission for the planned merger of their oil and gas activities.
In Thursday morning trading, stocks moved higher sending the S&P 500 across the 1500 mark for the first time since September 2000.
A Dutch judge halted the sale of LaSalle National Bank to Bank of America. The court said that ABN Amro was not allowed to sell any of its subsidiaries without consulting shareholders first.
Intel's CEO said profit growth will outpace revenue growth in 2007 and 2008.
The Andersons expects 2007 earnings of $2.35 to $2.60 a share. Analysts are looking for a per-share profit of $2.71.
Gold for June delivery closed up $9.30 at $684.40 an ounce on the New York Mercantile Exchange. July silver closed up 17.5 cents at $13.51 an ounce, July platinum gained $11.70 at $1,310.80 an ounce and June palladium rose $1.55 at $376.50 an ounce. July copper gained 8.2 cents at $3.7265 a pound.
he U.S. government said it would suspend oil purchases for the strategic Strategic Petroleum Reserve and Belgian oil workers tentatively agreed on a new contract, likely avoiding a strike.
Venezuela is not considering a cash payment to compensate foreign oil companies for their nationalized assets, the oil minister said early Thursday.
Sears Holdings Corp. expects first-quarter earnings of $1.30 to $1.53 a share, and net income of between $200 million and $235 million. Analysts polled by Thomson Financial are currently forecasting first-quarter earnings of $1.46 a share. The Hoffman Estates, Ill.-based retailer also said that Kmart same-store sales were down 4.7% for the first 12 weeks of the 13-week first quarter, primarily due to lower transaction volumes across most businesses. Sears domestic comparable-store sales declined by 2.4%, primarily reflecting a reduction in home appliances sales.
Chesapeake Energy Corp.'s first-quarter net income fell to $232 million, or 50 cents a share, from $604 million, or $1.44, a year ago. Revenue for the three months ended March 31 fell to $1.58 billion from $1.94 billion. The quarterly results included an unrealized mark-to-market loss of $193 million from the company's oil, gas and interest rate hedging program. Excluding the hedging loss, income from ongoing operations was $425 million, or 87 cents a share.
Nabors Industries posted a profit of $262.2 million, or 92 cents a share, up from $256.8 million, or 79 cents a share, a year ago. Sales came in at $1.30 billion, up from $1.18 billion last year. Analysts polled by Thomson Financial had expected a profit of 84 cents a share on sales of $1.25 billion. Earnings benefited from a share-count reduction as well as a lower tax rate, the oil equipment maker said. Chairman and CEO Gene Isenberg said he is looking for a "lower but strong level of income" in the second quarter.
Callaway Golf said it now expects 2007 pro forma per-share earnings of 72 cents to 82 cents on revenue of $1.045 billion to $1.065 billion. The company had previously estimated pro forma per-share earnings of 66 cents to 76 cents on revenue of $1.035 billion to $1.055 billion.
Starbucks backed its its full-year 2007 per-share profit forcast of 87 cents to 89 cents.
June crude fell 49 cents to close at $63.19 a barrel Thursday. June natural gas climbed 21.7 cents, or 2.8%, to close at $7.947 per million British thermal units after touching $8 during the session.
Wednesday, May 02, 2007
The Beat Goes On
5/3/07 The Beat Goes On
The American Petroleum Institute reported a climb of 5.4 million barrels in crude supplies for the week ended April 27. The Energy Department had reported an increase of 1.1 million barrels. Motor gasoline supplies were down 212,000 barrels, the API said. The government reported a drop of 1.1 million barrels. Distillate supplies were up 2.9 million barrels, the API said, though the government said supplies were down 200,000 barrels for the week.
Orders for U.S.-made factory goods rose 3.1% in March, the biggest gain in a year, the Commerce Department reported Wednesday. The gains in March, led by a 38% increase in orders for civilian aircraft and an 11% increase in petroleum, were strong across the board. Orders for core capital equipment rose 4.8%, the fastest pace in nearly three years. Orders for durable goods were revised higher to 3.7%. Shipments of factory goods increased 1.5%, the highest in 10 months. Unfilled orders grew 1.8%, the fastest pace this year.
Genesis Healthcare Corp amended its merger deal with affiliates of Formation Capital LLC and JER Partners to lift the consideration payable to Genesis stockholders to $65.25 per share from $64.25 per share.
Cablevision Systems Corp said it agreed to a buyout by members of the Dolan Family Group, valuing the cable operator at about $22 billion, or $36.26 a share. The deal is conditioned on a "majority of the minority" voting provision, which requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers.
Helmerich & Payne, Inc. reported net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 for its second fiscal quarter ended March 31, 2007, compared with net income of $64,573,000 ($0.61 per diluted share) from operating revenues of $290,830,000 during last year's second fiscal quarter ended March 31, 2006. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. Comparable after-tax gains from the sale of assets totaled $0.02 per share net income for the second quarter of 2006. Company President and C.E.O., Hans Helmerich commented, "We have long believed that the technological advances introduced with the Company's FlexRig(R)* technology would help differentiate the Company from the rest of the field. As many of our competitors report significant numbers of rigs currently stacked, our land rig utilization in the U.S. remains high at 97%. Dayrates continue to experience some softening in the face of uncertain natural gas pricing and new capacity displacing less capable rigs. During increased market volatility, the overall rig count has held up nicely and is slightly above year-ago levels, suggesting resiliency to the energy cycle. "With the sale of two of our offshore platform rigs, the remaining nine platform rigs represent only 5% of our entire fleet and less than 2% of total Company segment operating income. We expect that segment's operating income during the next two to three quarters to be slightly improved over that reported in this year's second quarter."
Valero Energy Corp.agreed to sell its 165,000 barrel-per-day refinery in Lima, Ohio, to Husky Energy Inc. for $1.9 billion, plus net working capital estimated at $200 million.
Citigroup Inc.will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. said Wednesday they have agreed to acquire it U.S. Foodservice from Royal Ahold N.V. in a deal valued at $7.1 billion.
Gold for June delivery closed down $2.20 at $675.10 an ounce on the New York Mercantile Exchange. July silver ended down 3.5 cents at $13.335 an ounce, July platinum fell $1.80 at $1,299.10 an ounce, while June palladium closed up 80 cents at $374.95 an ounce. July copper closed up 1 cent at $3.6445 a pound.
Crude closed down 72 cents at $63.68 per barrel while natural gas rose 1 cent to $7.73.
The American Petroleum Institute reported a climb of 5.4 million barrels in crude supplies for the week ended April 27. The Energy Department had reported an increase of 1.1 million barrels. Motor gasoline supplies were down 212,000 barrels, the API said. The government reported a drop of 1.1 million barrels. Distillate supplies were up 2.9 million barrels, the API said, though the government said supplies were down 200,000 barrels for the week.
Orders for U.S.-made factory goods rose 3.1% in March, the biggest gain in a year, the Commerce Department reported Wednesday. The gains in March, led by a 38% increase in orders for civilian aircraft and an 11% increase in petroleum, were strong across the board. Orders for core capital equipment rose 4.8%, the fastest pace in nearly three years. Orders for durable goods were revised higher to 3.7%. Shipments of factory goods increased 1.5%, the highest in 10 months. Unfilled orders grew 1.8%, the fastest pace this year.
Genesis Healthcare Corp amended its merger deal with affiliates of Formation Capital LLC and JER Partners to lift the consideration payable to Genesis stockholders to $65.25 per share from $64.25 per share.
Cablevision Systems Corp said it agreed to a buyout by members of the Dolan Family Group, valuing the cable operator at about $22 billion, or $36.26 a share. The deal is conditioned on a "majority of the minority" voting provision, which requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers.
Helmerich & Payne, Inc. reported net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 for its second fiscal quarter ended March 31, 2007, compared with net income of $64,573,000 ($0.61 per diluted share) from operating revenues of $290,830,000 during last year's second fiscal quarter ended March 31, 2006. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. Comparable after-tax gains from the sale of assets totaled $0.02 per share net income for the second quarter of 2006. Company President and C.E.O., Hans Helmerich commented, "We have long believed that the technological advances introduced with the Company's FlexRig(R)* technology would help differentiate the Company from the rest of the field. As many of our competitors report significant numbers of rigs currently stacked, our land rig utilization in the U.S. remains high at 97%. Dayrates continue to experience some softening in the face of uncertain natural gas pricing and new capacity displacing less capable rigs. During increased market volatility, the overall rig count has held up nicely and is slightly above year-ago levels, suggesting resiliency to the energy cycle. "With the sale of two of our offshore platform rigs, the remaining nine platform rigs represent only 5% of our entire fleet and less than 2% of total Company segment operating income. We expect that segment's operating income during the next two to three quarters to be slightly improved over that reported in this year's second quarter."
Valero Energy Corp.agreed to sell its 165,000 barrel-per-day refinery in Lima, Ohio, to Husky Energy Inc. for $1.9 billion, plus net working capital estimated at $200 million.
Citigroup Inc.will buy financial services outsourcing company Bisys Group for $1.45 billion in cash.
Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. said Wednesday they have agreed to acquire it U.S. Foodservice from Royal Ahold N.V. in a deal valued at $7.1 billion.
Gold for June delivery closed down $2.20 at $675.10 an ounce on the New York Mercantile Exchange. July silver ended down 3.5 cents at $13.335 an ounce, July platinum fell $1.80 at $1,299.10 an ounce, while June palladium closed up 80 cents at $374.95 an ounce. July copper closed up 1 cent at $3.6445 a pound.
Crude closed down 72 cents at $63.68 per barrel while natural gas rose 1 cent to $7.73.
Tuesday, May 01, 2007
Outlook
5/2/07 Outlook
Centex reported financial results for its fiscal fourth quarter and fiscal year ended March 31, 2007.
Highlights of the quarter ended March 31, 2007 (compared to last year's fourth quarter):
* Total revenues decreased 11% to $3.67 billion
* Home closings decreased 14% to 10,582
* Loss from continuing operations was $0.18 per diluted share
* Reduced inventory of unsold homes by 23% in the quarter
* Unit backlog declined 39% on a decrease in sales (orders) of 21%
Highlights of fiscal year 2007 (compared to fiscal year 2006):
* Total revenues decreased 7% to $12.0 billion
* Earnings per diluted share of $2.16
* Home closings decreased 9% to 35,785
* Generated $1 billion of operating cash flow
* Successfully sold sub-prime mortgage and commercial contracting
businesses
"In reacting to one of the most difficult markets in 25 years, we accomplished important goals that lay the groundwork for the future," said Tim Eller, chairman and CEO of Centex Corp. "We reduced costs, continued to align our land position with current demand and generated $1 billion in cash. Additionally, we profitably sold our sub-prime mortgage and commercial contracting businesses. Although we still see uncertainty in many of our markets, we are in position to increase our market share and generate additional cash."
P&G said it now expects to earn $3.01 to $3.03 per share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents per share.
Analysts, on average, expect $3.03 per share. Growth at the Gillette razor and Duracell battery units was the slowest in three quarters.
Chief Engineer Rick Land said Caltrans is having difficulty locating the steel needed to fix the connector following the fiery crash of a gasoline truck Sunday morning between I-80 and southbound I-880. Steel holding up the section of I-580 weakened in the intense heat and bent, causing the roadway to pull away from support beams. Both the eastbound I-580 and southbound I-880 connectors remain closed. "The steel is going to have to be special ordered and custom fabricated," said agency spokesman Jeff Weiss. "We were calling yesterday getting assessments of what's available; it's a matter of getting someone who can fill our order. Everything is hinging on getting the steel."
Liz Claiborne said on Tuesday that quarterly profit fell, hurt by restructuring charges, lower-than-expected wholesale sales and higher markdowns. The company also said it expects adjusted 2007 earnings per share in the range of $1.90 to $2.05, excluding charges.
According to Bloomberg, the fate of the proposed $25 billion buyout of Sallie Mae, the largest U.S. provider of student loans, rests in part on a debate among Democrats over an obscure point of congressional procedure. The agreement last month between Reston, Virginia-based SLM Corp. and a group of investors led by the private-equity firm J.C. Flowers & Co. allows the buyers to withdraw if Congress cuts federal subsidies for lenders by more than the $16 billion requested by President George W. Bush in his February budget. Democrats are considering plans to do just that as they search for revenue for proposals such as lower-interest student loans.
Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank.
Circuit City expects to post a first-quarter loss of as much as $90 million before taxes as rivals cut prices on flat-panel television sets.
Bloomberg reported China, the world’s largest steel producer, will introduce export licenses for some steel products from May 20 to rein in shipments which more than doubled in the first quarter.
Prices of liquid-crystal displays used in computers began rising this month and may climb until the third quarter as Microsoft’s new Windows operating system spurs demand for wider screens, research firm iSuppli Corp. said.
Martin Hutchinson: "Japan and China, the world’s largest holders of foreign exchange reserves with $2 trillion between them are considering investing those reserves in the stock market. Russia has announced it will invest its $108 billion oil stabilization fund in foreign stocks. If you try to remember the last time major government money pools were punted in the stock market (other than for a bailout) you won’t be able to – it was in 1720. That episode didn’t end happily, but it is I suppose encouraging to see that government can avoid such an egregious mistake for as long as 287 years!"
Kurdish lawmakers plan to oppose U.S.-backed legislation to regulate Iraq's oil industry, claiming the government is seeking a greater voice in revitalizing one of OPEC's former heavyweight producers, a Kurdish official said Monday. Kurds hold 58 of the 275 parliament seats — not enough to defeat the measure on their own.
Barron's reports that Charles Schwab sold $16 million in stock in his company two days after the firm announced a buyback.
Anadarko Petroleum Corp. said Monday its first-quarter net income fell dramatically from a year ago, as the company incurred a variety of charges related to its ongoing restructuring and an unresolved tax issue in Algeria. The company said Monday that it has generated more than $10.2 billion in after-tax proceeds from announced sales. "Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date," Chairman and Chief Executive Jim Hackett said in a statement.
German unemployment fell to its lowest level in more than four years in April, in the latest sign that the recovery of Europe’s largest economy is having a positive impact on the labor market. Headline unemployment fell to 3.967m from 4.108m in March, dipping below the 4m mark for the first time since November last year.
The WSJ reported TPG, the investment operation managed by turnaround specialists David Bonderman and Jim Coulter, is in very early discussions with some of its large pension-fund investors to acquire a stake under 20%, according to people familiar with the matter.
Crain's reported Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim “breached his duty” by failing to disclose he was the subject of a grand jury investigation into his former employer’s connections to a Colombian terrorist group, according to a company filing Monday.
Nouriel Roubini: "Wealth effect due to falling prices combined with a lagged effect of HEW ( home equity withdrawal) on consumption could cost as much 2 percent of GDP growth in 2007."
Martin Weiss: "The Decline in the Dollar Is So Deep It's Unleashing
A Chain Reaction of Price Explosions In Every
One of Our Favorite Contra-Dollar Investments."
Contrary Investor: "Although a decline in goods imports may seem a good thing when it causes a contraction in the headline US trade deficit, the reality is that a contraction in the rate of change in imported US goods is also a meaningful signal of domestic economic slowing. That's the big message we want to get across...In 2006, 66% of the US trade deficit is accounted for by crude imports and the trade deficit with China. It's no wonder China/US trade circumstances are such a perceptual political flash point. Unless something acts to change the trajectory of these trends, it will probably only be a year or two until crude and China account for three-quarters of the total US trade deficit...we're an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble."
Marathon Oil Corp. reported first-quarter earnings of $717 million, or $2.07 a share, down from a year-ago profit of $784 million, or $2.13 a share. On an adjusted basis, the Houston-based oil and gas company earned $707 million, or $2.04 a share, in the latest quarter. Revenue fell in the latest three months to $13 billion from $16.54 billion in the same period a year earlier.
24/7 Real Media soared more than 20% on a news report Microsoft is planning to make a $1 billion offer to acquire the company.
Athletic apparel and footwear maker Under Amour Inc. on Tuesday said it expects higher marketing expenses in the second quarter and earnings below analyst estimates.The company expects net income in the quarter to be 2 cents or 3 cents per share, while analysts polled by Thomson Financial are looking for a profit of 7 cents per share.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April, the highest since May 2006, from 50.9 in March. The prices paid index rose to 73.0 in April, from 65.5 in March.
New orders rose to 58.5 in April from 51.6 while the employment index rose to 53.1 from 48.7.
Archer Daniels Midland Co., the nation's largest ethanol producer, said Tuesday that its fiscal third-quarter profit rose 4 percent, but the results fell short of Wall Street expectations.
Pending sales of U.S. homes fell by 4.9% in March. The pending home sales index was down 10.5% from March 2006 and is the lowest in three years.
Chemed, which provides health-care services in one segment and plumbing services in another, expects 2007 adjusted earnings of $2.85 to $3.05 a share.
Bernanke: "The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
Crude for June delivery finished Tuesday with a loss of 2%, down $1.31, at $64.40 a barrel.
June gold fell $6.20 to close at $677.30 an ounce Tuesday. But July copper prices closed up 2.2%, or 7.8 cents, at a one-week high of $3.6345 a pound as a labor strike in Peru continued.
General Motors Corp. posted a 9.5% decline in April U.S. light vehicle sales to 307,554 cars and trucks from 339,796 a year ago. The car side saw sales drop 10% while light truck sales shed 9.1%.
News Corp. confirmed it "made a friendly offer" to Dow Jones & Company to acquire all of the outstanding shares of the company for $60 a share in cash, or in a combination of cash and stock. The Bancroft family hold shares representing a majority of the company's voting power. The Bancroft family is seen opposing News Corp.'s unsolicited bid of $60 a share unsolicited offer of $60 a share for Dow Jones , owner of the Wall Street Journal, according to CNBC's David Faber. Bear Stearns believes Dow Jones will accept the News Corp. bid. I agree with Faber.This bid was not a well-kept secret. On Monday, the number of call-option contracts traded in Dow Jones jumped 14-fold to 4,335 from the average daily volume of 309 over the previous 20 trading sessions, according to Bloomberg data.
Ford Motor Co. posted a 13% decline in April U.S. auto sales to 228,623 vehicles. Car sales fell 23.6% to 80,732 while the truck side fared much better, down 5.8% to 147,891 vehicles.
Chrysler posted a 1.6% rise in April U.S. vehicle sales to 193,104 cars and trucks. Car sales fell 20% to 46,665 while the truck side jumped 11% thanks to strong results from the Jeep brand.
National City Corp. agreed to buy MAF Bancorp for about $1.9 billion in stock to expand in Chicago and enter Wisconsin.
Iran’s foreign minister will not hold a “dialogue” with US Secretary of State Condoleezza Rice at the Iraq security conference planned this week.
Japanese wages fell for a fourth month in March.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Centex reported financial results for its fiscal fourth quarter and fiscal year ended March 31, 2007.
Highlights of the quarter ended March 31, 2007 (compared to last year's fourth quarter):
* Total revenues decreased 11% to $3.67 billion
* Home closings decreased 14% to 10,582
* Loss from continuing operations was $0.18 per diluted share
* Reduced inventory of unsold homes by 23% in the quarter
* Unit backlog declined 39% on a decrease in sales (orders) of 21%
Highlights of fiscal year 2007 (compared to fiscal year 2006):
* Total revenues decreased 7% to $12.0 billion
* Earnings per diluted share of $2.16
* Home closings decreased 9% to 35,785
* Generated $1 billion of operating cash flow
* Successfully sold sub-prime mortgage and commercial contracting
businesses
"In reacting to one of the most difficult markets in 25 years, we accomplished important goals that lay the groundwork for the future," said Tim Eller, chairman and CEO of Centex Corp. "We reduced costs, continued to align our land position with current demand and generated $1 billion in cash. Additionally, we profitably sold our sub-prime mortgage and commercial contracting businesses. Although we still see uncertainty in many of our markets, we are in position to increase our market share and generate additional cash."
P&G said it now expects to earn $3.01 to $3.03 per share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents per share.
Analysts, on average, expect $3.03 per share. Growth at the Gillette razor and Duracell battery units was the slowest in three quarters.
Chief Engineer Rick Land said Caltrans is having difficulty locating the steel needed to fix the connector following the fiery crash of a gasoline truck Sunday morning between I-80 and southbound I-880. Steel holding up the section of I-580 weakened in the intense heat and bent, causing the roadway to pull away from support beams. Both the eastbound I-580 and southbound I-880 connectors remain closed. "The steel is going to have to be special ordered and custom fabricated," said agency spokesman Jeff Weiss. "We were calling yesterday getting assessments of what's available; it's a matter of getting someone who can fill our order. Everything is hinging on getting the steel."
Liz Claiborne said on Tuesday that quarterly profit fell, hurt by restructuring charges, lower-than-expected wholesale sales and higher markdowns. The company also said it expects adjusted 2007 earnings per share in the range of $1.90 to $2.05, excluding charges.
According to Bloomberg, the fate of the proposed $25 billion buyout of Sallie Mae, the largest U.S. provider of student loans, rests in part on a debate among Democrats over an obscure point of congressional procedure. The agreement last month between Reston, Virginia-based SLM Corp. and a group of investors led by the private-equity firm J.C. Flowers & Co. allows the buyers to withdraw if Congress cuts federal subsidies for lenders by more than the $16 billion requested by President George W. Bush in his February budget. Democrats are considering plans to do just that as they search for revenue for proposals such as lower-interest student loans.
Venezuela will withdraw from the Washington-based lending organizations, the IMF and World Bank.
Circuit City expects to post a first-quarter loss of as much as $90 million before taxes as rivals cut prices on flat-panel television sets.
Bloomberg reported China, the world’s largest steel producer, will introduce export licenses for some steel products from May 20 to rein in shipments which more than doubled in the first quarter.
Prices of liquid-crystal displays used in computers began rising this month and may climb until the third quarter as Microsoft’s new Windows operating system spurs demand for wider screens, research firm iSuppli Corp. said.
Martin Hutchinson: "Japan and China, the world’s largest holders of foreign exchange reserves with $2 trillion between them are considering investing those reserves in the stock market. Russia has announced it will invest its $108 billion oil stabilization fund in foreign stocks. If you try to remember the last time major government money pools were punted in the stock market (other than for a bailout) you won’t be able to – it was in 1720. That episode didn’t end happily, but it is I suppose encouraging to see that government can avoid such an egregious mistake for as long as 287 years!"
Kurdish lawmakers plan to oppose U.S.-backed legislation to regulate Iraq's oil industry, claiming the government is seeking a greater voice in revitalizing one of OPEC's former heavyweight producers, a Kurdish official said Monday. Kurds hold 58 of the 275 parliament seats — not enough to defeat the measure on their own.
Barron's reports that Charles Schwab sold $16 million in stock in his company two days after the firm announced a buyback.
Anadarko Petroleum Corp. said Monday its first-quarter net income fell dramatically from a year ago, as the company incurred a variety of charges related to its ongoing restructuring and an unresolved tax issue in Algeria. The company said Monday that it has generated more than $10.2 billion in after-tax proceeds from announced sales. "Our deleveraging plan remains ahead of schedule, and we are very pleased with the values we have received to date," Chairman and Chief Executive Jim Hackett said in a statement.
German unemployment fell to its lowest level in more than four years in April, in the latest sign that the recovery of Europe’s largest economy is having a positive impact on the labor market. Headline unemployment fell to 3.967m from 4.108m in March, dipping below the 4m mark for the first time since November last year.
The WSJ reported TPG, the investment operation managed by turnaround specialists David Bonderman and Jim Coulter, is in very early discussions with some of its large pension-fund investors to acquire a stake under 20%, according to people familiar with the matter.
Crain's reported Sun-Times Media Group Inc. Chief Executive Cyrus Freidheim “breached his duty” by failing to disclose he was the subject of a grand jury investigation into his former employer’s connections to a Colombian terrorist group, according to a company filing Monday.
Nouriel Roubini: "Wealth effect due to falling prices combined with a lagged effect of HEW ( home equity withdrawal) on consumption could cost as much 2 percent of GDP growth in 2007."
Martin Weiss: "The Decline in the Dollar Is So Deep It's Unleashing
A Chain Reaction of Price Explosions In Every
One of Our Favorite Contra-Dollar Investments."
Contrary Investor: "Although a decline in goods imports may seem a good thing when it causes a contraction in the headline US trade deficit, the reality is that a contraction in the rate of change in imported US goods is also a meaningful signal of domestic economic slowing. That's the big message we want to get across...In 2006, 66% of the US trade deficit is accounted for by crude imports and the trade deficit with China. It's no wonder China/US trade circumstances are such a perceptual political flash point. Unless something acts to change the trajectory of these trends, it will probably only be a year or two until crude and China account for three-quarters of the total US trade deficit...we're an asset inflation dependent nation. From stock bubble to housing bubble, and now back to potential stock bubble."
Marathon Oil Corp. reported first-quarter earnings of $717 million, or $2.07 a share, down from a year-ago profit of $784 million, or $2.13 a share. On an adjusted basis, the Houston-based oil and gas company earned $707 million, or $2.04 a share, in the latest quarter. Revenue fell in the latest three months to $13 billion from $16.54 billion in the same period a year earlier.
24/7 Real Media soared more than 20% on a news report Microsoft is planning to make a $1 billion offer to acquire the company.
Athletic apparel and footwear maker Under Amour Inc. on Tuesday said it expects higher marketing expenses in the second quarter and earnings below analyst estimates.The company expects net income in the quarter to be 2 cents or 3 cents per share, while analysts polled by Thomson Financial are looking for a profit of 7 cents per share.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April, the highest since May 2006, from 50.9 in March. The prices paid index rose to 73.0 in April, from 65.5 in March.
New orders rose to 58.5 in April from 51.6 while the employment index rose to 53.1 from 48.7.
Archer Daniels Midland Co., the nation's largest ethanol producer, said Tuesday that its fiscal third-quarter profit rose 4 percent, but the results fell short of Wall Street expectations.
Pending sales of U.S. homes fell by 4.9% in March. The pending home sales index was down 10.5% from March 2006 and is the lowest in three years.
Chemed, which provides health-care services in one segment and plumbing services in another, expects 2007 adjusted earnings of $2.85 to $3.05 a share.
Bernanke: "The broad benefits of trade and the associated economic change may come at a cost to some individuals, firms and communities," he said. "We need to continue to find ways to minimize the pain of dislocation without standing in the way of economic growth and change."
Crude for June delivery finished Tuesday with a loss of 2%, down $1.31, at $64.40 a barrel.
June gold fell $6.20 to close at $677.30 an ounce Tuesday. But July copper prices closed up 2.2%, or 7.8 cents, at a one-week high of $3.6345 a pound as a labor strike in Peru continued.
General Motors Corp. posted a 9.5% decline in April U.S. light vehicle sales to 307,554 cars and trucks from 339,796 a year ago. The car side saw sales drop 10% while light truck sales shed 9.1%.
News Corp. confirmed it "made a friendly offer" to Dow Jones & Company to acquire all of the outstanding shares of the company for $60 a share in cash, or in a combination of cash and stock. The Bancroft family hold shares representing a majority of the company's voting power. The Bancroft family is seen opposing News Corp.'s unsolicited bid of $60 a share unsolicited offer of $60 a share for Dow Jones , owner of the Wall Street Journal, according to CNBC's David Faber. Bear Stearns believes Dow Jones will accept the News Corp. bid. I agree with Faber.This bid was not a well-kept secret. On Monday, the number of call-option contracts traded in Dow Jones jumped 14-fold to 4,335 from the average daily volume of 309 over the previous 20 trading sessions, according to Bloomberg data.
Ford Motor Co. posted a 13% decline in April U.S. auto sales to 228,623 vehicles. Car sales fell 23.6% to 80,732 while the truck side fared much better, down 5.8% to 147,891 vehicles.
Chrysler posted a 1.6% rise in April U.S. vehicle sales to 193,104 cars and trucks. Car sales fell 20% to 46,665 while the truck side jumped 11% thanks to strong results from the Jeep brand.
National City Corp. agreed to buy MAF Bancorp for about $1.9 billion in stock to expand in Chicago and enter Wisconsin.
Iran’s foreign minister will not hold a “dialogue” with US Secretary of State Condoleezza Rice at the Iraq security conference planned this week.
Japanese wages fell for a fourth month in March.
David Ogilvy: "I always said that mega-mergers were for megalomaniacs."
Monday, April 30, 2007
Risk Is Alive And Well
5/1/07 Risk Is Alive And Well
The U.S. death toll in Iraq has now reached 104 in April. If Bush and the Congress had family in harm's way in Iraq, they might stop playing politics and get our troops home.
Mike Steinhardt: "The bell is beginning to ring. We're not too far from the end of the bull market."
What happens when the markets run out of things to inflate? Reality can get ugly.
Oliver Wendell Holmes: “Controversy equalizes fools and wise men - and the fools know it."
John Hussman: "In recent weeks, investors have been enthralled with the idea that stocks are being supported not only by earnings surprises, but also by heavy repurchases, as if these are two separate effects. As I've noted before, repurchases are already reflected in the calculation of the S&P 500 index and index fundamentals such as earnings and dividend figures. To assume that repurchases are a separate source of “return to investors” is double counting."
Citigroup executives are worried that hedge funds may pressure a breakup of the world’s biggest financial services company, the Financial Times reported. The executives believe Citigroup needs to better explain to shareholders the value of keeping its businesses together, the FT said.
Bloomberg reports that the cost of shipping coal and iron- ore is about to decline as the supply of cargo vessels overwhelms demand. Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world's largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.
Vice President Dick Cheney and other Bush administration officials wanted to ``handpick'' Iraq's leaders after the fall of Saddam Hussein and limit Iraqi involvement in choosing a new government, former CIA Director George Tenet says in his book.
M3 growth stood at 10.9 percent on an annualized basis in March, up from 10.0 percent in February, the European Central Bank said Monday.
Dominion agreed to sell its offshore natural gas and oil exploration & production to ENI Petroleum for roughly $4.76 Billion.
Enpath Medical is being acquired by Wilson Greatbatch for $14.38.
Michael Panzer notes "while optimists might welcome news that the current bull run is four-and-a-half years old, "only three out of the past 15 bull markets have lasted five years or longer, with the average surviving only 3.4 years," according to Jim Stack, editor of the InvesTech Market Analyst newsletter, in U.S. News & World Report. What's more, "even that's distorted by the longevity of the 1990s bull," the magazine writes. "The median length of a bull market-- the statistical point where an equal number last longer or shorter-- is only 2.6 years."
David Geffen: "The Clintons lie with such ease, it’s troubling." Maybe it's a White House viral strain.
Tim Iacono: "Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown. The most astonishing part of this entire report is that personal consumption now accounts for 72 percent of gross domestic product, up from 71 percent during all of 2006 (using chained dollars)."
Eagle Hospitality Properties Trust Inc. agreed to be acquired by the AP AIMCAP joint venture. The deal values Eagle Hospitality, a Covington, Ky., hotel investor, at $13.35 per share and unit in cash.
March consumer spending rose a smaller-than-expected 0.3 percent. Analysts were expecting a 0.5 percent rise. Core prices eased to a 2.1 percent increase from the same month a year ago. Overall prices rose 2.4 percent from a year ago, the largest rise since August, when the 12-month gain was 3.2 percent.
The March saving rate moderated to negative 0.8 percent from minus 1.2 percent in February, the strongest rate since a negative 0.4 percent in March 2006.
Meanwhile, spending on services, which account for almost 60 percent of all outlays, dropped 0.3 percent, the biggest decline since January 2006. It might prove fruitful to keep your eye on future outlays for services. The last time I checked we were a service-oriented economy.
Israeli Prime Minister Ehud Olmert faced strident calls for his resignation in the wake of harsh findings of an official inquiry into the shortcomings of his leadership during last summer's costly but inconclusive war in Lebanon.
International Securities Exchange confirmed it's in talks to be acquired by Deutsche Boerse in a deal, "that could lead to a possible business combination with Eurex."
Hilton Hotels said it now anticipates net income in a range of $1.18 to $1.24 per share on revenue between $8.07 billion and $8.15 billion. It previously forecast a 2007 profit of $1.20 to $1.30 per share, on revenue of $8.89 billion to $9.05 billion.
April Chicago PMI 52.9% vs. 54.5% expected. The Chicago purchasing managers' index fell to 52.9% from 61.7% in March.The new orders index fell to 56.5% from 72.2%. The prices paid index rose to 64.9% from 59.1%, indicating greater inflationary pressures on firms.
Spending on U.S. construction projects rose by 0.2% in March, fueled mostly by higher outlays for private nonresidential projects. Private residential construction fell by 1% in March, but followed a revised gain in February of 1.8%, the first gain after 10 straight months of declines. Spending on private nonresidential projects rose by 2.4%, while total private construction outlays climbed by 0.2%. Public construction spending rose by 0.4%. Spending on federal construction projects, meanwhile, fell by 4.1% in March, following a drop of 7% in February.
Bill Fleckenstein: "To sum this up, money printing in the past several years by virtually every central bank on the planet has created a synchronized global boom and, with it, gobs of speculation and complete disregard for risk. The fact that our economy is slowing down due to the housing bubble's unwind is immaterial at the moment, though it will become material. In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise."
Humana reported that its Medicare Advantage membership exceeded 1.1 million at the end of March, up 50 percent from the year-ago period and 11 percent higher than at the end of 2006. Membership in Humana's stand-alone prescription drug plans totaled nearly 3.5 million as of March 31, compared to nearly 2 million a year earlier, the company said. Humana raised its full-year earnings per share projection to a range of $4.10 to $4.25, compared to the previous projection of $4 to $4.20.
Barry Ritholtz: "The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing."
Mark Hulbert points out that Investors Intelligence, a newsletter edited by Michael Burke and John Gray which monitors a technical indicator that goes by the name of "buying climaxes," noted that the high number of buying climaxes last week is a "sign of distribution" that indicates that "smart money is moving to the sidelines." What, exactly, is a buying climax? The newsletter's editors explain: "Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones."
Last week, according to their calculations, there were 206 buying climaxes.
To put that high number in context, Burke and Gray write that "buying climaxes readings over 100 are somewhat worrisome, and the current level at twice that is a further sign of topping action. We usually see at least 200 buying climaxes before the market makes a top, although very often there are 500 or 600. The current readings are a cause for increased nervousness."
Oliver Wendell Holmes: “Truth, when not sought after, rarely comes to light."
May reformulated gasoline climbed 3.4% to close the session at $2.4405 a gallon. It tallied a gain of 18.6% for the month. June reformulated gas, which became the new front-month contract, closed nearly flat at $2.2594. June crude fell 75 cents to end at $65.71 a barrel, down 2.6% for the month.
The benchmark 10-year Treasury note ended up 19/32 at 100, yielding [s:tnx] 4.626%, down from 4.697% at Friday's close.
July copper closed at $3.5565 a pound Monday, up 2.4 cents for the session to tally a gain of $13.3% for the month of April. June gold climbed $1.70 to end at $683.50 an ounce for the session, up 2.2% for the month.
Genesis HealthCare Corp. said Monday that Fillmore Capital Partners LLC has increased its acquisition offer to $65.25 a share from $64.75 a share. In addition, under the revised proposal the price will increase by roughly a penny-per-share a day, beginning Aug. 15, until the transaction closes.
The following is a worthwhile article from the BBC:
http://news.bbc.co.uk/2/hi/health/660692...
The U.S. death toll in Iraq has now reached 104 in April. If Bush and the Congress had family in harm's way in Iraq, they might stop playing politics and get our troops home.
Mike Steinhardt: "The bell is beginning to ring. We're not too far from the end of the bull market."
What happens when the markets run out of things to inflate? Reality can get ugly.
Oliver Wendell Holmes: “Controversy equalizes fools and wise men - and the fools know it."
John Hussman: "In recent weeks, investors have been enthralled with the idea that stocks are being supported not only by earnings surprises, but also by heavy repurchases, as if these are two separate effects. As I've noted before, repurchases are already reflected in the calculation of the S&P 500 index and index fundamentals such as earnings and dividend figures. To assume that repurchases are a separate source of “return to investors” is double counting."
Citigroup executives are worried that hedge funds may pressure a breakup of the world’s biggest financial services company, the Financial Times reported. The executives believe Citigroup needs to better explain to shareholders the value of keeping its businesses together, the FT said.
Bloomberg reports that the cost of shipping coal and iron- ore is about to decline as the supply of cargo vessels overwhelms demand. Japan, China and South Korea will produce so many vessels that shipping costs, now at an all-time high, will fall 40 percent by 2010, according to futures contracts traded privately between banks, transportation companies and hedge funds. The decline would hurt Antwerp-based Compagnie Maritime Belge SA, the world's largest commodities-shipping line, and Golden Ocean Group Ltd., run by Norwegian billionaire John Fredriksen.
Vice President Dick Cheney and other Bush administration officials wanted to ``handpick'' Iraq's leaders after the fall of Saddam Hussein and limit Iraqi involvement in choosing a new government, former CIA Director George Tenet says in his book.
M3 growth stood at 10.9 percent on an annualized basis in March, up from 10.0 percent in February, the European Central Bank said Monday.
Dominion agreed to sell its offshore natural gas and oil exploration & production to ENI Petroleum for roughly $4.76 Billion.
Enpath Medical is being acquired by Wilson Greatbatch for $14.38.
Michael Panzer notes "while optimists might welcome news that the current bull run is four-and-a-half years old, "only three out of the past 15 bull markets have lasted five years or longer, with the average surviving only 3.4 years," according to Jim Stack, editor of the InvesTech Market Analyst newsletter, in U.S. News & World Report. What's more, "even that's distorted by the longevity of the 1990s bull," the magazine writes. "The median length of a bull market-- the statistical point where an equal number last longer or shorter-- is only 2.6 years."
David Geffen: "The Clintons lie with such ease, it’s troubling." Maybe it's a White House viral strain.
Tim Iacono: "Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown. The most astonishing part of this entire report is that personal consumption now accounts for 72 percent of gross domestic product, up from 71 percent during all of 2006 (using chained dollars)."
Eagle Hospitality Properties Trust Inc. agreed to be acquired by the AP AIMCAP joint venture. The deal values Eagle Hospitality, a Covington, Ky., hotel investor, at $13.35 per share and unit in cash.
March consumer spending rose a smaller-than-expected 0.3 percent. Analysts were expecting a 0.5 percent rise. Core prices eased to a 2.1 percent increase from the same month a year ago. Overall prices rose 2.4 percent from a year ago, the largest rise since August, when the 12-month gain was 3.2 percent.
The March saving rate moderated to negative 0.8 percent from minus 1.2 percent in February, the strongest rate since a negative 0.4 percent in March 2006.
Meanwhile, spending on services, which account for almost 60 percent of all outlays, dropped 0.3 percent, the biggest decline since January 2006. It might prove fruitful to keep your eye on future outlays for services. The last time I checked we were a service-oriented economy.
Israeli Prime Minister Ehud Olmert faced strident calls for his resignation in the wake of harsh findings of an official inquiry into the shortcomings of his leadership during last summer's costly but inconclusive war in Lebanon.
International Securities Exchange confirmed it's in talks to be acquired by Deutsche Boerse in a deal, "that could lead to a possible business combination with Eurex."
Hilton Hotels said it now anticipates net income in a range of $1.18 to $1.24 per share on revenue between $8.07 billion and $8.15 billion. It previously forecast a 2007 profit of $1.20 to $1.30 per share, on revenue of $8.89 billion to $9.05 billion.
April Chicago PMI 52.9% vs. 54.5% expected. The Chicago purchasing managers' index fell to 52.9% from 61.7% in March.The new orders index fell to 56.5% from 72.2%. The prices paid index rose to 64.9% from 59.1%, indicating greater inflationary pressures on firms.
Spending on U.S. construction projects rose by 0.2% in March, fueled mostly by higher outlays for private nonresidential projects. Private residential construction fell by 1% in March, but followed a revised gain in February of 1.8%, the first gain after 10 straight months of declines. Spending on private nonresidential projects rose by 2.4%, while total private construction outlays climbed by 0.2%. Public construction spending rose by 0.4%. Spending on federal construction projects, meanwhile, fell by 4.1% in March, following a drop of 7% in February.
Bill Fleckenstein: "To sum this up, money printing in the past several years by virtually every central bank on the planet has created a synchronized global boom and, with it, gobs of speculation and complete disregard for risk. The fact that our economy is slowing down due to the housing bubble's unwind is immaterial at the moment, though it will become material. In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise."
Humana reported that its Medicare Advantage membership exceeded 1.1 million at the end of March, up 50 percent from the year-ago period and 11 percent higher than at the end of 2006. Membership in Humana's stand-alone prescription drug plans totaled nearly 3.5 million as of March 31, compared to nearly 2 million a year earlier, the company said. Humana raised its full-year earnings per share projection to a range of $4.10 to $4.25, compared to the previous projection of $4 to $4.20.
Barry Ritholtz: "The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing."
Mark Hulbert points out that Investors Intelligence, a newsletter edited by Michael Burke and John Gray which monitors a technical indicator that goes by the name of "buying climaxes," noted that the high number of buying climaxes last week is a "sign of distribution" that indicates that "smart money is moving to the sidelines." What, exactly, is a buying climax? The newsletter's editors explain: "Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones."
Last week, according to their calculations, there were 206 buying climaxes.
To put that high number in context, Burke and Gray write that "buying climaxes readings over 100 are somewhat worrisome, and the current level at twice that is a further sign of topping action. We usually see at least 200 buying climaxes before the market makes a top, although very often there are 500 or 600. The current readings are a cause for increased nervousness."
Oliver Wendell Holmes: “Truth, when not sought after, rarely comes to light."
May reformulated gasoline climbed 3.4% to close the session at $2.4405 a gallon. It tallied a gain of 18.6% for the month. June reformulated gas, which became the new front-month contract, closed nearly flat at $2.2594. June crude fell 75 cents to end at $65.71 a barrel, down 2.6% for the month.
The benchmark 10-year Treasury note ended up 19/32 at 100, yielding [s:tnx] 4.626%, down from 4.697% at Friday's close.
July copper closed at $3.5565 a pound Monday, up 2.4 cents for the session to tally a gain of $13.3% for the month of April. June gold climbed $1.70 to end at $683.50 an ounce for the session, up 2.2% for the month.
Genesis HealthCare Corp. said Monday that Fillmore Capital Partners LLC has increased its acquisition offer to $65.25 a share from $64.75 a share. In addition, under the revised proposal the price will increase by roughly a penny-per-share a day, beginning Aug. 15, until the transaction closes.
The following is a worthwhile article from the BBC:
http://news.bbc.co.uk/2/hi/health/660692...
Sunday, April 29, 2007
Turning Points?
4/30/07 Turning Points?
Airbus has set out details of job reductions under its Power8 restructuring plan, including 4,100 job cuts in France, French newspaper Le Monde reported on Saturday.The restructuring calls for 10,000 Europe-wide job cuts and six full or partial factory sales by 2010. The job losses are to be split between Airbus and suppliers.
U.K. home prices, rising at the fastest pace in two years, are "very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners. "It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. "The bubble could burst in the event of a financial shock or terrorism.''
Tradingthecharts.com: "I have long believed in the credit cycle being the primary factor behind the “liquidity” that seems to be driving the global economy and financial markets. Whether it’s exotic mortgages, yen carry-trades, CDOs or LBOs the common denominator has been easy credit. Expanding credit is in theory bearish for the currency as the increased supply of dollars is discounted by the Forex market. A major low in the value of the dollar could indicate a reversal in the credit cycle which could have negative implications for all levered."
Randall Forsyth: "Meanwhile, Japan similarly is mulling diversifying a portion of its huge foreign-exchange reserves to be invested along the lines of the Government of Singapore Investment Co., or GIC. That would mean shifting from U.S. Treasury securities to higher-returning global equities and alternatives, in part to help pay for the retirement costs of Japan's aging population, the FT also said."
China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site.
ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.
George Tenet said Mr Bush had already decided to invade Iraq in December 2002, two months before Colin Powell, then secretary of state, gave his now infamous presentation on Iraqi WMD before the United Nations.
Democrats plan to highlight the unprecedented rebuke they are delivering to Bush when they send their bill to him on Tuesday. That day is the fourth anniversary of Bush's speech aboard an aircraft carrier declaring the end to major combat operations in Iraq. To remind Americans of the anniversary, antiwar groups are running television ads showing footage of Bush aboard the carrier that had been decorated with a "Mission Accomplished" banner. Meanwhile, a new compromised bill is in the works.
Iran agreed Sunday to attend a major regional conference on Iraq set for this week in Egypt.
Bill Bonner: "The important fact, at least as we see it through our glass darkly, is that the world is gushing dollars. And here we connect anklebone to leg bone. Dollars are the main export of the world's biggest economy. But that economy is the economy of the world's most debt-ridden nation. And it's the same nation that sets the value of the dollar, the paper in which the debts are measured. That same nation - and you know which one it is, dear reader - shows no sign of paying down the debt. In fact, the debt has begun to feed on itself; now, more money has to be borrowed to pay the interest on previous borrowings. Currently, 80% of the U.S. fiscal deficit is financed by foreigners; one hundred percent of the U.S. trade deficit is financed by foreigners; and all over the world, the piles of dollar bills…dollar credits…dollar shorts…dollar bets…and dollar-based debts…are mounting up. China alone is expected to have more than $1 trillion U.S. dollars in reserves by the end of this year. In short, many of the people with the most to lose from a falling dollar are people who can perfectly well get along without it."
John Mauldin: "Rising prices create their own kind of self-fulfilling momentum. As more and more people throw caution to the wind and jump into the market, hoping to capture some of the profits they see their friends making so effortlessly, you finally get down to the last bear standing. Mr. Market will do whatever it takes to prove the most people wrong. And one of his favorite things to do is to create momentum markets which defy the logic of the underlying fundamentals. It then ends in tears."
Mike Shedlock: "Capital spending bounces back in March is the fact that first quarter capital spending was down 15.3% annualized."
Paul Kasriel: "Going forward, we expect a modest rebound in real GDP growth to about a 2% annual rate in the second quarter. A sharp narrowing in the trade deficit because of strong export growth and a surge in national defense spending are the factors we expect to be responsible for this rebound, offsetting weaker private domestic spending. Without FOMC interest rate cuts commencing early in the second half of this year, we would not expect real economic growth to accelerate meaningfully."
Mike Burk: "Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC. The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963...The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong. I expect the major indices to be higher on Friday May 4 than they were on Friday April 27."
Oroborean: "The Fed took a different direction in its open market activities this week and actually started removing money from total bank deposits through reverses. The move could reflect less demand for money, but in this case is probably more of a preemptive measure to goose up bond yields and make the dollar more attractive. It's also an anti-inflationary step and if this trend develops, it would be profoundly bearish for metals, especially if in lieu of a change in interest rates."
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday. "I do think there are downside risks to the American economic growth, but in spite of those risks I really think it is quite likely that the U.S. economy is going to pick up steam and revert back to trend growth before 2007 comes to and end," Yellen said. Given "slightly elevated" levels of inflation, a period of subpar output will help dispel inflationary pressures, she added.
The House Judiciary Committee voted 32-6 to grant immunity to Monica Goodling, Gonzales' former White House liaison, for her testimony. The panel also unanimously approved -- but did not issue -- a subpoena to compel her to appear.
Airbus has set out details of job reductions under its Power8 restructuring plan, including 4,100 job cuts in France, French newspaper Le Monde reported on Saturday.The restructuring calls for 10,000 Europe-wide job cuts and six full or partial factory sales by 2010. The job losses are to be split between Airbus and suppliers.
U.K. home prices, rising at the fastest pace in two years, are "very highly inflated'' and at risk of collapsing, said Vincent Tchenguiz, one of Britain's largest residential property owners. "It is not sustainable in the long term, prices are very high,'' Tchenguiz, 50, said in an interview. "The bubble could burst in the event of a financial shock or terrorism.''
Tradingthecharts.com: "I have long believed in the credit cycle being the primary factor behind the “liquidity” that seems to be driving the global economy and financial markets. Whether it’s exotic mortgages, yen carry-trades, CDOs or LBOs the common denominator has been easy credit. Expanding credit is in theory bearish for the currency as the increased supply of dollars is discounted by the Forex market. A major low in the value of the dollar could indicate a reversal in the credit cycle which could have negative implications for all levered."
Randall Forsyth: "Meanwhile, Japan similarly is mulling diversifying a portion of its huge foreign-exchange reserves to be invested along the lines of the Government of Singapore Investment Co., or GIC. That would mean shifting from U.S. Treasury securities to higher-returning global equities and alternatives, in part to help pay for the retirement costs of Japan's aging population, the FT also said."
China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site.
ICICI Bank Ltd., India's biggest bank by market value, plans to raise 200 billion rupees ($4.9 billion) in India and the U.S. in the largest share sale by a company based in the South Asian nation.
George Tenet said Mr Bush had already decided to invade Iraq in December 2002, two months before Colin Powell, then secretary of state, gave his now infamous presentation on Iraqi WMD before the United Nations.
Democrats plan to highlight the unprecedented rebuke they are delivering to Bush when they send their bill to him on Tuesday. That day is the fourth anniversary of Bush's speech aboard an aircraft carrier declaring the end to major combat operations in Iraq. To remind Americans of the anniversary, antiwar groups are running television ads showing footage of Bush aboard the carrier that had been decorated with a "Mission Accomplished" banner. Meanwhile, a new compromised bill is in the works.
Iran agreed Sunday to attend a major regional conference on Iraq set for this week in Egypt.
Bill Bonner: "The important fact, at least as we see it through our glass darkly, is that the world is gushing dollars. And here we connect anklebone to leg bone. Dollars are the main export of the world's biggest economy. But that economy is the economy of the world's most debt-ridden nation. And it's the same nation that sets the value of the dollar, the paper in which the debts are measured. That same nation - and you know which one it is, dear reader - shows no sign of paying down the debt. In fact, the debt has begun to feed on itself; now, more money has to be borrowed to pay the interest on previous borrowings. Currently, 80% of the U.S. fiscal deficit is financed by foreigners; one hundred percent of the U.S. trade deficit is financed by foreigners; and all over the world, the piles of dollar bills…dollar credits…dollar shorts…dollar bets…and dollar-based debts…are mounting up. China alone is expected to have more than $1 trillion U.S. dollars in reserves by the end of this year. In short, many of the people with the most to lose from a falling dollar are people who can perfectly well get along without it."
John Mauldin: "Rising prices create their own kind of self-fulfilling momentum. As more and more people throw caution to the wind and jump into the market, hoping to capture some of the profits they see their friends making so effortlessly, you finally get down to the last bear standing. Mr. Market will do whatever it takes to prove the most people wrong. And one of his favorite things to do is to create momentum markets which defy the logic of the underlying fundamentals. It then ends in tears."
Mike Shedlock: "Capital spending bounces back in March is the fact that first quarter capital spending was down 15.3% annualized."
Paul Kasriel: "Going forward, we expect a modest rebound in real GDP growth to about a 2% annual rate in the second quarter. A sharp narrowing in the trade deficit because of strong export growth and a surge in national defense spending are the factors we expect to be responsible for this rebound, offsetting weaker private domestic spending. Without FOMC interest rate cuts commencing early in the second half of this year, we would not expect real economic growth to accelerate meaningfully."
Mike Burk: "Measured by the SPX since 1928 May has had the 3rd worst return of all months, up 56% of the time with an average return of -0.2%. The OTC has done a little better, up 55% of the time with an average return of +0.4% making May the 4th best month for the OTC. The 3rd year of the Presidential Cycle measured by the SPX is only slightly better, up 58% of the time with an average return of 0%. The OTC has done a little better, up 64% of the time with an average return of 1.9%. SPX averages are skewed because the worst year for the SPX was 1931 when it was down 11.1% and OTC data begins in 1963...The market is still overbought and by many indications due for a tumble, however, seasonally next week has been very strong. I expect the major indices to be higher on Friday May 4 than they were on Friday April 27."
Oroborean: "The Fed took a different direction in its open market activities this week and actually started removing money from total bank deposits through reverses. The move could reflect less demand for money, but in this case is probably more of a preemptive measure to goose up bond yields and make the dollar more attractive. It's also an anti-inflationary step and if this trend develops, it would be profoundly bearish for metals, especially if in lieu of a change in interest rates."
There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday. "I do think there are downside risks to the American economic growth, but in spite of those risks I really think it is quite likely that the U.S. economy is going to pick up steam and revert back to trend growth before 2007 comes to and end," Yellen said. Given "slightly elevated" levels of inflation, a period of subpar output will help dispel inflationary pressures, she added.
The House Judiciary Committee voted 32-6 to grant immunity to Monica Goodling, Gonzales' former White House liaison, for her testimony. The panel also unanimously approved -- but did not issue -- a subpoena to compel her to appear.
Saturday, April 28, 2007
Euphoria
4/29/07 Euphoria
Peru's largest miners union on Friday said a nationwide strike set for Monday looked increasingly inevitable, but it would meet again with government officials in the afternoon to try to reach a deal. Luis Castillo, president of the National Federation of Metallurgic and Steel Miners, told Reuters: "The decision has been made. There is no turning back on the strike." Castillo said another meeting with government officials was scheduled for 3 pm local time, "but we don't foresee anything (resulting) because our positions haven't grown any closer."
Bloomberg noted "the Federal Reserve’s trade-weighted dollar index fell to the lowest since its inception in 1971 amid expectations the currency will extend a slide against the euro." Trading at a record low against the euro, the dollar index declined to 81.35. Meanwhile, Barron's discussed the possibility of the dollar recovering later this year. Anything is possible, as there are rallies in a bear market; however, I prefer to keep the trend my friend, and being short the dollar for years has been a great decision for me.
The Bank of England: "The surge in cheap corporate lending, combined with looser credit standards, has increased the vulnerability of the [global financial] system."
Doug Noland: "When it comes to global imbalances, perceptions today differ greatly from reality. The optimists look to booming exports and relatively stable U.S. trade deficits as encouraging signs. But the massive U.S. current account deficit will again this year spurn meaningful improvement. Years of dollar weakness may have finally, if only at the margin, helped to stabilize our trade position. They have also given rise to heightened speculative flows seeking profits from the allure of stronger foreign currencies and inflating global securities markets. The bottom line is that total U.S. “Bubble dollar” flows to the world – the most destabilizing global imbalance – will further worsen this year. Attempts to rectify U.S. Credit Bubble excesses through a global inflation will fail miserably... It is certainly possible that we’ll see trillion dollar annual deficits within the next decade...Unprecedented gains in financial wealth come not predominantly from stock or asset prices shooting openly (and “vertically”) to the moon. Instead, the Mania Unique to this extraordinary phase of “Financial Arbitrage Capitalism” involves the enormous (and highly concentrated) accumulation of “small” spread profits on tens of Trillions of “dollars” of highly leveraged “structured” Credit instruments (expanding insidiously and “horizontally”). Pricing isn’t a critical issue and they don’t even need to trade, as gains are accumulated with the receipt of “payment in kind” spread profits through the issuance of only more debt instruments... For one thing, the associated financial flows are becoming increasingly unwieldy and its “reserve” currency an accident in the making. We should expect its eventual unraveling to be similarly exceptional. In the meantime, this Mania is an imbalance exacerbating and “currency”-debasing behemoth. And that concludes my bout of “defiance” for this week."
"The direct model has been a revolution, but is not a religion,'' Dell wrote in an e-mail to employees yesterday. "We will simplify our business model and go beyond it to give our customers what they need.'' It's a smart person who remains flexible in thinking. We should keep a vigilant eye on Dell's future progress
Bloomberg reported Venezuela's heavy oil deposits may rival Canada's tar sands as a source of crude to meet rising global demand should President Hugo Chavez convince foreign companies that their investments are secure in the country. Venezuela needs $200 billion to develop the heavy oil reserves in the Faja region, Ali Moshiri, head of Chevron Corp.'s Latin American exploration and production unit, said at a conference in Caracas last night. Heavy oil production could jump fivefold to as much as 3 million barrels a day, Moshiri said.
Randall Tobias, the deputy secretary of state responsible for U.S. foreign aid, abruptly resigned Friday after his name surfaced in an investigation into a high-priced call-girl ring, U.S. government sources said. He might better be described as the under secretary.
Dendreon shares are being sold short at a record pace as some investors bet the company's experimental prostate-cancer drug will fail to win approval from U.S. regulators. About 44 percent of Dendreon shares as of mid-April were sold short, according to Nasdaq Stock Market data compiled by Bloomberg News. It's not enough that the shares jumped 10 points overnight just a few weeks ago. The masochists are at it again.
The sharp decline of the sub-prime housing market offering high-cost mortgages hasn't yet hit bottom, the head of home mortgage buyer Freddie Mac said Friday.
"I don't think it's troughed yet, because of the class of 2006," Syron, chairman and chief executive of Freddie Mac, said before speaking at a housing conference. "The mortgages written in 2006 in the subprime market are probably the most troublesome. They haven't hit the reset point yet on interest rates."
The Oil Drum: "Russia's giant Shtokman gas field, one of the world's most challenging offshore projects, will face even greater problems as global warming unleashes vast icebergs into the Arctic, a senior scientist says. Even if icebergs are unlikely to halt the world's largest single energy development, as the global hunger for resources grows, they would make the $30 billion-plus project by Russia's gas monopoly Gazprom yet more expensive."
The Bush administration will roll out a plan Monday to open new acreage offshore that for decades has been off-limits to drilling.
For all my Jewish friends. What do they call a Roman Catholic? A sleep-walking Nun.
Nouriel Roubini: "Currently the most sophisticated "soft landing" commentators do recognize that Q1 was weak - hard to deny it given the fact of a near growth recession 1.3% - but then argue that Q1 will turn out to be the bottom of the US growth deceleration with a recovery of the economy in Q2 and H2. The economy may well turn out to surprise on the upside if there is a recovery of corporate capex and a resilience of the US consumer. But actual and forward looking data suggest that the growth deceleration is continuing in Q2 and that Q2 - as argued extensively before in this blog - will turn out worse than Q1. Thus the risk of a hard landing is increasing."
U.S. first-quarter 2007 drilling estimates hit a 21-year high and were nearly twice the level of first quarter drilling activity recorded during the 1990s, API said.
Axel Merk: "What a weaker dollar may do is provide temporary relief. But unless the U.S. turns into a society of savers and investors, a weaker dollar will only be a pause to an even weaker dollar as imbalances are built up yet again."
The WSJ opines "tighter credit and a growing glut of properties are depressing an already weak U.S. housing market, wrecking the industry's hopes for an early rebound. That leaves buyers in a strong position to negotiate for bargains during the spring home-shopping season, the busiest time of the year for housing sales."
Jeremy Grantham says we are now seeing the first worldwide bubble in history covering all asset classes. Everything is in bubble territory.
Stanley Elkin: “Life's tallest order is to keep the feelings up, to make two dollars' worth of euphoria go the distance. And life can't do that. So fiction does.”
Peru's largest miners union on Friday said a nationwide strike set for Monday looked increasingly inevitable, but it would meet again with government officials in the afternoon to try to reach a deal. Luis Castillo, president of the National Federation of Metallurgic and Steel Miners, told Reuters: "The decision has been made. There is no turning back on the strike." Castillo said another meeting with government officials was scheduled for 3 pm local time, "but we don't foresee anything (resulting) because our positions haven't grown any closer."
Bloomberg noted "the Federal Reserve’s trade-weighted dollar index fell to the lowest since its inception in 1971 amid expectations the currency will extend a slide against the euro." Trading at a record low against the euro, the dollar index declined to 81.35. Meanwhile, Barron's discussed the possibility of the dollar recovering later this year. Anything is possible, as there are rallies in a bear market; however, I prefer to keep the trend my friend, and being short the dollar for years has been a great decision for me.
The Bank of England: "The surge in cheap corporate lending, combined with looser credit standards, has increased the vulnerability of the [global financial] system."
Doug Noland: "When it comes to global imbalances, perceptions today differ greatly from reality. The optimists look to booming exports and relatively stable U.S. trade deficits as encouraging signs. But the massive U.S. current account deficit will again this year spurn meaningful improvement. Years of dollar weakness may have finally, if only at the margin, helped to stabilize our trade position. They have also given rise to heightened speculative flows seeking profits from the allure of stronger foreign currencies and inflating global securities markets. The bottom line is that total U.S. “Bubble dollar” flows to the world – the most destabilizing global imbalance – will further worsen this year. Attempts to rectify U.S. Credit Bubble excesses through a global inflation will fail miserably... It is certainly possible that we’ll see trillion dollar annual deficits within the next decade...Unprecedented gains in financial wealth come not predominantly from stock or asset prices shooting openly (and “vertically”) to the moon. Instead, the Mania Unique to this extraordinary phase of “Financial Arbitrage Capitalism” involves the enormous (and highly concentrated) accumulation of “small” spread profits on tens of Trillions of “dollars” of highly leveraged “structured” Credit instruments (expanding insidiously and “horizontally”). Pricing isn’t a critical issue and they don’t even need to trade, as gains are accumulated with the receipt of “payment in kind” spread profits through the issuance of only more debt instruments... For one thing, the associated financial flows are becoming increasingly unwieldy and its “reserve” currency an accident in the making. We should expect its eventual unraveling to be similarly exceptional. In the meantime, this Mania is an imbalance exacerbating and “currency”-debasing behemoth. And that concludes my bout of “defiance” for this week."
"The direct model has been a revolution, but is not a religion,'' Dell wrote in an e-mail to employees yesterday. "We will simplify our business model and go beyond it to give our customers what they need.'' It's a smart person who remains flexible in thinking. We should keep a vigilant eye on Dell's future progress
Bloomberg reported Venezuela's heavy oil deposits may rival Canada's tar sands as a source of crude to meet rising global demand should President Hugo Chavez convince foreign companies that their investments are secure in the country. Venezuela needs $200 billion to develop the heavy oil reserves in the Faja region, Ali Moshiri, head of Chevron Corp.'s Latin American exploration and production unit, said at a conference in Caracas last night. Heavy oil production could jump fivefold to as much as 3 million barrels a day, Moshiri said.
Randall Tobias, the deputy secretary of state responsible for U.S. foreign aid, abruptly resigned Friday after his name surfaced in an investigation into a high-priced call-girl ring, U.S. government sources said. He might better be described as the under secretary.
Dendreon shares are being sold short at a record pace as some investors bet the company's experimental prostate-cancer drug will fail to win approval from U.S. regulators. About 44 percent of Dendreon shares as of mid-April were sold short, according to Nasdaq Stock Market data compiled by Bloomberg News. It's not enough that the shares jumped 10 points overnight just a few weeks ago. The masochists are at it again.
The sharp decline of the sub-prime housing market offering high-cost mortgages hasn't yet hit bottom, the head of home mortgage buyer Freddie Mac said Friday.
"I don't think it's troughed yet, because of the class of 2006," Syron, chairman and chief executive of Freddie Mac, said before speaking at a housing conference. "The mortgages written in 2006 in the subprime market are probably the most troublesome. They haven't hit the reset point yet on interest rates."
The Oil Drum: "Russia's giant Shtokman gas field, one of the world's most challenging offshore projects, will face even greater problems as global warming unleashes vast icebergs into the Arctic, a senior scientist says. Even if icebergs are unlikely to halt the world's largest single energy development, as the global hunger for resources grows, they would make the $30 billion-plus project by Russia's gas monopoly Gazprom yet more expensive."
The Bush administration will roll out a plan Monday to open new acreage offshore that for decades has been off-limits to drilling.
For all my Jewish friends. What do they call a Roman Catholic? A sleep-walking Nun.
Nouriel Roubini: "Currently the most sophisticated "soft landing" commentators do recognize that Q1 was weak - hard to deny it given the fact of a near growth recession 1.3% - but then argue that Q1 will turn out to be the bottom of the US growth deceleration with a recovery of the economy in Q2 and H2. The economy may well turn out to surprise on the upside if there is a recovery of corporate capex and a resilience of the US consumer. But actual and forward looking data suggest that the growth deceleration is continuing in Q2 and that Q2 - as argued extensively before in this blog - will turn out worse than Q1. Thus the risk of a hard landing is increasing."
U.S. first-quarter 2007 drilling estimates hit a 21-year high and were nearly twice the level of first quarter drilling activity recorded during the 1990s, API said.
Axel Merk: "What a weaker dollar may do is provide temporary relief. But unless the U.S. turns into a society of savers and investors, a weaker dollar will only be a pause to an even weaker dollar as imbalances are built up yet again."
The WSJ opines "tighter credit and a growing glut of properties are depressing an already weak U.S. housing market, wrecking the industry's hopes for an early rebound. That leaves buyers in a strong position to negotiate for bargains during the spring home-shopping season, the busiest time of the year for housing sales."
Jeremy Grantham says we are now seeing the first worldwide bubble in history covering all asset classes. Everything is in bubble territory.
Stanley Elkin: “Life's tallest order is to keep the feelings up, to make two dollars' worth of euphoria go the distance. And life can't do that. So fiction does.”
Friday, April 27, 2007
Never A Serious Debate
4/28/07 Never A Serious Debate
George Tenet: "There was never a serious debate that I know of within the administration about the imminence of the Iraqi threat."
Henry Miller: “One can be absolutely truthful and sincere even though admittedly the most outrageous liar. Fiction and invention are of the very fabric of life.” His words could apply to 43, Dick, and/or Condi.
Cummins lifted its outlook for 2007 to earnings of $6 to $6.50 a share from a prior projection of $5.50 to $5.75 a share.
Coventry Health Care said that it's expecting sales in a range of $9.22 billion to $9.55 billion for 2007, and earnings per share in a range of $3.92 to $3.98 a share.
Japanese consumer prices fell 0.3%, slightly faster than the consensus forecast for a 0.2% fall. Bank of Japan Gov. Toshihiko Fukui said Friday the central bank did not exclude the possibility of lifting interest rates in an environment where the core consumer price index declines on year. "Even if prices stay weak, or fall on year, rate hikes may be needed when consumer prices continue moving in line with our forecast."
Statoil agreed to buy North American Oil Sands for C$2.2 billion (US$2 billion). It's paying C$20 a share for the Calgary-based company that's 69% held by the Paramount Resources Ltd, funds managed by affiliates of ARC Financial Corporation and Ontario Teachers' Pension Plan, which all back the deal.
Standard Pacific's quarterly results, excluding the impairment charges, were 62 cents a share. Revenue for the three months ended March 31 fell to $698.3 million from $879 million, the company said. The first-quarter backlog of 2,712 presold homes, valued at $983 million, a decrease of 58% from a year ago. The backlog figures exclude joint-venture homes. Additionally, Standard Pacific said it now expects 2007 home-building revenue of $3.1 billion and 8,150 deliveries.
IPCS Inc. declared a special cash dividend of $11 a share, payable on May 16 to shareholders of record as of May 8. Schaumburg, Ill.-based iPCS is the Sprint PCS Affiliate of Sprint Nextel Corp.
Citigroup cemented its biggest-ever Asian acquisition for $7.7 billion after a majority of shareholders in Japanese brokerage Nikko Cordial Corp. accepted a buyout offer. Citigroup said it secured 61 percent of Nikko's voting stock in a tender bid that expired on Thursday.
GM suspended development work at two U.S. plants after talks between the union and management on cost cutting ended, the Wall Street Journal reported on its Web site on Friday. United Auto Workers leaders ended talks at facilities in Fairfax, Kansas and Lordstown, Ohio after disagreements with the company, the Journal reported, citing unnamed sources.
Brett Steenbarger: "We need to see price highs and an expansion in the number of stocks registering fresh 20 day highs to sustain the uptrend. I'm alert to the possibility of continued consolidation, given that the rally is not broadening."
A group led by Royal Bank of Scotland Group Plc plans to make an unsolicited offer for ABN Amro Holding NV, escalating the fight with Barclays Plc for control of the biggest Dutch bank.
WTRG: "The U.S. rotary rig count was up 11 rigs to 1,769 for the week of April 20, 2007 and is 11.2 percent higher than last year. The number of rotary rigs drilling for oil is up 10 at 292. The number of rigs targeting oil is 33 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.5% percent of total drilling activity. Rigs directed toward natural gas were up 1 at 1,473. The number of rigs currently drilling for gas is 142 greater than last year's level of 1,331. Year-over-year oil exploration in the US is up 12.7 percent. Gas exploration is up 10.7 percent. The weekly average of crude oil spot prices is 11.9 percent lower than last year and natural gas spot prices are 1.1 percent lower. Canadian rig activity* was up 1 at 98 for the week of April 20, 2007 and is 78 lower than last year's rig count.
Richard Daughty: "
But somebody is still buying things; like the Fed, for instance, which bought up $1.4 billion in government debt last week! Hahaha! In fact, the Federal Reserve (which is, if you recall, just a private bank that, in an almost-deserted Congress on an infamous Christmas Eve in 1913, was given extraordinary powers to create debt and money), now admits to owning $782 billion in U.S. government securities! So, it looks like the Federal Reserve created more credit in the banking system, which they themselves borrowed to buy government debt for themselves! Hahaha! What a scam!
But this little Fed flimflam aside (which is hard to say five times quickly!), without new money coming into the system through the banks, the only way that the stock market, or the bond market, or the housing market, or any market, can go up, is for the new buyers to get the money by selling something else - or if some other country's central bank is supplying the new money. Either way, this is definitely not how to achieve "economic nirvana"."
Cardinal Health Inc. forecast fiscal 2007 profit from continuing operations in a range of $3.32 to $3.40 a share, in the upper half of the range it previously provided. For fiscal 2008, the company expects earnings from continuing operations to be above its long-term goal of 12% to 15% growth and in a range of $3.95 to $4.15 a share.
Chevron Q1 earns $2.18 vs. $1.80. Revenue fell to $48.23 billion from $54.6 billion.
U.S. employment costs increased 0.8% in the first quarter after a 0.9% gain in the last three months of 2006, the Labor Department reported Friday. Wages and salaries rose 1.1% in the quarter, the biggest gain since the first quarter of 2001. Benefits rose 0.1%, the slowest pace since March 1999. Over the past year, employment costs have increased 3.5%, up from 3.3% in the fourth quarter. This is the largest year-over-year gain since the first quarter of 2005. Wages and salary costs have increased 3.6% in the past year, while benefit costs increased 3.1%.
The U.S. economy slowed to 1.3% real annualized growth in the first quarter, the weakest expansion in four years, the Commerce Department estimated Friday.
Growth was led by consumer spending, state and local government spending, and business investments, offsetting drags from housing, foreign trade, inventories and federal government spending. Final sales of domestic product increased 1.6%, the weakest in five quarters. Led by higher energy costs, the GDP price index increased 4%, the most in 16 years. Meanwhile, core consumer prices - which exclude food and energy costs - increased at a more moderate 2.2% annual pace. Unfortunately, living does not occur at core prices.
Mazda Motor Corp., Japan's fourth biggest automaker, posted a 24 percent jump in profit for its fourth fiscal quarter and record annual earnings for the third straight year amid strong U.S. demand for a new sport utility vehicle and other models. Mazda, which is 33.4 percent owned by Ford Motor Co., said Friday it had a group profit of 31.6 billion yen ($264 million) in the three months ended March 31, up from 25.4 billion yen the same period a year earlier. Sales climbed 16 percent to 957.9 billion yen ($8 billion) for the quarter from 826.4 billion yen a year ago.
Financial Sense: "In this week of technology celebration, the relationship between technology stocks and all stocks is nearing a critical technical juncture. Why is this important? This relationship has been a useful tool with regard to picking important tops and bottoms in the stock market. Bull markets and rallies have been accompanied by out performance of technology stocks. This trend has reversed for bear markets and corrections against the bull trend. Yet in the last couple of months, something seems to have changed where the latest bull run is accompanied by underperformance of tech stocks."
The Daily Reckoning: "For the decline of the dollar - against euros, gold, and financial assets generally - undermines Americans' wealth even as they see themselves living in the lap of prosperity. The decline of the dollar could also push forward the day on which the world's big holders of the greenback look at their piles and begin to worry that they have a trillion or two too many. At that point (which we have been attending for so long we often forget what we are waiting for) you should see some real excitement in the world's investment markets.The most obvious consequences will be a further sell-off of the dollar, sparking an increase in U.S. dollar-yields. This, in turn, would disrupt millions of financial decisions, making lenders more wary and borrowers more prudent."
The euro surged to a new record high vs. the dollar above $1.3680 early Friday after a Commerce Department report showed the U.S. economy slowed to 1.3% annualized growth in the first quarter.
Asian Times: "Russia, officially listed as holder of 27% of the world's proven natural-gas reserves, but soon to be upgraded to 35%, and Iran hold more than 51% of the world's reserves. When Algeria, Qatar and Indonesia, the world's leaders in the export of liquefied natural gas (LNG), and the rest of the 16-member group comprising the Gas Exporting Countries Forum (GECF) are added in, then the grouping accounts for more than three-fourths of the world's
reserves and at least 60% of world production."
National Oilwell Varco, Inc. reported that for its first quarter ended March 31, 2007 it earned net income of $275.9 million, or $1.55 per fully diluted share, compared to fourth quarter ended December 31, 2006 net income of $239.2 million, or $1.35 per fully diluted share. Earnings per share more than doubled from the first quarter of 2006, when the Company earned $120.3 million or $0.68 per fully diluted share. Reported revenues for the first quarter were $2,165.7 million, an increase of 4 percent from the fourth quarter of 2006 and an increase of 43 percent from the first quarter of 2006.
The Justice Department released a list of internal documents Thursday focusing on lawmakers' concerns and media questions about the firings of eight federal prosecutors, but the department resisted congressional demands for copies of the memos.
The Reuters/University of Michigan Surveys of Consumers said the final April reading of its consumer sentiment index slipped to 87.1 from from 88.4 in March. It was the third straight monthly fall in the index.April's final result was the lowest since 85.4 in September 2006.
The vacancy rate for owner-occupied homes rose to a record 2.8% in the first quarter from 2.7% in the fourth quarter, the Commerce Department reported Friday. A year ago, the vacancy rate was 2.1%, a record at the time. The vacancy rate for rental homes rose to 10.1% from 9.8%, the highest in two years.
Lubrizol now expects earnings in the range of $3.70 per share to $3.90 per share on revenue of between $4.32 billion and $4.36 billion, compared with a forecast in February that called for a profit of between $3.30 per share to $3.50 on revenue of between $4.28 billion and $4.32 billion.
ZMAN reports Pemex sees Cantarell field production off 15% in 2007.
OPEC said in its monthly magazine published Thursday
"...in the light of the recent developments regarding the stated move away from traditional fossil fuels - and oil in particular - OPEC member countries feel they ought to review their future expansion plans," the magazine said.The magazine went on to say: "It would, in fact, make no sense for them to spend money unnecessarily on building or improving facilities when their customers are telling them they intend to minimize dependence on OPEC supplies."
Ford Motor Co. said on Friday that U.S. auto industry sales to date in April were "terrible" as consumer confidence was hit by a slow housing market and rising gas prices."This month is terrible," Ford chief sales analyst George Pipas said in an interview. "We are not even close to where we expected to be in April."
June gold closed at $681.80 an ounce Friday, up $3.80 for the session, but down 2% for the week.
June crude up $1.40 to close at $66.46/brl and up 3.7% for the week.
Workers at Brazil's state-owned oil and gas company, Petrobras, announced Thursday that they will go on strike halting operations in all of the giant's production units.
Lukoil has reduced its 2007 production growth target to 4.5-5.0 percent from 8.2 percent following delays in the Yuzhno-Khylchuyuskoye (YK) field development project in Northern Russia.
A mild winter hampered the development of the field, which is now expected to come on stream at the end of this year, company officials told analysts at a briefing in London.
Rep. Ron Paul: "Real conservatives have always supported low taxes and low spending. But today, too many politicians and lobbyists are spending America into ruin. We are nine trillion dollars in debt as a nation... If we don't cut spending now, higher taxes and economic disaster will be in their future - and yours. In addition, the Federal Reserve, our central bank, fosters runaway debt by increasing the money supply - making each dollar in your pocket worth less."
George Tenet: "There was never a serious debate that I know of within the administration about the imminence of the Iraqi threat."
Henry Miller: “One can be absolutely truthful and sincere even though admittedly the most outrageous liar. Fiction and invention are of the very fabric of life.” His words could apply to 43, Dick, and/or Condi.
Cummins lifted its outlook for 2007 to earnings of $6 to $6.50 a share from a prior projection of $5.50 to $5.75 a share.
Coventry Health Care said that it's expecting sales in a range of $9.22 billion to $9.55 billion for 2007, and earnings per share in a range of $3.92 to $3.98 a share.
Japanese consumer prices fell 0.3%, slightly faster than the consensus forecast for a 0.2% fall. Bank of Japan Gov. Toshihiko Fukui said Friday the central bank did not exclude the possibility of lifting interest rates in an environment where the core consumer price index declines on year. "Even if prices stay weak, or fall on year, rate hikes may be needed when consumer prices continue moving in line with our forecast."
Statoil agreed to buy North American Oil Sands for C$2.2 billion (US$2 billion). It's paying C$20 a share for the Calgary-based company that's 69% held by the Paramount Resources Ltd, funds managed by affiliates of ARC Financial Corporation and Ontario Teachers' Pension Plan, which all back the deal.
Standard Pacific's quarterly results, excluding the impairment charges, were 62 cents a share. Revenue for the three months ended March 31 fell to $698.3 million from $879 million, the company said. The first-quarter backlog of 2,712 presold homes, valued at $983 million, a decrease of 58% from a year ago. The backlog figures exclude joint-venture homes. Additionally, Standard Pacific said it now expects 2007 home-building revenue of $3.1 billion and 8,150 deliveries.
IPCS Inc. declared a special cash dividend of $11 a share, payable on May 16 to shareholders of record as of May 8. Schaumburg, Ill.-based iPCS is the Sprint PCS Affiliate of Sprint Nextel Corp.
Citigroup cemented its biggest-ever Asian acquisition for $7.7 billion after a majority of shareholders in Japanese brokerage Nikko Cordial Corp. accepted a buyout offer. Citigroup said it secured 61 percent of Nikko's voting stock in a tender bid that expired on Thursday.
GM suspended development work at two U.S. plants after talks between the union and management on cost cutting ended, the Wall Street Journal reported on its Web site on Friday. United Auto Workers leaders ended talks at facilities in Fairfax, Kansas and Lordstown, Ohio after disagreements with the company, the Journal reported, citing unnamed sources.
Brett Steenbarger: "We need to see price highs and an expansion in the number of stocks registering fresh 20 day highs to sustain the uptrend. I'm alert to the possibility of continued consolidation, given that the rally is not broadening."
A group led by Royal Bank of Scotland Group Plc plans to make an unsolicited offer for ABN Amro Holding NV, escalating the fight with Barclays Plc for control of the biggest Dutch bank.
WTRG: "The U.S. rotary rig count was up 11 rigs to 1,769 for the week of April 20, 2007 and is 11.2 percent higher than last year. The number of rotary rigs drilling for oil is up 10 at 292. The number of rigs targeting oil is 33 rigs higher than last year's level of activity. Rigs currently drilling for oil represent 16.5% percent of total drilling activity. Rigs directed toward natural gas were up 1 at 1,473. The number of rigs currently drilling for gas is 142 greater than last year's level of 1,331. Year-over-year oil exploration in the US is up 12.7 percent. Gas exploration is up 10.7 percent. The weekly average of crude oil spot prices is 11.9 percent lower than last year and natural gas spot prices are 1.1 percent lower. Canadian rig activity* was up 1 at 98 for the week of April 20, 2007 and is 78 lower than last year's rig count.
Richard Daughty: "
But somebody is still buying things; like the Fed, for instance, which bought up $1.4 billion in government debt last week! Hahaha! In fact, the Federal Reserve (which is, if you recall, just a private bank that, in an almost-deserted Congress on an infamous Christmas Eve in 1913, was given extraordinary powers to create debt and money), now admits to owning $782 billion in U.S. government securities! So, it looks like the Federal Reserve created more credit in the banking system, which they themselves borrowed to buy government debt for themselves! Hahaha! What a scam!
But this little Fed flimflam aside (which is hard to say five times quickly!), without new money coming into the system through the banks, the only way that the stock market, or the bond market, or the housing market, or any market, can go up, is for the new buyers to get the money by selling something else - or if some other country's central bank is supplying the new money. Either way, this is definitely not how to achieve "economic nirvana"."
Cardinal Health Inc. forecast fiscal 2007 profit from continuing operations in a range of $3.32 to $3.40 a share, in the upper half of the range it previously provided. For fiscal 2008, the company expects earnings from continuing operations to be above its long-term goal of 12% to 15% growth and in a range of $3.95 to $4.15 a share.
Chevron Q1 earns $2.18 vs. $1.80. Revenue fell to $48.23 billion from $54.6 billion.
U.S. employment costs increased 0.8% in the first quarter after a 0.9% gain in the last three months of 2006, the Labor Department reported Friday. Wages and salaries rose 1.1% in the quarter, the biggest gain since the first quarter of 2001. Benefits rose 0.1%, the slowest pace since March 1999. Over the past year, employment costs have increased 3.5%, up from 3.3% in the fourth quarter. This is the largest year-over-year gain since the first quarter of 2005. Wages and salary costs have increased 3.6% in the past year, while benefit costs increased 3.1%.
The U.S. economy slowed to 1.3% real annualized growth in the first quarter, the weakest expansion in four years, the Commerce Department estimated Friday.
Growth was led by consumer spending, state and local government spending, and business investments, offsetting drags from housing, foreign trade, inventories and federal government spending. Final sales of domestic product increased 1.6%, the weakest in five quarters. Led by higher energy costs, the GDP price index increased 4%, the most in 16 years. Meanwhile, core consumer prices - which exclude food and energy costs - increased at a more moderate 2.2% annual pace. Unfortunately, living does not occur at core prices.
Mazda Motor Corp., Japan's fourth biggest automaker, posted a 24 percent jump in profit for its fourth fiscal quarter and record annual earnings for the third straight year amid strong U.S. demand for a new sport utility vehicle and other models. Mazda, which is 33.4 percent owned by Ford Motor Co., said Friday it had a group profit of 31.6 billion yen ($264 million) in the three months ended March 31, up from 25.4 billion yen the same period a year earlier. Sales climbed 16 percent to 957.9 billion yen ($8 billion) for the quarter from 826.4 billion yen a year ago.
Financial Sense: "In this week of technology celebration, the relationship between technology stocks and all stocks is nearing a critical technical juncture. Why is this important? This relationship has been a useful tool with regard to picking important tops and bottoms in the stock market. Bull markets and rallies have been accompanied by out performance of technology stocks. This trend has reversed for bear markets and corrections against the bull trend. Yet in the last couple of months, something seems to have changed where the latest bull run is accompanied by underperformance of tech stocks."
The Daily Reckoning: "For the decline of the dollar - against euros, gold, and financial assets generally - undermines Americans' wealth even as they see themselves living in the lap of prosperity. The decline of the dollar could also push forward the day on which the world's big holders of the greenback look at their piles and begin to worry that they have a trillion or two too many. At that point (which we have been attending for so long we often forget what we are waiting for) you should see some real excitement in the world's investment markets.The most obvious consequences will be a further sell-off of the dollar, sparking an increase in U.S. dollar-yields. This, in turn, would disrupt millions of financial decisions, making lenders more wary and borrowers more prudent."
The euro surged to a new record high vs. the dollar above $1.3680 early Friday after a Commerce Department report showed the U.S. economy slowed to 1.3% annualized growth in the first quarter.
Asian Times: "Russia, officially listed as holder of 27% of the world's proven natural-gas reserves, but soon to be upgraded to 35%, and Iran hold more than 51% of the world's reserves. When Algeria, Qatar and Indonesia, the world's leaders in the export of liquefied natural gas (LNG), and the rest of the 16-member group comprising the Gas Exporting Countries Forum (GECF) are added in, then the grouping accounts for more than three-fourths of the world's
reserves and at least 60% of world production."
National Oilwell Varco, Inc. reported that for its first quarter ended March 31, 2007 it earned net income of $275.9 million, or $1.55 per fully diluted share, compared to fourth quarter ended December 31, 2006 net income of $239.2 million, or $1.35 per fully diluted share. Earnings per share more than doubled from the first quarter of 2006, when the Company earned $120.3 million or $0.68 per fully diluted share. Reported revenues for the first quarter were $2,165.7 million, an increase of 4 percent from the fourth quarter of 2006 and an increase of 43 percent from the first quarter of 2006.
The Justice Department released a list of internal documents Thursday focusing on lawmakers' concerns and media questions about the firings of eight federal prosecutors, but the department resisted congressional demands for copies of the memos.
The Reuters/University of Michigan Surveys of Consumers said the final April reading of its consumer sentiment index slipped to 87.1 from from 88.4 in March. It was the third straight monthly fall in the index.April's final result was the lowest since 85.4 in September 2006.
The vacancy rate for owner-occupied homes rose to a record 2.8% in the first quarter from 2.7% in the fourth quarter, the Commerce Department reported Friday. A year ago, the vacancy rate was 2.1%, a record at the time. The vacancy rate for rental homes rose to 10.1% from 9.8%, the highest in two years.
Lubrizol now expects earnings in the range of $3.70 per share to $3.90 per share on revenue of between $4.32 billion and $4.36 billion, compared with a forecast in February that called for a profit of between $3.30 per share to $3.50 on revenue of between $4.28 billion and $4.32 billion.
ZMAN reports Pemex sees Cantarell field production off 15% in 2007.
OPEC said in its monthly magazine published Thursday
"...in the light of the recent developments regarding the stated move away from traditional fossil fuels - and oil in particular - OPEC member countries feel they ought to review their future expansion plans," the magazine said.The magazine went on to say: "It would, in fact, make no sense for them to spend money unnecessarily on building or improving facilities when their customers are telling them they intend to minimize dependence on OPEC supplies."
Ford Motor Co. said on Friday that U.S. auto industry sales to date in April were "terrible" as consumer confidence was hit by a slow housing market and rising gas prices."This month is terrible," Ford chief sales analyst George Pipas said in an interview. "We are not even close to where we expected to be in April."
June gold closed at $681.80 an ounce Friday, up $3.80 for the session, but down 2% for the week.
June crude up $1.40 to close at $66.46/brl and up 3.7% for the week.
Workers at Brazil's state-owned oil and gas company, Petrobras, announced Thursday that they will go on strike halting operations in all of the giant's production units.
Lukoil has reduced its 2007 production growth target to 4.5-5.0 percent from 8.2 percent following delays in the Yuzhno-Khylchuyuskoye (YK) field development project in Northern Russia.
A mild winter hampered the development of the field, which is now expected to come on stream at the end of this year, company officials told analysts at a briefing in London.
Rep. Ron Paul: "Real conservatives have always supported low taxes and low spending. But today, too many politicians and lobbyists are spending America into ruin. We are nine trillion dollars in debt as a nation... If we don't cut spending now, higher taxes and economic disaster will be in their future - and yours. In addition, the Federal Reserve, our central bank, fosters runaway debt by increasing the money supply - making each dollar in your pocket worth less."
Thursday, April 26, 2007
Will $4 Gas Impact Consumer Spending?
Will $4 Gas Impact Consumer Spending?
Chevron Corp. increased its quarterly dividend 11.5% to 58 cents a share. The dividend is payable on June 11 to shareholders of record as May 18, the San Ramon, Calif.-based energy company said.
Wendy's said it has formed a special committee of independent directors to review strategic options to enhance shareholder value, among them revisions to the Wendy's strategic plan, changes to its capital structure, a possible sale, merger or other business combination. Wendy's also backed its full-year per-share earnings forecast range of $1.26 to $1.32.
Exxon's first-quarter earnings rose more than 10 percent as higher profits from its refineries outweighed lower crude oil prices.
Ford Motor Co. posted a narrower quarterly loss Thursday as cost-cutting and improved results from its European and luxury vehicle operations partially offset weaker sales and charges for restructuring. "Our first-quarter results came in somewhat stronger than expected, but there are many uncertainties going forward," Chief Executive Alan Mulally said in a statement. Ford's loss from continuing operations, excluding one-time items, was 9 cents per share.
3M reported net profit of $1.37 billion, or $1.85 a share, for the first quarter, up 52% from net profit of $899 million, or $1.17 a share, in the same quarter a year ago. Revenues rose 6.1% to $5.94 billion from $5.59 billion in the year-ago period. Excluding the sale of the European drug business, the company earned $1.28 a share.Looking ahead, the company said it expects full-year earnings per share of $4.50 to $4.85.
Iran's chief nuclear negotiator Ali Larijani said differences with the European Union over its nuclear program were gradually narrowing.
Boeing earned $877 million, or $1.13 a share, for the quarter ending March 31 compared with $692 million, or 88 cents a share, a year earlier. Revenue climbed 8% to $15.4 billion, beating Wall Street expectations.
The Labor Department reported Thursday that applications for jobless benefits totaled 321,000 last week, a decline of 20,000 from the previous week. Some of the improvement reflected trouble adjusting the weekly claims data around Easter, which does not fall in the same week every year.
For the full year, Bristol-Myers boosted its forecast for net income to $1.24 to $1.34 a share from $1.12 to $1.22 a share. Excluding one-time items, Bristol-Myers predicts a profit of $1.30 to $.140 a share, up from earlier guidance of $1.20 to $1.30 a share.
Excluding charges for inventory impairments, impairments of investments in joint ventures and abandonment of land option contracts, Beazer's adjusted net income was $11.2 million, or 30 cents per diluted share. "Most housing markets across the country continue to experience lower levels of demand coupled with higher levels of inventory, resulting in increased competition and continued significant discounting," Beazer President and CEO Ian J. McCarthy said in a press release. "While we were pleased with the level of new orders we achieved this quarter, at this point in the traditional spring selling season we still have yet to see any meaningful evidence of a sustainable recovery in the housing market, and we expect current conditions will continue to put pressure on homebuilders' operating results." The company also said that given "low visibility as to when conditions may improve" it is not comfortable at this time updating its earnings-per-share outlook for fiscal 2007.
Halliburton reported earnings of $552 million, or 54 cents a share, for the first quarter, up from earnings of $488 million, or 46 cents a share, in the same quarter a year ago. Revenues rose 17% to $3.4 billion.
Dow Chemical, for the three months ended March 31, had net income after paying preferred dividends dipped to $973 million, or $1 a share, from $1.21 billion, or $1.24 a share, a year ago. Sales grew 3% to $12.43 billion from $12.02 billion last year, as double-digit sales growth in Europe, Asia Pacific and Latin America more than offset continued weakness in North America, particularly in the housing and automotive sectors.
A majority of Americans believe the nation is headed in the wrong direction, according to a recent NBC News/Wall Street Journal survey. Sixty-six percent of individuals polled believe things in the nation have veered off onto the wrong track, up from 57% at the start of the year. Meanwhile, 22% of individuals surveyed believe the nation is headed in the right direction while 12% had mixed feelings.
Lenders to highly indebted companies are making many of the same mistakes that undermined the US subprime mortgage market, suggesting that leveraged loans will become “tomorrow’s problem”, says the chief executive of BlackRock, the $1,000bn-plus fund management group. “If I was the chairman of the Federal Reserve, I’d be paying more attention to that because, to me, this is going to be tomorrow’s problem,” Mr Fink said in an interview with the Financial Times. “Standards have deteriorated to levels that we never even dreamed that we would see.”
Qualcomm also boosted its projections for earnings and revenue for the fiscal year ending in September.
The WSJ reported that Applebee's received several bids to be acquired and agreed to give activist investor Richard Breeden and one of his nominees board seats.
The WSJ also reported that the amount borrowers owe on home-equity lines of credit fell for the first time since 1999.
Comcast Corp said first-quarter profit soared 80% as customers continued to snap up bundled packages of TV, phone and Internet services.
Pulte, the fourth-largest U.S. homebuilder by revenue, reported a first-quarter net loss of $85.7 million, or 33 cents a share, compared with a profit of $262.6 million, or $1.01, a year earlier. Revenue fell 37 percent to $1.87 billion.
The company forecast break-even results to a loss of 10 cents a share in the second quarter, excluding land charges.
"Overall, the homebuilding environment remained challenging during the first quarter of 2007, as elevated inventory levels combined with weak consumer confidence for housing continue to place pressure on results,'' Pulte Chief Executive Officer Richard Dugas said in the statement.
New orders tumbled 21 percent in the quarter. The average sales price of a Pulte home fell 1.8 percent to $330,000.
Ryland, the biggest U.S. homebuilder for first-time buyers, reported a net loss in the three months ended March 31 of $24.4 million, or 58 cents a share. That compared with a profit of $90 million, or $1.86, a year earlier.
First-quarter revenue fell 34 percent to $706.4 million, the Calabasas, California-based company said in a statement. New orders in the quarter plunged 26 percent to 2,989. The company had forecast earnings in January of $3.75 to $4.25 a share for 2007.
At least 50 companies have stopped lending, gone into bankruptcy or sought buyers since the start of 2006, according to Bloomberg data.
New Zealand's central bank raised the benchmark interest rate to a record 7.75 percent, the second- highest after Iceland among AAA-rated nations, saying housing demand and consumer spending may fan inflation.
Technitrol Inc.said it's withdrawn an offer to purchase Bel Fuse Inc. for $43 per share.
Harman International Industries agreed to by acquired by private-equity firms Kohlberg Kravis Roberts and GS Capital in a deal valued at $8 billion. Under terms of the deal, Harman shareholders can elect to exchange their shares for $120 a share in cash, or shares of the company after the closing of the deal, which is expected to occur in the third quarter of 2007.
Valero Energy Corp.reported first-quarter net income for the three months ended March 31 rose 30% to $1.1 billion, or $1.86 a share from $849 million, or $1.32 a share in the year-ago period. Revenue fell to $19.7 billion from $20.9 billion. Operating income rose to $1.8 billion from $1.3 billion. Analysts surveyed by Thomson Financial forecast earnings of $1.81 a share, on average.
Qatar investment group Delta Two confirmed that it bought 302 million shares in J Sainsbury on Wednesday.
For the year Bunge expects to earn $4.56 to $4.71 a share, including around 23 cents a share form the sale of assets.
In the latest quarter Apple sold 10.5 million iPods and 1.5 million Macs.
The number of help-wanted ads in major U.S. newspapers dipped in March, signaling that job growth may be modest this summer, the Conference Board said Thursday. The help-wanted index fell by one point to 30 in March. It was 37 a year ago. Ads fell in eight of nine U.S. regions over the past three months. Online help-wanted postings fell by 2% in March.
Self-service regular unleaded gas averages $3.16 a gallon, said Janet Ray, spokeswoman for AAA-Washington. That's less than 2 cents below the state's record-high average, $3.174 a gallon, which was set last May 29. "There's every indication that we'll set a new record, probably sometime this week," Ray said. "The question is, how much higher will they go?"
Natural-gas inventories rose by 18 billion cubic feet for the week ended April 20, the Energy Department said Thursday. Total stocks now stand at 1.564 trillion cubic feet, down 276 billion cubic feet from the year-ago level, but 233 billion cubic feet above the five-year average, the government data said.
Gen. David Petraeus, the top U.S. commander in Iraq, depicted the situation there as "exceedingly complex and very tough" Thursday and said the U.S. effort might become more difficult before it gets easier.
The Pentagon's new intelligence undersecretary is recommending the Defense Department shut down a controversial classified database that has been criticized for improperly collecting information on anti-war groups and citizens.
June crude fell 78 cents to close at $65.06 a barrel Thursday. May reformulated gas pared gains to close at $2.2903 a gallon, up 0.77. May natural gas fell 18.1 cents to end at $7.508 per million British thermal units. June become the lead-month contract at the close of trading. June natural gas fell 17.9 cents to finish at $7.602.
June gold fell $9.40 to close at $678 an ounce Thursday. May silver dropped 3.2%, or 44 cents, to end at $13.325 an ounce.
The Senate voted Thursday to send President Bush a $124.2 billion war-spending bill that urges the withdrawal of U.S. troops from Iraq beginning this fall. Divided along party lines, the Senate voted 51-46 in favor of the Democratic measure, which the House approved Wednesday night.
Broadcom's non-GAAP earnings came in at $175.1 million, or 29 cents a share. Revenue was up slightly to $901.5 million compared to $900.6 million last year. Analysts were expecting earnings of 27 cents a share on revenue of $897.2 million, according to Thomson Financial.
Let's take a close look at the Microsoft numbers. The company announced revenue of $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year. Diluted earnings per share for the quarter grew 72% to $0.50, and included $0.02 in tax benefits and $0.01 in legal charges. In addition, these results reflect $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share that were previously deferred primarily related to the technology guarantee programs for Windows Vista(TM) and the 2007 Microsoft® Office release. Net cash flow from operations was $7.29 billion and Microsoft returned $7.72 billion in cash to shareholders through share buybacks and dividends this quarter.
Management offers the following preliminary guidance for the full fiscal year ending June 30, 2008:
-- Revenue is expected to be in the range of $56.5 billion to $57.5
billion.
-- Operating income is expected to be in the range of $22.0 billion to
$22.5 billion.
-- Diluted earnings per share are expected to be in the range of $1.68 to
$1.72.
The current market cap is about $281 billion or 5 times estimated 2008 sales and about 13 times operating income for 2008. In my view, only the company's buyback of shares is keeping the stock close to the $30 level. For the past seven years I have viewed these shares as a poor investment choice. In addition, I have very little confidence in the CEO.
SanDisk posted a loss of $575,000, or break-even on a per-share basis, compared with a profit of $35 million, or 17 cents a share a year ago. For the three months ended April 1, SanDisk said sales rose 26% to $786 million, outpacing Wall
Street's forecast. The company said weak prices for flash memory chips will persist into the summer months, further pressuring margins, which were cut in half in the first quarter compared to a year ago. SanDisk forecast that demand for its products will increase as the year unfolds.
Over the past month gasoline consumption in the U.S. grew 2.3% and 2.2% over the past year. In the latest weekly figures the nation's refineries are operating at 87.8% of capacity. It is not surprising that U.S. gasoline inventories are at a 20-year low, and this represents less than 21 days of national use. I just put 10 gallons of gas into my car and it cost $35. On a nationwide basis one must believe that record gasoline prices will cut into consumers' disposable income and impact, for example, restaurants, entertainment, and many other non-essential areas. If you disagree, then maybe you can suggest where the extra money will come from for the consumers to maintain their spending habit. It won't come from the ATM machine on their home equity.
Epictetus: "God has entrusted me with myself."
Chevron Corp. increased its quarterly dividend 11.5% to 58 cents a share. The dividend is payable on June 11 to shareholders of record as May 18, the San Ramon, Calif.-based energy company said.
Wendy's said it has formed a special committee of independent directors to review strategic options to enhance shareholder value, among them revisions to the Wendy's strategic plan, changes to its capital structure, a possible sale, merger or other business combination. Wendy's also backed its full-year per-share earnings forecast range of $1.26 to $1.32.
Exxon's first-quarter earnings rose more than 10 percent as higher profits from its refineries outweighed lower crude oil prices.
Ford Motor Co. posted a narrower quarterly loss Thursday as cost-cutting and improved results from its European and luxury vehicle operations partially offset weaker sales and charges for restructuring. "Our first-quarter results came in somewhat stronger than expected, but there are many uncertainties going forward," Chief Executive Alan Mulally said in a statement. Ford's loss from continuing operations, excluding one-time items, was 9 cents per share.
3M reported net profit of $1.37 billion, or $1.85 a share, for the first quarter, up 52% from net profit of $899 million, or $1.17 a share, in the same quarter a year ago. Revenues rose 6.1% to $5.94 billion from $5.59 billion in the year-ago period. Excluding the sale of the European drug business, the company earned $1.28 a share.Looking ahead, the company said it expects full-year earnings per share of $4.50 to $4.85.
Iran's chief nuclear negotiator Ali Larijani said differences with the European Union over its nuclear program were gradually narrowing.
Boeing earned $877 million, or $1.13 a share, for the quarter ending March 31 compared with $692 million, or 88 cents a share, a year earlier. Revenue climbed 8% to $15.4 billion, beating Wall Street expectations.
The Labor Department reported Thursday that applications for jobless benefits totaled 321,000 last week, a decline of 20,000 from the previous week. Some of the improvement reflected trouble adjusting the weekly claims data around Easter, which does not fall in the same week every year.
For the full year, Bristol-Myers boosted its forecast for net income to $1.24 to $1.34 a share from $1.12 to $1.22 a share. Excluding one-time items, Bristol-Myers predicts a profit of $1.30 to $.140 a share, up from earlier guidance of $1.20 to $1.30 a share.
Excluding charges for inventory impairments, impairments of investments in joint ventures and abandonment of land option contracts, Beazer's adjusted net income was $11.2 million, or 30 cents per diluted share. "Most housing markets across the country continue to experience lower levels of demand coupled with higher levels of inventory, resulting in increased competition and continued significant discounting," Beazer President and CEO Ian J. McCarthy said in a press release. "While we were pleased with the level of new orders we achieved this quarter, at this point in the traditional spring selling season we still have yet to see any meaningful evidence of a sustainable recovery in the housing market, and we expect current conditions will continue to put pressure on homebuilders' operating results." The company also said that given "low visibility as to when conditions may improve" it is not comfortable at this time updating its earnings-per-share outlook for fiscal 2007.
Halliburton reported earnings of $552 million, or 54 cents a share, for the first quarter, up from earnings of $488 million, or 46 cents a share, in the same quarter a year ago. Revenues rose 17% to $3.4 billion.
Dow Chemical, for the three months ended March 31, had net income after paying preferred dividends dipped to $973 million, or $1 a share, from $1.21 billion, or $1.24 a share, a year ago. Sales grew 3% to $12.43 billion from $12.02 billion last year, as double-digit sales growth in Europe, Asia Pacific and Latin America more than offset continued weakness in North America, particularly in the housing and automotive sectors.
A majority of Americans believe the nation is headed in the wrong direction, according to a recent NBC News/Wall Street Journal survey. Sixty-six percent of individuals polled believe things in the nation have veered off onto the wrong track, up from 57% at the start of the year. Meanwhile, 22% of individuals surveyed believe the nation is headed in the right direction while 12% had mixed feelings.
Lenders to highly indebted companies are making many of the same mistakes that undermined the US subprime mortgage market, suggesting that leveraged loans will become “tomorrow’s problem”, says the chief executive of BlackRock, the $1,000bn-plus fund management group. “If I was the chairman of the Federal Reserve, I’d be paying more attention to that because, to me, this is going to be tomorrow’s problem,” Mr Fink said in an interview with the Financial Times. “Standards have deteriorated to levels that we never even dreamed that we would see.”
Qualcomm also boosted its projections for earnings and revenue for the fiscal year ending in September.
The WSJ reported that Applebee's received several bids to be acquired and agreed to give activist investor Richard Breeden and one of his nominees board seats.
The WSJ also reported that the amount borrowers owe on home-equity lines of credit fell for the first time since 1999.
Comcast Corp said first-quarter profit soared 80% as customers continued to snap up bundled packages of TV, phone and Internet services.
Pulte, the fourth-largest U.S. homebuilder by revenue, reported a first-quarter net loss of $85.7 million, or 33 cents a share, compared with a profit of $262.6 million, or $1.01, a year earlier. Revenue fell 37 percent to $1.87 billion.
The company forecast break-even results to a loss of 10 cents a share in the second quarter, excluding land charges.
"Overall, the homebuilding environment remained challenging during the first quarter of 2007, as elevated inventory levels combined with weak consumer confidence for housing continue to place pressure on results,'' Pulte Chief Executive Officer Richard Dugas said in the statement.
New orders tumbled 21 percent in the quarter. The average sales price of a Pulte home fell 1.8 percent to $330,000.
Ryland, the biggest U.S. homebuilder for first-time buyers, reported a net loss in the three months ended March 31 of $24.4 million, or 58 cents a share. That compared with a profit of $90 million, or $1.86, a year earlier.
First-quarter revenue fell 34 percent to $706.4 million, the Calabasas, California-based company said in a statement. New orders in the quarter plunged 26 percent to 2,989. The company had forecast earnings in January of $3.75 to $4.25 a share for 2007.
At least 50 companies have stopped lending, gone into bankruptcy or sought buyers since the start of 2006, according to Bloomberg data.
New Zealand's central bank raised the benchmark interest rate to a record 7.75 percent, the second- highest after Iceland among AAA-rated nations, saying housing demand and consumer spending may fan inflation.
Technitrol Inc.said it's withdrawn an offer to purchase Bel Fuse Inc. for $43 per share.
Harman International Industries agreed to by acquired by private-equity firms Kohlberg Kravis Roberts and GS Capital in a deal valued at $8 billion. Under terms of the deal, Harman shareholders can elect to exchange their shares for $120 a share in cash, or shares of the company after the closing of the deal, which is expected to occur in the third quarter of 2007.
Valero Energy Corp.reported first-quarter net income for the three months ended March 31 rose 30% to $1.1 billion, or $1.86 a share from $849 million, or $1.32 a share in the year-ago period. Revenue fell to $19.7 billion from $20.9 billion. Operating income rose to $1.8 billion from $1.3 billion. Analysts surveyed by Thomson Financial forecast earnings of $1.81 a share, on average.
Qatar investment group Delta Two confirmed that it bought 302 million shares in J Sainsbury on Wednesday.
For the year Bunge expects to earn $4.56 to $4.71 a share, including around 23 cents a share form the sale of assets.
In the latest quarter Apple sold 10.5 million iPods and 1.5 million Macs.
The number of help-wanted ads in major U.S. newspapers dipped in March, signaling that job growth may be modest this summer, the Conference Board said Thursday. The help-wanted index fell by one point to 30 in March. It was 37 a year ago. Ads fell in eight of nine U.S. regions over the past three months. Online help-wanted postings fell by 2% in March.
Self-service regular unleaded gas averages $3.16 a gallon, said Janet Ray, spokeswoman for AAA-Washington. That's less than 2 cents below the state's record-high average, $3.174 a gallon, which was set last May 29. "There's every indication that we'll set a new record, probably sometime this week," Ray said. "The question is, how much higher will they go?"
Natural-gas inventories rose by 18 billion cubic feet for the week ended April 20, the Energy Department said Thursday. Total stocks now stand at 1.564 trillion cubic feet, down 276 billion cubic feet from the year-ago level, but 233 billion cubic feet above the five-year average, the government data said.
Gen. David Petraeus, the top U.S. commander in Iraq, depicted the situation there as "exceedingly complex and very tough" Thursday and said the U.S. effort might become more difficult before it gets easier.
The Pentagon's new intelligence undersecretary is recommending the Defense Department shut down a controversial classified database that has been criticized for improperly collecting information on anti-war groups and citizens.
June crude fell 78 cents to close at $65.06 a barrel Thursday. May reformulated gas pared gains to close at $2.2903 a gallon, up 0.77. May natural gas fell 18.1 cents to end at $7.508 per million British thermal units. June become the lead-month contract at the close of trading. June natural gas fell 17.9 cents to finish at $7.602.
June gold fell $9.40 to close at $678 an ounce Thursday. May silver dropped 3.2%, or 44 cents, to end at $13.325 an ounce.
The Senate voted Thursday to send President Bush a $124.2 billion war-spending bill that urges the withdrawal of U.S. troops from Iraq beginning this fall. Divided along party lines, the Senate voted 51-46 in favor of the Democratic measure, which the House approved Wednesday night.
Broadcom's non-GAAP earnings came in at $175.1 million, or 29 cents a share. Revenue was up slightly to $901.5 million compared to $900.6 million last year. Analysts were expecting earnings of 27 cents a share on revenue of $897.2 million, according to Thomson Financial.
Let's take a close look at the Microsoft numbers. The company announced revenue of $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year. Diluted earnings per share for the quarter grew 72% to $0.50, and included $0.02 in tax benefits and $0.01 in legal charges. In addition, these results reflect $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share that were previously deferred primarily related to the technology guarantee programs for Windows Vista(TM) and the 2007 Microsoft® Office release. Net cash flow from operations was $7.29 billion and Microsoft returned $7.72 billion in cash to shareholders through share buybacks and dividends this quarter.
Management offers the following preliminary guidance for the full fiscal year ending June 30, 2008:
-- Revenue is expected to be in the range of $56.5 billion to $57.5
billion.
-- Operating income is expected to be in the range of $22.0 billion to
$22.5 billion.
-- Diluted earnings per share are expected to be in the range of $1.68 to
$1.72.
The current market cap is about $281 billion or 5 times estimated 2008 sales and about 13 times operating income for 2008. In my view, only the company's buyback of shares is keeping the stock close to the $30 level. For the past seven years I have viewed these shares as a poor investment choice. In addition, I have very little confidence in the CEO.
SanDisk posted a loss of $575,000, or break-even on a per-share basis, compared with a profit of $35 million, or 17 cents a share a year ago. For the three months ended April 1, SanDisk said sales rose 26% to $786 million, outpacing Wall
Street's forecast. The company said weak prices for flash memory chips will persist into the summer months, further pressuring margins, which were cut in half in the first quarter compared to a year ago. SanDisk forecast that demand for its products will increase as the year unfolds.
Over the past month gasoline consumption in the U.S. grew 2.3% and 2.2% over the past year. In the latest weekly figures the nation's refineries are operating at 87.8% of capacity. It is not surprising that U.S. gasoline inventories are at a 20-year low, and this represents less than 21 days of national use. I just put 10 gallons of gas into my car and it cost $35. On a nationwide basis one must believe that record gasoline prices will cut into consumers' disposable income and impact, for example, restaurants, entertainment, and many other non-essential areas. If you disagree, then maybe you can suggest where the extra money will come from for the consumers to maintain their spending habit. It won't come from the ATM machine on their home equity.
Epictetus: "God has entrusted me with myself."
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